Welcome to Bimmerfest -- The #1 Online Community for BMW related information! Please enjoy the discussion forums below and share your experiences with the 200,000 current, new and past BMW owners. The forums are broken out by car model and into other special interest sections such as BMW European Delivery and a special forum to voice your questions to the many BMW dealers on the site to assist our members!

Please follow the links below to help get you started!

Go Back   Bimmerfest - BMW Forums > BMW Model Discussions > 3 Series / 4 Series > F30 / F31 / F32 / F33 (2012 - current)

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.

Closed Thread
 
Thread Tools
  #376  
Old 11-27-2012, 07:52 AM
boltjaM3s's Avatar
boltjaM3s boltjaM3s is offline
BMW Platinum Visa® Member
Location: USA
 
Join Date: Nov 2009
Posts: 7,994
Mein Auto: BMW M428i
Quote:
Originally Posted by Chris90 View Post
i assume your lease is 15k miles/year? A 2002 325i cost $27,100. So even with your assumption the residual is $6k on a $50k car.

Don't fudge the math, please.
Not fudging the math, just using a known to show the 10-years-hence value of a 2012 3 Series. You are right though, the $3000 value of a 10 year old $27,100 car would equate to something closer to $6000 on a 10 year old $50,000 car or thereabouts.

The error that would need to be un-done in my math is that the lease on a $27,100 car back in 2002 would be, what, $329 a month? $299 a month? Not $549 a month, so the residual you're talking about is offset by substantially lower lease payments than in my example.

Additionally, my financial planner routinely gets me a 7% annual return on my money. So if I'm floating $50,000 for that purpose over a 10 year period, I'd expect to generate something closer to $15,000 and not the $10,000 I put in there.

Again, in simplest terms, the difference between buying and leasing is a very small number. Especially for people who can afford a $50,000 car in the first place. The concept of buying and holding onto a car for 10 years is for the coupon-cutting crowd, not an executive driving a German luxury car.

BJ
__________________

2015 BMW 428i Gran Coupe | M-Sport Line | Premium | Technology | DHP | HK | Driver Assistance
Mineral Grey Metallic | Coral Red Leather | Park Assist | Sirius | Rolex | Trophy Wife | Beach House
  #377  
Old 11-27-2012, 07:54 AM
boltjaM3s's Avatar
boltjaM3s boltjaM3s is offline
BMW Platinum Visa® Member
Location: USA
 
Join Date: Nov 2009
Posts: 7,994
Mein Auto: BMW M428i
Quote:
Originally Posted by Chris90 View Post
Hey, if fudging the numbers makes you feel better, knock yourself out. The cash buyer saved $21,000 over 10 years vs your lease. Maybe the leaser can make that up investing $45k, maybe he used Bernie Madoff, who knows.
Not sure where you got that number from.

Look, you buy used cars and then hold onto them for 10 years. That's a whole different animal. I could buy a bicycle and eschew a car completely, show you how I'd save $100,000 but that's not what we're talking about here. This conversation is about someone about to buy a brand new $50,000 BMW F30 and whether or not he should instead lease them. For that person, leasing is only a slightly more expensive proposition, perhaps as little as $26 a month, and that's chump change to a new BMW buyer (which is not you).

BJ
__________________

2015 BMW 428i Gran Coupe | M-Sport Line | Premium | Technology | DHP | HK | Driver Assistance
Mineral Grey Metallic | Coral Red Leather | Park Assist | Sirius | Rolex | Trophy Wife | Beach House

Last edited by boltjaM3s; 11-27-2012 at 07:56 AM.
  #378  
Old 11-27-2012, 07:56 AM
Chris90's Avatar
Chris90 Chris90 is offline
Officially Welcomed to the 'Fest
Location: Massachusetts
 
Join Date: Apr 2003
Posts: 13,797
Mein Auto: '04 330i
Quote:
Originally Posted by boltjaM3s View Post
Not fudging the math, just using a known to show the 10-years-hence value of a 2012 3 Series. You are right though, the $3000 value of a 10 year old $27,100 car would equate to something closer to $6000 on a 10 year old $50,000 car or thereabouts.

The error that would need to be un-done in my math is that the lease on a $27,100 car back in 2002 would be, what, $329 a month? $299 a month? Not $549 a month, so the residual you're talking about is offset by substantially lower lease payments than in my example.
What? Now you're substituting 2002 lease numbers to compare with a 2012 cash purchase?

Just change the residual to $6k, and the cash purchase price to $45k, which would match your lease deal.

