Leasing vs Financing??

[Upgrade+]

Hey guys/girls. Just negotiated a deal on a 135i. So it's a case of the 6-8 week waiting game. I've got a great CA that also sold my folks their 328xi. As we were talking numbers he was explaining to me that because of the state of the market now, it might be better to lease rather than finance. I've never leased a car before, so this would be very new to me:iono:. What are some opinions you guys have on this (leasing over financing)? Pros vs Cons? I do plan on keeping the car for a while (at least the next 5-8 years). I don't have to make a decision until the car is delivered, but I want to make sure I know by that time. I know I can buy the car at the end of the lease term, but I still don't know if this would be more beneficial than financing from the beggining. Thanks everyone.

[Slay0r]

ok... ima try too keep this as simple and short as possible but here it goes...


i ended up leasing mine, and i was planning on putting the 3 yrs down lump sum, and save, and pay the residual after the 3 yrs. But when i went and tlaked to the financial consultant when i was buying at the dealer, he said i Could do that, but it wouldnt b smart. (losing sales tax right away, GAP insurance taking your money b/4 they put up theirs, putting your money at risk and so on)

so this is what he advised me to do:

~take the money i was going to use to pay off the first 3 yrs, and put it in an interest bearing accnt. (Capital One has 3.5%apr on saving accnts over 10k right now)
~and just pay the monthly note from that accnt, while it stil is earning interest.
I made sure and asked him that there is Absolutely NO Benifit to paying it off asap, and he said No.

Me and a dealer worked out a few scenerios, and leasing came in a few hundred cheaper than financing it out right. (plus BMW covers you if you lease)

Again this ALL depends on what kind of person you are (whether you like a new vehivle every 3 or so years, or if u drive it till the wheels fall off) Whether you drive low miles, or commute a decent distance

[drand]

If you are planning on keeping it more than three years you do not want to lease (in most circumstances anyway), if you are keeping the car less than three years then leasing is an option you should at least consider. Since you want to keep it 5-8 years there is no way leasing is going to work for you.

[Upgrade+]

Thanks for the help so far. Keep them coming...

[morscode]

Looking at another post in this section, Navy Federal CU is offering 4.4% on a lease for 36 months.

Assuming with the options you listed (Leather and Sport) I figured the car to be about 38,400, just rough I didn't actually look at individual pricing so it's most likely a bit off.

Leasing with a 4.4% for 36 months will put you at about $590/mo.
Pay 36 months and you've paid $21,300. Assuming a 60% residual (10k miles per year) you'll end up with a buy out option of $23,000. Now add tax and say 4.5% financing for 48 months you'll now pay $580/mo and dish out another $27,700. With both options combined you'll pay the $21,300 and $27,700 to put you at $49,000. Purchasing outright with a 4.25% from PenFed for 60 months will put you at $783/mo and a total of $46,900.

No doubt you will save financing the car if you plan on keeping it that long.

[Slay0r]

hrmm financing seems like a better option for mil. numbers

but when me and the dealer worked out the numbers, i would still end up paying less (barely) if i were to choose to refinance (buy out) after the 3 yrs

plus bmw covers you during the 3 yr lease

[Jace]

All,

I am a little confused here. BMW already covers you for 4 years or 50k miles. What more would BMW cover on a "3 yr lease?"

[Slay0r]

im kinda curious to know, b/c my dealer did a horrible job of explaining it, and i was there for 5 hours

[morscode]

Absolutely no difference, he might have been trying to make a point that by leasing you are always covered through the term unless going over on the miles vs purchasing the car and running out after 50k/4 years, but that can be addressed by an extended warranty which I will purchase after 4 years.

The leasing option may have came out cheaper for you because he might have gave you BMW Financial's rate of ridiculous.horrible% right now. Go with PenFed and you can get a 4.25%. Interest is a huge factor that most people overlook until you're in the office with the Finance manager and seem to be unable to walk at that point.

Putting your money away for 3.5% does not outweigh the higher percentage you will be paying for your lease. Find out if MSDs (Multiple Security Deposits) are available in your state/dealer, that's the best method for lowering your interest rate on a lease if you have up front cash.

[Slay0r]

i know the 3.5 doesnt OUTWEIGH whati mpaying out, but it instead of me paying my first 3 yrs of the lease off, like i had planned, i can still have the money, let it earn Something rather that lose 9% (my states current sales tax) immediately

[Upgrade+]

Okay. I see about the long term and how buy out would be more, but how am I "covered" by BMW with leasing? With the options I got (Leather and Sport package), I got a good deal for $36,744. I planned on putting down around $10k, but my CA told me he could give me a lease at $575, with no money, just the fees. If my financing is about the same monthly, what should I do?

