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F30 / F31 / F32 / F33 (2012 - current)
The sixth generation 3 series, chassis code F30. 2013 model year 328i and 335i sedans now in production. Read the F30 frequently asked question thread for all your basic question and dive into all the details in the ultimate F30 information thread.

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  #1426  
Old 09-23-2013, 08:52 PM
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Quote:
Originally Posted by SanDiegoBMW328i View Post
Sorry, I don't see it that way. There is like one poster here that is pointing out the strange, but true reality that it is actually a characteristic of buyers (by virtue of their argument that buying is actually cheaper than leasing) who, being so concerned about a few bucks per month, are the very people they accuse leasers of being.
Well said indeed.

BJ
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  #1427  
Old 09-23-2013, 08:56 PM
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Originally Posted by Dr. 328xi View Post
Those are the people who can afford to drive luxury cars, because they make wise financial decisions.
And because those folks make wise financial decisions, you are not likely to find them either purchasing or leasing new luxury cars.

Author of The Millionaire Next Door Dr. Thomas Stanley stated,

"Within the used vehicle prone segment, there are two subsegments. One, the most illuminating, is the UVPS [used vehicle prone shopper] which makes up about 20% of the total millionaire next door population.

When asked how he gets a "good deal" when acquiring a motor vehicle, the UVPS's number one response is "buying used cars via aggressive shopping among private owners, dealers, leasing companies, etc." But there is much more to this story than just the acquisition of motor vehicles. The UVPS segment represents literally hundreds of productive habits, financial lifestyle patterns, and attitudes.

In fact, the UVPS segment is more productive in transforming income into wealth than any of the other vehicle acquisition groups among the millionaire population."
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  #1428  
Old 09-23-2013, 08:59 PM
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Originally Posted by boltjaM3s View Post
We are all spending a LOT more each month for the privilege of driving a BMW be it for the panache or the performance, so judging a leaser or a purchaser in that context is very hypocritical.
This is very true.
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  #1429  
Old 09-23-2013, 09:05 PM
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Neither are automobiles in the U.S. The data below represents average age of registered vehicles in operation, according to R.L. Polk:



Fortunately, a properly cared for BMW automobile can deliver driving enjoyment for decades. The late Murray Fowler vividly demonstrated this with his stunning E9 coupe, as mentioned earlier in this thread.
Today's cars are built differently as they each have two lives:

1. Original owner, 36 month lease.
2. CPO owner, 60 month loan.

BMW, like every other auto maker, makes more money on #2 than they do on #1, therefore they must last longer. BMW's Ultimate Service Warranty is code for "we'll maintain our own cars, thank you, as we don't trust you and we need your car back in excellent condition so we can cash-out."

BJ
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  #1430  
Old 09-23-2013, 09:05 PM
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Doesn't Anyone Buy Anymore?

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Originally Posted by boltjaM3s View Post
That's not my point, and if you knew a bit more about me you'd know that I'm slumming it in my $600 3 Series, could be driving a substantially superior car if indeed I was sloppy with my money.
I think anyone who has been on these boards for more than thirty seconds is aware of your finances.

If I knew more about you, I might have a better handle on why you choose to bring it up so often on an internet forum, but that's neither here nor there.

My point is that there's a value to every purchase. $600 a month for a leased 3er seems like a lot for what it is - doesn't matter if you could afford ten times that much. It's not a matter of whether one can afford more, it's a matter of whether one is getting a good value for what they're buying. Much like I wouldn't pay $15 for a Big Mac even though I can afford $15 for a cheeseburger, I wouldn't pay more than I had to for my 3 series. The extra money I save by negotiating a better price can go into a 529 for my kid or into my retirement rather than an extra fifty to bmw.


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  #1431  
Old 09-23-2013, 09:07 PM
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Originally Posted by gkr778 View Post
And because those folks make wise financial decisions, you are not likely to find them either purchasing or leasing new luxury cars..
True, true...I only said they could, not that they would... Haha.


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  #1432  
Old 09-23-2013, 09:12 PM
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Originally Posted by Dr. 328xi View Post
I think anyone who has been on these boards for more than thirty seconds is aware of your finances.

If I knew more about you, I might have a better handle on why you choose to bring it up so often on an internet forum, but that's neither here nor there.

