Doesn't Anyone Buy Anymore?

Originally Posted by SamS

Sure, I listed all the info! But I will be happy to give you more.

Drive off price $70,763
Cap cost reduction (technically this is a down payment, but probably should be referred to as a MSD since I got it back) $21K
Amount financed, $50K @ 2.49% 60 months (rates are lower, now). I paid $963 in interest over the 12 months. Go ahead and add that to my drive off price of $70,763 for a total of $71,726. Selling price of $61K plus tax credit of $3500 towards any new vehicle still nets an out of pocket of $602.66/month for 12 months. Add my $500 dealer fee in there, I'm still under $650 a month.

There is no way you're leasing a $76K M3 for under $650/month, for a 12 month term. But I did! BTW, how much is your lease per month?

This is not a non-typical sale. This how to buy/sell cars, smartly.

Originally Posted by SamS

Sure, I listed all the info! But I will be happy to give you more.

Drive off price $70,763
Cap cost reduction (technically this is a down payment, but probably should be referred to as a MSD since I got it back) $21K
Amount financed, $50K @ 2.49% 60 months (rates are lower, now). I paid $963 in interest over the 12 months. Go ahead and add that to my drive off price of $70,763 for a total of $71,726. Selling price of $61K plus tax credit of $3500 towards any new vehicle still nets an out of pocket of $602.66/month for 12 months. Add my $500 dealer fee in there, I'm still under $650 a month.

There is no way you're leasing a $76K M3 for under $650/month, for a 12 month term. But I did! BTW, how much is your lease per month?

This is not a non-typical sale. This how to buy/sell cars, smartly.

First. Do you honestly believe you got all 21k back? On a 5 year loan the first year is over 70% interest payments. It works like reverse slopes. The last two years of a 5 year loan you are finally paying mostly balance not interest. What was the payoff for the 50k loan after one year?

But that isn't the big thing. Lets use your numbers for a lease.
76k MSRP
Cap cost: 50k thanks to 21k cap cost reduction
Residual 62% 47,120
Monthly payment 180.00
Payoff at 12 months. 52k approx
Sell car for 61k

Same end result as you but only 180 a month in payments.

Third.

You do realize you are simply making the same crazy points as everyone else. If you read my first post in this thread you would understand you are not a typical buyer and in no way is your purchase traditional. Most people don't put 30% plus down. Most people aren't buying m type cars. Most people are not getting rid of the car in 12 months. You can't say leasing doesn't give you the same options. Just like a financed purchase sometimes you might be upside down. Oh well.

Your system works for you. However, my argument is based solely on removing variables and using standard features across the board.

Please oh please read my first post on page 20 or 19 I think.

You're correct in your stats, but more by luck than anything else. $100 invested in the S&P 500 index 10 years ago, with dividends reinvested, but no taxes or expenses, would be worth $196 today. It's worth noting, however, that 10 years ago was late 2002, which was near the market bottom.

Originally Posted by dpwr

dividends of a blue chip companies are pretty much guaranteed, they mostly always increase them... your 45k in 2000 could of been worth 30k 10 years later sure, but unless you sold you don't loose anything (it's a loss on a paper) while collecting dividends for those 10 years... don't forget about 2:1,3:1 splits, over a 10 year period there's a good change you hit that... dividend is a constant, share price can go up and down.. and lastly i'm not talking about penny stocks or some crazy risky companies

Originally Posted by MonkeyCMonkeyDo

You do realize you are simply making the same crazy points as everyone else. If you read my first post in this thread you would understand you are not a typical buyer and in no way is your purchase traditional. Most people don't put 30% plus down. Most people aren't buying m type cars. Most people are not getting rid of the car in 12 months. You can't say leasing doesn't give you the same options. Just like a financed purchase sometimes you might be upside down. Oh well.

Your system works for you. However, my argument is based solely on removing variables and using standard features across the board.

Please oh please read my first post on page 20 or 19 I think.

Exactly.

Take a $48,000 F30.

Person A has saved up $48,000 and decides to lease, keeps that money in the bank, invest it, pay off the car in $539 monthly payments for 36 months. When that time is up, gets another lease at the same values. Car is never out of warranty, never needs repairs.

Person B has saved up $48,000 and decides to buy the car for cash, has an $839 monthly payment, keeps it for 57 months. When it's out of warranty, he pays for repairs. When it's time for a new car, he trades it in.

When you look at the end of the 57 month period, the financial difference between Person A and Person B is insignificant.

No one needs to suffer in old cars, no one needs hefty monthly payments. Just lease already.

