[bavarianride]

Originally Posted by jmg

I get what you are saying, but the bottom line is you are only assuming depreciation for the first three years of the car, which is a lot compared to the life of the car, HOWEVER, in the same amount of time it takes to lease two cars, the 6 yr old car will have double the miles and twice the age, and less retained value. You would have to own the car past 6 years to make up for the depreciation and have an advantage over consecutive leases. So, as the old saying goes: if you plan on getting a new car every 3 years... just lease. It's easier, safer, and can be cost effective if the RF is high enough.



Total out of pocket can be the same or even less, despite a 3% interest, because you are not paying for the entire principle, you are paying for the depreciation.

Serial lessees pay depreciation on every lease, e.g. if depreciation is 40%, then lessees pay 80% of depreciation in two leases, plus bank fees and lease interests@3+%. Two leases at those RV can easily be 100% of MSRP total.

Now a 85% MSRP buy-and-hold can still hold 20% after 6 years, right?!? That is only 65% MSRP in cost. Does buy-and-hold look better than lease already?

And the biggest depreciation is on the first 3-years, e.g. down to 55% of MSRP, once BMWFS readjusts their inflated RV. The lessees are forced to pay the steepest depreciation in the first 3 years over and over again.

[Kafkaesque328]

Originally Posted by bavarianride

Serial lessees pay depreciation on every lease, e.g. if depreciation is 40%, then lessees pay 80% of depreciation in two leases, plus bank fees and lease interests@3+%. Two leases at those RV can easily be 100% of MSRP total.

Now a 85% MSRP buy-and-hold can still hold 20% after 6 years, right?!? That is only 65% MSRP in cost. Does buy-and-hold look better than lease already?

And the biggest depreciation is on the first 3-years, e.g. down to 55% of MSRP, once BMWFS readjusts their inflated RV. The lessees are forced to pay the steepest depreciation in the first 3 years over and over again.

These are all straw man arguments. The numbers are the numbers. Total cash outlay over x amount of months years and tell me where you land. Lease is drive-offs and lease payments, purchase is selling price, sales tax, finance charges, maintenance, repairs less private party sale or trade in. Whatever it is in the end is what is. That is all there is. There is nothing else. One is cheaper, one is not, the rest of the less tangible pros/cons, benefits or drawbacks are all subjective and less tangible. I.e., hard to put price tag on a, b, c and d. There are also 2 large uncertainties at play in both scenarios:

Lease: what lease terms or deals there will be in 3-6 years. Only uncertainty I can really foresee.

Buy: Whether or not your car will be in an accident, how many miles you drive per year or will drive in x amount of years, the condition the car will be in at the end and whether you private party or trade in all drastically effect resale or the true cost of that buy scenario. Throw in having no idea where the market for used cars of said model will be when you go to sell or trade in, whether you buy an extended warranty or whether you run into high maintenance and repair expenses are all uncertainties contributing to real cost to buy said car.

All that being said, Im surprised that fans of buying and holding are so confident in that scenario. Sounds like a lot of unknowns to me with no way to predict the outcome. I have known so many people that have attempted to sell their car private party via CL or autotrader and get 'high blue book' and all this and then end up being frustrated with weirdos and tire kickers or not having the time and just trading the car in for some low ball dealer offer. You can factor that in too.. That car you thought was 'worth $15000' that you just traded in for $9500 is worth, well... $9500.

[bavarianride]

Originally Posted by Kafkaesque328

These are all straw man arguments. The numbers are the numbers. Total cash outlay over x amount of months years and tell me where you land. Lease is drive-offs and lease payments, purchase is selling price, sales tax, finance charges, maintenance, repairs less private party sale or trade in. Whatever it is in the end is what is. That is all there is. There is nothing else. One is cheaper, one is not, the rest of the less tangible pros/cons, benefits or drawbacks are all subjective and less tangible. I.e., hard to put price tag on a, b, c and d. There are also 2 large uncertainties at play in both scenarios:

Lease: what lease terms or deals there will be in 3-6 years. Only uncertainty I can really foresee.

Buy: Whether or not your car will be in an accident, how many miles you drive per year or will drive in x amount of years, the condition the car will be in at the end and whether you private party or trade in all drastically effect resale or the true cost of that buy scenario. Throw in having no idea where the market for used cars of said model will be when you go to sell or trade in, whether you buy an extended warranty or whether you run into high maintenance and repair expenses are all uncertainties contributing to real cost to buy said car.