My point is that there's a value to every purchase. $600 a month for a leased 3er seems like a lot for what it is - doesn't matter if you could afford ten times that much. It's not a matter of whether one can afford more, it's a matter of whether one is getting a good value for what they're buying. Much like I wouldn't pay $15 for a Big Mac even though I can afford $15 for a cheeseburger, I wouldn't pay more than I had to for my 3 series. The extra money I save by negotiating a better price can go into a 529 for my kid or into my retirement rather than an extra fifty to bmw.
Watching 6 movies a year, $360

iPhone dataplan per year, $480

Taking Muffin to the vet per year, $900

Skiing 4 times a year, $1,200

Attending 4 pro sporting events per year, $3,500

Taking 2 nice vacations per year, $12,000

The incremental in leasing vs. keeping forever per year, $600

I mean, seriously? Bunch of wealthy mid-life executives are going to spend another night arguing over chump-change? If everyone truly cared about saving money, tucking that $50 a month into a piggy bank, driving a used $50,000 CPO into the ground isn't the answer either.

BJ
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  #1433  
Old 09-23-2013, 09:13 PM
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  #1434  
Old 09-23-2013, 09:17 PM
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You seem to be quite the expert. Where do you come up with a statement like that?

Quote:
Originally Posted by boltjaM3s View Post
Today's cars are built differently as they each have two lives:

1. Original owner, 36 month lease.
2. CPO owner, 60 month loan.

BMW, like every other auto maker, makes more money on #2 than they do on #1, therefore ...

BJ
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  #1435  
Old 09-23-2013, 09:31 PM
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Doesn't Anyone Buy Anymore?

Quote:
Originally Posted by boltjaM3s View Post

I mean, seriously? Bunch of wealthy mid-life executives are going to spend another night arguing over chump-change? If everyone truly cared about saving money, tucking that $50 a month into a piggy bank, driving a used $50,000 CPO into the ground isn't the answer either.

BJ
Not at all. I'm not middle aged nor am I an executive, so I will duck out of this one and let the baby boomers duke it out. G'night.




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  #1436  
Old 09-23-2013, 09:45 PM
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You seem to be quite the expert. Where do you come up with a statement like that?
Google. Television. Podcasts. News articles.

BJ
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  #1437  
Old 09-23-2013, 10:13 PM
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Back in 12/2012 at post#634 of this same thread I naively posted the following math:

C = cap cost for lease and purchase price for cash/finance
R = residual at lease end, say, n months, or N years. This is also the value of car at end of N years, and let's say the finance is for the same n or N period
r = APR of lease. Just assume finance rate is also r

Cash - Net cost after N years is C - R
Finance - Net cost after N years is ( C + (C/2)*r*N ) - R, or ( C - R) + (C/2)*r*N
Lease - Net cost after N years is ( C - R )+ (C/2 + R/2 )*r*N

If the math is correct, then for any period of n or N, a lease is always R/2*r*N more expensive than finance, and cash purchase is always C/2*r*N cheaper than finance.

As many people have observed:

1. currently leasing is not that much more expensive than buying since r the interest rate is small. If r goes up in the future the perpetual leasers will need to pay more.
2. if the R for cash purchase and finance (the market price) is less than the R for the lease(predetermined trade in value), then leasing will be cheaper than buying, or vice versa.
3. Lease has a shortened timing value(the lease expires in 24-26 months), while buying's timing line can be flexible(e.g. until the wheel falls off).

As for me, I will definitely consider any lease that carries no interest on the residual, but I haven't found any yet.
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  #1438  
Old 09-24-2013, 12:34 AM
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Quote:
Originally Posted by namelessman View Post
Back in 12/2012 at post#634 of this same thread I naively posted the following math:

C = cap cost for lease and purchase price for cash/finance
R = residual at lease end, say, n months, or N years. This is also the value of car at end of N years, and let's say the finance is for the same n or N period
r = APR of lease. Just assume finance rate is also r

Cash - Net cost after N years is C - R
Finance - Net cost after N years is ( C + (C/2)*r*N ) - R, or ( C - R) + (C/2)*r*N
Lease - Net cost after N years is ( C - R )+ (C/2 + R/2 )*r*N

If the math is correct, then for any period of n or N, a lease is always R/2*r*N more expensive than finance, and cash purchase is always C/2*r*N cheaper than finance.