BJ

BJ, nothing you wrote in #453 makes any sense.

I haven't read this entire thing, but I think one thing the leasers are skipping is inflationary pressures on the price. If an equally equipped BMW goes up 2% a year, your second lease will be about 6% higher and the third will be about 12.5%. So that's probably another couple thousand right there.

Not only do lessees feel inflationary pressures more, they are also more at risk of BMW ending their bonanza of super high residuals and crazy low money factor on leases. If interest rates doubled and residuals dropped then leasing would become much less attractive, even for the well heeled.

Originally Posted by niddin

I haven't read this entire thing, but I think one thing the leasers are skipping is inflationary pressures on the price. If an equally equipped BMW goes up 2% a year, your second lease will be about 6% higher and the third will be about 12.5%. So that's probably another couple thousand right there.

They are cutting thousands in all kinds of places - underestimate the residual trade in by $3k, overestimate the negotiated cash purchase price by $3-6k, neglect higher excise taxes if you have them by $3k.

It all adds up to a lot of money. there's no free lunch, leasing isn't it.

Originally Posted by Robert A

BJ, nothing you wrote in #453 makes any sense.

Sure it does. The average buyer keeps his car for 57 months or 4¾ years.

At the end of the day, my leased $48,000 F30 costs me $539 a month. Over 57 months, that's $30,723 + $5,000 down = $35,723 out of pocket.

Someone who bought the same $48,000 F30 spent $832 a month. Add $1,000 in out-of-warranty repairs. At the end of 57 months, the car is worth $12,000 on trade in. That's $49,000 - $12,000 = $37,000 out of pocket.

As others have said repeatedly, the "buy and-keep" strategy only works on a car that's 7+ years old. Most people buy a car and get rid of it after 4¾ years. Had they leased, they'd have been in their second brand new car and been $1,500 richer. Not to mention the hassle of ownership, title, DMV, selling it privately and/or getting robbed at trade-in, and of course a monthly payment over $800.

BJ

Originally Posted by niddin

I haven't read this entire thing, but I think one thing the leasers are skipping is inflationary pressures on the price. If an equally equipped BMW goes up 2% a year, your second lease will be about 6% higher and the third will be about 12.5%. So that's probably another couple thousand right there.

My E90 lease on a $48,000 build was $579 a month whereas my F30 lease on a $48,000 build is $539 a month. Same amount of money down, same credit rating, same amount of mileage, same everything.

BMW keeps building better cars that cost the same money.

BJ

Originally Posted by Chris90

They are cutting thousands in all kinds of places - underestimate the residual trade in by $3k, overestimate the negotiated cash purchase price by $3-6k, neglect higher excise taxes if you have them by $3k.

It all adds up to a lot of money. there's no free lunch, leasing isn't it.

I'm sorry, but you drive a 9 year old E46 that you bought used.

You know nothing of new cars, nothing of leasing. Find another thread in which your expertise can be helpful. Perhaps one about what to do when you cross 100,000 miles, or how to replace a transmission, or how to pretend that you're driving a "luxury" car when you're actually driving a car with a $4,200 street value that any 16 year old with a learner's permit would turn down if it was given to him as a birthday gift.

BJ

I don't think keeping bimmers(and other luxury makes) for 10-15 years are outliers, the independent mechanics around here can attest to that.

Originally Posted by boltjaM3s

My E90 lease on a $48,000 build was $579 a month whereas my F30 lease on a $48,000 build is $539 a month. Same amount of money down, same credit rating, same amount of mileage, same everything.

BMW keeps building better cars that cost the same money.

BJ

Well maybe you just got better wheeling a dealing and flashing that Rolex/wife/muscles. Because the MY 2013 was $1600 more than the MY2012 and in a month the price is going up another $350.

Originally Posted by Robert A

Look up IRS publication 463 here for the rules on business miles.

Essentially, leasing isn't a "loophole." If you didn't lease the car, you would still be entitled to deduct depreciation and interest costs, although at a slower rate as compared to a lease.

Exactly. The rate (of depreciation) on a lease if 100% - its all expense, there is no asset at all. It's rent after all.

My take on this, in terms of the previous comment re risky deductions - yes I believe that a personal return deduction for business use of a car can be high risk. I personally would not do this without some planning and consideration. Home office too is a big red flag on a personal return.

I am also not suggesting using a corporation to misrepresent personal assets. Co-mingiling is easy to see and easy to get nailed on if anything at all is ever looked into. Not worth it. Corporate compliance issues can get really serious, fast.

