Buying your X5 at the end of the lease. Opinions?

[ard]

Originally Posted by jeep

I think that is a totally worth, price to pay for the ability to drive a new car every 3yrs not .

But wait, at the end of 10 years you have a car to drive!

I find it hard to believe that leasing a car for 10 years, versus paying off a car in 6 years will only be $6k more!! Almost impossible I'd say.

The assumption that finances will always be good, that everyone will remain fully employed and people's 'personal economies' always growing are a pivotal part of the 'lease decision'...just like our current national economy, assumptions like that can have dire consequences.

Everyone should have at least reliable transportation bought and paid for.... IMHO

A

[BGM]

Originally Posted by ard

But wait, at the end of 10 years you have a car to drive!

I find it hard to believe that leasing a car for 10 years, versus paying off a car in 6 years will only be $6k more!! Almost impossible I'd say.

The assumption that finances will always be good, that everyone will remain fully employed and people's 'personal economies' always growing are a pivotal part of the 'lease decision'...just like our current national economy, assumptions like that can have dire consequences.

Everyone should have at least reliable transportation bought and paid for.... IMHO

A

+1 on all accounts--well said.. And It's way more to lease a car over 10 years. Maybe back in the day when lease prices were like half of a finance payment.

[jeep]

Originally Posted by BGM

+1 on all accounts--well said.. And It's way more to lease a car over 10 years. Maybe back in the day when lease prices were like half of a finance payment.

I based my calculations on the following:
12yrs back interest rates were higher and they have been going down over the years but at the same time BMW has been jacking up car prices faster than inflation. Granted the features and performance has also improved.

To buy an X5 today assuming a price of 58K with 0down and .9% financing would work out to about $1000/month whereas lease for the same car would cost $650/month. Over a 10yr period, assuming lease payments remain the same, the cost would be 78000, the difference in cost is $18K. Now if you include the maintenance cost of 10K over the 10yr life of car which is conservative for BMWs IMHO (0 maintenance cost with lease). You do have residual value of the car which I am guessing will not be more than 10K at trade in for a 10yr old X5 which cancels out the maintenance, so essentially it works out to 18K over a 10yr period or 1800/yr to drive a new X5 every 3yrs. (The 6K diff. I quoted earlier was based on 3 series nos.), no maintenance hassles and unexpected expenses plus no headache of trying to sell the car (I went through an unpleasant experience where I got 3K less than what I expected for the car and had to deal with all kinds of low ballers).

Now these are very conservative numbers but still looking at this I feel leasing is a very compelling option.

[BGM]

Originally Posted by jeep

I based my calculations on the following:
12yrs back interest rates were higher and they have been going down over the years but at the same time BMW has been jacking up car prices faster than inflation. Granted the features and performance has also improved.

To buy an X5 today assuming a price of 58K with 0down and .9% financing would work out to about $1000/month whereas lease for the same car would cost $650/month. Over a 10yr period, assuming lease payments remain the same, the cost would be 78000, the difference in cost is $18K. Now if you include the maintenance cost of 10K over the 10yr life of car which is conservative for BMWs IMHO (0 maintenance cost with lease). You do have residual value of the car which I am guessing will not be more than 10K at trade in for a 10yr old X5 which cancels out the maintenance, so essentially it works out to 18K over a 10yr period or 1800/yr to drive a new X5 every 3yrs. (The 6K diff. I quoted earlier was based on 3 series nos.), no maintenance hassles and unexpected expenses plus no headache of trying to sell the car (I went through an unpleasant experience where I got 3K less than what I expected for the car and had to deal with all kinds of low ballers).

Now these are very conservative numbers but still looking at this I feel leasing is a very compelling option.

According to BMWUSA.com a MSRP of $58K with $4K down on 36 months 15K miles a year is $760. So, you have to put $4K down three times totalling $12K vs $0 down on a finance over those 10 years. And if you want an example of 10 year old BMW I am one of them--I have an '01 e53 that I've had since new that most people think is only a few years old. I realize everyone doesn't drive their cars 10 years. Even at year 6 look at the numbers--- $60K for finance vs. $54K for a lease. But you just spent $8K on 2 down payments on the 2 leases so now you are at $62K for your cost on the lease. And you also have no equity on a lease vs. when you finance you probably can sell it for $30K at year 6--so effectively that $60K car only cost $30K when financing. Plus you forgot to mention you are paying twice the sales tax on 2 leases vs. one on the finance--that's a lot of money. And you also just put $12K back in your account on year 5-6 on the finance having no payment. But I understand people choose either or for their own reasons. Like I said lease payments 4-5 years ago were much cheaper than to finance--but that has changed IMO.

[barbja]

Originally Posted by BGM

And if you want an example of 10 year old BMW I am one of them--I have an '01 e53 that I've had since new that most people think is only a few years old. .... And you also have no equity on a lease vs. when you finance you probably can sell it for $30K at year 6--so effectively that $60K car only cost $30K when financing.

I had a 7yo E53 3.0 that, when it was clean, a few people actually had asked me if it was new ('scuse me?). Yes, I know that the body style is different than an E70, but they didn't know any better. BMW just doesn't change their body styles drastically enough so that you can drive a car for a really long time and it will look new. I loved that car and would have kept it if the repair bills weren't getting too high, but that's another story.

However, how much it will be worth? You need to run the numbers for a similar car for how long you want to keep it on kbb or Edmunds. At the time I traded mine in a 7yrs, it was worth $12k. I think it was worth $30k at three or four years. I ran the numbers on a 2005 4.4 with some nice options and 72k miles (about 12k per yr) and came up with 18k/20k (tradein/private party). A 2004? 16/18.