All that being said, Im surprised that fans of buying and holding are so confident in that scenario. Sounds like a lot of unknowns to me with no way to predict the outcome. I have known so many people that have attempted to sell their car private party via CL or autotrader and get 'high blue book' and all this and then end up being frustrated with weirdos and tire kickers or not having the time and just trading the car in for some low ball dealer offer. You can factor that in too.. That car you thought was 'worth $15000' that you just traded in for $9500 is worth, well... $9500.

The over-confidence seems be equally strong from the serial leasing fans, especially when the intricacies of leases are coarsely condensed into one sentence.

$9500 trade in is still 20%, yes/no? And why does the resale value matter at year 6, when year 6-10 are trouble-free years(YMMV)? For a $500 monthly (without BMWFS lease subventing going forward), those 4 years can put $24k into the pocket of the buy-and-hold fans, enough to get a couple of engine swap from indies? And year 10 car is still worth $7000, believable?

[jmg]

Originally Posted by bavarianride

Serial lessees pay depreciation on every lease, e.g. if depreciation is 40%, then lessees pay 80% of depreciation in two leases, plus bank fees and lease interests@3+%. Two leases at those RV can easily be 100% of MSRP total.

Now a 85% MSRP buy-and-hold can still hold 20% after 6 years, right?!? That is only 65% MSRP in cost. Does buy-and-hold look better than lease already?

And the biggest depreciation is on the first 3-years, e.g. down to 55% of MSRP, once BMWFS readjusts their inflated RV. The lessees are forced to pay the steepest depreciation in the first 3 years over and over again.

You are forgetting several important factors.


1) Assuming a $50k car, if 1% financing is available for the same car, then the MF on the lease will reflect the low rate. If you compare 2.76% financing $10k down for 3 years to a 0.00115 MF (2.76%) 0.58 RF 36 mo, then the difference is only $3000 in favor of financing. BUT, the car will be 2 years out of warranty. Assuming $1000/yr in maintenance for a total of $2000, financing only has a $1k advantage to leasing. And you have a 6 yr old car instead of a 3 yr old car to enjoy. So, is it worth $1k to have an older car? Keep in mind this doesn't include a new set of tires. At 6 years, 15k miles year, and a 30k life, you will need 2 new sets of tires plus a new set due at the end of 6 years whether or not you plan to sell or keep. With two 3 year leases, you only need to purchase 2 sets of tires because you will inherit a new set with your new car at 3 years, and your last set will still have 15k miles left on them and do not needing replacing for the lease return. So your $1000 advantage all but disappears. Change the term of financing to 72 months and you are now $1k in the red before the tires.

2) The $50k car in the above scenario requires a $10k down payment and has a $1300/mo payment for 3 years. The consecutive leases with zero down will be about $700/mo. $10k less from the get go in your bank account and an additional $700 a month. You won't see that money for 6 years. Generally, why would you want to tie up that much money to save only $1000? You cold have paid off any other debt with an interest rate higher than 2.76% and saved even more.

3) If you are a business owner, the entire lease payment is taken into account as a % of the business write-off. For financing, it is only a % of the interest based on business use or the depreciation deduction allowance. Unless it's a heavy truck or SUV, then it's actually more advantageous.

[bavarianride]

Yes business deduction is a different ballgame, lease or finance, most wage earners do not get to enjoy that perk though ....

The CURRENT best finance rate is 0.99% from penfed for 3 years. Like u said one could have paid off any other debt charging > 0.99% and saved even more.

CURRENT BMWFS finance is 3.31%, and that usually match the top-tier lease interest rate too. BMWFS at times offers 0.99%, but only on CPO/used cars.

Just say $50k MSRP, 15% off discount, 55% RV, 3.31%. 3-year total lease cost is around $22k, which includes 30% depreciation + 10% lease interest and tax + $1k acquisition fee + misc fees.

Two back-to-back lease is around $44k.

A $50k car purchased at 15% off is $42.5k, let's say $47.5k total with tax + fee. Let's say finance in 3-year 1%, for a total interest for $712.5.

Let's round up the total finance cost to $49k. And let's say Kafka's number of $9500 of trade-in is good at year 6. So after 6 years, the difference is $5k, and tires + maintenance wipe that out. That is fair. So now at end of year 6, lease and finance is even. Very likely finance case has $2k to $3k advantage, but let's assume $0.

