Leasing or Buying

Konfucius · 03-01-2006, 01:49 PM

Hey guys, I need some opinions as too whether I should lease or buy a 330i. I don't do alot of driving since a have a daily driver and I'm would like to change out my cars around 4 years or so. Which why would be best for me?

kobechrome · 03-01-2006, 01:53 PM

Unless you can find a 4 yr lease, looks like you're buying.

If you can deal with switching every 3 years and you don't put alot of miles on - leasing is a decent option.

But if I bought OR leased an e90 (I did buy one) - I would not buy or lease it to sit in the garage or driveway. What's the fun in that? It would be my daily driver.

BMW F22 · 03-01-2006, 02:58 PM

seriously though- they're both the same. Just think of it this way : you lease a $40k car for 3 years. After 3 years, you've already paid $15000 worth of payments. This means that the resale value of the car is at least $25k. The dealer can turn around and sell it for at least $25k. OR you can just buy the car and sell it after 3 years for the same price. Think about it, a 325/330 keeps about 62% of its original value. Leasing is only good if you wanna drive a new car every few years and dont want to have to worry about getting rid of the car yourself. But then on the other hand, you have the mileage restriction and you cant do anything to the car. When you buy a car, the payments will be higher because you're paying for the entire thing. In turn, you get to keep that car and sell it back whenever you want.I would just buy it and sell it back later. If you're gonna buy it though, dont buy colors that will cause you troubles down the road. Pros recommend colors like :white, black, and silver. I will leave you with one last thought: I looked thru the newspaper and found a lease ad for a 330i. It's around $469+ tax a month for 36 months. THat comes out to $16884 BEFORE tax. So with tax and the down payment you're looking at around $21,000 (depending on how much down. It's typically around $1600 or so) Let's assume it's a strip 330i with only auto. THe MSRP is around $38000 and you're already paying ~21,000 for it. So bascially the car is worth 17,000 after 3 years right??? WRong. The dealer can sell that car for at least 24,000 or so. So why not buy the car and sell it back for $24000 yourself. That way, you only lost $14K in depreciation instead of 21K. And there's no mileage restriction. But since you're not gonna drive it a lot, this doesnt concern you either way. So would you rather pay $14k over 3 years for a weekend car, or $21k???

just my .02

ashecnc · 03-01-2006, 03:04 PM

Oh believe me this is something you will have to decide on your own, trust me on this one.

seevemonka · 03-01-2006, 04:02 PM

Three years or less,you should lease.4 or more years,you should buy.If you can olny afford to lease,then car is too much.This is my personal opinion,if you can afford to buy a car with 48mnth loan with 10-15% down,the you can afford car.

hotsand5 · 03-01-2006, 04:09 PM

actually I think that the "pros" say if you plan on keeping a car for 4 years or less, then lease. Anything over that then its better to buy.

Hotan Braskey · 03-01-2006, 05:48 PM

I have been into looking at leases, as well. My buddy works for BMW and says that almost everyone at the dealership, and a majority of the customers, lease the car. If you are planning on keeping the car, then leasing is not for you. However, if you are planning on trading cars every few years, leasing may be a good option. What BMWE90 was saying is true in some respects, but wrong in others. His scenario is true if you turn in the car at the end of the lease. That is not really advisible. At any point during the lease, you are free to sell the car, or trade it in. As long as the bank gets their pay-off amount, they don't care. So leasing gets you lower monthly payments, but a traditional loan means that you have more of the car payed off when you are ready to make a switch. You decide which best suits your needs.