Now, yes, you need a Bernie Madoff-like guaranteed 7% return to make leasing a better financial decision.

The stock market could crash next year and you could lose half your $45k. The cash buyer doesn't have to worry about this.
__________________
"When you were born, you cried and the world rejoiced. Live your life so that when you die, the world cries and you rejoice." - Cherokee Expression

Last edited by Chris90; 11-27-2012 at 08:00 AM.
  #379  
Old 11-27-2012, 07:57 AM
Lorenzzo Lorenzzo is offline
Officially Welcomed to the 'Fest
Location: Orange County, CA
 
Join Date: Sep 2012
Posts: 160
Mein Auto: 2012 328i Sport
Quote:
Originally Posted by 2010drive View Post
Buying a car with cash is always a stupid idea no matter how you look at it...tying up 50K in a depreciating asset...
It is hilarious, that people can draw this conclusion in a vacuum. The question turns on after tax returns on investment alternatives vs. auto loan interest rate. If you use stock exchange returns historically, at times it's likely at other times it isn't.

As far as lease vs. buy either way you're paying for depreciation.

It's entertaining when someone who doesn't understand how the numbers work gets smug.
__________________
2012 328i Sport
2008 550i Sport
2005 E55
2002 M3
1988 BMW 325is
Never again anything larger than a 3 series sedan.
  #380  
Old 11-27-2012, 08:46 AM
Kamdog's Avatar
Kamdog Kamdog is offline
-- Robert S. Johnson 56FG
Location: New York
 
Join Date: Apr 2007
Posts: 6,010
Mein Auto: 2008 535i
We all basically agree that leasing costs more than buying. The issue is the delta. I don't agree with BJ that the monthly delta is only 26 bucks, but even if the monthly delta is about 125 dollars, I agree with BJ that it is a lifestyle choice. If you like driving new BMWs without worrying at all about maintenance and repair, and are willing to spend the price of, say, a cable TV/phone/internet monthly package, then lease.

IMO, it is not that much of a big deal for those who choose to spend some discretionary income on a car rather than one very nice dinner a month. You will drop more than that at any of Peter Kelly's restaurants.

Having said that, I prefer to buy and own my cars. I know I would not have liked to have gotten rid of my car after only 3 years and start the car shopping process all over again.
__________________

535i, Monaco, Cream, Light Poplar, Comfort Seats, PP, Nav, ED.

Last edited by Kamdog; 11-27-2012 at 08:47 AM.
  #381  
Old 11-27-2012, 10:24 AM
dunderhi's Avatar
dunderhi dunderhi is offline
0-60 in 4 secs or less!
Location: MD
 
Join Date: Dec 2006
Posts: 5,963
Mein Auto: '13 X5M, 650xi
Quote:
Originally Posted by boltjaM3s View Post
Right, but the $50,000 "invested" depreciates to $3,000 at the end of 10 years (assuming 150K miles, current KBB value for a 2002 3 Series).

Not sure why you think that the buyer has an incremental $50,000 laying around for investments and that the leaser doesn't. Not sure why you think that that investment income should count as a benefit to the cash buyer and not the leaser, especially when it's the buyer who has purchased a depreciating asset, not the leaser. Remove that from your calculations as it's not apples to apples as you know.

At the end of 10 years:

The buyer is out of pocket $50,000 for the car + 4,500 for repairs or $54,500. He sells the car for $3,000. He's spent $51,500 and has no car.

The leaser is out of pocket $64,680 and has no car. But he rolled that $50,000 cash into different investments instead of giving it to BMW. He made $10,000 in assorted profit from that decade of investments, bringing his out of pocket down to $54,680.

The delta between the buyer and the leaser is $3,180 or $318 a year or $26 a month.

So had the buyer chosen a lease-and-invest path with that $50,000 he'd spend $26 more a month for the ability to be in 4 brand new 3 Series in the same 10 year period he was driving a 10 year old car.

Double that number, triple it if you want, the reality is that there isn't this mammoth variance between buying-and-keeping vs. leasing-new-cars. If we were in a Kia forum I could understand the $25-$75 a month being a real hardship and this being a difficult concept to digest. But we're in a BMW forum discussing $50,000 cars and for someone with a typical $549 monthly payment, having it drop to $525 or $499 isn't going to make their lives incrementally better.

Most people also don't have $50,000 cash to drop down, either. So they'd deal with the hardship of an $850 payment for 5 years to then have $0 payment for the last 5 years. That first 5 years hurts.