The situation I am speaking of is a legitimate corporation that is a continuing business which has employees and that pays the lease on a car (the corporation does, that is). Even in that case unless its purely a fleet vehicle (unlikely) a certain use of that car should end up being properly stated as benefit to an employee or employees (who will then report that benefit and be subject to tax on that benefit).

You don't end up without the car personally costing you something. But this ultimately is indeed cheaper vs. paying for it after tax from your paycheck. With the company paying you also don't have a neon-sign of the lease trying to come off your personal return for business use. In that case (ie a professional like the BJ's dentist wife) I would be both conservative with the definition of business use and as he stated have logs. Might not be worth the headache for some, might be for others. Probably depends on if you're the type of person who already is paying for significant tax preparation. And the above corporate example there is plenty of accounting already necessary, the additional burden is negligible.

Blah blah...

Originally Posted by niddin

Well maybe you just got better wheeling a dealing and flashing that Rolex/wife/muscles. Because the MY 2013 was $1600 more than the MY2012 and in a month the price is going up another $350.

Did you option it the same way?

BJ

People who say one way is better than the other 100% of the time are likely wasting their money on the beliefs rather than understanding the facts. Kind like the of guys who still believe they need to change their engine oil every 3,000 miles.

Here's and analysis that might help you all out: Cost of Pennies

Anyway, I think it is hilarious that a person of BJ's obvious wealth and stature within the community would take such pride in driving a car every couple of years and think it's somehow impressive. Given the stigma of the last financial crisis, it might be good idea to let the 99% see you driving an older car.

Originally Posted by niddin

Well maybe you just got better wheeling a dealing and flashing that Rolex/wife/muscles. Because the MY 2013 was $1600 more than the MY2012 and in a month the price is going up another $350.

Interesting...BTW the $1600 bump was because power seats and a few other things like auto dimming mirrors became standard.

What's causing the $350 bump without a change in MY?

Originally Posted by dunderhi

Anyway, I think it is hilarious that a person of BJ's obvious wealth and stature within the community would take such pride in driving a car every couple of years and think it's somehow impressive. Given the stigma of the last financial crisis, it might be good idea to let the 99% see you driving an older car.

Anyone in a BMW is impressing the 80% of American's who make $49,000 a year or less. Sometimes we forget that we live in a large country, we drive outside of our nestled enclave's, the rest of the country isn't so fortunate.

As for myself, I'm in a 3 Series as it's the bare-minimum needed to run with my country club crowd. For someone at my income level, it's our Camry, very practical, lots of us do it.

BJ

Originally Posted by MonkeyCMonkeyDo

First. Do you honestly believe you got all 21k back?

Uh, it was like $20,5xx as a check from my dealer who paid off the loan, so yep. Technically I got even more than $21K back because I'm not paying any tax on the car I ordered. More like $24K. Sweeeeeet.

Originally Posted by MonkeyCMonkeyDo

On a 5 year loan the first year is over 70% interest payments.

Dude you need some better math skills, or at least try an online calculator. On a 5 year loan at 2%, the interest in the first year is about $1K total.

http://www.bankrate.com/calculators/...alculator.aspx <-- You should play around with this for a while. Be sure and click the button for Show Amortization Table!

Originally Posted by MonkeyCMonkeyDo

It works like reverse slopes. The last two years of a 5 year loan you are finally paying mostly balance not interest. What was the payoff for the 50k loan after one year?

Yeah, I understand a reverse slope and it does decrease over the life of the loan, but it's not 70% interest the first year, more like 10%.

Originally Posted by MonkeyCMonkeyDo

But that isn't the big thing. Lets use your numbers for a lease.
76k MSRP
Cap cost: 50k thanks to 21k cap cost reduction
Residual 62% 47,120
Monthly payment 180.00
Payoff at 12 months. 52k approx
Sell car for 61k

Using your math above, you're only making $9K profit on the sale. You put down $21K as a cap cost reduction. Subtract $21K-$9K leaves you $12K in the hole. Add in the $180 you paid per month in your theoretical lease, and now your effective monthly cost for 12 months was $1180 PER MONTH. Yeah, that sounds about what someone would pay leasing a $76K M3. And about 2X what I paid per month, doing a traditional finance.

Originally Posted by MonkeyCMonkeyDo

You do realize you are simply making the same crazy points as everyone else. If you read my first post in this thread you would understand you are not a typical buyer and in no way is your purchase traditional. Most people don't put 30% plus down. Most people aren't buying m type cars. Most people are not getting rid of the car in 12 months. You can't say leasing doesn't give you the same options. Just like a financed purchase sometimes you might be upside down. Oh well.

