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      12-03-2017, 12:39 PM   #1
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Early lease buyout questions

Question to those with a better financial mind than me

So my situation is a little peculiar in that I leased my car (2017 340 x drive-list was 65k after all the bells and whistles) but I anticipated overage on miles... got a 15k miles. I drive a lot... like 22k a year... and I expected to pay overages, but based on my previous work situation, I had a car allowance and it was basically a wash between buying and leasing...

So my work situation has changed, which is not the biggest deal, but the part that is a big deal is I am driving way more miles than I expected... thus I will have hefty mileage overage.

I really like the car and I could buy it out at the end, but given the residual rates of these cars, it's not always the best idea... but I think what I would loose in overpaying for the car I will overpay on the miles....

Is there any advantage to trying to buy it out early? Is that possible?

My next car I will buy 1-2 years used, and I wasn't the smartest financially with this purchase, but I'm trying to mitigate its damage. I am fine paying for the miles, and just suck it up, but wondering if anyone has any smarter ideas that could save me some bucks...

I am anticipating now having 30k in overage miles versus the 15k that I initially expected

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      12-03-2017, 01:09 PM   #2
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what is it, 20 cents per mile? thats like 6k. there are a lot of nice used cars for under 6k out there
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      12-03-2017, 02:17 PM   #3
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If you're going to pay them $6k for overage miles then you might as well put that money as a down payment and buy the car out at lease end. You can also trade it in at a later date after you purchase it.
Good luck.
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      12-03-2017, 02:37 PM   #4
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what is it, 20 cents per mile? thats like 6k. there are a lot of nice used cars for under 6k out there
That was another alternative I was considering. Buying a daily driver/beater, probably not $6000 car. But one that I could have for a few years Then I could actually split miles between the two cars. The drawback however, is the insurance situation as well as my driveway situation.

This option is appealing, because then I could have an SUV that I could take advantage of on the bad snow days.
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      12-03-2017, 02:39 PM   #5
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Originally Posted by Seba77W View Post
If you're going to pay them $6k for overage miles then you might as well put that money as a down payment and buy the car out at lease end. You can also trade it in at a later date after you purchase it.
Good luck.
I go back-and-forth on that. Realistically, had I bought the car out right I would've paid less than buying the car out of the lease most likely. But probably not $6000 less. So that is my default option. If I decide to not do anything, then I just buy it out at the end. Thing is, I do really like this car, but in all reality I want a different one at the end of the lease. So even if I buy it out, I get screwed a little there and then I probably get screwed on the trade later on.

Bottom line it's all a wash and I should just stop thinking about it. But I would like to be informed before just sucking it up.

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      12-04-2017, 07:53 AM   #6
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One note: You don't actually have to wait until the end of the lease to buy it out. You could finance it through another company earlier if you want. It all depends on how the payoff price looks right now vs. how much of it you can get someone to finance. You may have to pay some cash to even out the loan value, but depending on how many payments you've made, you may have already saved that cash:

If the difference between your lease payments and what the monthly payment on financing the car for 60 months would have been is $300...which sounds like a lot but a 60k loan at around 3% interest is $1078 a month...and you've made 10 payments, you've saved 3 grand paying the lease vs a loan. If you haven't spent that money then it's sitting in your bank waiting to be a down-payment. I doubt very many of us actually tuck away all the lease vs. finance savings (I certainly have not), but the concept is solid (or it was until the lease deals tanked).
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      12-04-2017, 07:42 PM   #7
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One note: You don't actually have to wait until the end of the lease to buy it out. You could finance it through another company earlier if you want. It all depends on how the payoff price looks right now vs. how much of it you can get someone to finance. You may have to pay some cash to even out the loan value, but depending on how many payments you've made, you may have already saved that cash:

If the difference between your lease payments and what the monthly payment on financing the car for 60 months would have been is $300...which sounds like a lot but a 60k loan at around 3% interest is $1078 a month...and you've made 10 payments, you've saved 3 grand paying the lease vs a loan. If you haven't spent that money then it's sitting in your bank waiting to be a down-payment. I doubt very many of us actually tuck away all the lease vs. finance savings (I certainly have not), but the concept is solid (or it was until the lease deals tanked).
I would just buy it with cash. Any advantage in now versus later?
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      12-04-2017, 10:39 PM   #8
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I would just buy it with cash. Any advantage in now versus later?
No, not really. Your best bet as far as buying the car is to wait until the lease end. At that time BMWFS will confidentially publish a price that BMW dealers will have access to. It will not take into account that you are over mileage, but it will very likely be less than your contracted residual. The thing to do then is negotiate with a dealer to come to a purchase price that is less than the residual, but more than the dealers purchase price from BMWFS. You'll still take a hit financially, because you'll be buying the car for more than its true used car value based on the mileage, but the discount from your contracted residual buyout price will help mitigate the financial damage you'll incur. This is, of course, assuming you decide buying the car at lease end suits your needs, rather than just paying the mileage penalty and returning the car.

If you decide buying the car at lease end is the way you want to go, you may want to look at buying an extended BMW warranty before your car goes out of warranty based on mileage. Once the car is out of warranty BMW extended warranties are no longer available.
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      12-04-2017, 11:47 PM   #9
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Quote:
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Quote:
Originally Posted by chicagoshark View Post
I would just buy it with cash. Any advantage in now versus later?
No, not really. Your best bet as far as buying the car is to wait until the lease end. At that time BMWFS will confidentially publish a price that BMW dealers will have access to. It will not take into account that you are over mileage, but it will very likely be less than your contracted residual. The thing to do then is negotiate with a dealer to come to a purchase price that is less than the residual, but more than the dealers purchase price from BMWFS. You'll still take a hit financially, because you'll be buying the car for more than its true used car value based on the mileage, but the discount from your contracted residual buyout price will help mitigate the financial damage you'll incur. This is, of course, assuming you decide buying the car at lease end suits your needs, rather than just paying the mileage penalty and returning the car.

If you decide buying the car at lease end is the way you want to go, you may want to look at buying an extended BMW warranty before your car goes out of warranty based on mileage. Once the car is out of warranty BMW extended warranties are no longer available.
Good thought on warranty...it's 4 years 50k for 17 right?
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      12-05-2017, 01:13 AM   #10
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Good thought on warranty...it's 4 years 50k for 17 right?
Yes
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      12-05-2017, 01:16 AM   #11
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A dealer will sell you the car for well below residual. It happens all the time. My last car they offered me a price $2500 below residual value. Some have done much better. BMWFS won't do it, the dealer basically buys the car from BMW @ fair market/auction/whatever and then sells it back to you @ a profit. You should just do that
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      12-05-2017, 01:58 PM   #12
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A dealer will sell you the car for well below residual. It happens all the time. My last car they offered me a price $2500 below residual value. Some have done much better. BMWFS won't do it, the dealer basically buys the car from BMW @ fair market/auction/whatever and then sells it back to you @ a profit. You should just do that
Yes. That That was my initial plan, however I still have to pay the miles then, don't I? Because that involves the lease return and then a sale, no?
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      12-05-2017, 08:42 PM   #13
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Another option:

Lease swap. Let someone else take over the lease. It costs $500, which the new leaser can pay. Then you can wash your hands of it and get a CPO car and save some $.

Yet another option:

Lease a second car. I was actually in the exact same situation as you. Leased my M3, then my commute jumped to 80 miles a day. I would have paid close to $7k in mile overages as well. I shopped around for used cars but a $7k car is usually a POS. Do I really want to drive around half the time in a shit car? Personally, I'd rather pay $7 and drive around in my M3 all the time. BUT... then I thought about leasing an i3. It's not as nice, but I get to use the carpool lane, and I don't feel like I'm in a shitty used beater! PLUS BMW has 2 years free charging, so not only would I save on mileages on my M3 lease, but I won't be paying for gas! It was a no brainer. I found a great deal, and I mean really great. My total out of pocket is less than my mileage penalty. Insurance is an added expense, but I'm saving a good amount of money on gas. All in all, I'm spending about $50 a month net and I have the convenience of an extra car in the driveway.