There's a reason that over 60% of all BMW's are leased. Because if you ask the average buyer whether he'd rather pay $499 a month and drive the same car for 10 long years -or- pay $539 a month and drive a brand new car every 36 months during those 10 years, they'd pay a bit more for that privilege.

BJ
BJ,

I am only using your numbers from your example. In your example you compared a $50,000 cash purchase to a $50,000 lease. You assumed the lessee had $50,000 lying around, so the purchaser also has $50,000 lying around, so there's no hardship of making $850 payments. The lessee's total outlay is $50,000 which he invests and his $64,680 in lease payments for a total of $114,680. The purchaser's total outlay consists of $50,000 for which he buys the car and $64,680 in monthly investments for a total of $114,680. Check the math, but I'm pretty sure $114,680 = $114,680. If you don't want the purchaser to benefit from having $539/mo in investments, then he needs to benefit from $539/mo in monthly savings.

As I have posted previously, I do a lease vs buy analysis for every car I acquire. My analysis includes options such as early lease exits, normal turn-ins, purchase after lease, or whether I want to modify the car like I did for the my current 550. My typical car ownership is in the 2.5-5 year range. Sometimes leases are cheaper, sometimes they are not. My monthly car payments are typically in the $2,000-$3,000 range, and yes saving a $100/mo matters to me. Think of it this way, a $100/mo for 18 years at 7% can generate $43,323 towards a childs the tuition bill or you can just give that money to BMW - your choice.

Finally, cash buyers by definition have $50,000 lying around. Cash buyers in general prefer to have an extra $10-15 grand at the end of an automotive ownership experience vice bragging that they rented a new BMW every 2.5 years.
__________________


2013 X5M ........ 2013 650xi ...... 2011 550xi (ret) 2011 335d (ret)
  #382  
Old 11-27-2012, 10:36 AM
MonkeyCMonkeyDo MonkeyCMonkeyDo is offline
Officially Welcomed to the 'Fest
Location: Anaheim Hills
 
Join Date: Jun 2012
Posts: 493
Send a message via AIM to MonkeyCMonkeyDo
Mein Auto: 2013 335i
I think the thing that everyone is forgetting (and this is mostly due to the fact that everyone is pointing out the extreme examples not the norm) is that most people finance their cars for 60 or 72 months now and the majority of car owners own a vehicle for 57 months. This number is up from I think 38 months in 2002, where leasing was an even better deal. But even using the 57 month number this means a MAJORITY of buyers sell their car before the payments are finished. Which would mean they, just like leasees, always have a car payment. The difference is they have put more money up front and paid more money each month in payments.

I used to always tell people if you plan on owning the vehicle 7 years or longer, then a purchase is a better option as you need those two extra years of NO payments to both offset repair and maintenance costs and to build true equity in your purchase. If you sell like a majority of people do, before your payments are up or within a couple then seriously look at a lease.

People that support buying a car keep throwing out 36 month purchases, cash purchases, owning a car for 10 years, etc. Well these things do happen, but in no way is it the norm. Just like some people do 60 month leases, do 12 month leases, are stupid enough to do a 5k cap cost reduction on a lease, etc. This is like the judges for diving or gymnastics. Always throw out the high and low scores to create a more accurate average.

Take the averages and remove the common expenses like drive off etc.:

Buyer A buys his 50k car with a 60 month loan at an average of say 4% with 10% down. So 5k up front and financing 45k at $828.74/month.
Buyer B leases his 50k car for 36 months at a money factor converted % of 4% with 0 money out of pocket and $600/month.

So in 5 years what happens:
Buyer A has now put in $55,725 into the car (taking into account an average of 1k of maintenance and repair work outside warranty and free service) and according to statistics a car is only worth about 37% of its value making their car worth $18,500.
Buyer B has had two new cars with no repair or service costs and has paid a total of $36,000.

Which means Buyer B has netted a potential $1225 premium over Buyer A over 5 years. However, let's just say Buyer A keeps his car for another 12 months out so that both buyers go shopping again for new cars 72 months out and see what happens.
Buyer A has now put $56,725 into the car (using the same 1k cost of service) and the car is now worth 33% of its value making it worth $16500.
Buyer B has just finished their second lease making a grand total of $43,200 in payments.

Buyer A has a net expense of $40,225 while Buyer B has spent $43,200. Now Buyer A has a potential premium of $3k over Buyer B and that value continues to climb as the years move on.

