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2019+ BMW 3 AND 4-SERIES FORUMS (G2x Generation) Ordering / Pricing / Order Tracking Forum Am I the only one *not* leasing?

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      10-10-2019, 09:38 AM   #1
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Am I the only one *not* leasing?

I am in the process of getting an M340xi in place of my 2016 M235xi. I have never leased a car, and have always read to stay away from them if you can, but I figured I'd see what you guys think.

I have about 22k in equity in my M235, so after all is said and done I'd be financing about 34k for the M340. I don't drive much, so I wouldn't end up hitting 36k in that 3 year span so I'm not sure if leasing makes sense.

Payment on the lease would be sub $600 on a $62,500k MSRP, and roughly the same for financing. Monthly is not an issue, just wondering where the value for me would be.

Anyone want to help me out?
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      10-10-2019, 10:25 AM   #2
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The only way buying a car is cheaper than leasing is if you keep the car past the break even point (the break-even point being the point at which the difference between the leasing payments and the finance payments converges) This varies based on the car, but typically this is in the 6-8 year range. (Not counting any maintenance you may have to pay for outside of warranty period).

As an example:

Let's say you have a car with a price of $65,000

Finance Option
Assuming $0 down, 7% sales tax, 3.5% APR, 60 month term
~10k miles/year; 50% Residual Value @ 36 months

Monthly Payment = $1,265

After 3 years of ownership, you will have paid $45,540
After 3 years of ownership, car is valued at $32,500
After 3 years of ownership, you will have $30,360 remaining to pay on the loan

So after 3 years of ownership, you will have positive equity of ~$2k

Lease Option:
Assuming $0 down, 7% sales tax (applied on monthly payment), 0.00128 MF, 36 months/10k miles;
61% Residual Value @ 36 months

Monthly payment: $926

After 3 years of leasing, you will have paid $33,336
After 3 years of leasing, you will have spent net $10,064 LESS than had you purchased. ($45,540 in finance payments - $33,336 in lease payments - $2,140 in equity)

So as I mentioned above, purchasing a new car is typically ONLY cheaper if you plan to keep it for a long time (6-8 years) and it remains trouble free.
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      10-10-2019, 11:03 AM   #3
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I should mention the above is just a rough example, you can extrapolate the calculations to fit your situation, and you should get a similar result. Keep in mind the $22k in equity in your M235i, if placed towards the finance payment of the m340i, is essentially investment to build equity into a depreciating asset. So in order for it to be an apples to apples comparison, I removed any trade-in/downpayment amount from both scenarios. If your finance payment is the same as your lease payment then that means you've put money down into your financed car (either that or something funky is being done to make the lease payment higher).
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      10-10-2019, 11:16 AM   #4
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Quote:
Originally Posted by wtwo3 View Post
I should mention the above is just a rough example, you can extrapolate the calculations to fit your situation, and you should get a similar result. Keep in mind the $22k in equity in your M235i, if placed towards the finance payment of the m340i, is essentially investment to build equity into a depreciating asset. So in order for it to be an apples to apples comparison, I removed any trade-in/downpayment amount from both scenarios. If your finance payment is the same as your lease payment then that means you've put money down into your financed car (either that or something funky is being done to make the lease payment higher).
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      10-10-2019, 12:48 PM   #5
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Conventional financing has some advantages:
  • No acquisition, disposition, or excessive wear fees.
  • No concerns over vehicle modifications.
  • The ability to sell the vehicle at will.
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      10-10-2019, 05:51 PM   #6
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Are you a person that purchases every 2 to 3 years? If so, leasing is your best option. If you can stomach a little higher payment, put less down and put the rest in a savings or CD or something. I personally dont lease and hold on to my cars for a while. My father was not rich by any means and he would only finance for three years and after, he would continue to put payment in a savings for the next car. Cars were cheaper then but it made sense.
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      10-10-2019, 05:54 PM   #7
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Originally Posted by Wyndi335I View Post
Are you a person that purchases every 2 to 3 years? If so, leasing is your best option. If you can stomach a little higher payment, put less down and put the rest in a savings or CD or something. I personally dont lease and hold on to my cars for a while. My father was not rich by any means and he would only finance for three years and after, he would continue to put payment in a savings for the next car. Cars were cheaper then but it made sense.
So I think what I'm going to end up doing is similar. I've got around 22k equity in my current car so I'll basically use that to pay the lease each month. Then I'll take the $600 ish a month that I was going to finance, and put that into an investment that appreciates.
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      10-10-2019, 06:01 PM   #8
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i keep cars about 4-5 years and usually paid off early. before my M340i i had a 2014 M235i which i owned clean. got 18k for towards my 2020 M340i. i will have it paid off before the 48 month term. maybe 40 or 42 months. i prefer to buy. i leased once but i bought the car at the end because i liked it. true if i changed cars every 3 years i would lease.
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      10-11-2019, 03:21 PM   #9
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Quote:
Originally Posted by crbalch View Post
Quote:
Originally Posted by Wyndi335I View Post
Are you a person that purchases every 2 to 3 years? If so, leasing is your best option. If you can stomach a little higher payment, put less down and put the rest in a savings or CD or something. I personally dont lease and hold on to my cars for a while. My father was not rich by any means and he would only finance for three years and after, he would continue to put payment in a savings for the next car. Cars were cheaper then but it made sense.
So I think what I'm going to end up doing is similar. I've got around 22k equity in my current car so I'll basically use that to pay the lease each month. Then I'll take the $600 ish a month that I was going to finance, and put that into an investment that appreciates.
How do you have 22k positive equity on your car? Have you never driven it? Kind of hard to believe there's 22k positive equity on a car after it's been purchased.

