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F10 / F11 (2011 - Current)
The new chapter in the highly successful story of the BMW 5 Series Sedan (F10) and wagon (F11)

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  #51  
Old 02-06-2012, 06:38 PM
Blkthght Blkthght is offline
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OP here.

Just want to say thank you to everyone who shared their experiences and thoughts on the subject. I agree with the poster who said that there is no general answer to the lease/buy question and folks need to do what works best for them. In case anyone is curious, I made the decision that I'm going to lease the 550i instead of buy it. My thinking in making this decision began first with choosing which car I wanted: 535 or 550, understanding that both vehicles represent a fundamentally poor and wholly egotistical financial decision. I think once the decision is made to acquire a new and well optioned luxury car, and a check is written, you immediately begin fighting a losing battle against depreciation, and one can only hope to mitigate their losses.

I am leasing because--aside from the lower tax liability and the protection from diminished value due to the unforeseen--I decided I want to drive the 550 but I am wary of the "soft" resale values of v8 vehicles. But I am not the typical lease customer since I would actually entertain keeping the car if everything went well. My client adviser says it is not unusual for bmwfs to sell the car to the dealer at the end of the lease term for a sale back to the lessee at a price above auction value but a good amount below the residual. So even if I buy the car at the end of the lease term (usually not recommended), and pay a premium as opposed to having just financed it with a loan from the beginning, I am comfortable with paying that premium to have the flexibility of that option. To me the option is valuable. I don't know what fuel prices will be in the future, or if BMW engineers a more fuel efficient v8 or a more powerful 6, or even what the effect of tougher vehicle emissions standards recently adopted by California will have on the used v8 market. Also, my family situation (single/no kids) may change in 3 years (married/kids). At least my girlfriend hopes so.

So who knows. I think the point has already been made that everyone's situation is different. If I had decided on the 535, I may be more inclined to buy that car and keep it for at least 6 or 7 years with an extended warranty. Anyway, thanks again for all your comments.
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  #52  
Old 02-06-2012, 07:49 PM
Emilner Emilner is online now
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Ah, why not get into this pi$$ fest:

First off, if you think leasing is always a waste of money, then you are right. And wrong.

We need to quantify two aspects to determine if leasing makes sense, and YES, IN THE REAL WORLD LEASING DOES SOMETIMES MAKE SENSE.

1. Length of ownership. Your intended length of ownership is the ultimate deciding factor whether leasing is a possibility. If you buy a car and drive it into the ground then of course leasing makes NO sense. If you tend to get a new car every few years then leasing MIGHT make sense.

2. Your mileage/modification intentions. If you plan to heavily mod or do high mileage then purchasing makes sense.

Everything else comes down to numbers.

If you are saying to yourself "well it is stupid to get a new car every three years, thats a total waste of money", then you are on the wrong board. Try Camrylovers.com or something like that. If you are buying/leasing a BMW you have already made a "bad" financial decision. A low priced car will do the same job for financial purposes at much lower cost. If you are getting a BMW or any luxury car then you have traded a "good financial decision" for your passion/love of driving/ego/etc (pick one or all). We do that all the time. Eating out of our home is a total waste of money, yet we do it. 90% of what we spend our money on is overspent beyond our actual "needs". We could own a smaller home, buy cheaper clothes, spend less on food, have no or less electronic devices. You could literally have spent less on nearly everything you have spent money on. What has happened each time you spend money (save on some healthcare issues) is you have weighed your needs and wants and decided to spend money on an item/service that falls somewhere in between both.

Now that we have gone past the "it is stupid to get a new car every few years" point for this conversation let's talk numbers.

First off let's get off the facts/myths of ownership vs leasing. In reality while you are driving down the highway or parked in your garage the way the title is printed is meaningless. Whether you own it for cash, you financed it, or you leased it, it's the same car. The only way to EVER tell which method of ownership will work best is after you have moved on to the next vehicle and can see the actual numbers. For those who say it is stupid to rent a car I have one question for you- What is different, in reality, with any of the three methods of ownership? With any method of ownership you can sell the car any time, trade it in any time, do anything to it at any time. You may be ready to fire back "but you don't own it with leasing". Your complete ownership of the car can happen at any point in time with no penalty. Make your final payments due and residual and the car is yours. It is impossible to say which method will have cost more to own up until that point without knowing what the rates were on leasing/financing and what your lost interest/gain income was on that cash spent. Guess what? It is really no different from someone who bought the car and made payments or paid cash. The difference is "How much did I pay total in each circumstance, how much am I getting for it (the same for all three methods), and what financial/tax incentives were involved.