You must own your car for at least a year while making no payments to make a purchase the right option compared to a well structured lease. I always recommend comparing the payments between the two as well. A 36 month lease is the sweet spot for BMW, but if you took a 30 for example the payments may be closer to 800 making a purchase a better all around option. Your payment needs to be at least a 100 less on a lease than the equivalent finance payment for it to work out.
__________________
  #383  
Old 11-27-2012, 11:17 AM
Vector Pilot Vector Pilot is offline
Vector Pilot
Location: Chicago
 
Join Date: Nov 2010
Posts: 136
Mein Auto: 2014 Z4 28i
Leasing is the way to go because:
A- Yearly, I do not put on a lot miles on my cars.
B- Allows the freedom every three years to get into a new car.
C- Lease a car that's covered under a comprehensive warranty package.
D- Not experience the heartbreak of depreciation.
  #384  
Old 11-27-2012, 11:31 AM
gweeta gweeta is offline
Registered User
Location: New England
 
Join Date: Oct 2012
Posts: 85
Mein Auto: 2013 328i
Quote:
Originally Posted by Vector Pilot View Post
D- Not experience the heartbreak of depreciation.
I thought it was the heartbreak of psoriasis.

Sorry. Couldn't resist.
  #385  
Old 11-27-2012, 12:29 PM
Vector Pilot Vector Pilot is offline
Vector Pilot
Location: Chicago
 
Join Date: Nov 2010
Posts: 136
Mein Auto: 2014 Z4 28i
Quote:
Originally Posted by gweeta View Post
i thought it was the heartbreak of psoriasis.

Sorry. Couldn't resist.
lol
  #386  
Old 11-27-2012, 01:21 PM
gweeta gweeta is offline
Registered User
Location: New England
 
Join Date: Oct 2012
Posts: 85
Mein Auto: 2013 328i
Just figured out the biggest downside of leasing, at least if the car has to be ordered. Here I sit waiting for my car, but since I'm leasing, I can't plan any cool mods, like upgraded audio or roof racks. So what do I do to occupy myself till it comes??? This thread, while entertaining, won't carry me all the way till the end of December.
  #387  
Old 11-27-2012, 01:45 PM
53K 53K is offline
Officially Welcomed to the 'Fest
Location: CA
 
Join Date: Apr 2010
Posts: 137
Mein Auto: 2011 335i
*

Last edited by 53K; 11-27-2012 at 01:53 PM.
  #388  
Old 11-27-2012, 01:51 PM
53K 53K is offline
Officially Welcomed to the 'Fest
Location: CA
 
Join Date: Apr 2010
Posts: 137
Mein Auto: 2011 335i
Quote:
Originally Posted by Kamdog View Post
We all basically agree that leasing costs more than buying. The issue is the delta. I don't agree with BJ that the monthly delta is only 26 bucks, but even if the monthly delta is about 125 dollars, I agree with BJ that it is a lifestyle choice. If you like driving new BMWs without worrying at all about maintenance and repair, and are willing to spend the price of, say, a cable TV/phone/internet monthly package, then lease.

IMO, it is not that much of a big deal for those who choose to spend some discretionary income on a car rather than one very nice dinner a month. You will drop more than that at any of Peter Kelly's restaurants.

Having said that, I prefer to buy and own my cars. I know I would not have liked to have gotten rid of my car after only 3 years and start the car shopping process all over again.
+1

I purchased an E46 coupe and kept it for 8 years before my current X5D which I leased for the first time. I did a cost study for buy vs. lease at the time and arrived at a similar conclusion as BJ: ~$100/month premium for lease (based upon my E46 history). I wanted an X5 definitely, but wasn’t quite sure if I could live with diesel, suv, etc for a long time.., so I decided to go with lease to minimize the risk.

Now that I have had my X5D for over two years, I can’t wait for the lease to be up so that I can move to a 4 series (hence the reason I have been lurking in F30 forum recently). The car has been trouble free and is a very nice vehicle, but I hate the blind spots (even with the proper side mirrors set up), 2nd gear start from dead stop (big lag), occasional diesel pump hunt, etc..to name a few. Not huge issues, but enough for me to look forward to the lease end. So it turned out to be a good decision that I leased this vehicle. If I purchased it, I think I would try to keep it a couple more years just to minimize resale hit (both for financial and psychological reasons), with much less fun than being in a F32 during those two years, I suppose.

We have seen good arguments from both sides in this thread as usually with buy vs. lease threads. Personally I agree with BJ’s logic: I consider car payments (lease, finance, or cash pay-off) as a monthly expenditure just like utilities. Is a person who spends $150 on Starbucks coffee, $150 gold level cable, & $400 car payment per month any more financially sensible than another who spends $50 on house brewed coffee, $100 family cable, & $550 car payment?? All depends on where you put your priorities and money.

