10-10-2019, 09:38 AM | #1 |
The Schwab
473
Rep 1,605
Posts
Drives: 2020 AW M340xi
Join Date: Jun 2011
Location: Chicagoland
|
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? |
10-10-2019, 10:25 AM | #2 |
Major General
17969
Rep 5,484
Posts
Drives: 23 X7 40i; 23 M3; 24 cooper s
Join Date: Aug 2019
Location: IL
|
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. |
Appreciate
8
alex23642861.50 crbalch472.50 cpbandit1340.50 premier3is1631.50 sikotic488.00 jeveryday79.50 dancing__narwhal141.50 hgill139.00 |
10-10-2019, 11:03 AM | #3 |
Major General
17969
Rep 5,484
Posts
Drives: 23 X7 40i; 23 M3; 24 cooper s
Join Date: Aug 2019
Location: IL
|
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).
|
Appreciate
0
|
10-10-2019, 11:16 AM | #4 | |
The Schwab
473
Rep 1,605
Posts
Drives: 2020 AW M340xi
Join Date: Jun 2011
Location: Chicagoland
|
Quote:
|
|
Appreciate
0
|
10-10-2019, 12:48 PM | #5 |
Private
65
Rep 70
Posts |
Conventional financing has some advantages:
|
10-10-2019, 05:51 PM | #6 |
Colonel
3501
Rep 2,365
Posts |
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.
|
Appreciate
0
|
10-10-2019, 05:54 PM | #7 | |
The Schwab
473
Rep 1,605
Posts
Drives: 2020 AW M340xi
Join Date: Jun 2011
Location: Chicagoland
|
Quote:
|
|
Appreciate
0
|
10-10-2019, 06:01 PM | #8 |
Colonel
1691
Rep 2,699
Posts
Drives: 23 X5MC
Join Date: Sep 2018
Location: San Rafael CA
|
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.
|
Appreciate
1
crbalch472.50 |
10-11-2019, 03:21 PM | #9 | ||
Major
1632
Rep 1,004
Posts |
Quote:
I'm assuming you mean you'll get 22k for it.... |
||
Appreciate
0
|
10-12-2019, 12:33 AM | #10 | |||
The Schwab
473
Rep 1,605
Posts
Drives: 2020 AW M340xi
Join Date: Jun 2011
Location: Chicagoland
|
Quote:
|
|||
Appreciate
0
|
10-12-2019, 01:24 AM | #11 |
...
935
Rep 4,326
Posts
Drives: M340
Join Date: Aug 2006
Location: Seattle, WA
|
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.
__________________
2020 G20 M340 xDrive - Portimao Blue - ZDA|ZPP|ZPX|1CR|1PE|6NW|6WD
2016 F10 535i xDrive - AW - Retired 2011 E92 M3 - AW……………....ED April 29th, 2010 - Retired 2007 E92 335i -Space Gray.....ED Oct 19th, 2006 - Retired |
Appreciate
1
crbalch472.50 |
10-12-2019, 11:08 AM | #12 | ||||
Major
1632
Rep 1,004
Posts |
Quote:
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 |
||||
Appreciate
1
crbalch472.50 |
10-12-2019, 09:57 PM | #13 | |
Colonel
3501
Rep 2,365
Posts |
Quote:
|
|
Appreciate
1
crbalch472.50 |
10-13-2019, 08:46 PM | #14 |
Major
1632
Rep 1,004
Posts |
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.
|
10-13-2019, 09:21 PM | #15 | |
The Schwab
473
Rep 1,605
Posts
Drives: 2020 AW M340xi
Join Date: Jun 2011
Location: Chicagoland
|
Quote:
|
|
Appreciate
0
|
11-10-2019, 10:46 PM | #16 |
Major
605
Rep 1,077
Posts |
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 |
Appreciate
0
|
11-11-2019, 06:30 AM | #17 |
Major General
17969
Rep 5,484
Posts
Drives: 23 X7 40i; 23 M3; 24 cooper s
Join Date: Aug 2019
Location: IL
|
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.
__________________
2023 BMW X7 xDrive40i
2023 BMW M3 6MT 2024 Mini Cooper S Convertible '20 BMW m340i... '20 BMW X5 40i... '16 Infiniti Q50 RS 400... '10 Lexus RX 350... '08 Lexus IS 350... '00 Nissan Maxima... '93 Nissan Maxima |
Appreciate
2
premier3is1631.50 dancing__narwhal141.50 |
11-11-2019, 08:34 AM | #18 | |
Lieutenant
284
Rep 402
Posts |
Quote:
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. |
|
Appreciate
2
hans007604.50 Panscan340254.50 |
11-11-2019, 10:39 AM | #19 | |
Major General
17969
Rep 5,484
Posts
Drives: 23 X7 40i; 23 M3; 24 cooper s
Join Date: Aug 2019
Location: IL
|
Quote:
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.
__________________
2023 BMW X7 xDrive40i
2023 BMW M3 6MT 2024 Mini Cooper S Convertible '20 BMW m340i... '20 BMW X5 40i... '16 Infiniti Q50 RS 400... '10 Lexus RX 350... '08 Lexus IS 350... '00 Nissan Maxima... '93 Nissan Maxima Last edited by wtwo3; 11-11-2019 at 10:44 AM.. |
|
Appreciate
0
|
11-12-2019, 03:33 AM | #20 |
Zooombie attaaack!!
136
Rep 1,179
Posts |
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. |
Appreciate
1
wtwo317968.50 |
11-17-2019, 08:02 AM | #21 | |
Private
48
Rep 75
Posts |
Quote:
|
|
Appreciate
0
|
Post Reply |
Bookmarks |
|
|