[New 2 BMW]

Hello, sorry to bug you all, hope I'm doing this right. I have never owned a BMW, only hondas...I recently test drove a 2016 BMW 228i x-drive convertible and loved it and want to lease one. I was really blown away at the quality of BMW and want to join the team.

Never have leased before. I'm told there are many layers to leasing that one must know before going to lease, I know nothing, never leased.

Was wondering is this the wrong forum to ask this? if so, please direct me to the correct one. If not, was wondering what would be the best way to go about leasing this car so as to not get completely bent over and hosed...I thank everyone for their time and sorry if I've inconvenienced anybody.....bye, peace.

 

[jhm5]

Go to the Ask-a-BMW-Dealer Forum on Bimmerfest for Leasing 101 and feel free to post your question there for lots of tips.

 

[Zooks527]

Well, if a friend or family member came to me and asked to be steered in the right direction, I'd honestly say "Don't lease", especially if you've never done one before.

Leasing has some advantages in some circumstances, but few of those exist outside of business contexts. Sure, you get to drive a nicer vehicle than you can legitimately afford, but you're clearly paying for that privilege. If you lease, you'll pay all the depreciation on a new car while never developing any equity in the vehicle. You can find yourself constrained on miles.

Some conditions that can be referenced later in the thread when lease aficionados pile in to scream what a great deal it is:

1. Is a lease appropriate for a friend who own his own consulting business and gets a full write-off on the cost? Yeah, he and his accountant think so.
2. Is is appropriate for my 80-year-old aunt, who just puts gas in it and goes? Maybe, as she can't keep up with tracking the maintenance on a car.
3. Is it appropriate for someone in mid-career who wants to be seen with the new cool toy? Not really, but he'll hand you a ton of excuses and justifications that he's been talked into believing.
4. Is it appropriate for someone at the start of his career who wants a nice ride but doesn't have the cash yet? No.

Save up, wait a year or two, and buy the 2016 as it comes off lease from someone whose desire for the car overrode his wallet's ability to pay. You'll be better off financially in the long run. Or even the mid-run. Possibly the short-run as well.

 

[raleedy]

When you read the post above, pay particular attention to the phrase "You get to drive a nicer vehicle than you can legitimately afford". This is a tip-off that the poster is biased. He is making assumptions about you, about the car, and about the terms of the transaction that may not be true at all. Pay attention also to the phrase "never developing any equity in the vehicle". This betrays his assumption that a vehicle is a valuable asset. Very few cars appreciate in value over time, so this is probably just not true or relevant.

 

[Sportstick]

Before this thread gets hostile, please clarify, as you said you owned Hondas, but want to lease a BMW. Are you intent on leasing and just want to learn more? In that case, you might do well with some experts to go over money factor, capital cost, etc.

If you are still open to lease vs. buy, there are other issues to consider, so please let us know and you'll get more opinions.

 

[New 2 BMW]

Thanks for the replies everyone...it's nice to see different sides of opinions and for taking the time....I'm younger and retired from the military (hurt, retired early) so I don't have to do much driving and when I test drove the 228 convertible, I really did like it and thought about leasing but I know nothing about it and have seen random things here and there where people say things like "if u don't know anything about leasing, the dealership will screw u big time" so now I'm gun shy about the whole thing and am not sure who I should talk to, to get educated, maybe I need to pay someone/expert??

Sportstick, I guess my thought on the leasing thing was, though I really like the car today, because I know nothing really about BMW, who's to say I'll like it in a year or two and if I'm in a lease, I could just dump it at the end of the lease, not as easy when selling (I'm assuming, not 4 sure).

But, I guess I should follow jhm5's advice and post this in the proper place

 

[Zooks527]

When you read the post above, pay particular attention to the phrase "You get to drive a nicer vehicle than you can legitimately afford". This is a tip-off that the poster is biased.

You needed a tip-off? I was trying to be polite.

He is making assumptions about you, about the car, and about the terms of the transaction that may not be true at all.

Well, we have a person who has never owned a German car before who's asking for financial advice on an internet forum about a financial product with which he has no experience. I'll readily admit to assuming he's financially inexperienced and since he's therefore not likely a businessman who can deduct the expense nor my maiden aunt (who wouldn't know the internet if it bit her), I'll assume he's asking about leasing instead of buying since the salesman's probably already determined he can't qualify for a loan to buy the car.

