[Strudle]

If you're only keeping a car for 3 years then leasing will usually be cheaper unless you are getting a raw deal on the lease. But it's not THAT much cheaper. When I ran the #s on my 4 series the buy option with 3% APR was about a hundred more per month than the lease with 0 down for both options to keep the math true. But we also pay sales tax on a lease here in NY, so that ups the lease price a bit.

I was less concerned about monthly payment than having to lose money on a trade in again. When I traded in my 2015 A5 (it had a CARFAX from a bad accident), I had to contribute 5,000 just to cover the negative equity and avoid carrying that into my lease.

With a lease, at least I won't be upside down when I swap cars again in a couple of years.

[Auditobimmer42]

I think leasing is great but I just bought a used car again after getting out of my lease. Think it's really about personal preference and if it will fit your lifestyle. For me, the mileage restrictions were hard. But a lease was so sweet because it is a super nice new car and I did not have to worry about anything. Maintenance and warranty really gives you peace of mind.

For my used cars..I get a CPO with plenty of warranty left and maybe even extend a maintenance package depending on what the car will need over the next couple of years.

[tariqhaque]

Originally Posted by doctor80

This is good point.
How is your car so far?

Great, as good as new. it's been a issue free year of ownership so far.

[spuntyb]

If you?re going to do your own wrenching, then buy used

[bavarianride]

Originally Posted by Auditobimmer42

I think leasing is great but I just bought a used car again after getting out of my lease. Think it's really about personal preference and if it will fit your lifestyle. For me, the mileage restrictions were hard. But a lease was so sweet because it is a super nice new car and I did not have to worry about anything. Maintenance and warranty really gives you peace of mind.

For my used cars..I get a CPO with plenty of warranty left and maybe even extend a maintenance package depending on what the car will need over the next couple of years.

The current direction of BMWNA/BMWFS appears to entice customers to buy used BMWs and buyout leases, as new leases are gradually jacked up in costs.

[jmg]

Originally Posted by bavarianride

Are bimmer forums used to be for owners with 100k to 200k miles complaining about $2k cooling system overhauls?

Lessees probably do not know this, but BMW has value line maintenance kits, e..g. E90 brake kits are 50% off MSRP, for $300, for DIY with $0 labor!

And knowledge is power, do pay attention to the current RV, lease interest rate, and incentives, that $360 monthly for that $48900(?) car very likely won't be around in a year or two.

In a year or two it won't matter, you are locking in your lease TODAY. In 3 years, if leasing isn't attractive, then change the game plan. RIGHT NOW, leasing is attractive unless you plan on keeping the car for more than 6 years.

[bavarianride]

Originally Posted by jmg

In a year or two it won't matter, you are locking in your lease TODAY. In 3 years, if leasing isn't attractive, then change the game plan. RIGHT NOW, leasing is attractive unless you plan on keeping the car for more than 6 years.

That is true, right now 2017(end of model year) leases look OK. However 2018 leases are not that good, e.g. 58% RV is TODAY, and it is not that attractive RIGHT NOW.

If your lease ends today, will you accept a new lease with 58% RV versus 68%(or whatever) from a year ago? What will be your game plan?

[jmg]

Originally Posted by bavarianride

That is true, right now 2017(end of model year) leases look OK. However 2018 leases are not that good, e.g. 58% RV is TODAY, and it is not that attractive RIGHT NOW.

If your lease ends today, will you accept a new lease with 58% RV versus 68%(or whatever) from a year ago? What will be your game plan?

You would have to ask yourself if the residual factor is overvalued or undervalued compared to the real world residual.

At 68% it's ridiculously overvalued and leasing is a no-brainer. 58% is actually still pretty good and it actually is attractive right now considering that the car market is in a downward trend right now and the real world residual on cars sold today will likely not be as high as 58% in 3 years.

[bavarianride]

Originally Posted by jmg

You would have to ask yourself if the residual factor is overvalued or undervalued compared to the real world residual.

At 68% it's ridiculously overvalued and leasing is a no-brainer. 58% is actually still pretty good and it actually is attractive right now considering that the car market is in a downward trend right now and the real world residual on cars sold today will likely not be as high as 58% in 3 years.

Great points. Going from 68% to 58% is extra $5k of depreciation paid on MSRP of $50k. Would the extra $5k encourage customers to just buy the car instead of lease? Or buy used cars/CPO/buyout lease?

58% RV is reality now(until BMWFS starts to redirect sales support), it would be interesting to see how the serial lessees change their game plans.

[jmg]

Originally Posted by bavarianride

Great points. Going from 68% to 58% is extra $5k of depreciation paid on MSRP of $50k. Would the extra $5k encourage customers to just buy the car instead of lease?

It shouldn't matter. When comparing financing vs leasing, I compare current deals to current deals or future trends, not past trends. True, you would be saving $5k less than last year but that's not relevant. You are making that decision now to lock in your terms with a lease. You are weighing it against financing today and selling in 3+ years.

[Kafkaesque328]

Originally Posted by jmg

In a year or two it won't matter, you are locking in your lease TODAY. In 3 years, if leasing isn't attractive, then change the game plan. RIGHT NOW, leasing is attractive unless you plan on keeping the car for more than 6 years.

Nice condensed summary. Being in my current car though, I could totally vibe with spending another 5 years in it. I have zero issues with it really besides really minor gripes, or that registering it with DMV costs me four fucking hundred dollars a year, so Id be fine in it for another 5 but pretend I had bought it new and Id prob need to keep it even more than 6 years to make it cheaper than my current lease

[bavarianride]

Originally Posted by jmg

It shouldn't matter. When comparing financing vs leasing, I compare current deals to current deals or future trends, not past trends. True, you would be saving $5k less than last year but that's not relevant. You are making that decision now to lock in your terms with a lease. You are weighing it against financing today and selling in 3+ years.

Or another option is to lock in your terms with finance, or even pay-in-full, versus a lease that forces a day of reckoning every 3(e.g.) years.

E.g. that MSRP $48900 at 20% off can be locked in with finance@1%(e.g. penfed car buying service), or pay-in-full(zero finance charge). .

Why pay BMWFS 3-3.5%(and keep ramping up), and be forced into renegotiation every 3 years?

[jmg]

Originally Posted by bavarianride

Or another option is to lock in your terms with finance, or even pay-in-full, versus a lease that forces a day of reckoning every 3(e.g.) years.

E.g. that MSRP $48900 at 20% off can be locked in with finance@1%(e.g. penfed car buying service), or pay-in-full(zero finance charge). .

Why pay BMWFS 3-3.5%(and keep ramping up), and be forced into renegotiation every 3 years?

Those aren't the "terms" I speak of when I said lock in lease terms. 20% off can be negotiated on a lease just the same as financing.

If you want to pay in full, you will save on interest, but you will also be subject to the market depreciation and you will have more money tied up in a depreciating asset. If your real world residual is lower than the lease RF at the time, you will likely lose more money on it than leasing.


Think of a lease as a bet against the market that the residual factor on a lease will equal or better real word residual. If the real world residual value of the car in 3 years actually turns out to be less than the residual factor then the lease deal would have been in your favor and you would have saved money. Of course, this is only if you don't plan on keeping the financed car past 6 years.

[bavarianride]

Originally Posted by jmg

Those aren't the "terms" I speak of when I said lock in lease terms. 20% off can be negotiated on a lease just the same as financing.

If you want to pay in full, you will save on interest, but you will also be subject to the market depreciation and you will have more money tied up in a depreciating asset. If your real world residual is lower than the lease RF at the time, you will likely lose more money on it than leasing.


Think of a lease as a bet against the market that the residual factor on a lease will equal or better real word residual. If the real world residual value of the car in 3 years actually turns out to be less than the residual factor then the lease deal would have been in your favor and you would have saved money. Of course, this is only if you don't plan on keeping the financed car past 6 years.

Yes 20% off applies to pay-in-full/lease/finance alike, so paying 1% finance does look to me to be better than paying 3-3.5% lease. Also BMWFS lease terms usually stretch out the amortization schedules to 7-8 years and beyond, versus a 3-year finance terms. So BMW collects a lot more interests@3.5% over 8 years versus penfed@1% over 3 years.

Now that BMWFS is rolling back the lease subsidies, the RV and FMV difference also shrinks, and the CURRENT bet/hedge can be less favorable as in the PAST.

And it puzzles me why cars are treated as asset, they are primarily utility items like cooking utensils, or TV, etc, etc. Paying interest on a 8-year amortization schedule on a utility item just does not look good .... My opinions of course.

[Kafkaesque328]

Originally Posted by bavarianride

Yes 20% off applies to pay-in-full/lease/finance alike, so paying 1% finance does look to me to be better than paying 3-3.5% lease. Also BMWFS lease terms usually stretch out the amortization schedules to 7-8 years and beyond, versus a 3-year finance terms. So BMW collects a lot more interests@3.5% over 8 years versus penfed@1% over 3 years.

Now that BMWFS is rolling back the lease subsidies, the RV and FMV difference also shrinks, and the CURRENT bet/hedge can be less favorable as in the PAST.

And it puzzles me why cars are treated as asset, they are primarily utility items like cooking utensils, or TV, etc, etc. Paying interest on a 8-year amortization schedule on a utility item just does not look good .... My opinions of course.

This. When people start saying things like 'equity' and cars in the same sentence, my eyes glaze over. Come on people. Its an appliance like anything else. You pay for it, it plummets in value and the longer you have it, it eventually becomes worthless, either in that it is so old and out dated that it is basically worth nothing, adjusted for inflation, or it is worthless because cost to own and operate outweighs value. Its not an asset and the equity in your car is not real. Now if you just don't want a car payment, I get that. Say you just want one less thing to worry about. You want something thats yours that 'they' can't take away from you. Totally get that. Hard to put a price tag on that, but thats about personal preference, not about money. We are talking cost comparisons here and you just don't really 'save' any money buying, in my opinion, or rather, what you save is negligible when weighed with what seem like obvious benefits of leasing, to me after a lifetime of buying, babying and later selling cars.

[jmg]

Originally Posted by bavarianride

Also BMWFS lease terms usually stretch out the amortization schedules to 7-8 years and beyond, versus a 3-year finance terms. So BMW collects a lot more interests@3.5% over 8 years versus penfed@1% over 3 years.

I'm not 100% sure what you are asking, I wasn't even aware of how or why they would stretch out amortization schedules to 7-8 years. Besides, the principal/interest ratios don't directly matter to the leaser if the total out of pocket beats or meets the market residuals and cost of financing. They wouldn't care how much of the principle is being paid in 3 years, that's BMWFS's burden when the lease is done. That's the beauty of the lease: You know EXACTLY how much is coming out of pocket for that car. However, the total out of pocket for a purchase is dependent on it's resale in X number of years.

[bavarianride]

Originally Posted by Kafkaesque328

This. When people start saying things like 'equity' and cars in the same sentence, my eyes glaze over. Come on people. Its an appliance like anything else. You pay for it, it plummets in value and the longer you have it, it eventually becomes worthless, either in that it is so old and out dated that it is basically worth nothing, adjusted for inflation, or it is worthless because cost to own and operate outweighs value. Its not an asset and the equity in your car is not real. Now if you just don't want a car payment, I get that. Say you just want one less thing to worry about. You want something thats yours that 'they' can't take away from you. Totally get that. Hard to put a price tag on that, but thats about personal preference, not about money. We are talking cost comparisons here and you just don't really 'save' any money buying, in my opinion, or rather, what you save is negligible when weighed with what seem like obvious benefits of leasing, to me after a lifetime of buying, babying and later selling cars.

It really depends what the lease deals are like.

Simply put, with favorable lease terms from past few years, the break-even point of lease versus buy is 6 years.

