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

[bimmerfan]

Looking for some advice from the lease experts, or folks who have bought their cars out of the lease/kept it after the lease ended.

The lease on my X5 is up in March of 2011. I've been struggling with whether or not I want to purchase the car or potentially even convert now from a lease to a purchase. If purchased now the buyout is $47k. If purchased at the end of the lease the buyout is $41k.

I had considered doing a 3 year loan but surprisingly the best rate BMW FS offers when doing this is 6% (which seems incredibly high compared to rates available through credit unions - 2.99-3.99%).

Anyway, all in all buying the car either now or at the end of the lease seems like a bit of bad financial move. Any opinions?


The reason I'm considering doing this is my first 2005 X5 replaced an M5. And while I have become really accustomed to the convenience of owning an SUV, I miss having a sportier car. So I'm wanting to have the X5, and then purchase a 911. The easy thing to do would be to get into a lease on a 2011 50i. But then in the back of my mind I'll always want that 911.

[bd3500]

What options are on your '08? I just spent the better part of a month looking at '07's and '08s to determine pricing. Ended up buying a 07.

In regards to purchase price, its hard to know what to tell you to do from purchase perspective without knowing:

1.) What is currently monthly payment
2.) What was residual?
3.) What is money factor?
4.) Money down at inception?
5.) How many miles per year?
6.) Where are you currently on miles?
7.) Where do you think you'll be at termination?

FWIW, That lease buyout fee is usually negotiable as well...

[mtech8]

So why don't you lease a 2011 50i and buy the 911? From strictly a payment stand point, I'm guessing that leasing new 2011 50i and the payment to buy your $41K 2008 X5 would be about the same. It's just at the end of the lease then you'd still owe more money rather than owing the X5. You'll have to figure out your finances and see what you really want to do.

If I were faced with a lease end decision, I'd ask myself if this is really the car I'd want to own. That's a benefit of leasing. If the car isn't perfect, I wouldn't buy it just for the sake of buying it. You're going to start paying for maintenace and repairs. So unless you love the car, don't go down that road.

[Price]

In general, buying out a BMW after lease end is the worst scenario from $$ perspective:
1st, BMW lease rate is usually high (around 6-8%) compared to new car financing, so you overpay first 3 years (or whatever the duration of the lease is).
2nd, Lease includes addit. fees as compared to cash/financed purchase, so you overpay the total new car price (some fee can be waived though).
3rd, BMW uses escalated residual values to make leases more attractive, so quite often you can get a better deal on a 3 y.o. car elsewhere

[faz]

Originally Posted by Price

3rd, BMW uses escalated residual values to make leases more attractive, so quite often you can get a better deal on a 3 y.o. car elsewhere

The above is true, but fortunately, you may be able to work out a deal with the dealer on buying back your own car.

I just did this a week ago on my wife's 07 328i. Buyback was very high ($24.4k), and after a couple of phone calls to a couple of dealers, I was offered $21k by the dealer to buyback my own car. They basically took it in (as in lease returned), did a safety inspection, and sold it as a used car back to me.

I would suggest that regardless of what you want to do (buy it back or lease another or ...), do not do anything now. You don't have any negotiating power at this time. Wait until there is a month left from your lease end, and decide then.

[Marwan1]

Originally Posted by Price

In general, buying out a BMW after lease end is the worst scenario from $$ perspective:
1st, BMW lease rate is usually high (around 6-8%) compared to new car financing, so you overpay first 3 years (or whatever the duration of the lease is).
2nd, Lease includes addit. fees as compared to cash/financed purchase, so you overpay the total new car price (some fee can be waived though).
3rd, BMW uses escalated residual values to make leases more attractive, so quite often you can get a better deal on a 3 y.o. car elsewhere

Absolutely... Buying out your leased car is the worst way of acquiring a car, financially speaking. You would have had a much better deal if you bought the car outright. Just stick with this X5 until the end of the lease and then lease a 50i and buy a 911 as said in a previous post. This makes the most sense if you insist on having an SUV and a sports car.

[jeep]

This is a very interesting and relevant topic. I kept my 328is which I bought in 98 for 10 yrs, absolutely loved driving it. I have always liked buying my cars, just felt that was better in the long run and hence purchased my X5 in 08, .9% financing was difficult to ignore. On the other hand my boss always leases, loves cars and gets to change them every 3 years (which I would love to do if it made financial sense). I therefore decided to run the numbers and found that if I had leased my X5 and kept leasing a new X5 every 3 yrs, over the course of 10yrs I would have spent about 6K more to lease, which works out to $600/yr extra/yr. I think that is a totally worth, price to pay for the ability to drive a new car every 3yrs not to mention the fact that you have lower maintenance costs because the warranty covers any expensive repairs and you avoid the hassle of selling your old car. This is especially true for more expensive cars.

Sorry digressed a little bit, but to your question, I would do the same what others are suggesting, lease a new X5 and lease a new 911 if you don't plan on keeping it long.

[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.