[f30er]

So I've run into a bit of a conundrum! I leased my car last August with 3y-12k/yr at a good rate. At the time, I was averaging ~600-700 miles a month and did not see that changing anytime soon. Well, it's changed. My wife and I are moving and our new place will be a 60 mile commute (120 roundtrip) for me starting September. That puts me at roughly 31k/yr.

So here's my thoughts;
1) Switch cars with my wife who will have a very short commute. BUT, it's a non-turbo Veloster
2) Drive it for the year/year-and-half, hope I can "pull ahead" early and they'll forgive me of the miles
3) Pay now for extra miles
4) The most interesting; My current payoff is 49k. At the end of my lease, my payoff will be 36.8k. Does it make any financial sense for me to buy out the car now, drive it for a year or so, and then sell it?

FYI: Not planning at all on keeping this car long-term. Just never developed the same love for it like I did on my E92!

[erroberts1]

It depends, quite honestly. I am guessing you leased for either a.) cash flow control or b.) preference to have a new vehicle.

I will tell you that early purchase of additional mileage is a huge racket. You'll pay somewhere in the range of $0.15-0.20 for miles you may or may not require. I would personally avoid this.

Since you're currently financing, I will assume you would finance in a purchase situation as well. So if you choose to continue the lease and buy it out at expiration, you'll have a more favorable cash flow for the remainder of the lease term prior to purchasing. Put another way, to buy it out today, financing 100% results in a monthly payment in the range of $850/month (60 mo. note for $49k @ 4%), whereas you can maintain your current lease rate for the remainder of your term and finance $36.8k (same term length note and rates = $637/mo).

Obviously a down payment against the buyout can significantly change the math on a cash flow basis. Put down $5k and that $850 number becomes $762. Also, worth noting that you're currently only paying interest on the depreciation over the term of the lease, and not the total capitalized cost of the vehicle.

Since you stated you don't plan on keeping the car long-term, an end of lease buyout may not be the best option for you (for a few reasons). You have to keep in mind the fact that if you beat it up and run up the clock, you'll be upside down on the lease and will have to pony up almost $37k for a car that may be worth considerably less and has limited warranty coverage. The residual value is calculated as a function of the allowed mileage. If you crush the mileage, you open yourself up to exposure on the overage (should you return it) or drowning in it (should you buy it out with the overage). I don't know how negotiable residual rates are with BMW. They're very favorable for leasing, but not so much in a buyout.

Let's say you buy it out today and can handle the increased loan service vs. lease payment. You gain the flexibility to sell the car later and would not have to deal with the prospect of purchasing an asset at a price well above it's actual value.

Last option is to transfer the lease to another party, whereby they may assume the lease, take the car off your hands, and become financially responsible to the lessor. There are online services such as Swapalease and Leasetrader that create a marketplace for these kind of transactions. I would read your lease carefully to understand your rights here, especially if you would remain a cosigner in the event of a transfer or assignment of the lease to another party.

Personally, I would explore the transfer option. But I will let others weigh in!

[erroberts1]

Sorry for the rant, got excited.

Short version: option 4 might work for you, option 2 is dicey especially if you're way over, and I would explore the 5th option being a transfer.

[dtn]

5) Buy a motorcycle.

[f30er]

Originally Posted by erroberts1

It depends, quite honestly. I am guessing you leased for either a.) cash flow control or b.) preference to have a new vehicle.

I will tell you that early purchase of additional mileage is a huge racket. You'll pay somewhere in the range of $0.15-0.20 for miles you may or may not require. I would personally avoid this.

Since you're currently financing, I will assume you would finance in a purchase situation as well. So if you choose to continue the lease and buy it out at expiration, you'll have a more favorable cash flow for the remainder of the lease term prior to purchasing. Put another way, to buy it out today, financing 100% results in a monthly payment in the range of $850/month (60 mo. note for $49k @ 4%), whereas you can maintain your current lease rate for the remainder of your term and finance $36.8k (same term length note and rates = $637/mo).

Obviously a down payment against the buyout can significantly change the math on a cash flow basis. Put down $5k and that $850 number becomes $762. Also, worth noting that you're currently only paying interest on the depreciation over the term of the lease, and not the total capitalized cost of the vehicle.

Since you stated you don't plan on keeping the car long-term, an end of lease buyout may not be the best option for you (for a few reasons). You have to keep in mind the fact that if you beat it up and run up the clock, you'll be upside down on the lease and will have to pony up almost $37k for a car that may be worth considerably less and has limited warranty coverage. The residual value is calculated as a function of the allowed mileage. If you crush the mileage, you open yourself up to exposure on the overage (should you return it) or drowning in it (should you buy it out with the overage). I don't know how negotiable residual rates are with BMW. They're very favorable for leasing, but not so much in a buyout.

Let's say you buy it out today and can handle the increased loan service vs. lease payment. You gain the flexibility to sell the car later and would not have to deal with the prospect of purchasing an asset at a price well above it's actual value.

Last option is to transfer the lease to another party, whereby they may assume the lease, take the car off your hands, and become financially responsible to the lessor. There are online services such as Swapalease and Leasetrader that create a marketplace for these kind of transactions. I would read your lease carefully to understand your rights here, especially if you would remain a cosigner in the event of a transfer or assignment of the lease to another party.

Personally, I would explore the transfer option. But I will let others weigh in!

Thanks! Thats exactly what I was looking for! I'm sure I could use Swapalease and get rid of the car pretty quick since it's got a great monthly and is extremely well equipped. I initially leased the car because of the low monthly payments and I get bored easily. Although I can now afford the payments if I purchase, I also have to keep in mind the wife. She wants a Range Rover...

Decisions decisions! Appreciate the input and will update once I decide on what I'm gonna do!

[reddemon73]

Another option, car somehow get totaled. You walk away no owing anything. I am just joking.

[JasonX4MComp]

If you cant get someone to take the lease for you just wait until 6 months before the lease expires and get miles at $.16/mile. You are already about 5,000 miles under where you're supposed to be based off 700 miles a month from last August so you're ahead of the game.