[morscode]

You'll have to calculate the payoff (term and estimated apr are huge variables) if you decide to purchase it afterwards and make the determination what you want to do.

[Slay0r]

yeh, if u ask your dealer they can run diff. scenerios for u to help you determine the best method...for you

[ptack]

Keep in mind that the dealer much prefers you take the risk of having you pay them even more money at the end of the lease in the form of excess mileage and various "damages". They can't do that if you just purchase the car from the start. Unless you are absolutely certain that, no matter how much you love the car, you're not going to drive it more than 10,000(?) miles a year and that you can keep it in excellent condition, you should probably forget leasing if you're looking for the lower cost. Check out one of the Consumer Reports car guides for a more detailed evaluation of the differences.

[1Ronnie]

I'm replacing my leased E90 with a purchased 128i, and am just about to give the E90 back. I don't think I would do a lease again, there are a few gotchas that have caused me some stress ...

1) You can't get out of the lease for a viable cost. Look on craigslist for the huge number of people trying to get people to take over their lease.

2) No capital at the end of the lease. I invested quite a lot down to get the lease affordable, and at the end of it all, I have nothing. I'm sure that dollars wise, it works out all pretty similar, but it just doesn't feel right spending that money and having nothing at the end.

3) Lease end inspections. Oh the stress ... not only do I get nothing back, but I have to get the bumper and wheels fixed, small scuffs under the front bumper and a couple of curb chips on the wheels. Now, I'm sure you're a better driver than me, but it's pretty hard to get a few years of milage without a few fees at the end.

4) Limited modding options ... want that CF trim, or performance exhaust, etc, make sure your lease allows it, otherwise you may have to undo it at the end.

No, not for me, it was an interesting excercise, and I don't regret a day of driving my 323i :smile:, but back to owning for me.

[WhiteOne]

If you put $10,000 down and finance for 60 months at 4.25 your payments will be around $420 a month (+ or -). You can pay extra each month to pay it off early and save some money at the same time.
If you are earning 3.5% and inflation is 4% you are losing money by sitting on it aren't you?
Look at it everyway you can. You will find a way that makes you happy. Best of luck.

[e36chris]

what are you opinions on my situation,

living at home, was planning to for the next couple years, buying (leasing?) a new 2009 135 and then moving out 1-2 years after buying the car, keep in mind i have a good 30k to put down as a downpayment...

but now shit at home is crazy, i cant really handle the rents for more than a few reasons, and im looking for a place.

with a down payment of like maybe 20k next year, and leasing the car, would i be able to snag a mortgage on top of that too? or am i dreaming?

my plans for the car are keeping them, and not trading in, if anything refinance after my 39 months.

my net is around 3100-3400 a month

$ canadian btw

Thanks, Chris

[Qube]

"it just doesn't feel right spending that money and having nothing at the end."

That's the primary and real gotcha for leasing. It SEEMS like you're getting NOTHING, when it fact the money you 'saved' allowed you to take an extra European vacation, etc.

It's a hurdle to justify and get the numbers right

Never would I put a downpayment for a lease. Although I now own my 540, and also the 535 before, I leased BOTH 1ers because it just made more sense (after THEM throwing in more free mileage/lease damage coverage/etc).

BTW it ONLY made sense to lease the 128 vert for my toy because I have the 540 to put mileage on. I run about 30k a year and no way does it make sense to lease a car doing that mileage.

[ARES45]

Never ever put a down payment on a lease. If the car gets hit on the way out of the dealer driveway, you just lost your downpayment.

I financed through my own bank because the money factors were high at the time (1st allocation). If you multiply the MF by 2400 you will get the equivalent to an apr on a loan, mine would have been like 6.8 or some ridiculous amount.

[Rossmar]

I was originally going to put down a larger number on my lease and decided against it. At the end of the lease my payments will total $9000 (24x$375), and the value of the car will only fall $4400. The only way I could justify a lease was that my salary will hopefully double in 4 years.

If I had the cash on hand, I'd go for financing but this ended up being the math:
Lease: $375x24 mo + 1.5k down
Fin: $550x60 mo + 6k down
And yes, there's no car at the end, but maybe I'll get an M or a 135 instead

Don't total it and you will not have wasted your downpayment.