I'm assuming you mean you'll get 22k for it....
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      10-12-2019, 12:33 AM   #10
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Quote:
Originally Posted by premier3is View Post
Quote:
Originally Posted by crbalch View Post
Quote:
Originally Posted by Wyndi335I View Post
Are you a person that purchases every 2 to 3 years? If so, leasing is your best option. If you can stomach a little higher payment, put less down and put the rest in a savings or CD or something. I personally dont lease and hold on to my cars for a while. My father was not rich by any means and he would only finance for three years and after, he would continue to put payment in a savings for the next car. Cars were cheaper then but it made sense.
So I think what I'm going to end up doing is similar. I've got around 22k equity in my current car so I'll basically use that to pay the lease each month. Then I'll take the $600 ish a month that I was going to finance, and put that into an investment that appreciates.
How do you have 22k positive equity on your car? Have you never driven it? Kind of hard to believe there's 22k positive equity on a car after it's been purchased.

I'm assuming you mean you'll get 22k for it....
I'm getting 27k for it and I have 5k left on the financing. Not difficult math
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      10-12-2019, 01:24 AM   #11
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Daily drivers, I lease..... other toys, I buy.

There is no way I would purchase a brand new daily driver. If I must purchase, I would go with a lease return CPO route.

This has been a decades old conversation. I recommend doing some research.
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      10-12-2019, 11:08 AM   #12
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Quote:
Originally Posted by crbalch View Post
Quote:
Originally Posted by premier3is View Post
Quote:
Originally Posted by crbalch View Post
Quote:
Originally Posted by Wyndi335I View Post
Are you a person that purchases every 2 to 3 years? If so, leasing is your best option. If you can stomach a little higher payment, put less down and put the rest in a savings or CD or something. I personally dont lease and hold on to my cars for a while. My father was not rich by any means and he would only finance for three years and after, he would continue to put payment in a savings for the next car. Cars were cheaper then but it made sense.
So I think what I'm going to end up doing is similar. I've got around 22k equity in my current car so I'll basically use that to pay the lease each month. Then I'll take the $600 ish a month that I was going to finance, and put that into an investment that appreciates.
How do you have 22k positive equity on your car? Have you never driven it? Kind of hard to believe there's 22k positive equity on a car after it's been purchased.

I'm assuming you mean you'll get 22k for it....
I'm getting 27k for it and I have 5k left on the financing. Not difficult math
I look at on either positive or negative equity terminology... so yea it's not difficult math but how you phrased it...

Just take what you paid for it - 22k. You'll see what your cost of ownership was for those 3 years. Simple. Compare it with the new car calculating your lease payments. If you flip cars often your best bet is leasing since you should notice the savings. Obviously there's more to it than this but this is a quick way to see it.

If money isn't the issue, then do whatever you like. : there's tons of information out there if leasing or purchasing is better just like the post above mentioned
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      10-12-2019, 09:57 PM   #13
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Quote:
Originally Posted by crbalch View Post
So I think what I'm going to end up doing is similar. I've got around 22k equity in my current car so I'll basically use that to pay the lease each month. Then I'll take the $600 ish a month that I was going to finance, and put that into an investment that appreciates.
Not a bad idea, good luck with your decision and you will also have a best egg for emergencies.
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      10-13-2019, 08:46 PM   #14
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I've done the math on leasing vs. ownership pretty extensively before. Overall, if you are getting an economy car you're better off buying unless you like to change cars often. Leasing is a better option for a more luxury vehicle which will be obviously more expensive and costly to maintain in the long run.
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      10-13-2019, 09:21 PM   #15
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Quote:
Originally Posted by premier3is View Post
I've done the math on leasing vs. ownership pretty extensively before. Overall, if you are getting an economy car you're better off buying unless you like to change cars often. Leasing is a better option for a more luxury vehicle which will be obviously more expensive and costly to maintain in the long run.
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      11-10-2019, 10:46 PM   #16
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i really don't get why people think the math is so hard.

3 year residual on a G20 is what 60% on 10k miles.

So if the car depreciates more than 40% in the first 3 years, and you buy it you probably lose.

If you keep it say 4 years then probably you'll beat leasing as a 4 year lease per month is barely less than a 3 year and most cars dont depreciate too much from year 3 to 4.

Obviously you have to factor in sales tax per month of leasing and if you have to pay all tax up front depending on the state you live in. And also lease origination and return fee.