Unfortunately you can't get any i3's now. You can, however, get some great deals on Chevy Bolts and Volts as well as Fiat 500e's for less than $200/mo. Check out a continually updated list here:

http://ev-vin.blogspot.com/2016/07/c...ected-evs.html

The Honda Clarity can be had for $900 down, $199 a month. That's a decent deal for a range of 366 miles.
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      12-07-2017, 12:31 PM   #14
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Another option:

Lease swap. Let someone else take over the lease. It costs $500, which the new leaser can pay. Then you can wash your hands of it and get a CPO car and save some $.

Yet another option:

Lease a second car. I was actually in the exact same situation as you. Leased my M3, then my commute jumped to 80 miles a day. I would have paid close to $7k in mile overages as well. I shopped around for used cars but a $7k car is usually a POS. Do I really want to drive around half the time in a shit car? Personally, I'd rather pay $7 and drive around in my M3 all the time. BUT... then I thought about leasing an i3. It's not as nice, but I get to use the carpool lane, and I don't feel like I'm in a shitty used beater! PLUS BMW has 2 years free charging, so not only would I save on mileages on my M3 lease, but I won't be paying for gas! It was a no brainer. I found a great deal, and I mean really great. My total out of pocket is less than my mileage penalty. Insurance is an added expense, but I'm saving a good amount of money on gas. All in all, I'm spending about $50 a month net and I have the convenience of an extra car in the driveway.

Unfortunately you can't get any i3's now. You can, however, get some great deals on Chevy Bolts and Volts as well as Fiat 500e's for less than $200/mo. Check out a continually updated list here:

http://ev-vin.blogspot.com/2016/07/c...ected-evs.html

The Honda Clarity can be had for $900 down, $199 a month. That's a decent deal for a range of 366 miles.
What do you guys think about the mathematics of buying a second car. I was considering buying a small SUV for about $20,000. However from the best I can ascertain most cars that have depreciated at least 40 to 50% of their value, continue to depreciate although in a much lower rate over the course of the following years, still at a better rate of 5-10% per year per 10k miles. Given that, a 20k car that was new at 40k, still depreciates 1-2k per year. Add in insurance, and it's kind of a wash... and I have to drive a car I don't like

Maybe just suck it up. Pay the miles, get rid of it, and learn from my mistake, that is buy a new used car and drive the shit out of it knowing that I am willing to pay the money because I like it...
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      12-07-2017, 02:55 PM   #15
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Quote:
Originally Posted by chicagoshark View Post
What do you guys think about the mathematics of buying a second car. I was considering buying a small SUV for about $20,000. However from the best I can ascertain most cars that have depreciated at least 40 to 50% of their value, continue to depreciate although in a much lower rate over the course of the following years, still at a better rate of 5-10% per year per 10k miles. Given that, a 20k car that was new at 40k, still depreciates 1-2k per year. Add in insurance, and it's kind of a wash... and I have to drive a car I don't like

Maybe just suck it up. Pay the miles, get rid of it, and learn from my mistake, that is buy a new used car and drive the shit out of it knowing that I am willing to pay the money because I like it...
If you're looking at an SUV I would recommend a used volvo XC60. Had one as my old car never had any problems and they hold their value decently. Just don't use a dealership for maintenance or they will overchage you. With the recent release of the redesigned 2018 XC60 the prices will probably be a bit lower and can probably find a good deal on used. Takes regular gasoline too and I averaged about 22 mpg in the winter/26 mpg in the summer.
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