Am I going to lease a F32? Probably if leasing terms are favorable when F32 comes out. I might consider buying if I fall in love with F32.

Last edited by 53K; 11-27-2012 at 01:56 PM.
  #389  
Old 11-27-2012, 05:06 PM
lacarnut lacarnut is offline
Registered User
Location: Baton Rouge LA
 
Join Date: Nov 2012
Posts: 18
Mein Auto: Infiniti G37
This is my first lease and my first BMW. I could have paid cash for the car but usually wind up keeping a car around 3 years or less. I purchased a new 300Z, non turbo. It drove like a boulevard car; keep it 3 months. Driving a G37 now and want to see if the BMW has as good reliability as Jap cars. Also, I might decided to get another make of car after the lease expires. If I am thrilled with the car at the end of the lease, I will buy it.
  #390  
Old 11-27-2012, 05:54 PM
krash's Avatar
krash krash is offline
Officially Welcomed to the 'Fest
Location: PA
 
Join Date: Nov 2005
Posts: 2,703
Mein Auto: 2013 335i Sport Sedan
Quote:
Originally Posted by MonkeyCMonkeyDo View Post
I think the thing that everyone is forgetting (and this is mostly due to the fact that everyone is pointing out the extreme examples not the norm) is that most people finance their cars for 60 or 72 months now and the majority of car owners own a vehicle for 57 months. This number is up from I think 38 months in 2002, where leasing was an even better deal. But even using the 57 month number this means a MAJORITY of buyers sell their car before the payments are finished. Which would mean they, just like leasees, always have a car payment. The difference is they have put more money up front and paid more money each month in payments.

I used to always tell people if you plan on owning the vehicle 7 years or longer, then a purchase is a better option as you need those two extra years of NO payments to both offset repair and maintenance costs and to build true equity in your purchase. If you sell like a majority of people do, before your payments are up or within a couple then seriously look at a lease.

People that support buying a car keep throwing out 36 month purchases, cash purchases, owning a car for 10 years, etc. Well these things do happen, but in no way is it the norm. Just like some people do 60 month leases, do 12 month leases, are stupid enough to do a 5k cap cost reduction on a lease, etc. This is like the judges for diving or gymnastics. Always throw out the high and low scores to create a more accurate average.

Take the averages and remove the common expenses like drive off etc.:

Buyer A buys his 50k car with a 60 month loan at an average of say 4% with 10% down. So 5k up front and financing 45k at $828.74/month.
Buyer B leases his 50k car for 36 months at a money factor converted % of 4% with 0 money out of pocket and $600/month.

So in 5 years what happens:
Buyer A has now put in $55,725 into the car (taking into account an average of 1k of maintenance and repair work outside warranty and free service) and according to statistics a car is only worth about 37% of its value making their car worth $18,500.
Buyer B has had two new cars with no repair or service costs and has paid a total of $36,000.

Which means Buyer B has netted a potential $1225 premium over Buyer A over 5 years. However, let's just say Buyer A keeps his car for another 12 months out so that both buyers go shopping again for new cars 72 months out and see what happens.
Buyer A has now put $56,725 into the car (using the same 1k cost of service) and the car is now worth 33% of its value making it worth $16500.
Buyer B has just finished their second lease making a grand total of $43,200 in payments.

Buyer A has a net expense of $40,225 while Buyer B has spent $43,200. Now Buyer A has a potential premium of $3k over Buyer B and that value continues to climb as the years move on.

You must own your car for at least a year while making no payments to make a purchase the right option compared to a well structured lease. I always recommend comparing the payments between the two as well. A 36 month lease is the sweet spot for BMW, but if you took a 30 for example the payments may be closer to 800 making a purchase a better all around option. Your payment needs to be at least a 100 less on a lease than the equivalent finance payment for it to work out.
Lots of good posts. This is one of the best.
  #391  
Old 11-27-2012, 06:36 PM
Seff5677 Seff5677 is offline
Registered User
Location: Ontario
 
Join Date: Oct 2011
Posts: 8
Mein Auto: Jetta Tdi
I wish Canadians could get similar leasing rates that U.S citizens get. Especially on the 3 series which is what i'm interested in and living in Canada.
  #392  
Old 11-28-2012, 12:06 AM
bmw_or_audi bmw_or_audi is offline
Officially Welcomed to the 'Fest
Location: California
 
Join Date: May 2012
Posts: 898
Mein Auto: Passat 1.8T MT
BJ, there are a few other things to take into account, such as a few hundreds less per year for registration as the car ages, slightly lower insurance premiums, etc. Then there can be unanticipated expenses with leases, such having to get new tires close to the end of the lease period and being charged for little dings you would just live with on an older car. Also, I don't understand the point about tying up $50K when you buy. You can get a 1.5-2% loans nowadays.

