Doesn't Anyone Buy Anymore?

Originally Posted by lacarnut

6. My notes on a new 335I coupe are $417 per month total with $4.7 down payment on a $50k car. My total payout is $21k. My present car is paid for and is worth $27k.

One note on reducing the monthly payment via a heavy capital cost reduction. If you pay in $5k (or in this case 4.7k) to lower your payment and are unlucky enough to total the car you are out that money in full that you put down to lower the payment. Early in a lease this can be especially painful.

This risk is removed if you put that $5k into a savings account and have a payment that is a hundred higher or whatever. You can always use that money to help meet your payment. Better yet place that cash into multiple security deposits and lower your payment that way. It won't come down as much as cap-costing but that money is only a deposit and stays yours.

I once signed a lease where I cap-cost reduced my payment way down for comfort and then realized that I had a lot of exposure after I had a car wreck. The car was severely damaged and in danger of being totaled. In the end the insurance company opted to repair the car and therefore I didn't lose the money I put down at the front. I was only six months into the lease and even though I would have walked away financially if they totaled it, I would have been out all of that front money I put in. Never again.

One useful practice if you're playing with lease numbers is to figure out the total outlay over the lease. Out the door plus all the payments. You'll see scenarios that use more money up front and result in a higher payment (multiple security deposit vs. cap cost reduction) but over the term of the lease the total cost to you is less.

momo is right, putting any money down is a bad move on a lease...

Originally Posted by lacarnut

This is my first lease. So, unlike you that knows every thing about leases, I would like to present you with some facts.
1. Everyone's situation may be different
2. I like driving new cars and have no interest in buying a used car
3. It makes sense to buy new if you can write it off
4. At the end of 39 months, I am giving it back to the dealer cause I want something different
5. Putting little or no money down payment makes no sense to me because of the interest being charged
6. My notes on a new 335I coupe are $417 per month total with $4.7 down payment on a $50k car. My total payout is $21k. My present car is paid for and is worth $27k.

Well put. And I'll just add the following which really puts things into perspective:

The average family of 4 spends somewhere in the neighborhood of $300 a month on cellphones, $500 a month on gas/electric, $350 a month on a triple-play of cable/landline/wifi, $600 on groceries, $365 on cigarettes, $300 on lunch at work, $325 on pets.

The family car is just as important as any of these other monthly necessities, so why treat it as something different? Why is leasing a BMW for $539 a month any different than a cable bill or a power bill or a grocery bill? This isn't 1955 and the family car isn't the second-biggest investment a household makes. It's 2012 and leasing the car you can afford to drive at the price that fits your budget is all that's necessary to digest here. Money-factors and interest rates and all this other blah-blah isn't the issue at all.

The issue is why more people don't treat the car as just another monthly necessity, just another monthly utility. Because that's all it is.

BJ

Originally Posted by akaMomo

One note on reducing the monthly payment via a heavy capital cost reduction. If you pay in $5k (or in this case 4.7k) to lower your payment and are unlucky enough to total the car you are out that money in full that you put down to lower the payment. Early in a lease this can be especially painful.

This risk is removed if you put that $5k into a savings account and have a payment that is a hundred higher or whatever. You can always use that money to help meet your payment. Better yet place that cash into multiple security deposits and lower your payment that way. It won't come down as much as cap-costing but that money is only a deposit and stays yours.

I once signed a lease where I cap-cost reduced my payment way down for comfort and then realized that I had a lot of exposure after I had a car wreck. The car was severely damaged and in danger of being totaled. In the end the insurance company opted to repair the car and therefore I didn't lose the money I put down at the front. I was only six months into the lease and even though I would have walked away financially if they totaled it, I would have been out all of that front money I put in. Never again.

One useful practice if you're playing with lease numbers is to figure out the total outlay over the lease. Out the door plus all the payments. You'll see scenarios that use more money up front and result in a higher payment (multiple security deposit vs. cap cost reduction) but over the term of the lease the total cost to you is less.

I have not had a wreck in over 15 years. I have State Farm and they will never cancel me. So, let's say I wreck the car and I have put up that hefty deposit. If the wreck is not my fault, I am going to get that amount back from the other driver either by suing him or his insurance company. The last asshole that ran a stopsign and T-boned me hurt my neck and back. I sued and got $30k, Conclusion, I am not worried about the money I put up front. It lowers my monthly payments. I have the car on order. So, I can put less down if I want and see how the figures come out. The deal is not complete until the car gets here. If I get a lemon, I will insist on a new vehicle with no out of pocket.