With the current 58% RV, lease interest rate inching towards 4%, and incentives cut to, say, 5-10% off MSRP, the break-even point of lease is tending down to 4-5 years.

If these latest lease terms stay, the pendulum will swing back towards buying, as it becomes painful to keep paying 50% of the car every 3 years.

[bavarianride]

Originally Posted by jmg

I'm not 100% sure what you are asking, I wasn't even aware of how or why they would stretch out amortization schedules to 7-8 years. Besides, the principal/interest ratios don't directly matter to the leaser if the total out of pocket beats or meets the market residuals and cost of financing. They wouldn't care how much of the principle is being paid in 3 years, that's BMWFS's burden when the lease is done. That's the beauty of the lease: You know EXACTLY how much is coming out of pocket for that car. However, the total out of pocket for a purchase is dependent on it's resale in X number of years.

Lessees do not care how much of depreciation to pay as the favorable lease terms keep depreciation low, e.g. 80% cap cost, and 65% RV, that is a whopping 15% depreciation paid in 3 years.

Just imagine 95% cap cost and 55% RV, that is a realistic 40% depreciation paid in 3 years. That is a huge huge difference.

As far as 7-8 years of amortization schedule, a simple way to think of it is, lease is basically balloon finance. So while a 3-year finance pays off principal in 3 years, the 3-year lease still owes the RV amount at 3-year mark. The time to pay off the whole principal is in fact 7-8 years.

What matters here is that, as the principal is retired a lot slower, the amount of interest collected is also more, when compared to 3-year finance. And serial lessees are forced to pay the first 3 years of the amortization schedule over and over again .... brutal ....

And when finance can be as cheap as 1%(almost free money), it sucks in comparison to pay 3-4% to BMWFS for the privilege of leasing.

[Kafkaesque328]

Originally Posted by bavarianride

Lessees do not care how much of depreciation to pay as the favorable lease terms keep depreciation low, e.g. 80% cap cost, and 65% RV, that is a whopping 15% depreciation paid in 3 years.

Just imagine 95% cap cost and 55% RV, that is a realistic 40% depreciation paid in 3 years. That is a huge huge difference.

As far as 7-8 years of amortization schedule, a simple way to think of it is, lease is basically balloon finance. So while a 3-year finance pays off principal in 3 years, the 3-year lease still owes the RV amount at 3-year mark. The time to pay off the whole principal is in fact 7-8 years.

What matters here is that, as the principal is retired a lot slower, the amount of interest collected is also more, when compared to 3-year finance. And serial lessees are forced to pay the first 3 years of the amortization schedule over and over again .... brutal ....

And when finance can be as cheap as 1%(almost free money), it sucks in comparison to pay 3-4% to BMWFS for the privilege of leasing.

So then you do multiple security deposits and drive the interest rate down to 0.

[jmg]

Originally Posted by bavarianride

Lessees do not care how much of depreciation to pay as the favorable lease terms keep depreciation low, e.g. 80% cap cost, and 65% RV, that is a whopping 15% depreciation paid in 3 years.

Just imagine 95% cap cost and 55% RV, that is a realistic 40% depreciation paid in 3 years. That is a huge huge difference.

As far as 7-8 years of amortization schedule, a simple way to think of it is, lease is basically balloon finance. So while a 3-year finance pays off principal in 3 years, the 3-year lease still owes the RV amount at 3-year mark. The time to pay off the whole principal is in fact 7-8 years.

What matters here is that, as the principal is retired a lot slower, the amount of interest collected is also more, when compared to 3-year finance. And serial lessees are forced to pay the first 3 years of the amortization schedule over and over again .... brutal ....

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.

Originally Posted by bavarianride

And when finance can be as cheap as 1%(almost free money), it sucks in comparison to pay 3-4% to BMWFS for the privilege of leasing.

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.

[Kafkaesque328]

Originally Posted by jmg

I


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.

exactly.

[bavarianride]

Originally Posted by Kafkaesque328

So then you do multiple security deposits and drive the interest rate down to 0.

Knowledge is power, e.g. BMWFS no longer has MSD.