As many people have observed:

1. currently leasing is not that much more expensive than buying since r the interest rate is small. If r goes up in the future the perpetual leasers will need to pay more.
2. if the R for cash purchase and finance (the market price) is less than the R for the lease(predetermined trade in value), then leasing will be cheaper than buying, or vice versa.
3. Lease has a shortened timing value(the lease expires in 24-26 months), while buying's timing line can be flexible(e.g. until the wheel falls off).

As for me, I will definitely consider any lease that carries no interest on the residual, but I haven't found any yet.
So, how do you take into account a car accident, even a minor fender-bender, that gets reported to Carfax that results in plummeting of car's value? The newer a car the bigger value drop it sustains.
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  #1439  
Old 09-24-2013, 05:51 AM
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Quote:
Originally Posted by gkr778 View Post
http://www.thomasjstanley.com/blog-a...Used_Cars.html
And because those folks make wise financial decisions, you are not likely to find them either purchasing or leasing new luxury cars.

Author of The Millionaire Next Door Dr. Thomas Stanley stated,

"Within the used vehicle prone segment, there are two subsegments. One, the most illuminating, is the UVPS [used vehicle prone shopper] which makes up about 20% of the total millionaire next door population.

When asked how he gets a "good deal" when acquiring a motor vehicle, the UVPS's number one response is "buying used cars via aggressive shopping among private owners, dealers, leasing companies, etc." But there is much more to this story than just the acquisition of motor vehicles. The UVPS segment represents literally hundreds of productive habits, financial lifestyle patterns, and attitudes.

In fact, the UVPS segment is more productive in transforming income into wealth than any of the other vehicle acquisition groups among the millionaire population."
Well look what you wrote. 20% of the total millionaire next door. So you saying 20% makes up the majority?

I read the book, and it had a lot of interesting information but i don't know if its talking about the majority of people with a net worth of a million or more.

My net worth...I don't want to sound like BJ...... but lets just say I am very comfortably part of the group Dr. Stanley is discussing. And you will not catch me or my wife, cutting coupons, shopping at Thrift stores, eating fast food/junk food and buying used anything, including cars. its not that I am better than that. I can spend my time more productively than getting 5 dollars off groceries, etc

The "trick" that worked for being financially independent (besides education and a very good job) is to have zero debt. And when i say zero debt i mean Zero. No you don't own your house if you have a mortgage. The millions that got foreclosed on if you have asked them before the SHTF they would all have told you I am a home owner...BS. until you have your house paid off you need to be smart with your money, both in investing and spending.

But in the end money is a tool and you need to use it. As long as you have zero debt, save part of your labor (20%-40% of gross income) why the heck would you not spend it on things you would like to have?

The biggest issue I see with the old generation (especially the depression generation) is the fear of going poor. Its a huge motivation factor to save, save, save. In the end however these people are slaves to their fear and they end up missing out on things they want to do with their savings (including making more money thru riskier investments). In other words the opposite of but not different that people that can't stop spending.

If people learn the balance between those two extremes IMO they will be the most successful by far.

Ok I went of on a tangent, but what I wanted to say in conclusion, I have so much money allocated per month for my cars. I know by leasing I don't have to worry about maintenance, being without a car because of breakdowns, and I drive a brand new car every 3 years. That appeals to me and its well worth it to spend on average 100 - 300 extra a month (compared to buying and holding on for 5,6,7 years) for these two cars per month.

In other words having the stellar service and the latest and greatest BMW in my garage is well worth the extra money which I see as added value...to my lifestyle.
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  #1440  
Old 09-24-2013, 05:51 AM
gkr778 gkr778 is offline
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Quote:
Originally Posted by boltjaM3s View Post
Google. Television. Podcasts. News articles.

BJ
Can you please provide links or article citations of specific sources for your statement in post #1429? Thanks!
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  #1441  
Old 09-24-2013, 06:02 AM
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Well look what you wrote. 20% of the total millionaire next door. So you saying 20% makes up the majority?
No. I simply wanted to use that 20% Dr. Stanley labels "used vehicle prone shopper" to highlight what Dr. 328xi mentioned in post #1423:

Those are the people who can afford to drive luxury cars, because they make wise financial decisions

I qualified this further by stating that these people are not likely to purchase or lease new luxury cars, as they are wise enough to recognize that such actions diminish their ability to "transform income into wealth."