I think one thing that has not been talked about on the BMW lease is loading the car up with extras like navigat., prem. package, leather, etc. The car I ordered has few extras. However, if I did load it up, I would want to see how each package increases th lease price. So, in my case I wind up paying $21k on a $48k car. I figure that is approximately 2/5 or 40%. Let's say that a package cost $2k. I would use 40% times the 2 grand which equals $800 spread out over let's say 40 payments. Conclusion that package should not add more than $20 per month to the lease price. I betcha that is where your dealler can sock it to you. I see leasee's paying $700 plus on a lease. Damn, you could lease a Jag for another hundred or two.

Originally Posted by lacarnut

If the wreck is not my fault, I am going to get that amount back from the other driver either by suing him or his insurance company. The last asshole that ran a stopsign and T-boned me hurt my neck and back. I sued and got $30k, Conclusion, I am not worried about the money I put up front. It lowers my monthly payments.

If you think that money is safe nothing I say will change that. If your lawsuit recovers money you'd still net more after settlement if your cap-cost reduction was less. The ultimate total cost of the lease is same and to drop $5k in up front only makes it feel cheaper when you write your check each month. Cost is ultimately virtually the same. Fine.

For the rest, you'll find a heavily optioned car isn't much more than a lightly optioned one. The cap-cost only goes up by invoice amount if you make a decent deal and residuals for BMW are high. For the extra $50/mo or so get what you want on the car. The difference for a 328 to a 335 was not much more than that. This is where leases shine.

Originally Posted by lacarnut

This is my first lease. So, unlike you that knows every thing about leases, I would like to present you with some facts.

3. It makes sense to buy new if you can write it off

My buddy writes off $8000 a year with mileage on his POS 10 year old GTI. How much can you write off on your new car?

Originally Posted by Chris90

My buddy writes off $8000 a year with mileage on his POS 10 year old GTI. How much can you write off on your new car?

At 55.5 cents a mile, he must put well over a 100,000 miles on his car. .....you would have to be an idiot to lease a car putting that kind of mileage on a car. Your buddy might be up **** creek if he is ever audited.

I am retired so. I write off mileage at 55.5 cents per mile going to my beach condo and making repairs, board meetings, etc. .

Originally Posted by akaMomo

If you think that money is safe nothing I say will change that. If your lawsuit recovers money you'd still net more after settlement if your cap-cost reduction was less. The ultimate total cost of the lease is same and to drop $5k in up front only makes it feel cheaper when you write your check each month. Cost is ultimately virtually the same. Fine.

For the rest, you'll find a heavily optioned car isn't much more than a lightly optioned one. The cap-cost only goes up by invoice amount if you make a decent deal and residuals for BMW are high. For the extra $50/mo or so get what you want on the car. The difference for a 328 to a 335 was not much more than that. This is where leases shine.

I have 6 weeks before my car arrives from Germany. So I will check with my dealer and State Farm agent to see what you say is fact or fiction.

I think you might be wrong about the percentage of profit the dealer makes on a stripped down vehicle vs a loaded one. Would the options have a higher percentage mark up?.

Originally Posted by lacarnut

At 55.5 cents a mile, he must put well over a 100,000 miles on his car. .....you would have to be an idiot to lease a car putting that kind of mileage on a car. Your buddy might be up **** creek if he is ever audited.

I am retired so. I write off mileage at 55.5 cents per mile going to my beach condo and making repairs, board meetings, etc. .

he's writing off 16k miles a year (50 mile commute) yeah, but the car's old so costs him little. My point was I don't see the advantage of buying new for the writeoff when you can writeoff your sh1tbox to the tune of $8000/year. That seems like a huge advantage to the car owner.

Originally Posted by boltjaM3s

Well put. And I'll just add the following which really puts things into perspective:

The average family of 4 spends somewhere in the neighborhood of $300 a month on cellphones, $500 a month on gas/electric, $350 a month on a triple-play of cable/landline/wifi, $600 on groceries, $365 on cigarettes, $300 on lunch at work, $325 on pets.

The family car is just as important as any of these other monthly necessities, so why treat it as something different? Why is leasing a BMW for $539 a month any different than a cable bill or a power bill or a grocery bill? This isn't 1955 and the family car isn't the second-biggest investment a household makes. It's 2012 and leasing the car you can afford to drive at the price that fits your budget is all that's necessary to digest here. Money-factors and interest rates and all this other blah-blah isn't the issue at all.

The issue is why more people don't treat the car as just another monthly necessity, just another monthly utility. Because that's all it is.

BJ

Your average family should quit smoking. It stinks up the cars, is bad for their health, and, since I sold my Altria, does me no financial good anymore. That will help them move up to a 5er, and be more comfortable.

Originally Posted by Kamdog

Your average family should quit smoking. It stinks up the cars, is bad for their health, and, since I sold my Altria, does me no financial good anymore. That will help them move up to a 5er, and be more comfortable.

My family doesn't smoke and doesn't have a stinking dog, either.

That's $690 a month I don't spend, I'm going to get a fully-loaded Cadillac ATS with that money.

BJ

Originally Posted by boltjaM3s

My family doesn't smoke and doesn't have a stinking dog, either.

That's $690 a month I don't spend, I'm going to get a fully-loaded Cadillac ATS with that money.

BJ

Why does a Bergan County Family Man persist in getting these small cars? It is time for you to consider moving up in size, something more substantial, something more fitting, something the strangers who see you can really envy, rather than just sigh wistfully about?

Originally Posted by lacarnut

At 55.5 cents a mile, he must put well over a 100,000 miles on his car. .....you would have to be an idiot to lease a car putting that kind of mileage on a car. Your buddy might be up **** creek if he is ever audited.

I am retired so. I write off mileage at 55.5 cents per mile going to my beach condo and making repairs, board meetings, etc. .

I didn't think you could write off commuting miles from your home to your work?

Originally Posted by Axxlrod

I didn't think you could write off commuting miles from your home to your work?

You can't but thousands of people do it anyway and just hope they don't get audited.

Here's another scummy tax dodge trick;

open up some cheesy little business that generates little real revenue... something like selling cosmetics, jewelry, dog training, etc.

Put a small sticker on the vehicle that advertises the business.

Write 100% of the vehicle mileage/cost off as a business expense, as the vehicle is being used to "advertise" the business.

"In Jersey everythings legal, as long as you don't get caught."

Lucky Wilbury

Just because you didn't have a wreck in over 15 years doesn't mean you will not have one tomorrow. What if other driver doesn't have insurance who you going to collect money from then?

Originally Posted by lacarnut

I have not had a wreck in over 15 years. I have State Farm and they will never cancel me. So, let's say I wreck the car and I have put up that hefty deposit. If the wreck is not my fault, I am going to get that amount back from the other driver either by suing him or his insurance company. The last asshole that ran a stopsign and T-boned me hurt my neck and back. I sued and got $30k, Conclusion, I am not worried about the money I put up front. It lowers my monthly payments. I have the car on order. So, I can put less down if I want and see how the figures come out. The deal is not complete until the car gets here. If I get a lemon, I will insist on a new vehicle with no out of pocket.

I think one thing that has not been talked about on the BMW lease is loading the car up with extras like navigat., prem. package, leather, etc. The car I ordered has few extras. However, if I did load it up, I would want to see how each package increases th lease price. So, in my case I wind up paying $21k on a $48k car. I figure that is approximately 2/5 or 40%. Let's say that a package cost $2k. I would use 40% times the 2 grand which equals $800 spread out over let's say 40 payments. Conclusion that package should not add more than $20 per month to the lease price. I betcha that is where your dealler can sock it to you. I see leasee's paying $700 plus on a lease. Damn, you could lease a Jag for another hundred or two.

Originally Posted by dpwr

Just because you didn't have a wreck in over 15 years doesn't mean you will not have one tomorrow. What if other driver doesn't have insurance who you going to collect money from then?

You could fall out of your bed and break your neck tommorrow. It happens.

I have great insurance who will pay if the other driver is not insured. I also have a million dollar liability policy.

Originally Posted by Axxlrod

I didn't think you could write off commuting miles from your home to your work?

You are correct. Claiming mileage commuting from home to work is illegal. All those thousands of new auditors recently hired might just get around to someone that claims mileage as a deduction but has no income other than wages. The rule is that in order for an entity to claim a business expense such as mileage, they must be in business to produce income.

Originally Posted by lacarnut

You could fall out of your bed and break your neck tommorrow. It happens.

I have great insurance who will pay if the other driver is not insured. I also have a million dollar liability policy.

they will pay but you loose your 5k deposit is what i'm trying to say...

Originally Posted by dpwr

they will pay but you loose your 5k deposit is what i'm trying to say...

Like I have stated, I will find out whether that is a fact or fiction. Plus, do you have State Farm or a Mickey Mouse insurance company. Another fact is that if the car is totaled in a wreck I will have some type of injury. You can book on that if it is the other person fault.

