Xoutpost.com - Leasing vs. Buying

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Leasing vs. Buying

Hello all,

I ordered a 4.8 X5 about 5 weeks ago and am waiting for it to arrive. My initial thoughts were to lease the car, I have never leased a car, but I typically sell within 2.5-3.5 years after having a car. I was quoted a lease price of 1103/mth for 36 months with 12,000 miles a year. The MSRP on the vehicle is 71,672, Sport, Tech, Active Seat, Premium Pkgs, Premium sound, ipod, extended sunroof, sport wheels, Heated Seats, HUD, Sat Radio. The residual after 3 years on the vehicle is $41,200. I am located in the South Central part of the United States. Is this a good lease rate. With all the time I have had to sit here and think about leasing vs. buying while I wait for the car, I am beginning to have second thoughts about buying. Please give me some opinions on if I am getting a good lease rate, if the residual will be higher or lower than private party/dealer trade in price in 3 years, or if I should just buy the car and plan on selling in 3 years, while saving more a considerable amount of money if I had leased.

Thank you for your posts.

Quote:

Originally Posted by RLee371

Everyone's situation is different. Do you like to customize (different wheels, suspension, stereo, etc?) If so, leasing is not a good option for you in most cases. If you can keep within the mileage requirements of the lease on a 2.5-3 year ownership, you will likely come out about the same as ownership on a 5 year loan (cost-wise). What I mean by this is you should not be upside-down on the loan at 2.5-3 years into it, which means you can walk away from the lease or sell the car without owing more than it's worth. If you own your own business leasing has more tax benefits. For me, I would normally only lease such a vehicle as the X5, but I got a great (and I mean GREAT) deal on the purchase of our X5, so it was better for me to purchase. I am currently looking into leasing it to myself (one company I own would lease it to my other company) so I can take advantage of the tax breaks.

What about on a no loan basis, just paying the full amount one day one?

Quote:

Originally Posted by RLee371

What about on a no loan basis, just paying the full amount one day one?

Do you mean a single payment lease or a cash purchase? If a cash purchase, you have to look at the time value of the money if it were invested elsewhere, although there seem to be few safe investments lately!

for me its simple.. I lease a car I want to get rid of in 2-3 years, and I pay cash for a car I'm keeping for 5+.. Both my current cars are purchases, but I did lease a Volvo XC90 recently and that was a great thing since their resale value tanked after the residual was calculated for my lease.