Sorry for the confusion.
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  #1442  
Old 09-24-2013, 06:22 AM
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Originally Posted by gkr778 View Post
No. I simply wanted to use that 20% Dr. Stanley labels "used vehicle prone shopper" to highlight what Dr. 328xi mentioned in post #1423:

Those are the people who can afford to drive luxury cars, because they make wise financial decisions

I qualified this further by stating that these people are not likely to purchase or lease new luxury cars, as they are wise enough to recognize that such actions diminish their ability to "transform income into wealth."

Sorry for the confusion.
No my bad, I didn't read your post carefully.
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  #1443  
Old 09-24-2013, 06:27 AM
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Originally Posted by gkr778 View Post
No. I simply wanted to use that 20% Dr. Stanley labels "used vehicle prone shopper" to highlight what Dr. 328xi mentioned in post #1423:

Those are the people who can afford to drive luxury cars, because they make wise financial decisions

I qualified this further by stating that these people are not likely to purchase or lease new luxury cars, as they are wise enough to recognize that such actions diminish their ability to "transform income into wealth."

Sorry for the confusion.
My statement was a bit exaggerated as well to try to highlight a point about people who are smart with money will have money. However, it is very true that the very frugal will never be posting about their new BMW lease.

What I was getting at, though, is that there can be a balance. It is never financially "smart" to own or lease a BMW. It's a car, and you're going to be paying more than "a car" is worth. However, I think it is still financially savvy/responsible to not overpay within the segment. If I walked into my dealer looking for a new 3-series, I would be dumb to accept a $750/mo lease, regardless of whether I would "feel" the expense. At $450/mo, it's still out of line for a compact sedan, but it's a reasonable deal within the segment.

I don't deprive myself of the things I want and can afford, but I don't overpay for them just because I can. Like many here, I have plenty of expenses (mortgage, child, two car lease payments). I've also got a fair amount of medical school loans to pay off. That leaves me with a fair share to spend on the things I want, but I like to do my homework and make sure I'm maximizing my dollars when I can.
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Old 09-24-2013, 06:52 AM
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Originally Posted by Dr. 328xi View Post
My statement was a bit exaggerated as well to try to highlight a point about people who are smart with money will have money. However, it is very true that the very frugal will never be posting about their new BMW lease.

What I was getting at, though, is that there can be a balance. It is never financially "smart" to own or lease a BMW. It's a car, and you're going to be paying more than "a car" is worth. However, I think it is still financially savvy/responsible to not overpay within the segment. If I walked into my dealer looking for a new 3-series, I would be dumb to accept a $750/mo lease, regardless of whether I would "feel" the expense. At $450/mo, it's still out of line for a compact sedan, but it's a reasonable deal within the segment.

I don't deprive myself of the things I want and can afford, but I don't overpay for them just because I can. Like many here, I have plenty of expenses (mortgage, child, two car lease payments). I've also got a fair amount of medical school loans to pay off. That leaves me with a fair share to spend on the things I want, but I like to do my homework and make sure I'm maximizing my dollars when I can.
I hear what you are saying: But there are so many "dumb" financial moves out there i don't even know where to begin.

Cable TV. How many people pay 60 dollars or more for channels they don't even use.

Cell phones/Electronic gadgets. How many need to have the latest and greatest and spend big bucks for that privilege.

Eating out 3-5 times a week. Really? you can't cook bro? I mean if you want to talk about wasted money this has got to be the most wasted recreational activity there is. And its not like we need the extra calories. Lets just say you spend 7 dollars per day on eating lunch at a cafeteria (while you throw away leftovers in your house) that is 150/month.

Buying stuff on a wimp. Everyone of us do it, but some people just because they go to the mail have to need to purchase something, anything, even though they don't need it.

I can think of a lot of things that add up to a monthly expense that could easily be spend on driving a hell of a nice car, maintenance free, safe, etc. its life choices....
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  #1445  
Old 09-24-2013, 07:30 AM
namelessman namelessman is online now
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Originally Posted by 328AL View Post
So, how do you take into account a car accident, even a minor fender-bender, that gets reported to Carfax that results in plummeting of car's value? The newer a car the bigger value drop it sustains.
That's a valid point, I would think that's what car/gap insurance is for. A lease(which dictates full-coverage as well) by itself can be viewed a hedge with timing value, a shortened and forced termination, and a predetermined residual, as in any hedge it can go either way.