Originally Posted by boltjaM3s

The average family of 4 spends somewhere in the neighborhood of $300 a month on cellphones, $500 a month on gas/electric, $350 a month on a triple-play of cable/landline/wifi, $600 on groceries, $365 on cigarettes, $300 on lunch at work, $325 on pets.

Your point is well taken, and I know these are just numbers thrown for illustration, but I don't think the average family spends $500/mo on gas and electric I don't think we spend more than on average $100-120/mo on those things. Granted, we have no toddlers at home anymore, so everyone is at work or school. Our house is not huge, but still a decent 2600+sqft. And we do use the AC and heating before it gets uncomfortable. But I do live in Southern California, and have decent windows and reasonably efficient furnace/AC. Is heating really that expensive in the Northeast or is this the result of you living in an old poorly insulated gigantic mansion?

$365 in cigarettes? How much is a pack nowadays, $5, or have we reached $10?

$300/mo on cell phones? Actually that sounds about right (we use a mere $50) and apparently this has had a noticeable impact on retail spending.

Cable/line/internet is about $130-140/mo for me. How many lines and channels do you get to reach $600? Are things that much more in Bergen county?

But unfortunately, while your numbers may be a little made up, or perhaps simply specific to your clearly non-average situation, your point remains valid, and I kind of hate you for it because it makes me aware of my hangups. For instance, my two kids' extracurricular activities cost me about $650/mo, without even counting fundraisers and banquets and such. I could probably be driving a decently optioned 535i, or maybe even a 550i for that kind of payment. Let the little rat-brats do some less costly things My internal conflicts continue ...

Originally Posted by Chris90

My point was I don't see the advantage of buying new for the writeoff when you can writeoff your sh1tbox to the tune of $8000/year.

You can write it off, but it doesn't mean it is legal. A lot of people cheat on their taxes, sometimes knowingly, sometimes through wishful thinking.

Originally Posted by bmw_or_audi

Your point is well taken, and I know these are just numbers thrown for illustration, but I don't think the average family spends $500/mo on gas and electric I don't think we spend more than on average $100-120/mo on those things. Granted, we have no toddlers at home anymore, so everyone is at work or school. Our house is not huge, but still a decent 2600+sqft. And we do use the AC and heating before it gets uncomfortable. But I do live in Southern California, and have decent windows and reasonably efficient furnace/AC. Is heating really that expensive in the Northeast or is this the result of you living in an old poorly insulated gigantic mansion?

$365 in cigarettes? How much is a pack nowadays, $5, or have we reached $10?

$300/mo on cell phones? Actually that sounds about right (we use a mere $50) and apparently this has had a noticeable impact on retail spending.

Cable/line/internet is about $130-140/mo for me. How many lines and channels do you get to reach $600? Are things that much more in Bergen county?

But unfortunately, while your numbers may be a little made up, or perhaps simply specific to your clearly non-average situation, your point remains valid, and I kind of hate you for it because it makes me aware of my hangups. For instance, my two kids' extracurricular activities cost me about $650/mo, without even counting fundraisers and banquets and such. I could probably be driving a decently optioned 535i, or maybe even a 550i for that kind of payment. Let the little rat-brats do some less costly things My internal conflicts continue ...

My gas and electric runs $350 a month, and we only have three living here, and the house is around 1800 sqft, so I can see five bills easy. Ten bucks a pack is about right. If you can find it that cheap in NY. I don't know what they go for in Jersey, though.

Took the wife out for her birthday, brought along my adult child, at in a nice, but not extravagent restaurant, with appetizers, drinks, entrees and a shared dessert, plus tip, it was three hundred.

So, even though that is not how I choose to spend my own cash, BJ's take is absolutely valid. Now, even though I am a retired man on a fixed income, I still throw a thou a month into the travel fund, since I would rather waste my money traipsing all over tarnation than driving a new car all the time. My last trip would have funded a lease on a 650 for a year.

It is a matter of choices.

And we are very fortunate to be able to make the choices we want to make.

Originally Posted by bmw_or_audi

You can write it off, but it doesn't mean it is legal. A lot of people cheat on their taxes, sometimes knowingly, sometimes through wishful thinking.

Of course it's legal. He is an independent contractor driving to the client's office every day, the very definition of business mileage.

Who tells you this sh!t, the BMW dealer?

Originally Posted by Chris90

Of course it's legal. He is an independent contractor driving to the client's office every day, the very definition of business mileage.

Who tells you this sh!t, the BMW dealer?

I was not referring to your friends' situation in particular (the rules can be found here: http://www.consultingmentor.com/Article.asp?101).

Just that many people who claim deductions of this sort often do not qualify and could get burned if audited.