BMW F22 · 03-01-2006, 08:16 PM

Quote:

Originally Posted by Hotan Braskey

I have been into looking at leases, as well. My buddy works for BMW and says that almost everyone at the dealership, and a majority of the customers, lease the car. If you are planning on keeping the car, then leasing is not for you. However, if you are planning on trading cars every few years, leasing may be a good option. What BMWE90 was saying is true in some respects, but wrong in others. His scenario is true if you turn in the car at the end of the lease. That is not really advisible. At any point during the lease, you are free to sell the car, or trade it in. As long as the bank gets their pay-off amount, they don't care. So leasing gets you lower monthly payments, but a traditional loan means that you have more of the car payed off when you are ready to make a switch. You decide which best suits your needs.

agreed. I was assuming that you would trade it in cus you only want the car for a few years. It takes too long and too much effort to explain all the diff. between leasing and buying. At the end of the lease, you could buy the car or sell it yourself and keep the extra money, if any. THere's too much info to explain it all here. Try going to edmunds.com and look up leasing vs buying and make up your mind then.

kobechrome · 03-01-2006, 09:48 PM

Quote:

Originally Posted by Hotan Braskey

At any point during the lease, you are free to sell the car, or trade it in. As long as the bank gets their pay-off amount, they don't care. So leasing gets you lower monthly payments, but a traditional loan means that you have more of the car payed off when you are ready to make a switch. You decide which best suits your needs.

Is this really true? If you trade it in early, isn't there a penalty?

sdorn · 03-01-2006, 09:57 PM

When you trade in the car before the lease is up, you aren't really terminating the lease early, you are actually buying the car at the buyout price (which you can look up at the Owner Circle website). It is just like trading in a car with a loan that hasn't been paid off yet. The dealership buys the car from you and sends the payment to the lienholder, in the case of a lease the payment goes to BMW Financial Services.

gos · 03-01-2006, 10:09 PM

Quote:

Originally Posted by hotsand5

actually I think that the "pros" say if you plan on keeping a car for 4 years or less, then lease. Anything over that then its better to buy.

Except that if you look at money factors, the MF on 4/5 year leases are a HUGE markup compared to 2/3 year values.

If you're changing every 4 years anyway, I see no downside to changing every 3 or 2... Once you're leasing, go all the way =P

Schweitzer · 03-01-2006, 10:28 PM

Also, doesn't market value come into play here? There's the Bluebook value and then the market value. On all those hybrids the market value is so much more than the bluebook value because people are willing to pay huge markups over and above the sticker due to high gas prices. I wonder how our E90's will hold up in 4 years.

F32Fleet · 03-02-2006, 07:35 AM

Quote:

Originally Posted by kobechrome

Is this really true? If you trade it in early, isn't there a penalty?

There shouldn't be a penalty. I haven't confirmed this, but you shoud be able to pay off your remaining lease payments and keep the car for the duration of your lease term. At the end of the lease you have the option to buy the car at the residual value notated on your lease agreement (btw..this is the dumbest thing to do because the car ends up costing you significantly more than if you had bought it to begin with).

Most people who lease are self-employed and thereby gain a tax benefit by expensing the lease payment.

Biggest problem I've seen with leasing are those who are younger (20's-30's) that get into trouble with mileage OR those people who do not have GAP insurance which will cover the deficit between what the car is worth and the remaining lease payments in the event the car is totaled.

My E46 is my first experience with leasing and I'm not very fond of it (tired of always having to make a car payment, never get to take the car on trips or long drives). I was only putting about 15 miles a day on the car, but had to find another job which extended my daily commute to 50 miles a day.

davinet78 · 03-02-2006, 08:17 AM

buy the car and be the proud owner of a bmw e90

sdorn · 03-02-2006, 08:26 AM

Quote:

Originally Posted by Socom

At the end of the lease you have the option to buy the car at the residual value notated on your lease agreement (btw..this is the dumbest thing to do because the car ends up costing you significantly more than if you had bought it to begin with).

This isn't true. I ran a cash flow analysis to determine the present value of all of my payments assuming I leased the car and then bought it at the end of the lease versus just buying the car at the beginning. I used the same discount rate (8%) for both transactions. In my situation, I have a 36 month lease, so I assumed a 36 month lease and then a 60 month financing for the buyout. For the purchase I assumed a straight 60 month financing. I used the same downpayment for both transactions as well. The ultimate difference in present value of the cash flows when it was all said and done was only $467.46, and what was more surprising was that the lease ended up being cheaper than the purchase!