In the end, the delta as someone called it is closer to $100-200/mo. But based on how you describe your situation, that is an amount you probably won't even notice. That is because your $540/mo lease is a very small amount in your budget to begin with. But in relative terms, that extra $100-200/mo is very significant. Now how many times have we seen posts here saying "I can't afford the extra $30/mo for option X." Maybe such people shouldn't be in $50K cars, but many are.

As long as someone is being reasonable relative to their budget, they should be able to spend their money without being lectured about how to spend it.
  #393  
Old 11-28-2012, 12:41 AM
akaMomo's Avatar
akaMomo akaMomo is offline
Officially Welcomed to the 'Fest
Location: Los Angeles, CA
 
Join Date: Oct 2003
Posts: 247
Mein Auto: 335i F30 M-Sport
I can't make it through the whole thread but did a quick search and saw at least one person point out the potential tax advantages of a lease. If you have a business paying for a purchased car the money is simply moved over from an asset (cash) to another asset (the car) and not off the books. You can then depretiate that asset on a schedule but it is only partial and over time.

The complaint that you aren't buying anything or getting anything when leasing is the advantage here. By definition the lease payment is pure expense - 100% comes right off your books. The only issue becomes if the car usage is then a taxable benefit (or what portion of it is).

Paying for the use a car with pre tax dollars can be a huge incentive to lease if you can make that work for your situation.
  #394  
Old 11-28-2012, 06:19 AM
boltjaM3s's Avatar
boltjaM3s boltjaM3s is offline
BMW Platinum Visa® Member
Location: USA
 
Join Date: Nov 2009
Posts: 7,994
Mein Auto: BMW M428i
Quote:
Originally Posted by MonkeyCMonkeyDo View Post
I think the thing that everyone is forgetting (and this is mostly due to the fact that everyone is pointing out the extreme examples not the norm) is that most people finance their cars for 60 or 72 months now and the majority of car owners own a vehicle for 57 months. This number is up from I think 38 months in 2002, where leasing was an even better deal. But even using the 57 month number this means a MAJORITY of buyers sell their car before the payments are finished. Which would mean they, just like leasees, always have a car payment. The difference is they have put more money up front and paid more money each month in payments.

I used to always tell people if you plan on owning the vehicle 7 years or longer, then a purchase is a better option as you need those two extra years of NO payments to both offset repair and maintenance costs and to build true equity in your purchase. If you sell like a majority of people do, before your payments are up or within a couple then seriously look at a lease.

People that support buying a car keep throwing out 36 month purchases, cash purchases, owning a car for 10 years, etc. Well these things do happen, but in no way is it the norm. Just like some people do 60 month leases, do 12 month leases, are stupid enough to do a 5k cap cost reduction on a lease, etc. This is like the judges for diving or gymnastics. Always throw out the high and low scores to create a more accurate average.

Take the averages and remove the common expenses like drive off etc.:

Buyer A buys his 50k car with a 60 month loan at an average of say 4% with 10% down. So 5k up front and financing 45k at $828.74/month.
Buyer B leases his 50k car for 36 months at a money factor converted % of 4% with 0 money out of pocket and $600/month.

So in 5 years what happens:
Buyer A has now put in $55,725 into the car (taking into account an average of 1k of maintenance and repair work outside warranty and free service) and according to statistics a car is only worth about 37% of its value making their car worth $18,500.
Buyer B has had two new cars with no repair or service costs and has paid a total of $36,000.

Which means Buyer B has netted a potential $1225 premium over Buyer A over 5 years. However, let's just say Buyer A keeps his car for another 12 months out so that both buyers go shopping again for new cars 72 months out and see what happens.
Buyer A has now put $56,725 into the car (using the same 1k cost of service) and the car is now worth 33% of its value making it worth $16500.
Buyer B has just finished their second lease making a grand total of $43,200 in payments.

Buyer A has a net expense of $40,225 while Buyer B has spent $43,200. Now Buyer A has a potential premium of $3k over Buyer B and that value continues to climb as the years move on.