That said, generally the math works out that leasing and finance tend to break be about equal 3-3.5 years in.

Also sometimes bmw has better incentives for finance (like now... $2500 for a g20 , vs $1000 for lease). So financing is probably a win if you keep it 4 years. I financed a bmw before... had it 4 years. it was fine. Going to do it again, as I tend to keep cars 4 years
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      11-11-2019, 06:30 AM   #17
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Quote:
Originally Posted by hans007 View Post
That said, generally the math works out that leasing and finance tend to break be about equal 3-3.5 years in.
It's more like 6-8 years for break-even, depending on the car and numbers. Especially for most BMW's it's closer to the 7-8 year mark because the residuals are so inflated in their leases as opposed to the actual residual value of the car if you purchase.
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      11-11-2019, 08:34 AM   #18
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Quote:
Originally Posted by wtwo3 View Post
Quote:
Originally Posted by hans007 View Post
That said, generally the math works out that leasing and finance tend to break be about equal 3-3.5 years in.
It's more like 6-8 years for break-even, depending on the car and numbers. Especially for most BMW's it's closer to the 7-8 year mark because the residuals are so inflated in their leases as opposed to the actual residual value of the car if you purchase.
You're being way too general. You have to crunch the numbers for each deal individually.

In May, the M340i had a $3750 finance credit but only a $2000 lease credit. In my state, you pay taxes on the full price of the car whether you lease or purchase. After accounting for the $925 lease acquisition fee, the final price was $2675 cheaper if I financed instead of leasing. At that time, the special finance APR was actually lower than the equivalent APR of the lease money factor.

When using more realistic residual values (~80% of BMW's inflated residual numbers), I break even a little after 4 years. After 5 years I'm ahead by about $7,000 before subtracting any maintenance costs incurred between year 4 and 5. The longest I expect to keep the car is 5-6 years. I also like to customize the car and not have to worry about any end-of-lease fees.
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      11-11-2019, 10:39 AM   #19
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Quote:
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You're being way too general. You have to crunch the numbers for each deal individually.

In May, the M340i had a $3750 finance credit but only a $2000 lease credit. In my state, you pay taxes on the full price of the car whether you lease or purchase. After accounting for the $925 lease acquisition fee, the final price was $2675 cheaper if I financed instead of leasing. At that time, the special finance APR was actually lower than the equivalent APR of the lease money factor.

When using more realistic residual values (~80% of BMW's inflated residual numbers), I break even a little after 4 years. After 5 years I'm ahead by about $7,000 before subtracting any maintenance costs incurred between year 4 and 5. The longest I expect to keep the car is 5-6 years. I also like to customize the car and not have to worry about any end-of-lease fees.
Totally understand I'm being general, which is why I gave a range of 6-8 years "depending on the car and numbers". There's always exceptions to this as well, and states which require tax payment up front and on the entire value of the car in a lease are exceptions. Just so happened the OP is in Illinois, which only applies taxes on the monthly payment of the lease.

Also, credits/interest rates change month to month, so I gave an example which assumed all things being equal. With finance credits being higher than lease credits at that time, I agree break-even does come quite a bit earlier at a little over 4 years.

Also in terms of customizing the car and what else, totally agree you have more flexibility with financing than within a lease. I was only looking at the financial piece of it.
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      11-12-2019, 03:33 AM   #20
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a lot of people don't take into account sales tax

here in CA, like Chicago, it is very high. I don't know about Illinois but in Cali you do not get a credit on a trade towards sales tax. so if you trade in an 80k car for a 100k car you pay 10.25% on 100k, not the difference as some states do. because of that, you really have no incentive to buy if you won't keep for 4+ years. my last bmw was a $40k sale price, so my tax alone would have been over $4k. the entire cost of my lease was like $13k (not including tax). so basically for just what i would have paid in tax would have been a YEAR's worth of payments. if you end up selling the car after 18 months or something you take a bath.
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      11-17-2019, 08:02 AM   #21
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Quote:
Originally Posted by crbalch View Post
I am in the process of getting an M340xi in place of my 2016 M235xi. I have never leased a car, and have always read to stay away from them if you can, but I figured I'd see what you guys think.

I have about 22k in equity in my M235, so after all is said and done I'd be financing about 34k for the M340. I don't drive much, so I wouldn't end up hitting 36k in that 3 year span so I'm not sure if leasing makes sense.

Payment on the lease would be sub $600 on a $62,500k MSRP, and roughly the same for financing. Monthly is not an issue, just wondering where the value for me would be.

Anyone want to help me out?
I've always been in the mindset buy instead of lease .. and I agree that I would never buy a leased car because of some ppl abusing it because it was a lease. If you want to do anything to it do it flashing you have to undo it so idk... I think it more mindset for me than financial driven. I did put 35k down on mine so I've got equity in but also I wanted one that i know what has been done every mile it's been driven
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      11-17-2019, 01:40 PM   #22
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Bought mine as well. Plan to keep it 8-10 years, or as long as it lasts. In 5-6 years may buy a roadster for fun and use my 3 series as a daily.
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