Your system works for you. However, my argument is based solely on removing variables and using standard features across the board.

Please oh please read my first post on page 20 or 19 I think.

This is your first post on page 19.

My system works for me, because it's a smart way to buy/sell cars. There are no tricks, the numbers all add up, and it's not "theory" because I just now did it. You can do it like this with virtually any car/price point. Most people aren't getting rid of the car in 12 months because they're stuck in some horrible lease and would lose their shirts.

After you lease a few cars, you'll come around to this realization, too. There's no need to give the banks and dealers more profit, while taking away your flexibility.

EDIT delete

You're assuming that a five year old BMW 3 Series is worth only 25% of MSRP? I would beg to differ on that.

Originally Posted by boltjaM3s

Sure it does. The average buyer keeps his car for 57 months or 4¾ years.

At the end of the day, my leased $48,000 F30 costs me $539 a month. Over 57 months, that's $30,723 + $5,000 down = $35,723 out of pocket.

Someone who bought the same $48,000 F30 spent $832 a month. Add $1,000 in out-of-warranty repairs. At the end of 57 months, the car is worth $12,000 on trade in. That's $49,000 - $12,000 = $37,000 out of pocket.

As others have said repeatedly, the "buy and-keep" strategy only works on a car that's 7+ years old. Most people buy a car and get rid of it after 4¾ years. Had they leased, they'd have been in their second brand new car and been $1,500 richer. Not to mention the hassle of ownership, title, DMV, selling it privately and/or getting robbed at trade-in, and of course a monthly payment over $800.

BJ

Originally Posted by boltjaM3s

Someone who bought the same $48,000 F30 spent $832 a month. Add $1,000 in out-of-warranty repairs. At the end of 57 months, the car is worth $12,000 on trade in. That's $49,000 - $12,000 = $37,000 out of pocket.

wait, a 2009 335i is $12k trade? No wonder leasing is cheaper.

PS KBB says a 2009 335i w/ 57k miles is worth $25k trade-in. And your negotiated price for the 328i was probably between $42 and 45k, let's say $45k. That makes the finance at 2% $789 per month. So that's $45k - $25k, or $20,000 out of pocket.

ANd I think you forgot that you need another $5k down after 3 years for your second lease. So you're up to $42,000 out of pocket vs $20,000 for the financer.

Originally Posted by boltjaM3s

I'm sorry, but you drive a 9 year old E46 that you bought used.

You know nothing of new cars, nothing of leasing. Find another thread in which your expertise can be helpful. Perhaps one about what to do when you cross 100,000 miles, or how to replace a transmission, or how to pretend that you're driving a "luxury" car when you're actually driving a car with a $4,200 street value that any 16 year old with a learner's permit would turn down if it was given to him as a birthday gift.

BJ

Whatever dude. Your income is apparently so high that you don't need to be able to do simple math. The rest of us are not so lucky.

Only you would say $22,000 in 57 months is trivial money.

Originally Posted by Robert A

You're assuming that a five year old BMW 3 Series is worth only 25% of MSRP? I would beg to differ on that.

Kelley Blue Book a 2008 328i with 80,000 miles in good condition, it's $12,000 in trade-in value.

http://www.kbb.com/bmw/3-series/2008...&mileage=80000

BJ

Originally Posted by Chris90

wait, a 2009 335i is $12k trade? No wonder leasing is cheaper.

PS KBB says a 2009 335i w/ 57k miles is worth $25k trade-in. And your negotiated price for the 328i was probably between $42 and 45k, let's say $45k. That makes the finance at 2% $789 per month. So that's $45k - $25k, or $20,000 out of pocket.

ANd I think you forgot that you need another $5k down after 3 years for your second lease. So you're up to $42,000 out of pocket vs $20,000 for the financer.

The example was a 5 year old 328i which makes it a 2008 which in good condition with a realistic 80,000 miles has a trade-in value of $12,000.

I put $2,500 down on my leases, so that $5,000 is for both years.

Learn to read.

BJ

Originally Posted by Chris90

Whatever dude. Your income is apparently so high that you don't need to be able to do simple math. The rest of us are not so lucky.

Only you would say $22,000 in 57 months is trivial money.

You are driving a $4,200 twice-used car yet continue to troll a forum for new car buyers looking to spend $50,000.

Please go back to the E46 forum where you are relevant, do us all a favor. If ever a thread gets started about financing for a ride-on lawn mower or a jetski, I'll personally PM you as it'll be in your wheelhouse.

BJ