Quote:

Originally Posted by Socom

Biggest problem I've seen with leasing are those who are younger (20's-30's) that get into trouble with mileage OR those people who do not have GAP insurance which will cover the deficit between what the car is worth and the remaining lease payments in the event the car is totaled.

My E46 is my first experience with leasing and I'm not very fond of it (tired of always having to make a car payment, never get to take the car on trips or long drives). I was only putting about 15 miles a day on the car, but had to find another job which extended my daily commute to 50 miles a day.

I don't know if people know this, but you can go to the BMW Financial Services website and purchase additional miles for your lease at a discount from what they cost if you wait until you turn the car back in. I think they are around $.16/mile instead of the $.20/mile you have to pay at turn in. You can add miles to your lease at any time up to 4 months before the end of the contract. As for GAP insurance, it is included in your lease from BMW. They will pay up to the buyout price of the car at the end of the lease in additional coverage over what your insurance company values the car at.

I do have one question though, if you decide to buy your car at the end of the lease, do you still have to pay for the extra miles if you went over? I would think that you wouldn't, since the buyout price at the end of the lease is set and isn't dependent on the mileage of the car.

ap1994 · 03-02-2006, 08:33 AM

I leased as I thought it would be better for me. Cars are not an investment. I figure its the enjoyment that I drive from the car. Id rather lease, invest the difference, and enjoy a new car more often.
Andy

ic · 03-02-2006, 09:44 AM

Quote:

Originally Posted by sdorn

This isn't true. I ran a cash flow analysis to determine the present value of all of my payments assuming I leased the car and then bought it at the end of the lease versus just buying the car at the beginning. I used the same discount rate (8%) for both transactions. In my situation, I have a 36 month lease, so I assumed a 36 month lease and then a 60 month financing for the buyout. For the purchase I assumed a straight 60 month financing. I used the same downpayment for both transactions as well. The ultimate difference in present value of the cash flows when it was all said and done was only $467.46, and what was more surprising was that the lease ended up being cheaper than the purchase!

Could you show us the actual/details calculations? Thanks in advance.

sdorn · 03-02-2006, 10:01 AM

Quote:

Originally Posted by ic

Could you show us the actual/details calculations? Thanks in advance.

I tried to upload the spreadsheet as an attachment to this thread, but it only accepts images. I attached a screen shot of the numbers. I used the "XNPV" formula in excel to obtain the net present value of the cash flows listed on the right. For the lease they go out 8 years, the first 3 for the lease payments and the last 5 for the lease buyout. For the purchase they go out five years. I used the same interest rate (8%) for both the discount rate for the present value calculations as well as the interest rate for the financing, otherwise you could manipulate the numbers to make them say whatever you wanted.

The stuff in the top left corner is a calculation of the car payments for the financing portion of the two loans. The first being the financing of the buyout after the lease, including the sales tax on the car. The second is for the straight purchase, also including the sales tax on the car and the downpayment (same as on the lease). I also used the same interest rates for both as that is the only way to properly compare the two options. Ignore the date of purchase and payoff date information. I pulled this spreadsheet out of a much bigger one that I use for budget purposes, and those numbers affect other sheets in the workbook. They don't have anything to do with the numbers we are talking about here.

///M3John · 03-02-2006, 10:07 AM

Quote:

Originally Posted by ap1994

I leased as I thought it would be better for me. Cars are not an investment. I figure its the enjoyment that I drive from the car. Id rather lease, invest the difference, and enjoy a new car more often.
Andy

I totally agree w/ you on this. Here is my take...

I bought a '99 E36 M3 early 2000 and after driving it for 3 years, I got bored w/ it (being dated and wanted something I can drive through winter). It was a royal PITA to sell the vehicle privately and trading in wasn't an option because you'll always lose more $$. So then I LEASED an Audi w/ 18K mile restriction per year, zero down and have been happy about this decision. Cars aren't an investment and techically they're a long term "rental." Whether you lease or not, you don't OWN the vehicle until its paid off (obviously). I'd recommend LEASE if you don't drive as much and want something new every 3-4 years. I hope this helps.