You must own your car for at least a year while making no payments to make a purchase the right option compared to a well structured lease. I always recommend comparing the payments between the two as well. A 36 month lease is the sweet spot for BMW, but if you took a 30 for example the payments may be closer to 800 making a purchase a better all around option. Your payment needs to be at least a 100 less on a lease than the equivalent finance payment for it to work out.
Great job as always, MCMD.

Again, buying the car has either $0 or a very slight financial advantage over leasing. Not sure why anyone would want 5 years of $800 payments and an old car when they could have $599 payments and new cars.

BJ
__________________

2015 BMW 428i Gran Coupe | M-Sport Line | Premium | Technology | DHP | HK | Driver Assistance
Mineral Grey Metallic | Coral Red Leather | Park Assist | Sirius | Rolex | Trophy Wife | Beach House
  #395  
Old 11-28-2012, 06:21 AM
Chris90's Avatar
Chris90 Chris90 is offline
Officially Welcomed to the 'Fest
Location: Massachusetts
 
Join Date: Apr 2003
Posts: 13,797
Mein Auto: '04 330i
Quote:
Originally Posted by bmw_or_audi View Post
BJ, there are a few other things to take into account, such as a few hundreds less per year for registration as the car ages, slightly lower insurance premiums, etc.
True. In Mass, the excise tax is 2.5% of MSRP adjusted further as follows:

In the year of manufacture 90%
In the second year 60%
In the third year 40%
In the fourth year 25%
In the fifth and succeeding year 10%

So the leaser is gonna pay way more excise tax over 10 years, to the tune of $3000 or so.
__________________
"When you were born, you cried and the world rejoiced. Live your life so that when you die, the world cries and you rejoice." - Cherokee Expression
  #396  
Old 11-28-2012, 06:31 AM
boltjaM3s's Avatar
boltjaM3s boltjaM3s is offline
BMW Platinum Visa® Member
Location: USA
 
Join Date: Nov 2009
Posts: 7,994
Mein Auto: BMW M428i
Quote:
Originally Posted by Chris90 View Post
True. In Mass, the excise tax is 2.5% of MSRP adjusted further as follows:

In the year of manufacture 90%
In the second year 60%
In the third year 40%
In the fourth year 25%
In the fifth and succeeding year 10%

So the leaser is gonna pay way more excise tax over 10 years, to the tune of $3000 or so.
$3000 over 10 years is $300 a year or $25 a month.

We can go round and round on this subject all day, but the reality is that there is no good argument for buying a car at or over a $50,000 level. Leasing is only a tad more expensive and keeps you in a series of new cars, always under warranty, always stylish, always technologically relevant.

Buying-and-keeping is for people on a tight budget and those people shouldn't be looking at BMW's as they are expensive, underfeatured, and pricey to maintain. If you want to buy and keep for 10 years to save a little money, do it right get a Honda.

BJ
__________________

2015 BMW 428i Gran Coupe | M-Sport Line | Premium | Technology | DHP | HK | Driver Assistance
Mineral Grey Metallic | Coral Red Leather | Park Assist | Sirius | Rolex | Trophy Wife | Beach House
  #397  
Old 11-28-2012, 06:44 AM
hans007 hans007 is offline
Officially Welcomed to the 'Fest
Location: los angeles
 
Join Date: Oct 2012
Posts: 446
Mein Auto: 2013 328i m-sport EB2
i don't really get the whole leasing logic.


i mean, i am about to buy a bmw. i have had my current car for just about 3 years. the car before that a little over 4. i just uh trade them in or sell them. my current audi, had i leased it would have ended up costing me more to lease, than it would have to buy... and then sell to carmax / trade to bmw.

even on an equivalent 3 year term. i dont know, i just would rather buy the car, so i am not tied to an exact date for when i have to turn it in. i tend to buy a car somewhere between every 3-5 years. but its not exactly 36 months or whatever, so seems to me if a lease is all about residual , you can also sell the car and get the same amount o fmoney (and its usually more, unless theres weird circumstance like say you bought an escalade in 2006 and gas prices shot up).


i mean, paying for a car (especially with low rates or cash) and then selling it 3-4 years down, seems to still beat most leases.... and you aren't tied to some preset number of miles, or number of months or whatever. granted i always actually have enough cash to buy my car when i buy one. its not like leasing is the only way to own a car for a short amount of time? i mean as far as i know leasing is just the manufacturer taking the risk of having the car depreciate away from you while you pay a premium over the normal depreciation to have them assume that risk. it is almost like buying a put contract on a stock you own to insure against some of the loss. stock doesnt go down, you lose the money you paid for the options right.
  #398  
Old 11-28-2012, 07:38 AM
MonkeyCMonkeyDo MonkeyCMonkeyDo is offline
Officially Welcomed to the 'Fest
Location: Anaheim Hills
 