If my assumptions about the OP are wrong, I'll gladly apologize to him. You care to bet on whether I'll have to or not?

EDIT: OK, some of the asssumptions were wrong (see post immediately above), so I'll clearly apologize for the sections that didn't apply.

Pay attention also to the phrase "never developing any equity in the vehicle". This betrays his assumption that a vehicle is a valuable asset. Very few cars appreciate in value over time, so this is probably just not true or relevant.

This, however, is a considerably silly assumption for you to make. There's no indication that I think the average car is anything other than a depreciating asset. That notwithstanding, you can and do have the ability to hold value in a car. I could turn the one in my driveway into cash with a level of effort commensurate with the value I wanted to get. Still, let's be honest, your comment wasn't an attempt to clear up anything I said, but more a gratuitous attempt at insult.

Back to the OP's problem. Excluding cases (1) and (2) above, there's no financial case for leasing. If one of my business partners asked me what I though about his doing it, I'd say I thought it was a bad financial decision. If my daughter asked about leasing a car, I'd try to look sad and tell her I thought she was smarter than that.

The OP asked for advice. With the limited information available, leasing a car in his case sounds like a really bad idea.

Sportstick, I guess my thought on the leasing thing was, though I really like the car today, because I know nothing really about BMW, who's to say I'll like it in a year or two and if I'm in a lease, I could just dump it at the end of the lease, not as easy when selling (I'm assuming, not 4 sure).

It is certainly easy enough to return a car at end of lease, but you find yourself right where you are today, except without the deposit you put down and without anything from the string of payments. That can be quite a cost for convenience.

But, I guess I should follow jhm5's advice and post this in the proper place

Well asking someone who makes money off leasing you a car if leasing you a car is a good idea would seem to be a problematic position. There's no issue with putting it in this forum

 

[Sportstick]

If you're still here, New2, a few last words...

If you are willing to pay for flexibility and an easy walk-away after a couple of years, leasing works well, assuming you make a good deal. My son does this.

If you are looking for the overall lowest cost of driving, owning and keeping for a lengthier period is the preferred choice. I do this and extended my warranty to 7 years....first two have been outstanding with a 2 Series.

There are those who say never own a German car out of warranty, and those happily past 100,000 miles with minimal repairs beyond maintenance, so there is some risk to assess either way.

Good luck and thank you for your service.

 

[New 2 BMW]

Thanks for the help

 

[raleedy]

I think Sportstick has a good perspective on this. I'd just add a couple of things: it can be harder to get out of a lease early than it is to sell a car that you own. Since circumstances can change, it is probably a good idea to think of a lease as a fairly firm commitment for the (usually) three-year term. Second, driving habits can be important. If you don't use the miles that you pay for under the lease, you'll likely be leaving money on the table unless you exercise your option to buy at the end of the term. Lease rates are determined in part by projected depreciation based on estimated mileage. Leases that allow higher miles generally are more expensive. On the other hand, if you go over the mileage limit, you will have to pay for the extra miles, or else exercise the purchase option at the end of the lease. You'll also pay extra for damage that goes beyond ordinary wear and tear, unless you repair it. One more thing, not entirely trivial: BMW charges a $925 lease initiation fee and a $350 termination fee. You can escape the termination fee by exercising the lease-end purchase option. But the initiation fee is a non-trivial cost factor.

 

[msej449]

My last two cars have been BMWs bought new from the dealer. Previous (330d xDrive Touring) I financed, the current one (M235i Convertible) I bought.

One suggestion I'd make is that you at least compare leasing to what you can get from your bank as a simple loan to buy outright. For me, the dealer's finance rate came to 4.9% on the M235i. Since I can borrow from my bank at 2.8% there was no compelling reason why I'd go for a dealer offer that's 2.1% more.

What complicates this is the fact that a car is a depreciating asset, so you ideally need to know what the car is worth after the finance period. In some cases, such as my 330d, the financing includes an end-of-contract 'right to buy' price, so it is easy to work this out. And for a 0.1% premium over a bank loan, it seemed worth it, especially as the contract included a guaranteed 'right to buy' price at the end. If residual values tanked, I could hand the car back (which I did), but if they were high, I could buy at a discount.

