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2019+ BMW 3 AND 4-SERIES FORUMS (G2x Generation) General G20 Sedan / G22 Coupe / G26 Gran Coupe Discussions Purchase the car at end of lease and use it as trade in on new purchase?

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      11-30-2020, 10:33 AM   #1
kirr89
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Purchase the car at end of lease and use it as trade in on new purchase?

So I had this thought that I would potentially be planning to go for an M340i as my next car and probably decide to purchase it rather than lease it. But I was wondering, what if I tell the dealership I want to purchase my lease vehicle, then turn around the next day and use it as a trade in for the M340i? Would that work? advantage/disavantage?
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      11-30-2020, 10:50 AM   #2
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Wouldn’t work. The reasons are many, this is the biggest one - the contracted residual (the price at which you would purchase the car) from your lease is virtually always higher than the actual market value of the car.

edit: so, I’m looking at the car you have and it makes me guess you’re wanting to get out of your current lease early. Doesn’t really change the financials; your current lease payoff is almost certainly more than the current market value of the car. If I’m right about you wanting to get out of your current lease using www.swapalease.com or www.leasetrader.com are your best bets for getting out with the least financial pain. BMWFS makes it pretty easy to transfer a lease. There is a $500 fee.

edit 2: I re-read your title and see your question is at lease end. Curious, with having a 2019 model 330i I’m wondering if you have a two year lease that’s maturing in 2021 or if you’re just brainstorming early for your three year lease that matures in 2022.

Did I guess right on any of that?
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      11-30-2020, 11:01 AM   #3
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You don't want to do that. Your best options at lease end are to get offers from Carvana/Vroom/et al. or just turn it in. One of the main reasons people lease BMWs is that they come with inflated residuals, making the cost over 3 years much less than it should be. But that means you don't want to buy at lease end.

Make sure you look into the tax situation in your state, too. IIRC, Georgia may be one of the oddball states.
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      11-30-2020, 11:46 AM   #4
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It's more or less a math exercise to determine the best option. Look at the buy out price, and compare it trade in value at the dealership (hint: the dealer would be foolish to give you a trade-in value higher than your buy out price, so don't count on that.

The other option is to look at what value 3rd party companies like carvana/carmax/zoom etc would place on your car, and determine if that's higher than your buy out price. (Probably not because of BMW's inflated residuals)

A 3rd option is to scour the used car scene and see what private party resale value is for your car and compare that to your buy out price. (Again, highly unlikely that you'll come out ahead).

There's rare exceptions where it would make financial sense to buy out your lease, and with most of those exceptions it would have made more sense to just buy the car to begin with instead of leasing.
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      11-30-2020, 11:59 AM   #5
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Quote:
Originally Posted by wtwo3 View Post
It's more or less a math exercise to determine the best option. Look at the buy out price, and compare it trade in value at the dealership (hint: the dealer would be foolish to give you a trade-in value higher than your buy out price, so don't count on that.

The other option is to look at what value 3rd party companies like carvana/carmax/zoom etc would place on your car, and determine if that's higher than your buy out price. (Probably not because of BMW's inflated residuals)

A 3rd option is to scour the used car scene and see what private party resale value is for your car and compare that to your buy out price. (Again, highly unlikely that you'll come out ahead).

There's rare exceptions where it would make financial sense to buy out your lease, and with most of those exceptions it would have made more sense to just buy the car to begin with instead of leasing.
In addition to what has already been mentioned - Don't forget in most states (maybe all) you will be paying tax title etc fees on the purchase of your current BMW
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      11-30-2020, 02:48 PM   #6
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Lol pretty spot on. I was trying to see if I could get out of the lease a little early. But my main thinking was that I could use the depreciated value of the 330 and decrease the total cost to purchase a M340. Basically bringing down the total price to the price of a 330 theoretically.
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      12-01-2020, 07:20 AM   #7
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first off as someone mentioned you buyout might be worth more than an used car of the same make and model. Second you would owe taxes on the buy out (as a lease you pay taxes monthly) which could be thousands of dollars. 35,000 x 6% tax = $2100.00. Yes you would save tax money on the new car when trading if your state like PA allows it. Bottom line walk away and buy a new car. Unless they will cover a few payments for you.
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      12-01-2020, 06:14 PM   #8
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Quote:
So I had this thought that I would potentially be planning to go for an M340i as my next car and probably decide to purchase it rather than lease it. But I was wondering, what if I tell the dealership I want to purchase my lease vehicle and check this article, then turn around the next day and use it as a trade in for the M340i? Would that work? advantage/disavantage?
I definitely believe there are some restrictions applied to that kind of actions

Last edited by simons22; 12-08-2020 at 03:05 PM..
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      12-01-2020, 08:51 PM   #9
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Originally Posted by simons22 View Post
I definitely believe there are some restrictions applied to that kind of actions
I just thought with all the payments from the lease or whatever, there would have been some equity in the car.
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      12-01-2020, 09:49 PM   #10
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Try to sell it to carvana or vroom. More and more folks are coming out ahead by selling their lease early. I am not sure if BMWs customer payoff is the same as their dealer payoff. Worth checking out
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      12-01-2020, 10:05 PM   #11
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Quote:
Originally Posted by cnichols138 View Post
first off as someone mentioned you buyout might be worth more than an used car of the same make and model. Second you would owe taxes on the buy out (as a lease you pay taxes monthly) which could be thousands of dollars. 35,000 x 6% tax = $2100.00. Yes you would save tax money on the new car when trading if your state like PA allows it. Bottom line walk away and buy a new car. Unless they will cover a few payments for you.
Taxes depend on what state you have your car registered in. In MD you pay full sales tax on the price of the car up front so when you buyout the lease you won’t get taxed again.
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      12-02-2020, 04:13 AM   #12
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This is such a simple math question, why is there a thread? YOu can calculate residual, or what you have to pay. You know that from your statement based on lease terms. Compare market prices for the car - and assume they only go down. Then assume trade in value discount. 15% or whatever they charge to market. And after that you will have your best option financially.

Your trade in will most likely be undervalued, and then you could balance that with great offer on the new car because I dunno, Corona and BMW and Dealer needs to shift something that they cant sell on the lot and happy to deliver a number to BMW, and take a risk on your car through inventory purchase...

I would NOT buy back the lease with idea of trading it next day. Unless Im missing something, it sounds like a hassle. You can return your car, and then shop around for best deal on your new car. You will have much more negotiating power and choice. Makes sense?

Unless there is some weird tax options or inefficiencies, you should assume that a reseller will need a lower price than end customer on your car. Carmax, Zoom, Dealer etc - they all need margin. That margin varies but Im sure noone will take your car at market price and you dont have to own your car after lease ends then it is perfect for you.
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      12-02-2020, 01:08 PM   #13
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I was planning on giving up the lease and going for a new purchase. But I thought maybe somehow there was a way to drop down the monthly payment significantly on a purchase of a M340i.
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