I used this method when determining if I should lease vs buy. And when I determined buy, how much money I needed to put down in order to have the equity I wanted after 3yrs. (There were a whole lot of other factors in the lease vs buy decision too -- MF is bad on a 35d, and I live in Texas, which is not to favorable state for leases.)

You have to educate yourself on leases before you negotiate one with the dealer. It takes some time, but if you know your stuff, you can find where they are trying to cheat you. Especially if you know how to calculate MF into an interest rate, and what the MF they are receiving directly from BMWNA (ie, so that you can know what the dealer is upcharging on you -- you want to shoot for BMWNA+zero).

It made my CA go slack-jawed when I asked him "why on gods green earth would I pay you 9.5% for this lease when my credit rating is 820? You know that you're only allowed to add .0000x to BMWs money factor. What is going on here?" CA: Pause....Ummm...let me go back and check...she must have gotten something wrong... Ya, right.

[BGM]

Originally Posted by barbja

I had a 7yo E53 3.0 that, when it was clean, a few people actually had asked me if it was new ('scuse me?). Yes, I know that the body style is different than an E70, but they didn't know any better. BMW just doesn't change their body styles drastically enough so that you can drive a car for a really long time and it will look new. I loved that car and would have kept it if the repair bills weren't getting too high, but that's another story.

However, how much it will be worth? You need to run the numbers for a similar car for how long you want to keep it on kbb or Edmunds. At the time I traded mine in a 7yrs, it was worth $12k. I think it was worth $30k at three or four years. I ran the numbers on a 2005 4.4 with some nice options and 72k miles (about 12k per yr) and came up with 18k/20k (tradein/private party). A 2004? 16/18.

I used this method when determining if I should lease vs buy. And when I determined buy, how much money I needed to put down in order to have the equity I wanted after 3yrs. (There were a whole lot of other factors in the lease vs buy decision too -- MF is bad on a 35d, and I live in Texas, which is not to favorable state for leases.)

You have to educate yourself on leases before you negotiate one with the dealer. It takes some time, but if you know your stuff, you can find where they are trying to cheat you. Especially if you know how to calculate MF into an interest rate, and what the MF they are receiving directly from BMWNA (ie, so that you can know what the dealer is upcharging on you -- you want to shoot for BMWNA+zero).

It made my CA go slack-jawed when I asked him "why on gods green earth would I pay you 9.5% for this lease when my credit rating is 820? You know that you're only allowed to add .0000x to BMWs money factor. What is going on here?" CA: Pause....Ummm...let me go back and check...she must have gotten something wrong... Ya, right.

I agree "most people" don't really recognize that much of a difference between an e53 and e70 unless you keep track of model changes. My '01 e53 at 9 years old on KBB is $12K private party. I haven't had a car payment in 4 years as well. If you buy new and try to sell after 3 maybe 4 years you are better off leasing. If you keep them longer you don't have the depreciate hit + you are paying yourself back with no payments. If it costs $300 less a month to lease how many people are really that disciplined to store away or invest that money they are saving vs. buying--I would say it's not a lot of people. I agree leasing has a lot more components to it that need to understood by a buyer--that is one of the main factors people don't want to lease is the learning curve on it.

[faz]

If one chooses to sell their car every 3-4 years and buy another one, then leasing will be a very good alternative to consider, especially if lease rates / money factors are low; Just the extra tax that one pays at the time of the purchase for the unused portion of the ownership (value of the car when selling it in 3 years time) can come up to a good $50-$100 a month.

Also, during tough times, car companies defer their losses by providing unrealistic and higher than expected residual values (60+ percent for 3 year lease), to be able to offer a lower lease payment, and hope that in 3 years time the economy will turn around and they will get closer to the residual value they have set for the car. Worst case scenario, they won't... but still, they are not forced to sell the $50k car for $42k today... they lease it and worst case scenario they will absorb the $8k loss on the $30k residual value three years from now. This is something that BMW does A LOT.

Every lease/finance situation should really be considered on an individual basis. Simply saying 'leasing is not a good idea' or 'doesn't make financial sense' is over simplifying it, in my opinion.

[ard]

Originally Posted by jeep

I based my calculations on the following:
12yrs back interest rates were higher and they have been going down over the years but at the same time BMW has been jacking up car prices faster than inflation. Granted the features and performance has also improved.

To buy an X5 today assuming a price of 58K with 0down and .9% financing would work out to about $1000/month whereas lease for the same car would cost $650/month. Over a 10yr period, assuming lease payments remain the same, the cost would be 78000, the difference in cost is $18K. Now if you include the maintenance cost of 10K over the 10yr life of car which is conservative for BMWs IMHO (0 maintenance cost with lease). You do have residual value of the car which I am guessing will not be more than 10K at trade in for a 10yr old X5 which cancels out the maintenance, so essentially it works out to 18K over a 10yr period or 1800/yr to drive a new X5 every 3yrs. (The 6K diff. I quoted earlier was based on 3 series nos.), no maintenance hassles and unexpected expenses plus no headache of trying to sell the car (I went through an unpleasant experience where I got 3K less than what I expected for the car and had to deal with all kinds of low ballers).

Now these are very conservative numbers but still looking at this I feel leasing is a very compelling option.

$650 a month, zero down on all 3 of those lease deals????


Look, you want to rent cars and drive new every 3 years, go for it- but having to rely on having the stars align at each of the lease ends (no added mileage, replacement cars availble at competitive rates, dealers willing to deal- is one of the issues with leases.

As I said, you have a car in the end too, if you need it- so you are not forced to turn it in or buy yet another lease.