But if you have the capital, then think carefully about whether you need to finance at all: for the M235i I worked out that it would have cost me £4,100 extra over 3 years to finance and I had the cash, so I saved myself the 3-year expenditure, and bought cash: obviously I spent the 'saved' money on extra options ..... man logic

The big danger with any financing is that you're locked-in to a long contract - if you suddenly lose your job, or need the money for something else, meet someone and want a big wedding, get invited to join a round-the-world yacht race team, etc., then you may regret the lock-in, or cost of getting out of it.

This isn't definitive. You can a get a lot of different advice and it's hard to know for sure because you can't give us your full financial profile. As I said - get at least one other point of view e.g. from your bank.

 

[Elvisfan]

Ok,I'll chime in. I have leased one car. I bought it at the end of the lease because a friend was willing to buy it for more then it was costing me to buy it out. That was 20 years ago. There is a reason car companies lease cars. Hint,it's not because it's a good deal for you. They have both sides of the transaction. Plus you'll be back. I have owned 35 cars. I like flexibility. For what I'm paying monthly,I could lease a 4 series convertible. But I didn't. As someone mentioned,the reason for a lease was never mentioned. Going from a Honda to a BMW,some assumptions were made. Mostly to keep the payments lower. There are more variables with a lease. I like it simple. The selling price,the trade in. Get these separately. And the interest rate. When you lease you are doing this based on a monthly payment. I find leasing complicated. I don't have a math degree. Buying is simpler. Most of the times,the company wins on a lease. Vw diesels are one time they lost. And big.

 

[Elvisfan]

My last two cars have been BMWs bought new from the dealer. Previous (330d xDrive Touring) I financed, the current one (M235i Convertible) I bought.

What complicates this is the fact that a car is a depreciating asset, so you ideally need to know what the car is worth after the finance period. In some cases, such as my 330d, the financing includes an end-of-contract 'right to buy' price, so it is easy to work this out. And for a 0.1% premium over a bank loan, it seemed worth it, especially as the contract included a guaranteed 'right to buy' price at the end. If residual values tanked, I could hand the car back (which I did), but if they were high, I could buy at a discount.

But if you have the capital, then think carefully about whether you need to finance at all: for the M235i I worked out that it would have cost me £4,100 extra over 3 years to finance and I had the cash, so I saved myself the 3-year expenditure, and bought cash: obviously I spent the 'saved' money on extra options ..... man logic

The big danger with any financing is that you're locked-in to a long contract - if you suddenly lose your job, or need the money for something else, meet someone and want a big wedding, get invited to join a round-the-world yacht race team, etc., then you may regret the lock-in, or cost of getting out of it.

This isn't definitive. You can a get a lot of different advice and it's hard to know for sure because you can't give us your full financial profile. As I said - get at least one other point of view e.g. from your bank.

They must do things differently in the UK. What you described for your 330d sounds like a lease. In the US when you finance a car at the end you own it.
Also,with interest rates so low I would never pay cash. I'd put the money in the market. But that's just me. I would take the risk.
Also,4100 lbs translates to $6400 about. In no universe in the US can that interest come from financing a BMW 2 series for a 3 year loan. I think we are talking apples and oranges here.

 

[raleedy]

In the US, BMW Financial Services is more than happy to finance your new car through a lease or through a loan. In my limited experience with BMW leases, the terms have been quite favorable: a low money factor and a high residual value combine to make the monthly payments low. For example, my current 528i, just coming up on 3 years old, has a residual value under the lease of $34,624.65. Its trade-in value in our local market is probably a few thousand dollars lower than that. Even a private sale is likely to fetch less than that amount. Since I don't want to keep the car beyond the lease, that value difference roughly represents savings for me from leasing as compared to buying with a loan at a comparable interest rate. Not all manufacturers do this. Audi, for instance, definitely doesn't. In effect, I have had the car for the first three years without having to absorb all of the depreciation over that period. If I wanted to keep the car a long time (which I do not), I would still not be worse off with the lease, because the purchase option just puts me in the position I would have been in had I bought in the first place (with comparable interest rates on financing). So, for me, the lease gives me a three-year trial period to decide if the car is a keeper or not.

As someone else pointed out above, paying cash for your car up front may make you feel manly, but with borrowing costs so low, it is tempting to think that there may be more productive uses for your own cash.

 

[Elvisfan]

Ok,as I said. I don't understand it. If you are not keeping the car,that $34,000 means nothing. It's phantom savings. The only thing that means anything is what you paid during the 3 years.

 

[raleedy]

Ok,as I said. I don't understand it. If you are not keeping the car,that $34,000 means nothing. It's phantom savings. The only thing that means anything is what you paid during the 3 years.

Right. It is only something to compare to what the car could fetch today in the market if I chose to sell it. So, for example, if it had a resale value of $36K now, I could buy out the lease and flip it. As it is, with a resale value of more like $30K, it means that I am $4K better off, all in, having leased than I would be if I had bought 3 years ago and sold today. That's why people usually say it is uneconomic to buy a car if you are not going to keep it for a long time.

 

[Elvisfan]

Right. It is only something to compare to what the car could fetch today in the market if I chose to sell it. So, for example, if it had a resale value of $36K now, I could buy out the lease and flip it. As it is, with a resale value of more like $30K, it means that I am $4K better off, all in, having leased than I would be if I had bought 3 years ago and sold today. That's why people usually say it is uneconomic to buy a car if you are not going to keep it for a long time.

My question is what did you actually pay for 3 years for a lease versus buying and selling after 3 years? It's rhetorical. You don't have to answer that.

 

[msej449]

'They must do things differently in the UK. What you described for your 330d sounds like a lease. In the US when you finance a car at the end you own it. '

Here in the UK there are a number of things on offer, including classic leasing, plus PCP, PCH and what I did, which was just called 'financing' but is really just one option on offer. It comprised three elements: deposit, monthly payment for a loan, and final option to buy at a contracted residual value, or return. Also in the UK, some employers provide a contract vehicle if you need a car for the job, but this is taxed by the government as a 'benefit in kind', because the payment comes out of your pre-tax salary. This is what makes giving advice complicated, because each option has its pros and cons - my overall advice is really to look at all the options available, including from your bank. And as mentioned here, also think about what it is you're after in terms of money management (e.g. do you want predictability of monthly payment, a guaranteed final cost to buy, a guarantee of having car available whatever mechanical problems arise, to keep the capital in the bank for other things etc.).

I also had the option from my bank of using my offset mortgage facility. This is where the bank runs a linked mortgage and savings account and money in the mortgage account is 'offset' by whatever's in the savings account, when the monthly interest payment is calculated. I can pay into/take out from both accounts any time I want. These sorts of accounts are popular with people who have a variable income, like sales persons and contractors, and are pretty much the lowest interest rate for 'dynamic' borrowing (where there's no constraints on moving funds), in the main because they're secured against property. You might have access to something similar, for all I know.

One point I'd echo is that whatever is on offer from a dealer is biased - they'll make sure it's (a) profitable and (b) brings you back into the showroom when you renew. That's not to say it's bad - it may be exactly what you need. But no dealer is going to point out that borrowing from your bank, or buying outright is better for you. You have to work out these alternatives for yourself.

 

[tturedraider]

Hello, sorry to bug you all, hope I'm doing this right. I have never owned a BMW, only hondas...I recently test drove a 2016 BMW 228i x-drive convertible and loved it and want to lease one. I was really blown away at the quality of BMW and want to join the team.

Never have leased before. I'm told there are many layers to leasing that one must know before going to lease, I know nothing, never leased.

Was wondering is this the wrong forum to ask this? if so, please direct me to the correct one. If not, was wondering what would be the best way to go about leasing this car so as to not get completely bent over and hosed...I thank everyone for their time and sorry if I've inconvenienced anybody.....bye, peace.

Let us know what your thoughts are right now. Leasing makes getting out of the car easy at the end, but you pay a premium for that convenience. Leasing doesn't automatically mean you're buying more car than you can afford. It's a method of financing that some people find works for them. It's a perfectly valid way of trying out a car you're not sure that you'll want for the long term.

Anyway, if you're still interested in leasing let us know. There is a wealth of information in the Ask a Dealer forum, but it can be overwhelming when you're coming in with zero experience.

 

[raleedy]

My question is what did you actually pay for 3 years for a lease versus buying and selling after 3 years? It's rhetorical. You don't have to answer that.

I can't know for sure. To know that for sure I would have had to do one of,each at the same time. My lease payments over three years came to roughly $22,000. I could have bought the car for about $54,000 and my best estimate of its value today on the used car market is about $29,000. That makes the lease about $3k cheaper, because BMW underpriced the depreciation in fixing the lease rate. Maybe I could realize a little more in a private sale, but with a lease I can just turn it in.