So now ownership has been removed from the equation.

Financially it comes down to how much will the car cost you in total payments combined with loss of capital use and tax/incentives. Paying cash for a car when interest rates are low is one of the worst financial moves you can make.

A-You have total loss of capital that has been invested in a depreciating fairly illiquid (at a reasonable sale price) asset- the worst form of an investment. If rates are low you are not collecting any spread on those rates verses available investments and the asset is declining in value every year.

B-You are at risk for a great chunk of that money for quite some time. When leasing/financing a vehicle you are only on the hook for the amount you put down and the payments you have made (as long as you were smart enough to get gap insurance from your insurance company (not BMW)). If you buy a car for $70k + tax today and it is stolen next month you are screwed. Your insurance company is giving you a check for a used car, without taxes (I do not know if any/all states have any form of tax rebate/credit in this situation). There is no gap insurance available, since there is no gap. When leasing/financing (at low rates) you should always put as little down as possible to keep your at risk money as low as possible.

When you are leasing or buying for finance your decision comes down to two things:

A-Total expected out of pocket costs including expected residuals in both scenarios.

B-Your propensity to want a new car in a short (3-4 year) timeframe and you enjoy a hassle free disposal process.

If the finance numbers either way are near equal and you do tend to want a new car every few years then it makes no sense to buy the car for credit (or cash!!). You take on residual risk (which is almost NEVER in your favor) and you pay tax on the whole amount (except for a few states that tax both transactions the same). For me the break-even is $3-4k in the hole for leasing. If leasing will cost less than $3-4k more than buying then it is a no brainer for me to lease. I get rid of all residual risk. As a good example I traded in my S550 for my 550ix (selling private party was yielding less than the tax savings on my new car). The best price on LI from a dealer for trade in was $37k. I traded it in to a dealer in NJ for $44k. I was forced to buy a car out of state because of residuals. For me $3-4k is 6-10 dinners for me and my wife in NYC over the course of 3 years. It is a small enough margin where the residual of what you might get as a trade/sale might come low enough to be a break even. More than $3-4k difference and the trade in/sale price would have to really be crap for it to be better to lease.

When I bought my 550ix the lease numbers were terrible so it made financial sense to buy the car. If the numbers were closer I would have certainly leased.
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  #53  
Old 02-06-2012, 08:27 PM
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Kamdog Kamdog is offline
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I have a slightly different point to make, and that is, it is OK to lease, as long as you recognize that the concept of leasing vs. buying will cost you slightly more in the long run than buying and keeping for at least a 2 lease term, about six years. But, really, only slightly. Now, personally I buy. I am a frugal kind of guy, and, frankly, I tend to fall in love with my cars.

But all this 'depreciating asset' stuff is bunk. I spend more on vacations each year than on car payments. I bet everybody here who could monetize the difference between buying and leasing and apply it to a yearly expense, will find they spend way more than the difference on eating in restaurants, and such.

So, to the extent that your personal entertainment is included in the enjoyment you get out of leasing new cars every three years, go and enjoy that, and just chalk up the small cash difference to your personal pleasure. As with anything, if you can't afford to do it, don't do it. If, to you, the difference between leasing a BMW 5er and buying one is a real financial one, as opposed to a theoretical financial one, well, you should drive a less expensive car, IMO.
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  #54  
Old 02-06-2012, 08:34 PM
solstice solstice is offline
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Quote:
Originally Posted by Kamdog View Post
I have a slightly different point to make, and that is, it is OK to lease, as long as you recognize that the concept of leasing vs. buying will cost you slightly more in the long run than buying and keeping for at least a 2 lease term, about six years. But, really, only slightly. Now, personally I buy. I am a frugal kind of guy, and, frankly, I tend to fall in love with my cars.

But all this 'depreciating asset' stuff is bunk. I spend more on vacations each year than on car payments. I bet everybody here who could monetize the difference between buying and leasing and apply it to a yearly expense, will find they spend way more than the difference on eating in restaurants, and such.

So, to the extent that your personal entertainment is included in the enjoyment you get out of leasing new cars every three years, go and enjoy that, and just chalk up the small cash difference to your personal pleasure. As with anything, if you can't afford to do it, don't do it. If, to you, the difference between leasing a BMW 5er and buying one is a real financial one, as opposed to a theoretical financial one, well, you should drive a less expensive car, IMO.
Very well said. And it's not for sure that a 3 year lease will be cheaper than buying. In my case it has been the opposite. It's more of a religous than financial decision if you own for the short term. For long term you need to buy at some stage. I personally do not like monthly expenses. I don't use credit cards for private consumption and I have no debt, it's a way of life that makes me happy. Others prefer to hearding a larger cash pile with high debt and monthly expenses and are happy with that. To each his own.

