Yes, the payoff amount exists at all times, BMWFS gets that amount, the car is yours.

I figured I would finance it. I think I got a better deal on the price of the car by leasing it, I got an additional 2500 lease cash. So I planned to lease it, and then decide if I wanted to buy it. The car new was 49,995, and I got it for 43,800 which is my Payoff, all in all a great deal. So I think In a year and a half, I will finance it and the price per month will be similar to what I am paying now on a lease, but I will own it, and can put as many miles on as I want and modify it. Are there any flaws in my plan?

>Are there any flaws in my plan? yes, if you will finance it, you will not own it. This is the 1st lesson we all learned in the real estate market meltdown.

Matts335i said:

I figured I would finance it. I think I got a better deal on the price of the car by leasing it, I got an additional 2500 lease cash. So I planned to lease it, and then decide if I wanted to buy it. The car new was 49,995, and I got it for 43,800 which is my Payoff, all in all a great deal. So I think In a year and a half, I will finance it and the price per month will be similar to what I am paying now on a lease, but I will own it, and can put as many miles on as I want and modify it. Are there any flaws in my plan?

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Well not refinance, but I am leasing it now. I will buy it instead, and finance it , instead of lease it. I am not financing it now and then trying to refinance it.

What is the cost of your money on the lease? If it is higher that the cost of the money on your new loan you could have a good reason to buy it out. Leasing does have it's advantages that you will be giving up (gap ins, being able to walk away if you no longer want the car at lease end, possibility of negotiation the purchase price if you decide to buy at lease end or selling to the dealer to have the car cpo'ed). Weigh all of your options before ending the lease.

You could also have a sales tax issue. If you buy it now you will owe sales tax on the entire purchase price, where you are paying monthly on your lease payment. It could be thousands of dollars spent that you would not spend on the car if you continue to lease.

e30 for life: Actually, if you are financing the car, you do, in fact, own it.

actually, no, the bank holds the title until you pay off the note, and THEY own it.

chasz17 said:

e30 for life: Actually, if you are financing the car, you do, in fact, own it.

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+1

It's the opposite of financing a home. With a home, you hold the title and the bank is simply a lien holder. So you do in fact own the home.

Cars are different.

Orient330iNYC said:

actually, no, the bank holds the title until you pay off the note, and THEY own it.

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IMO, I'd keep paying the lease. Finance it at lease end. What if you get into an accident a year down the road and it devalues the car. You can then decide not to buy out the car and get something else.

Unless you're getting a considerably lower rate on a loan compared to the finance rate with the lease, I see no advantage.

Why pay financing on the lease interest? Lease interest is front-loaded, i.e. the entire rent charge is accrued when you sign the contract. Since you've already "paid" every cent of interest on the lease you might as well wait to "refinance" until the lease expires and you purchase the car for residual. Otherwise you're paying interst on the interest...

+1
You need to consider the cost of money.
Take the MF (money factor) from your lease contract and multiply it by 2400 to get an effective interest rate.
Compare that to the rate you can secure the auto loan at.

PS: BMWFS is not going to finance a lease buyout at 0.9, but you should be able to get as low as 4.0% (3.99) on an auto loan.

BlueC said:

Unless you're getting a considerably lower rate on a loan compared to the finance rate with the lease, I see no advantage.

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