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Discussion Starter · #1 ·
Anyone care to speculate as to what the 08 528i we are preparing to take delivery on will be worth this time next year?

2008 528i Trade in Value in August '09
  • Monaco Blue with Cream Beige Sport Seats
  • Premium Package
  • Sport Package
  • Cold Weather Package
  • Sirius Radio
  • Step Automatic Trans
  • Navigation System
  • Xenon Headlights
10k miles at time of trade.
$54220 MSRP Today
Assume mint condition at time of trade

I'm guessing 80-82% of MSRP.

I am interested in modeling our financing options (lease vs buy vs buy and trade in a year)

The standard 24mo lease is a good deal with BMWFS' inflated residuals, but if I buy and trade it after a year, I might be even better off. (We are getting the car via ED)

Because in TX I have to pay taxes on the full value of the car upfront, I have to eat this cost no matter what. But if I trade the car in next year, I will more or less get full credit on the taxes - giving me the ability to almost perpetually roll over the duty paid as a credit. On top of this, if I take the $1000 car club rebate each year my total cost of ownership drops further. My holding cost with conventional financing would be cheaper than with a lease (.0028MF vs .0529APR w/ credit union) .Finally, I can avoid the lease acquisition fee and the return fee (although the latter is usually credited).

All this assumes I can trade the car each year at a reasonable value and absorb a 12month depriciation that is less than half of what my 24mo depriciation would be.

If the car is likely to be worth more than 43k, I may just buy instead of lease.

Any thoughts??
 

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Love the taxes part!

I think in Texas BMWFS has a balloon type of loan which works like a lease but technically is a loan. So you might be able to take the advantage of the trade in rebate on the taxes while getting the low rate financing which BMW offers on the 5er Leases.

Expect the 12 month residual to be within a few percentage of the 24 month residual. Put in some credit for lower mileage. With the lease type arrangement you can always trade in/sell while your bottomline risk is limited.

Do the purchase very early in the model year and your car might still be in the same model year when you trade it in. Also be judicious about the colors and options (nothing too exotic on the color side; and decently optioned as a luxury car) and you should be able to get 80% of US MSRP.
 

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Anyone care to speculate as to what the 08 528i we are preparing to take delivery on will be worth this time next year?

2008 528i Trade in Value in August '09
  • Monaco Blue with Cream Beige Sport Seats
  • Premium Package
  • Sport Package
  • Cold Weather Package
  • Sirius Radio
  • Step Automatic Trans
  • Navigation System
  • Xenon Headlights
10k miles at time of trade.
$54220 MSRP Today
Assume mint condition at time of trade

I'm guessing 80-82% of MSRP.

I am interested in modeling our financing options (lease vs buy vs buy and trade in a year)

The standard 24mo lease is a good deal with BMWFS' inflated residuals, but if I buy and trade it after a year, I might be even better off. (We are getting the car via ED)

Because in TX I have to pay taxes on the full value of the car upfront, I have to eat this cost no matter what. But if I trade the car in next year, I will more or less get full credit on the taxes - giving me the ability to almost perpetually roll over the duty paid as a credit. On top of this, if I take the $1000 car club rebate each year my total cost of ownership drops further. My holding cost with conventional financing would be cheaper than with a lease (.0028MF vs .0529APR w/ credit union) .Finally, I can avoid the lease acquisition fee and the return fee (although the latter is usually credited).

All this assumes I can trade the car each year at a reasonable value and absorb a 12month depriciation that is less than half of what my 24mo depriciation would be.

If the car is likely to be worth more than 43k, I may just buy instead of lease.

Any thoughts??
My prior experience with that type of vehicle leads me to believe that in a year, the "trade in" (wholesale) value will start with a 3. As soon as you drive it off the lot, it will depreciate to mid-40's.
 

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30s! Wow Sarafil; that is almost 70% of MSRP after one year!
 

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I agree it could be that low, though that sounds more like an auction price...but trade ins are ugly. Private party would definitely be higher.
 

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Discussion Starter · #6 ·
FWIW, my figures show it is cheaper to buy and trade in each year as long as the trade value approaches 80% of MSRP. (My assumptions peg breakeven at about 77%)

My total cost of ownership for 6 annual purchase/trade iterations vs 3 X 24mo lease contracts is about $1400/year lower. That adds up to quite a bit over the 6 years I modeled, and drops the total cost of having the car(s) to below what it would cost to just buy and hold a single car for 6 years.

This assumes the following:

  • Continued availability of ED discount
  • Continued availability of BMWCCA Rebate
  • Today's MFs, Interest Rates, & Lease Residuals
  • Modest annual price increase
  • Ignores cost of pickup trips to Munich
  • Ignores maintenance costs
  • Ignores influence on insurance premiums

This also ignores the following:

  • Reduced maintenance cost - no new tires to buy etc
  • Opportunity to take advantage of a promotional deal along the way (trunk money or promo MF)
  • Non-monetary benefit of always having latest safety and tech features
  • The fun of picking out a new car (if you enjoy this part of the ownership experience)
  • Some prefer to modify their cars

Conventional Wisdom: buying and holding is always cheaper
My Suggestion: buying a new car every year can be cheaper in some cases :yikes:

Would love to hear some feedback or devil's advocacy - what am I missing or forgetting?
 

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