[mickbimmer]

I am considering buying a new BMW(probably 550 or 650). I can afford to purchase the car in full, but I would consider financing or leasing if it was financially advantageous.

I am hoping some of the experts here could give me some advance on the best approach assuming present Lease offers & interest rates.

Some info on me:

Location - Georgia,USA - I believe we are only taxed on Depreciation on leases(?)
Sales tax rate in Georgia = ?
No ED intended
Intend to keep car about 3 years
High tax bracket
Like gadgets
Take good care of my cars
Car will be garaged at home & work
I can afford to buy in full, make down payment or use MSDs if best
Any saved cash could be invested for at least 4% if not more or used to pay down mortgage

What would you do?:dunno:

Thanks,

Mick

 

[Rubber Ducky]

Am in about same position you are. I won't say it's a no-brainer, but it's close to that: lease.

Yesterday we signed the papers for 36-month lease of loaded 550i, which we pick up at the Spartanburg Center in mid-August. This is 5th BMW we've leased (along with 3 other cars) and advantages of new car every three years, lower outlay throughout, net-return on cost-of-money, and ease/simplicity of the end-of-lease phase all make this a very comfortable process. BMW's high residuals and good money factors help, of course. The dollar advantages are a bit on the margin (but favor leasing) and you can go batty trying to figure all the wrinkles (big unknown: owned car's true cash value when you trade it in), but net-net, leasing wins. Have not found leasing to lesson enjoyment of the car - YMMV.

Biggest swing factor in leasing is money factor. Check out thread for latest monthly lease programs (sticky above). Note big break upward between 36-month and loonger term leases for most vehicles (including 550i). Note also subvented leases (e.g., Z4s) with really low money factors. We were torn between an X-5 4.8 and the 550i (well, wife was); money factor and residuals broke the tie in favor of 550i (Allah be praised).

Finally, if you've not done so, check out this site: http://www.leaseguide.com/index2.htm. The lease calculator is precise against BMW's in-house calcs and the lease-or-buy engine very good for someone puzzling a deal, as you are.

When to flat-out buy a car? When it's one you intend to keep for a long time. We're considering an all-cash deal for a new Corvette or Z4 next year - intend to hang onto it for a number of years.

 

[Andrew*Debbie]

Location - Georgia,USA - I believe we are only taxed on Depreciation on leases(?)
Sales tax rate in Georgia = ?

GA sales tax is on each payment, not the entire car.

Sales tax rate depends on the county and sometimes the City. Fulton County is 7% but city of Atlanta is 8%.

Most of GA is 6% or 7%.

http://www.dor.ga.gov/salestax/salestaxrates/Countyrate20060701.pdf

 

[mickbimmer]

Thanks - good info

I appreciate the responses/

I would pursue any option that had a significant financial cost advantage for the 3 year holding period if it made a significant difference.

If the differences are minimal among the options, then I would favor leasing for its inherent advantages.

Mick

 

[adgrant]

Remember leasing protects you from unexpected deprecation risks (shuch as diminished value from a major accident) and also includes gap insurance if the car is totalled.

 

[BayAreaBMWFan]

http://www.bimmerfest.com/forums/showthread.php?t=150794

Go through the thread above and you will get all the perspective.

Exclusing the risks associated with owning an expensive depreciation asset (diminished value, residual value risk) the bottom line is that you need to compare the money factors charged in the lease with the post tax return on investment if you use the savings in the cash flow due to the lease and invest them elsewhere. The sales tax savings also add a few percentage points.

Since you are a real estate investor, I would rather keep the cash flow to invest in the appreciating asset rather than the depreciating asset.

And dont pay off your mortgage. It is cheapest post tax way of borrowing money.

 

[mclaren]

I appreciate the responses/

I would pursue any option that had a significant financial cost advantage for the 3 year holding period if it made a significant difference.

If the differences are minimal among the options, then I would favor leasing for its inherent advantages.

Mick

As BayAreaBMWFan said, read the thread I started.
Also, one advantage of leasing is that you have an option to buy or not buy the car for a known amount. Consider that the value of a car at the end of say, three years, is not known. The car could be worth far less or far more than the residual value. For example, media reports that a car is unsafe, like what happened to Audi a few years ago, could decimate the resale value. Or, as happened in the late 1970s, a strong dollar inflation could make the car worth much more than the residual. And so, when you lease, you have a free option which really does have a value as anyone familiar with stock options knows. :thumbup: