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Discussion Starter · #1 ·
My salesman is suggesting the following for the purchase of my 330i:

Lease it for 3 years with fewer miles built into the lease than I would actually use. Say 12,000 miles/yr when I actually drive closer to 20,000.

Then, at the end of the lease, upon turn-in to my dealership... buy it back from "myself" at wholesale. In the process, pay $1500 to have the car CPO'd and get a 100k warrantee out of it. This would be financing the car for another 5 years (as he suggested).

I don't know about this. Seems a fishy way to do things... and like I'll wind up paying much more in the end. My wife seems to have "fallen" for the idea. I'm dislike it though, because I've had my current car for 3 1/2 years... and that's the longest I've ever had a car before. Who knows if I'll even want the car for 7 years. I may want a newer/better bimmer (or other car) long before then.

Thoughts? Opinions? Suggestions?
 

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A sudden sense of liberty
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You don't have to pay excess mileage charges, but it's probably still a bad idea. Check the finance rate thread in Dear Jon for a full description of how leasing works, but basically when you lease you pay two charges: depreciation and rent. You are charged interest on the rental portion, generally at a higher interest rate than you would pay for financing. Critically, the rental fee is based not on the amount the car depreciates, but rather on the *total value* of the car. By leasing the car, and then financing the car, you are essentially financing the value of the car twice.

Moreover, do you really want to be locked in to buying the car at lease end? The real value of leasing is that it allows you to move on to a new car after a couple of years. I've leased a bunch of cars, and no matter how much I've liked them, I've never bought one of them at lease end.

You are probably much better off doing conventional financing.
 

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DougDogs said:


It that possibly a "state to state" thing????

I'm sure I've been told by salesmen, here in Jersey, that you still have to pay, per the terms of the contract.

sarcasm on...You don't think that a salesman would actually lie to me, do you???

sarcasm off...really, rules can be different in each state. Obsession's plan still sounds like an expensive way to purchase a car, unless he plans on putting few miles on the lease, and ending with a car that is worth more than the payout figure.
It is a basic fact in a lease. I do not know of a company out there that would require you to pay the excess mileage fees if you buy the car back. If you are still required to pay, why would you buy a car with high mileage if you could just pay the fees and then go out and get a new car. It is kind of a way for BMWFS to keep themselves from getting too many cars back every year with outrageously high mileage, as they are probably worth much less than the residual value.
 
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Look at it this way-

Your renting the car for three years and then buying your own used car with a 5 year note.

If you need to BS your way into a 8 year car note, you should probably be buying a cheaper car.

However, if you truly want an anal-rententive answer to your question, do the following-

Add up ALL of the cash out of pocket you would have to fork out over the 8 years. That includes everything you pay at lease origination, the lease payments, any lease end fees, the CPO charges, and then the payments on the lease buyout amount assuming a reasonable interest rate and ZERO down.

I think you'll find that the sum of the payments is an outrageous amount. And when you're finally done paying for it, you have an eight year old car.
 

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I would say that this strategy is a bad idea...

You will end up paying way more in the long run than
had you simply just purchased to begin with.

Leasing with the intent of ultimately
owning hardly ever works out...
 

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Discussion Starter · #7 ·
I've pretty much discounted this idea. I know me... no matter how much I may LOVE my 330i once I get it, after 3 years, I will probably have eyes for something else. Perhaps that M5 dream car... :D

Anyway, it looks like I'll either lease the thing for 36-39 months or finance it for 60. Whichever looks better once I crunch the numbers.

If I lease, I can just move on at lease-end. If I finance, I should have enough equity in the car after 3+ years of payments to trade it in like I've done on my last 6 cars. If by chance I'm abducted by aliens and they change my personality such that I keep cars for 10 years... I'll worry about that when the lease is up (if I go that route.)
 

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fahrer
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If you're looking to get a lower payment there's always the balloon option.

Not saying it's good or bad, just that it's there.

BMWFS might not have an option, (I know MBUSA does), but
there's probably always 3rd party financing.
 

