Lease on 3.0si? Is BMWUSA accurate?

[ravenheart]

I dont know how putting money down on leasing has become so misinterpreted. I suspect it comes from the widely accepted and uninformed belief that leasing is something invented by satan? How people get so narrowminded as to calling it dumb is beyond me.

There are a plethora of reasons to put money down - people just have to look at their situation when faced with the options and make the right choice for them selves.

[Texas5]

ravenheart is correct

Apparently, my post above providing further details is invisible!

gresch and tcn2k, your responses above suggest a very fundamental misunderstanding of how leasing works. It's not a rental deal - leasing is simply a repackaged form of financing the vehicle. The more you put down, the lower your payment. If you can earn more interest by keeping your money vs. the interest saved by putting money down, fine.

I bet anyone who leased last summer wishes they put their money toward a down payment.

Right now, most BMWFS lease rates are running about 4-5%. Money markets or CDs won't return that (not to mention tax implications)

[Thunder22]

Originally Posted by Texas5

ravenheart is correct

Apparently, my post above providing further details is invisible!

gresch and tcn2k, your responses above suggest a very fundamental misunderstanding of of how leasing works. It's not a rental deal - leasing is simply a repackaged form of financing the vehicle. The more you put down, the lower your payment. If you can earn more interest by keeping your money vs. the interest saved by putting money down, fine.

I bet anyone who leased last summer wishes they put their money toward a down payment.

Right now, most BMWFS lease rates are running about 4-5%. Money markets or CDs won't return that (not to mention tax implications)

You say i have a fundamental misunderstanding of leasing and then agree with what i said, make up your mind.

I stand by what I said and the math proves me correct, putting money down on a lease is a WASTE of money and if anyone does do it, it is the same as making extra monthly payments. Not to mention that the money is better in my pocket than in BMWFS account.

The only reason that I see to paying the entire lease up front, is if the leasee has bad credit and it is the only way the leasing company will give them a lease.

btw- I leased in September, the rates are the same or close to what they are now.

You can do the math.

Regarding your statement of "leasing is not renting it's repackaged financing", here's a link for you

http://www.leaseguide.com/lease03.htm

Then we can talk about the net present value of the dollar over 3 years which we haven't even discussed yet.

[ravenheart]

This thread is spiraling down the drain quickly - so to the OP - the times I've leased BMW's the rate on the site has been a little over the deals I typically get. Biggest difference was when we leased the E53 that will be gone in a few weeks time. The site estimated ~$850 and our payment ended up being $710

As for the whole putting money down thing going on - I think the point has been missed entirely - putting money down is the only way to reduce your payment beyond the lease numbers. Simple fact that.

Lets say that I have a budget of $500 pr month for a lease, but the car I want is $600 pr month. I could put a few grand down and get the monthly payment I want or I could put those money aside and pay the $600 - in one of those cases I would be comfortable spending $100 pr month on beer and chips - guess which? Wrong ... with my car budget busted I would be afraid to touch the rest of the money and I would feel poor. What if my income goes away? Then I have to rely on my parachute which wont be enough to cover the payments - where as if they are small enough, or indeed paid off entirely - I would be all set.

The point here is that if putting money down on a lease makes you more comfortable than making $2.50 more by investing the money - then those money have been well spent. There is more to life than squeezing every penny ... like beer and chips. And don't even get me started on the new car itch which is what leasing is all about for me

[Thunder22]

do this math:

monthly budget is $500, calculated payment is $600 with no money down.
for arguments sake, let's say that the down payment amount to lower the payment to $500 is $5000 up front.

Instead of giving BMWFS the $5000 up front, put the money in a savings account, and draw $100 a month out of it to make up the $100 and pay $600 a month.

The money is always better in your pocket than BMWFS.

1 other thing, any money put down as a down payment is *usually* lost if the car is totaled or stolen etc.

It's just that simple.

[ravenheart]

I understand the mentality behind that - I don't agree with it though. It comes down to what one prefers personally. You don't agree with my point of view and that is perfectly ok - just means that there is still some individuality in the world

[alewifebp]

While it is true that it does come down to what someone personally prefers, doing a large down payment on a leased vehicle extremely rarely makes sense since the risk of losing that capital is high. When leasing, paying more than the absolute minimum amount necessary is putting your money at risk with virtually no benefit.

A very small case can be made for times such as these when interest rates are low and investment opportunities are generating low returns, that the money saved by putting more money down can beat the amount that you would earn by spreading the payments over time and paying the additional interest on those payments. This is a risky endeavor because of the aforementioned risk of losing the car, and your down payment. True, GAP will pay off the rest of the lease payments, but you will still be stuck with the loss of a large wad of cash which you will have no recourse of getting it back. True, a car that gets totaled or declared a loss at the last few payments of a lease will have made yourself some money, but the risk is just too high. And any dealer that will sell you a lease without GAP is certainly a dealer to stay far away from.

If you want to spend some money, put down multiple security deposits. This is money that will earn you no interest, but will lower your payments at a decent clip, and will be refunded to you in the event of a complete loss.

To answer the OP, most car manufacturer web site lease calculators notoriously calculate high payments. This is done so that they don't undermine any dealers that may be applying a "stupid tax" to the lease.

[Texas5]

Originally Posted by gresch

You say i have a fundamental misunderstanding of leasing and then agree with what i said, make up your mind.

.........

Regarding your statement of "leasing is not renting it's repackaged financing", here's a link for you

Lease vs Buy? Car Leasing versus Buying Explained

Sorry gresch, not trying to give you a hard time, but I never agreed with a word you said. Your math doesn't work. Are you saying you're glad you kept your down payment money so you can now earn 1% (or less) in a savings account when you could have saved yourself 4% or more in lease interest??

And here's a direct quote from that rebuttal link you provided...

"Leases and purchase loans are simply two different methods of automobile financing. One finances the use of a vehicle; the other finances the purchase of a vehicle."

...which is what I originally said.

This is why dealers love leasing - there's so much confusion about it that it's easy to insert the "stupid tax" (as alewifebp calls it).

[CkDedmon]

Appreciate the feedback...it might have gotten a little side-tracked, but it is all useful info. I think I'm just hesitant because I've always purchased vehicles (i.e. used a loan)...this would be my first time to lease. I'm thinking of a lease now because I've got other large expenses that I would like to take on, so I don't want to sink so much of my money in a car for the next few years.

"Stupid tax"? I assume this refers to the random charges the dealership tries to tack on at the end of negotiation to get more out of you...things they claim are out of their control.

[Texas5]

"stupid tax" includes those things, plus all the strategies they use to increase the net price they receive for the car. Keep in mind that the dealer gets paid in full for the car when you lease (by BMWFS or whoever the leasing company is). Their objective is to maximize that amount. They'll take advantage of the average buyer's inability to quantify adjustments to the monthly payment, lease term, downpayment, etc. on the fly while sitting in the showroom. Just do your homework before you walk in and negotiate just as you would a purchase. Good luck.