BTW, I'm going back to BMW (335i) and away from the dark side

Konfucius · 03-02-2006, 04:10 PM

Omg, you guys are just awsome. I didn't expect to have so much informative replies. I loved the spreadsheet, it was very helpful. I think I'm leaning toward leasing myself but I haven't been able to actually sit down and talk with any BMW sales consulatant to actually get any real hard numbers. I live in Hawaii btw, so I don't know if the numbers will be different that of those some of you have stated. And also because I live on a rock I'm not too worried about the milage restrictions. My normal rackup for a year is around 10k on my beater. And yes, with my 330 I will definately drive it more than my RSX now. Imports draws too much attention in my twon.

selm · 03-02-2006, 04:54 PM

Quote:

Originally Posted by sdorn

This isn't true. I ran a cash flow analysis to determine the present value of all of my payments assuming I leased the car and then bought it at the end of the lease versus just buying the car at the beginning. I used the same discount rate (8%) for both transactions. In my situation, I have a 36 month lease, so I assumed a 36 month lease and then a 60 month financing for the buyout. For the purchase I assumed a straight 60 month financing. I used the same downpayment for both transactions as well. The ultimate difference in present value of the cash flows when it was all said and done was only $467.46, and what was more surprising was that the lease ended up being cheaper than the purchase!

I don't know if people know this, but you can go to the BMW Financial Services website and purchase additional miles for your lease at a discount from what they cost if you wait until you turn the car back in. I think they are around $.16/mile instead of the $.20/mile you have to pay at turn in. You can add miles to your lease at any time up to 4 months before the end of the contract. As for GAP insurance, it is included in your lease from BMW. They will pay up to the buyout price of the car at the end of the lease in additional coverage over what your insurance company values the car at.

I do have one question though, if you decide to buy your car at the end of the lease, do you still have to pay for the extra miles if you went over? I would think that you wouldn't, since the buyout price at the end of the lease is set and isn't dependent on the mileage of the car.

I too did a lease versus buy cash flow comparison and came up with a generalization -- If you buy a car and never pay it off because you trade it in or sell it before you finish your loan, you are better off leasing. If you keep your car for at least 1 month without having a payment, you are better off buying. There of course are exceptions and each scenario will have to be taken into account.

If you are a disciplined investor and can get a good return on your money, consider leasing the car and investing the difference between the lease versus buy payment. If you can get a better return than the interest rate on the loan, then leasing may come out ahead.

Hotan Braskey · 03-02-2006, 07:53 PM

Sdorn, if you buy the car at the end of the lease, you do NOT have to worry about mileage. The only time you have to worry about mileage, condition of the vehicle, etc. is if you turn in the car at the end of lease. If the bank is left with a car to sell, then all of those things matter, but if they have a stack of cash, they could care less about how much you have driven.

03-01-2006, 01:49 PM	#1
Konfucius New Member 1 Rep 8 Posts Drives: Acura RSX Join Date: Nov 2005 Location: Home iTrader: (0)	Leasing or Buying Hey guys, I need some opinions as too whether I should lease or buy a 330i. I don't do alot of driving since a have a daily driver and I'm would like to change out my cars around 4 years or so. Which why would be best for me?
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03-01-2006, 01:53 PM	#2
kobechrome Captain 38 Rep 699 Posts Drives: 2013 F30 335xi Join Date: Dec 2005 Location: Ashburn, VA iTrader: (0) Garage List 2013 BMW 335xi Sport [0.00] 2013 Lexus RX 350 [0.00] 2006 BMW 325i [0.00]	Unless you can find a 4 yr lease, looks like you're buying. If you can deal with switching every 3 years and you don't put alot of miles on - leasing is a decent option. But if I bought OR leased an e90 (I did buy one) - I would not buy or lease it to sit in the garage or driveway. What's the fun in that? It would be my daily driver. __________________
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03-01-2006, 02:58 PM	#3
BMW F22 Major General 3566 Rep 9,788 Posts Drives: ///M235i Join Date: Nov 2005 Location: Bay Area iTrader: (8)	seriously though- they're both the same. Just think of it this way : you lease a $40k car for 3 years. After 3 years, you've already paid $15000 worth of payments. This means that the resale value of the car is at least $25k. The dealer can turn around and sell it for at least $25k. OR you can just buy the car and sell it after 3 years for the same price. Think about it, a 325/330 keeps about 62% of its original value. Leasing is only good if you wanna drive a new car every few years and dont want to have to worry about getting rid of the car yourself. But then on the other hand, you have the mileage restriction and you cant do anything to the car. When you buy a car, the payments will be higher because you're paying for the entire thing. In turn, you get to keep that car and sell it back whenever you want.I would just buy it and sell it back later. If you're gonna buy it though, dont buy colors that will cause you troubles down the road. Pros recommend colors like :white, black, and silver. I will leave you with one last thought: I looked thru the newspaper and found a lease ad for a 330i. It's around $469+ tax a month for 36 months. THat comes out to $16884 BEFORE tax. So with tax and the down payment you're looking at around $21,000 (depending on how much down. It's typically around $1600 or so) Let's assume it's a strip 330i with only auto. THe MSRP is around $38000 and you're already paying ~21,000 for it. So bascially the car is worth 17,000 after 3 years right??? WRong. The dealer can sell that car for at least 24,000 or so. So why not buy the car and sell it back for $24000 yourself. That way, you only lost $14K in depreciation instead of 21K. And there's no mileage restriction. But since you're not gonna drive it a lot, this doesnt concern you either way. So would you rather pay $14k over 3 years for a weekend car, or $21k??? just my .02
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03-01-2006, 03:04 PM	#4
ashecnc In the delivery business :) 25 Rep 991 Posts Drives: '06 325i Jet Black/Black Join Date: Dec 2005 Location: Asheville, NC (mountains) Blue Ridge Parkway iTrader: (1) Garage List 2006 325i [0.00] 2006 325i [0.00]	Oh believe me this is something you will have to decide on your own, trust me on this one. __________________ Born 10/05 '06 325i Jet Black, Black, Sport Package, Xenon's, Heated Seats & Power, Sat. Prep, Rear Spoiler, Chrome Tips, Blacklines, Chrome Grills, 19" M5 wheels NO MORE run flats, drives like a dream now
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03-01-2006, 04:02 PM	#5
seevemonka Private 2 Rep 62 Posts Drives: 2006 bmw 325,black Join Date: Aug 2005 Location: mpls iTrader: (0)	Three years or less,you should lease.4 or more years,you should buy.If you can olny afford to lease,then car is too much.This is my personal opinion,if you can afford to buy a car with 48mnth loan with 10-15% down,the you can afford car.
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03-01-2006, 04:09 PM	#6
hotsand5 hotsand5 49 Rep 806 Posts Drives: 2006 BMW 330i 6spd Join Date: Nov 2005 Location: chicago iTrader: (0) Garage List 2006 330i [0.00]	actually I think that the "pros" say if you plan on keeping a car for 4 years or less, then lease. Anything over that then its better to buy. __________________ -2006 BMW 330i-Sapphire Black- Tera Leather-Aluminum trim- 6spd manual- Sport- Premium- Cold- Navigation- Euro. delivery -2005 Yamaha Warrior 1700 102cu"
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03-01-2006, 05:48 PM	#7
Hotan Braskey Private First Class 2 Rep 184 Posts Drives: 1M on Order- VO please Join Date: Jun 2005 Location: Maryland, USA iTrader: (0)	I have been into looking at leases, as well. My buddy works for BMW and says that almost everyone at the dealership, and a majority of the customers, lease the car. If you are planning on keeping the car, then leasing is not for you. However, if you are planning on trading cars every few years, leasing may be a good option. What BMWE90 was saying is true in some respects, but wrong in others. His scenario is true if you turn in the car at the end of the lease. That is not really advisible. At any point during the lease, you are free to sell the car, or trade it in. As long as the bank gets their pay-off amount, they don't care. So leasing gets you lower monthly payments, but a traditional loan means that you have more of the car payed off when you are ready to make a switch. You decide which best suits your needs.
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03-01-2006, 09:57 PM	#10
sdorn Lieutenant 26 Rep 491 Posts Drives: 2006 Jet Black 325i Join Date: Feb 2006 Location: Atlanta iTrader: (0)	When you trade in the car before the lease is up, you aren't really terminating the lease early, you are actually buying the car at the buyout price (which you can look up at the Owner Circle website). It is just like trading in a car with a loan that hasn't been paid off yet. The dealership buys the car from you and sends the payment to the lienholder, in the case of a lease the payment goes to BMW Financial Services. __________________ 2008 Sparkling Graphite 535i 2009 Land Rover LR2 2003 Porsche 911 Turbo (SOLD) 2006 Jet Black 325i (SOLD) 2001 Bullitt Mustang (450rwhp - SOLD)
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03-01-2006, 10:28 PM	#12
Schweitzer Lieutenant 46 Rep 415 Posts Drives: 2015 M5 CP Join Date: Nov 2005 Location: Downtown Los Angeles, CA iTrader: (1) Garage List 2007 335i Coupe [0.00]	Also, doesn't market value come into play here? There's the Bluebook value and then the market value. On all those hybrids the market value is so much more than the bluebook value because people are willing to pay huge markups over and above the sticker due to high gas prices. I wonder how our E90's will hold up in 4 years. __________________ 2015 M5, Alpine White, Sakhir Orange/Black leather, 20"M Style 343M, forged black wheels, Carbon Fiber trim/mirror caps, Competition Package, Executive Package, Bang & Olufsen sound.
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03-02-2006, 08:17 AM	#14
davinet78 Lieutenant Colonel 28 Rep 1,832 Posts Drives: bmw e90 320d Join Date: Jun 2005 Location: gibraltar(europe) iTrader: (0) Garage List 2005 bmw 320d E90 [0.00]	buy the car and be the proud owner of a bmw e90 __________________ e90 320d,arktis,lumber support, hifi speaker, alarm, dakota beige, 162 18", xenon with washer spray,window chrome trimmings, professional radio, 6 cd changer wood trimmings 6 speed manual.
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03-02-2006, 08:33 AM	#16
ap1994 Private 7 Rep 93 Posts Drives: 2006 BMW 330i Join Date: Oct 2005 Location: Middlebury, CT iTrader: (0)	I leased as I thought it would be better for me. Cars are not an investment. I figure its the enjoyment that I drive from the car. Id rather lease, invest the difference, and enjoy a new car more often. Andy __________________ 330i Titanium Silver, Black, Aluminum trim, Comfort Access, Heated Seats, Sport, Bluetooth, Nav, Sat prep
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03-02-2006, 04:10 PM	#20
Konfucius New Member 1 Rep 8 Posts Drives: Acura RSX Join Date: Nov 2005 Location: Home iTrader: (0)	Omg, you guys are just awsome. I didn't expect to have so much informative replies. I loved the spreadsheet, it was very helpful. I think I'm leaning toward leasing myself but I haven't been able to actually sit down and talk with any BMW sales consulatant to actually get any real hard numbers. I live in Hawaii btw, so I don't know if the numbers will be different that of those some of you have stated. And also because I live on a rock I'm not too worried about the milage restrictions. My normal rackup for a year is around 10k on my beater. And yes, with my 330 I will definately drive it more than my RSX now. Imports draws too much attention in my twon.
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03-02-2006, 07:53 PM	#22
Hotan Braskey Private First Class 2 Rep 184 Posts Drives: 1M on Order- VO please Join Date: Jun 2005 Location: Maryland, USA iTrader: (0)	Sdorn, if you buy the car at the end of the lease, you do NOT have to worry about mileage. The only time you have to worry about mileage, condition of the vehicle, etc. is if you turn in the car at the end of lease. If the bank is left with a car to sell, then all of those things matter, but if they have a stack of cash, they could care less about how much you have driven.
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