A few other random and non-scientific thoughts here:

1. no business(including BMW) is in the business of losing money.
2. BMWFS accounts for possible lease loss and lease cost and incentives and AVP bonus(etc, etc) by setting a high capital cost(invoice) C.
3. one can argue the buyers subsidize the leasers due to raised invoice.
4. many people would agree leasing improves volume helps to lower capital cost(invoice) due to basic supply and demand.

I would say both the buyers and the leasers together keep the sellers(BMW) honest. Having said that in our metro area the current trend still appears to be 60/40 buy versus lease, people seem to be more interested in staying way from debt than trusting the hedge will remain favorable in 2-3 years time.
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  #1446  
Old 09-24-2013, 07:37 AM
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Originally Posted by windsor027 View Post
Eating out 3-5 times a week. Really? you can't cook bro? I mean if you want to talk about wasted money this has got to be the most wasted recreational activity there is. And its not like we need the extra calories. Lets just say you spend 7 dollars per day on eating lunch at a cafeteria (while you throw away leftovers in your house) that is 150/month.

Well said, windsor027! And it's not just TGI Friday's that's applicable here.
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  #1447  
Old 09-24-2013, 09:55 AM
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dunderhi dunderhi is online now
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Originally Posted by gkr778 View Post
No. I simply wanted to use that 20% Dr. Stanley labels "used vehicle prone shopper" to highlight what Dr. 328xi mentioned in post #1423:

Those are the people who can afford to drive luxury cars, because they make wise financial decisions

I qualified this further by stating that these people are not likely to purchase or lease new luxury cars, as they are wise enough to recognize that such actions diminish their ability to "transform income into wealth."

Sorry for the confusion.
So let me play devil's advocate here. These millionaires couldn't afford frequent new cars AND have earned millionaire status. Sure they could have purchased new cars every three years, but there aspiration towards seven digit savings may not have been realized.
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Last edited by dunderhi; 09-24-2013 at 11:51 AM.
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  #1448  
Old 09-24-2013, 12:18 PM
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328AL 328AL is offline
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Doesn't Anyone Buy Anymore?

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Originally Posted by namelessman View Post
That's a valid point, I would think that's what car/gap insurance is for. A lease(which dictates full-coverage as well) by itself can be viewed a hedge with timing value, a shortened and forced termination, and a predetermined residual, as in any hedge it can go either way.
.

Gap insurance does not apply to cash transactions
Gap insurance does not protect against loss of value, unless it's a total loss, which is much less likely to occur
Gap insurance is not a value protection per se, it's more like a hedge against total loss
Gap insurance application is disproportionally worse for buy vs lease, especially at earlier stages of ownership due to non-linearity of value protection over time

The best solution, IMHO, is to lease first and then decide if you want to buy at the end of the lease period.
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  #1449  
Old 09-24-2013, 02:14 PM
namelessman namelessman is online now
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Originally Posted by 328AL View Post
Gap insurance does not apply to cash transactions
Gap insurance does not protect against loss of value, unless it's a total loss, which is much less likely to occur
Gap insurance is not a value protection per se, it's more like a hedge against total loss
Gap insurance application is disproportionally worse for buy vs lease, especially at earlier stages of ownership due to non-linearity of value protection over time

The best solution, IMHO, is to lease first and then decide if you want to buy at the end of the lease period.
I am no expert in car/gap, but as other posters mention diminished value claim can be filed with car insurances, some of which also have new car replacement clauses to cover early stage(12-month?). And car/gap are still needed in lease, it is not that it comes for free.
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Old 09-24-2013, 02:50 PM
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328AL 328AL is offline
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Originally Posted by namelessman View Post
I am no expert in car/gap, but as other posters mention diminished value claim can be filed with car insurances, some of which also have new car replacement clauses to cover early stage(12-month?). And car/gap are still needed in lease, it is not that it comes for free.
Yes diminished value claim can be filed, but getting lost value from an insurance company is a totally different matter, especially if you're even partly at fault.

Gap insurance is already included in BMWFS lease and it does come for free, unlike a purchase contract. As someone mentioned already, BMW is very smart in protecting their cars.

Last edited by 328AL; 09-24-2013 at 02:51 PM.
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