Join Date: Jun 2012
Posts: 493
Send a message via AIM to MonkeyCMonkeyDo
Mein Auto: 2013 335i
Quote:
Originally Posted by hans007 View Post
i don't really get the whole leasing logic.


i mean, i am about to buy a bmw. i have had my current car for just about 3 years. the car before that a little over 4. i just uh trade them in or sell them. my current audi, had i leased it would have ended up costing me more to lease, than it would have to buy... and then sell to carmax / trade to bmw.

even on an equivalent 3 year term. i dont know, i just would rather buy the car, so i am not tied to an exact date for when i have to turn it in. i tend to buy a car somewhere between every 3-5 years. but its not exactly 36 months or whatever, so seems to me if a lease is all about residual , you can also sell the car and get the same amount o fmoney (and its usually more, unless theres weird circumstance like say you bought an escalade in 2006 and gas prices shot up).


i mean, paying for a car (especially with low rates or cash) and then selling it 3-4 years down, seems to still beat most leases.... and you aren't tied to some preset number of miles, or number of months or whatever. granted i always actually have enough cash to buy my car when i buy one. its not like leasing is the only way to own a car for a short amount of time? i mean as far as i know leasing is just the manufacturer taking the risk of having the car depreciate away from you while you pay a premium over the normal depreciation to have them assume that risk. it is almost like buying a put contract on a stock you own to insure against some of the loss. stock doesnt go down, you lose the money you paid for the options right.
So are you buying in cash or financing? If you are financing then you always have a payment and it is always 100s if not multiple 100s more than the leaser just to have the ability to drive the miles you want. You can extend a lease and sell a lease at any time so the get out when I want excuse doesn't work.

You are willing to spend thousands more than the equivalent leaser simply to be able to say you own it. In your case you are losing a ton of money in comparison

Read my earlier post to help explain further. I don't feel like working out the numbers for your case.
__________________
  #399  
Old 11-28-2012, 07:52 AM
SamS's Avatar
SamS SamS is offline
Officially Welcomed to the 'Fest
Location: Dallas
 
Join Date: Jan 2011
Posts: 792
Mein Auto: 2013 ActiveHybrid 3
Quote:
Originally Posted by MonkeyCMonkeyDo View Post
So are you buying in cash or financing? If you are financing then you always have a payment and it is always 100s if not multiple 100s more than the leaser just to have the ability to drive the miles you want. You can extend a lease and sell a lease at any time so the get out when I want excuse doesn't work.

You are willing to spend thousands more than the equivalent leaser simply to be able to say you own it. In your case you are losing a ton of money in comparison

Read my earlier post to help explain further. I don't feel like working out the numbers for your case.
If you put down a down payment, then your payments can be the same or less than a lease. And "sell a lease at anytime" is typically with financial consequences, moreso than with a purchase + down payment. Much of this depends on your original negotiated price, but it is clearly more easily done with a traditional note.

As a point of reference, I bought a brand new $76K '12 M3, kept it for exactly one year and sold it outright to purchase another car. I got back every penny of my down payment, and my out of pocket costs to own the car for the 12 months were ~$650/month. Exactly how would I have down this with a lease, on a $76K car?

Last edited by SamS; 11-28-2012 at 08:03 AM.
  #400  
Old 11-28-2012, 07:56 AM
Chris90's Avatar
Chris90 Chris90 is offline
Officially Welcomed to the 'Fest
Location: Massachusetts
 
Join Date: Apr 2003
Posts: 13,797
Mein Auto: '04 330i
Quote:
Originally Posted by boltjaM3s View Post
$3000 over 10 years is $300 a year or $25 a month.
It's $3000 over 10 years in addition to the $21,000 you already saved. Now you're up to $2400/year, or $200/month.
__________________
"When you were born, you cried and the world rejoiced. Live your life so that when you die, the world cries and you rejoice." - Cherokee Expression
Closed Thread

Bookmarks


Forum Navigation
Go Back   Bimmerfest - BMW Forums > BMW Model Discussions > 3 Series / 4 Series > F30 / F31 / F32 / F33 (2012 - current)
Today's Posts Search
Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On



Forum Jump


All times are GMT -7. The time now is 09:52 PM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2014, vBulletin Solutions, Inc.
© 2001-2011 performanceIX, Inc. All Rights Reserved .: guidelines .:. privacy .:. terms