Last edited by solstice; 02-06-2012 at 08:36 PM.
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  #55  
Old 02-06-2012, 08:44 PM
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dunderhi dunderhi is offline
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Originally Posted by Stevej2001 View Post

I replaced it with a F10 535i which I bought. I couldn't pass up the 0.9% 36 month financing available at the time. The payments are enormous but the money is almost free.

I ordered the car and got just what I wanted so I figure I'm in for the long term. Wish me luck. It'll be paid off in October, 2014.
I took the 0.9% + $1,500 cashback. It was such a good deal, I didn't put a penny down and ended up with a $2,185/mo payment. My magic date is March 2014.
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  #56  
Old 02-08-2012, 12:10 PM
doctj doctj is offline
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I'd leased my last 3 vehicles but decided to buy this time for the following reasons:1. BMW has changed the calculated depreciation with resulting significantly higher lease payments.2. Upgrade cycle doesn't always coincide with a particular choice for eg I would have liked to explore the upcoming diesel model but I'm forced to upgrade my care at the end of this month. I had to order the vehicle 5 weeks ago to ensure timely delivery.
In response to maintenance costs I intend to keep this vehicle for 5-6 yrs so I'll just take the 6 yr/100k deal to prevent maintenance worries.
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  #57  
Old 05-13-2012, 05:24 PM
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5seriesHB 5seriesHB is offline
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The residuals are always exaggerated by dealerships
If they say 58% at the end of 3yr there is no way someone would buy your car or even the dealership buy your car back in 3 yrs for 58%
They would tell u to kick rocks. IMO
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  #58  
Old 05-13-2012, 05:41 PM
Emilner Emilner is online now
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Quote:
Originally Posted by 5seriesHB View Post
The residuals are always exaggerated by dealerships
If they say 58% at the end of 3yr there is no way someone would buy your car or even the dealership buy your car back in 3 yrs for 58%
They would tell u to kick rocks. IMO
The residuals are set by the leasing company, not the dealer.
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  #59  
Old 05-13-2012, 05:51 PM
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5seriesHB 5seriesHB is offline
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Originally Posted by Emilner View Post
The residuals are set by the leasing company, not the dealer.
The residuals are jacked. up regardless. Just like most #'s
Uve owned an MB...u know the deal...lol
me too
Ml63amg
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  #60  
Old 05-13-2012, 08:12 PM
Mikez38 Mikez38 is offline
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I bought an Audi S6 for cash just before I retired with the intention of keeping it for a long time. Turned out that my desire for a new 550GT just 3 years later had me trading in the Audi against the lease of the Bimmer. I was very sorry I bought the Audi instead of leasing it and am sure I lost a lot of $ in the transaction (not interested in doing the math). I will turn back the 550 at the end of 36 months for something?? new and hot that tickles my fancy. Never buy again.
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  #61  
Old 05-13-2012, 08:27 PM
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5seriesHB 5seriesHB is offline
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Quote:
Originally Posted by Mikez38 View Post
I bought an Audi S6 for cash just before I retired with the intention of keeping it for a long time. Turned out that my desire for a new 550GT just 3 years later had me trading in the Audi against the lease of the Bimmer. I was very sorry I bought the Audi instead of leasing it and am sure I lost a lot of $ in the transaction (not interested in doing the math). I will turn back the 550 at the end of 36 months for something?? new and hot that tickles my fancy. Never buy again.
We live and we learn Mike. Well said!
next time ull get them.
That was exactly my point...residuals dont mean a thing because a dealer and most of the times even a private party will not give us that number in a sale or trade in anyway!
for example BMW says my 535 Msport will be worth 58% in 3 years.... i bet if i tryed to sell it to them for 58% of 100% they would tell me 41% or something like that.
They inflate the numbers at the beginning so ull pay more, for example at the by out or balloon oayment. if they said it was 45% residual then they would get less$$$ from us at that time.
simple sales techniques.
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  #62  
Old 05-13-2012, 08:30 PM
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roseng roseng is offline
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I have a leased 2012 528i and a purchased 2007 650i.

I had a leased 2006 530i and after 64k miles, I was really happy to just give back the keys.

For me it's simple...
If you want to keep a car or are driving more than 25k per year, then buy it.
If you can write it off and/or want to change card more frequently then lease it.

My 650 is a keeper and the wife gets a new car every 3 years.
Works for me
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  #63  
Old 05-13-2012, 09:01 PM
davidc1 davidc1 is offline
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I wish two year programs were better. Three years feels long these days.
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  #64  
Old 05-13-2012, 11:07 PM
dontay dontay is offline
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I wouldn't lease now. Intrest rates are just too low. I got a 2.5% loan from chase. My total interest over 5 years is about 5k.

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  #65  
Old 05-13-2012, 11:22 PM
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Greg@Pacific BMW Greg@Pacific BMW is offline
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I just found this thread, very interesting.... For the record I would say that I probably have a breakdown like this..... 85% lease, 10%'finance and 5% cash in deals that I do every month.

Personally I would never buy a new car of any brand unless I plan on keeping it 10+ years and driving it until the wheels fall off.., or it's a true classic like a 1970 motion camaro, or a 1969 yanks camaro,hemi Cuba, mustang boss etc. to me those are the buy cars.
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  #66  
Old 05-14-2012, 03:03 AM
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Joe-BMW Joe-BMW is offline
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Lease new, buy CPO. That's what I follow.
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  #67  
Old 05-14-2012, 04:13 AM
hans_gregor hans_gregor is offline
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with the lease, I can drive a 550
with the buy, I could drive an Acura or something like it

Last edited by hans_gregor; 05-14-2012 at 04:14 AM.
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  #68  
Old 05-14-2012, 11:54 AM
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When I first started to lease cars I also thought that I would never feel comfortable driving it, taking care of it like I owned it. However, after leasing 3 cars in the last 6 years I've never felt like it wasn't my car. I've taken care of it like it was my own. I been anal about where to park because I didn't want any scratches or dings. The fact that I may or may not end up purchasing it after my lease is up makes me feel this way.
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  #69  
Old 05-14-2012, 12:59 PM
Imothph Imothph is offline
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I'm probably the exact type of person that SHOULD lease, I just can't do it. My record for keeping a new car is 4 years, I typically trade within 2.5 and its not uncommon for me to switch a year or so in (like now, my E350 is only 9mos old and I hope to be ordering a 535i this month) I drive about 1300 miles/mo.

Reasons I can't bring myself to Lease:

1) I'll be honest - leases seem very confusing. I consider myself to be a relatively smart person but I've really no idea what any of the lease nonsense means. I've tried here and there to look into it, but purchasing / financing just seems so much smoother - and perhaps more to the point, I feel confident that I'm not getting screwed - or that if I am, I at least know where, how and for how much.

2) I don't like the feeling of being "locked-in" I know its technically possible to get out of a lease early - someone can assume the lease or I bet you can pay a hefty fee, but either way, its a PITA. I like knowing that Im in control -If my financial situation changes, at any time, I can sell , trade-down or re-finance to a lower payment IF I've purchased the car. With the lease though, I'd be stuck at whatever the payment is for the duration of the agreement - unless I try get out of it or find someone to take the lease over.

3)Is it really my car? I like the feeling that the car is MINE....not on loan from some company. I know that in practical terms it probably doesn't make any difference - if you finance the car, its technically owned by the bank ...right? Still - leasing has a "borrowed but it aint yours" feeling I don't like.

4) Limits on what you can do - I don't like that either. I'm not big into Mods for my newer cars - but I like knowing I have the option. I don't want to be looking at my ODO and wondering if I need to switch cars for a week to make sure I say under the mile limit.

Sometimes I think I'd be ok with a lease and that I should just do it - worst case I get out in three years and never do it again - though, you could apply that same sentence to "attempted robbery" ......worst case I get out in three years and never do it again.
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Last edited by Imothph; 05-14-2012 at 01:01 PM.
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  #70  
Old 05-14-2012, 01:10 PM
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Kamdog Kamdog is offline
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I always buy, and I always buy new. I typically drive the car for at least 8 years. At the moment, I have a 2003 CRV (for my wife), a 2003 Accord (for my daughter), and a 2008 535i, for me. All are paid for, all look to go an indefinite period into the future. The CRV and the Accord (and the 535) have been well maintained and both Hondas are over 100k (118K for the CRV and 138K for the Accord).

If I were leasing these cars, yes, they would all be new, but I would be laying out 15-18K a year in lease payments, I estimate.

I just couldn't see myself handing in my car after only 3 years, and I expect to get 10 years, at least, out of it.
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Last edited by Kamdog; 05-14-2012 at 01:12 PM.
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  #71  
Old 05-14-2012, 01:39 PM
Kar Don Kar Don is offline
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I ordered the 535 with intention of buying and ended up leasing it. Glad I did because I'm not a huge fan of the car thanks to the wonderful accelerator pedal.
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  #72  
Old 05-14-2012, 01:54 PM
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5seriesHB 5seriesHB is offline
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Originally Posted by AlBoston View Post
I ordered the 535 with intention of buying and ended up leasing it. Glad I did because I'm not a huge fan of the car thanks to the wonderful accelerator pedal.