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Discussion Starter · #9 ·
It's not a matter of affording it. I could probably "afford" an M5 if I was really set upon it. It's more a matter of retaining as large a portion of my "disposable income" as possible... so that I can dispose of it in other ways while still enjoying a nice bimmer! ;)
 
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OBS3SSION said:
It's not a matter of affording it. I could probably "afford" an M5 if I was really set upon it.
Um, no offense, but it sure doesn't sound like it.

People that *could* afford M5s (even reaching) likely are not worried about minimizing their 330 MONTHLY payments to this degree. And, my old rule still applies- Anyone buying a car and thinking in terms of monthly payments is both finanically ignorant AND going to get shafted.
 

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Discussion Starter · #11 ·
When did this ever turn into a discussion about monthly payments. I never mentioned in my original post that this was a way to get my 330 at the lowest monthly payments. I asked because my salesman suggested this method. He is always asking me what I want to pay per month (don't they all...). While I've done all my negotiating on the actual selling price of the car, and the trade-in value of mine.

Perhaps he made this suggestion thinking I'd want to make my payments smaller. Perhaps he just wanted me to buy the same car from him twice. Perhaps he was just trying to find a way for me to have a 100K warranty.

Now... I don't believe that my primary concern is monthly payments. Sure, I'm not going to ignore what they would be. But my concerns are negotiating the best price for the car (which I've done), obtaining the best trade-in value of my current car (if I trade rather than sell it myself), and the best lease or finance rates. Monthly payment winds up being a result of those figures. As long as that payment is within my monthly budget, I'm happy.
 

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A sudden sense of liberty
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OBS3SSION said:
When did this ever turn into a discussion about monthly payments. I never mentioned in my original post that this was a way to get my 330 at the lowest monthly payments. I asked because my salesman suggested this method. He is always asking me what I want to pay per month (don't they all...). While I've done all my negotiating on the actual selling price of the car, and the trade-in value of mine.

Perhaps he made this suggestion thinking I'd want to make my payments smaller. Perhaps he just wanted me to buy the same car from him twice. Perhaps he was just trying to find a way for me to have a 100K warranty.

Now... I don't believe that my primary concern is monthly payments. Sure, I'm not going to ignore what they would be. But my concerns are negotiating the best price for the car (which I've done), obtaining the best trade-in value of my current car (if I trade rather than sell it myself), and the best lease or finance rates. Monthly payment winds up being a result of those figures. As long as that payment is within my monthly budget, I'm happy.
Sounds like the right approach. My only other thought would be to go with 48 month financing, if possible. Aside from the interest savings (which would be substantial), you're likely to be in a lot better shape with respect to not being "upside down" in a couple of years if you do decide to dump the vehicle and get something else.
 

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Formerly CCs328Ci
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OBS3SSION said:
When did this ever turn into a discussion about monthly payments. I never mentioned in my original post that this was a way to get my 330 at the lowest monthly payments. I asked because my salesman suggested this method. He is always asking me what I want to pay per month (don't they all...). While I've done all my negotiating on the actual selling price of the car, and the trade-in value of mine.

Perhaps he made this suggestion thinking I'd want to make my payments smaller. Perhaps he just wanted me to buy the same car from him twice. Perhaps he was just trying to find a way for me to have a 100K warranty.

Now... I don't believe that my primary concern is monthly payments. Sure, I'm not going to ignore what they would be. But my concerns are negotiating the best price for the car (which I've done), obtaining the best trade-in value of my current car (if I trade rather than sell it myself), and the best lease or finance rates. Monthly payment winds up being a result of those figures. As long as that payment is within my monthly budget, I'm happy.
that last line you said is all that matters, and remember...as long as you can live and enjoy the car..dont pay attention to what others think. Because they have much more deeper problems with matters than you do...good luck and please keep us posted! :thumbup:
 

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fahrer
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Never meant to imply anything about affording it with my statements.

Just that a balloon note would get you the same benefit as
that leasing arrangement without some of the headaches
of the lease agreement.

Not even suggesting you do that, just trying to make sure you're
aware that the option exists.

TD said:

Anyone buying a car and thinking in terms of monthly payments is both finanically ignorant AND going to get shafted.
At the risk of generalizing, I've got to agree.
 

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The other thing to remember when figuring a deal where you finance a used car is that the interest rates for used cars are typically a lot higher than those for a new car. That'll add to the total cost of the car.

- Ray
 
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