The real savings comes in when serial lessees start paying $500-$600 monthly for the 3rd lease. That is $6000-$7000 savings per year, every year going forward.

Originally Posted by jmg

You are forgetting several important factors.


1) Assuming a $50k car, if 1% financing is available for the same car, then the MF on the lease will reflect the low rate. If you compare 2.76% financing $10k down for 3 years to a 0.00115 MF (2.76%) 0.58 RF 36 mo, then the difference is only $3000 in favor of financing. BUT, the car will be 2 years out of warranty. Assuming $1000/yr in maintenance for a total of $2000, financing only has a $1k advantage to leasing. And you have a 6 yr old car instead of a 3 yr old car to enjoy. So, is it worth $1k to have an older car? Keep in mind this doesn't include a new set of tires. At 6 years, 15k miles year, and a 30k life, you will need 2 new sets of tires plus a new set due at the end of 6 years whether or not you plan to sell or keep. With two 3 year leases, you only need to purchase 2 sets of tires because you will inherit a new set with your new car at 3 years, and your last set will still have 15k miles left on them and do not needing replacing for the lease return. So your $1000 advantage all but disappears. Change the term of financing to 72 months and you are now $1k in the red before the tires.

2) The $50k car in the above scenario requires a $10k down payment and has a $1300/mo payment for 3 years. The consecutive leases with zero down will be about $700/mo. $10k less from the get go in your bank account and an additional $700 a month. You won't see that money for 6 years. Generally, why would you want to tie up that much money to save only $1000? You cold have paid off any other debt with an interest rate higher than 2.76% and saved even more.

3) If you are a business owner, the entire lease payment is taken into account as a % of the business write-off. For financing, it is only a % of the interest based on business use or the depreciation deduction allowance. Unless it's a heavy truck or SUV, then it's actually more advantageous.

[Kafkaesque328]

Again, a big assumption. So at the 6 year mark, how is it so safely assumed the cost becomes even? Aren't years 6-8 or so when the car gets more expensive to own and everything in terms of maintenance and repair are on you, the owner? Unless you buy some expensive platinum warranty, and if you do, you can add however many thousands of dollars that cost to purchase to the overall cost, basically, again, negating any 'savings' in the own scenario.

I'm just not buying it. Get it? 'Buying' it

[wilbur_the_goose]

Buy. Leasing = zero equity.

And in Pennsylvania, the state charges a 9% tax on every lease payment. That's a huge cost you must figure in

[bavarianride]

Originally Posted by Kafkaesque328

Again, a big assumption. So at the 6 year mark, how is it so safely assumed the cost becomes even? Aren't years 6-8 or so when the car gets more expensive to own and everything in terms of maintenance and repair are on you, the owner? Unless you buy some expensive platinum warranty, and if you do, you can add however many thousands of dollars that cost to purchase to the overall cost, basically, again, negating any 'savings' in the own scenario.

I'm just not buying it. Get it? 'Buying' it

No problem, there is nothing to buy here, just the usual lease versus buy ranting

Does the saved $500-$600 monthly starting 6 year mark contribute to those expensive maintenance and repair?

Or ask another way, would your game plan be different when your next lease for the same $48.9k car becomes $600-700 monthly all-in?

[bavarianride]

Originally Posted by wilbur_the_goose

Buy. Leasing = zero equity.

And in Pennsylvania, the state charges a 9% tax on every lease payment. That's a huge cost you must figure in

Same here, 9-10% sales tax charged on rent charge.

Do note 9-10% sales tax on depreciation is the same as finance/cash though.

My take is even if owning is zero equity for pure utility from day one, the numbers still go in favor of owning given the BMWFS lease subsidies are vaporizing.

[Kafkaesque328]

Originally Posted by wilbur_the_goose

Buy. Leasing = zero equity.

And in Pennsylvania, the state charges a 9% tax on every lease payment. That's a huge cost you must figure in

Equity in a car is merely whatever you paid up front that hasn't been eroded away by depreciation. Equity in your car is what is left, if any, of your down payment that hasn't been eaten away vs. leasing where you are paying as you go with minimal cash outlay on the front end and letting your money work for you along the way.

Again, it is akin to opening a 5 year CD with $50000 and in 5 years, having the CD be worth $12000. Thats 'equity'? Not to mention, the equity is slightly imaginary considering it depends on the market, whether you sell private party, what someone is actually willing to pay for it vs. what you think its worth, dealer trade in, which is always lowball, etc.

Seems to me that if you think cars actually have 'equity', then someone could lay out a lease vs. buy equation over say, a 6 year period where leasing comes out the same or cheaper and you would still tout 'equity' in the buy scenario as being a benefit of buying when in essence, it is imaginary. Does your washing machine have equity too after 5 years of using it, washing clothes with it day in and day out and left being a worn out 5 year old model that doesn't have the features of the new washers?

Finally, the 9% tax on each payment is still less than paying a giant 9% sales tax lump with the purchase and, in so many people's cases, financing that, so essentially paying interest on the sales tax. I.e., $45000 car, $4500 in tax alone.

[henryd31]

Everyone's different. I value peace of mind, so a used car 6-8 years old, especially German with higher potential costs of repair, is not something I'm willing to go thru all the time. Also, I like change and while BMW is best car for me, even different color or model or updates still appeal to me. Having the little excitement looking for another car every few years is something I like to do, and yes lease will cost me more but not that much more if I want to continue changing every 3-4 years anyway. I had GLI before current BMW and only kept it for under 4 years, I loved the way it drove but It had around 70k miles and I was already drooling over another car, lol. Bottom line once I traded it in the cost of that car was as much as leasing a bimmer. Sure, if you keep cars much longer and get lucky with it, you will definitely save some money, but you're probably also better off getting Japanese brand anyway. But where is the fun in that ? I commute in a car 2.5 hours every day so want to enjoy it, well, maybe half of it in the morning can be called enjoyment, returning home Im tired so not much fun in that hahaha...

[bavarianride]

Originally Posted by Kafkaesque328

Finally, the 9% tax on each payment is still less than paying a giant 9% sales tax lump with the purchase and, in so many people's cases, financing that, so essentially paying interest on the sales tax. I.e., $45000 car, $4500 in tax alone.

Say $50k car discounted to $45k, 10% off. A big lump sum tax of $4500 is no different than paying tax on 40%(e.g.) depreciation, or $20k, in each 3-year lease.

That is, lease still pays $2k tax on that depreciation every 3 years, or $6000 of tax in 3 back-to-back lease!!!

[jmg]

Originally Posted by bavarianride

Yes business deduction is a different ballgame, lease or finance, most wage earners do not get to enjoy that perk though ....

The CURRENT best finance rate is 0.99% from penfed for 3 years. Like u said one could have paid off any other debt charging > 0.99% and saved even more.

CURRENT BMWFS finance is 3.31%, and that usually match the top-tier lease interest rate too. BMWFS at times offers 0.99%, but only on CPO/used cars.

Just say $50k MSRP, 15% off discount, 55% RV, 3.31%. 3-year total lease cost is around $22k, which includes 30% depreciation + 10% lease interest and tax + $1k acquisition fee + misc fees.

Two back-to-back lease is around $44k.

A $50k car purchased at 15% off is $42.5k, let's say $47.5k total with tax + fee. Let's say finance in 3-year 1%, for a total interest for $712.5.

Let's round up the total finance cost to $49k. And let's say Kafka's number of $9500 of trade-in is good at year 6. So after 6 years, the difference is $5k, and tires + maintenance wipe that out. That is fair. So now at end of year 6, lease and finance is even. Very likely finance case has $2k to $3k advantage, but let's assume $0.

The real savings comes in when serial lessees start paying $500-$600 monthly for the 3rd lease. That is $6000-$7000 savings per year, every year going forward.

I?ve been saying that this whole time. After 6 years the purchase advantages take over with trade offs.l like maintenance, wear and tear, and not having a new car.

[jmg]

Originally Posted by bavarianride

Say $50k car discounted to $45k, 10% off. A big lump sum tax of $4500 is no different than paying tax on 40%(e.g.) depreciation, or $20k, in each 3-year lease.

That is, lease still pays $2k tax on that depreciation every 3 years, or $6000 of tax in 3 back-to-back lease!!!

More of which is a write off for businesses and more liquid assets to pay off other debt which has a higher interest than the 3% financing example you mentioned. Financial aid? Throw it in there. Got a 1% loan? Don?t put any money down.

[bavarianride]

Originally Posted by jmg

I?ve been saying that this whole time. After 6 years the purchase advantages take over with trade offs.l like maintenance, wear and tear, and not having a new car.

Yes that matches my personal experience, namely, a E39 held for 12 years saved enough money after repair + maintenance to pay for my current F30 for free!!!

Better yet, this F30 has been piling up savings every month. So assuming this F30 can last 12 years, there will be another 2 FREE cars waiting for me.

[bavarianride]

Originally Posted by jmg

More of which is a write off for businesses and more liquid assets to pay off other debt which has a higher interest than the 3% financing example you mentioned. Financial aid? Throw it in there. Got a 1% loan? Don?t put any money down.

Business expense deductions are indeed lucrative, e.g. my local bakery owner had a SL55, which was used occasionally for delivery.

[Kafkaesque328]

Some guy I know at work just leased a Chevy Cruz for $2500 down and $0 a month for 3 years, 10k miles per year. Holy shit. $2500 to drive a new car for 3 years. That is insane. $69.44 a month. Thats like, my internet bill. Brand new car. Now that is smart money. Is a Chevy Cruz a 3 series? No. Does it really matter? Also no.

Where is my equity from my cable/internet bill, btw? Im still waiting for that check in the mail.

[jmg]

Originally Posted by Kafkaesque328

Some guy I know at work just leased a Chevy Cruz for $2500 down and $0 a month for 3 years, 10k miles per year. Holy shit. $2500 to drive a new car for 3 years. That is insane. $69.44 a month. Thats like, my internet bill. Brand new car. Now that is smart money. Is a Chevy Cruz a 3 series? No. Does it really matter? Also no.

Where is my equity from my cable/internet bill, btw? Im still waiting for that check in the mail.

You can find fiat 500e leases here in CA for $69/mo after incentives.

[Kafkaesque328]

Originally Posted by jmg

You can find fiat 500e leases here in CA for $69/mo after incentives.

My wife's sister got on of those for a similar price but those things have like 80 miles of range or something silly like that. Id take the Cruz

[ONEof500]

Originally Posted by bavarianride

Yes business deduction is a different ballgame, lease or finance, most wage earners do not get to enjoy that perk though ....

The CURRENT best finance rate is 0.99% from penfed for 3 years. Like u said one could have paid off any other debt charging > 0.99% and saved even more.

CURRENT BMWFS finance is 3.31%, and that usually match the top-tier lease interest rate too. BMWFS at times offers 0.99%, but only on CPO/used cars.

Just say $50k MSRP, 15% off discount, 55% RV, 3.31%. 3-year total lease cost is around $22k, which includes 30% depreciation + 10% lease interest and tax + $1k acquisition fee + misc fees.

Two back-to-back lease is around $44k.

A $50k car purchased at 15% off is $42.5k, let's say $47.5k total with tax + fee. Let's say finance in 3-year 1%, for a total interest for $712.5.

Let's round up the total finance cost to $49k. And let's say Kafka's number of $9500 of trade-in is good at year 6. So after 6 years, the difference is $5k, and tires + maintenance wipe that out. That is fair. So now at end of year 6, lease and finance is even. Very likely finance case has $2k to $3k advantage, but let's assume $0.

The real savings comes in when serial lessees start paying $500-$600 monthly for the 3rd lease. That is $6000-$7000 savings per year, every year going forward.

This 1% pen fed argument is missing on major item. Those loans have a ballon payment at the end of 3 years. You are betting that the value of the car at the end is equal or greater than the ballon. Good luck with that. Cause if you are wrong you are going to need a down payment to refinance and get loan to value and score a good rate that will be greater than 1%. If you finance 100% of the ballon good luck on that rate…

[bavarianride]

Originally Posted by 1911and340

This 1% pen fed argument is missing on major item. Those loans have a ballon payment at the end of 3 years. You are betting that the value of the car at the end is equal or greater than the ballon. Good luck with that. Cause if you are wrong you are going to need a down payment to refinance and get loan to value and score a good rate that will be greater than 1%. If you finance 100% of the ballon good luck on that rate…

A friend recently got the penfed 0.99% 3-year loan as a traditional finance(no balloon, paid off in 36-month), maybe it depends on credit score? :dunno:

Now let's assume it is balloon payment, for the full $47.5k for 3 years@1%. In this case, the interest is a whopping $1425 instead of $712.5. It is not that bad, right?

[bavarianride]

This morning a friend said he is negotiating a 2017 F30 lease/purchase, and he got a $15k offer for his 2012 328i(45k-mile) with MSRP of $43k.

Nada says 17k clean trade, and 18k clean retail. The low mileage seems to help him.

That is almost 35% of MSRP retained value, for a 5-year old F30. Does that sound right?

He also got private offers for $17k from friends looking for first ride for teens.