I'm not a huge fan of the car thanks to the wonderful accelerator pedal


????? please explain...car is too fast or too slow?
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  #73  
Old 05-14-2012, 02:37 PM
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alex_c alex_c is online now
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Originally Posted by 5seriesHB View Post
We live and we learn Mike. Well said!
next time ull get them.
That was exactly my point...residuals dont mean a thing because a dealer and most of the times even a private party will not give us that number in a sale or trade in anyway!
for example BMW says my 535 Msport will be worth 58% in 3 years.... i bet if i tryed to sell it to them for 58% of 100% they would tell me 41% or something like that.
They inflate the numbers at the beginning so ull pay more, for example at the by out or balloon oayment. if they said it was 45% residual then they would get less$$$ from us at that time.
simple sales techniques.
Au contraire my friend!!! It is in YOUR best interest to have a large residual. Since on a lease you only pay for the depreciation (+ interest) of the vehicle, the larger the residual, the lower the payments. Plain and simple. That's why BMW's have such a great lease deals: their residuals are higher than normal, therefore, less depreciation.

Then, when you return the vehicle, and it is supposed to be worth 58%, but it is not, you can make an offer for about 50%, or 48% or 45%, and if it is higher than wholesale even if it is lower than residual, you may be able to purchase the car at that price.

So, in short, you paid in lease payments the equivalent of 42% of the car (58% residual), and then, at the end of the lease, you may be able to purchase the car (if you want to) for another 48% (instead of 58%), effectively making it a total of 90% of the original agreed-upon price of the car, or easier to say, you end up with an additional 10% discount at the end of the term if you decide to keep the car.

So, leasing is not bad at all, especially with BMW's.

Now, some other brands -most notable, Audi- have very low residuals, which make the monthly lease payments higher. The only good thing is that at the end of the lease, instead of having a car that is worth 40% (residual), it ends being more valuable, lets say, 45%. In that case, you can actually trade-in the lease return and have some equity build up, even when it was a lease and not a purchase.

BTW, I used to teach Finance 101 in college... so this is fun for me
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  #74  
Old 05-14-2012, 03:24 PM
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Quote:
Originally Posted by alex_c View Post
Au contraire my friend!!! It is in YOUR best interest to have a large residual. Since on a lease you only pay for the depreciation (+ interest) of the vehicle, the larger the residual, the lower the payments. Plain and simple. That's why BMW's have such a great lease deals: their residuals are higher than normal, therefore, less depreciation.

Then, when you return the vehicle, and it is supposed to be worth 58%, but it is not, you can make an offer for about 50%, or 48% or 45%, and if it is higher than wholesale even if it is lower than residual, you may be able to purchase the car at that price.

So, in short, you paid in lease payments the equivalent of 42% of the car (58% residual), and then, at the end of the lease, you may be able to purchase the car (if you want to) for another 48% (instead of 58%), effectively making it a total of 90% of the original agreed-upon price of the car, or easier to say, you end up with an additional 10% discount at the end of the term if you decide to keep the car.

So, leasing is not bad at all, especially with BMW's.

Now, some other brands -most notable, Audi- have very low residuals, which make the monthly lease payments higher. The only good thing is that at the end of the lease, instead of having a car that is worth 40% (residual), it ends being more valuable, lets say, 45%. In that case, you can actually trade-in the lease return and have some equity build up, even when it was a lease and not a purchase.

BTW, I used to teach Finance 101 in college... so this is fun for me
Wow
talk aboutgetting schooled.....lol
I luv it. Go Alex!
Thats Great stuff and so great that u shared that with us.
Im definately going to save this post for that day when ill need this info.
2yrs 270 days 8 hours till im in a 750li.
not that im counting!
All the best
Rob
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  #75  
Old 05-14-2012, 04:07 PM
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With BMW's willingness to inflate residuals and generally offer very competitive money factors it's almost crazy not to lease at times. Lease at the right time and you're playing with close to free money safe in the knowledge that BMWFS is taking on all the risk with its artificially high residuals. BMW is doing a superb job at shifting product and they have been incredibly wise by using financing as the driver for increasing sales. Pretty sure that Greg's lease v finance v cash breakdown is likely to be representative across other dealers, and with the aggressive deals BMW is willing to put out there it's not hard to see why. BMW is making it very easy to get into a great car with limited risk and downside - Audi and (to a lesser extent) MB just aren't as focused in this regard.
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