# 525 or 530? What are the real differences?



## vern (Apr 19, 2002)

Presley348 said:


> ========================================================
> Hi Alan:
> 
> I had the same problem you have now back in April of this year. I thought I wanted a 525i, that was until I test drove the 525i and 530i! I chose hand down the 530i.
> ...


I'm very intrested in the part of your post about its difficult to keep it properly aligned with the New Active Steering.This is the first time I'm hearing about this.Where did you get this kind of information??


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## Big Top Gt (Oct 22, 2004)

[


roadie said:


> I hate to hijack the thread into a leasing versus pre owned buying discussion, but given that you and your wife are honest, hardworking folks, I recommend you read this article on the pros/cons:
> 
> BUYING PREOWNED VERSUS LEASING NEW


I don't think you're hijacking at all. Thanks for the info. 

That having been said I'm going to have to deliver a blow to my own sparkling personal character.

Before my current position as a Regional Account Manager for Carfax (my current home away from home) I was in the retail auto business. (Read: I sold cars and closed car deals) Great job and not nearly as sleazy as everyone would lead you to believe.*Especially* some of these Internet pubilished / publisized articles on sites like Yahoo, Edmunds, KBB, etc... Here are a few of my observations based on that experience as a salesperson mixed with some of my own personal buying experience...

Example:



Yahoo Article said:


> Let's first talk about why leasing is such an ego stroker. As I just mentioned, it allows you to drive a car you couldn't afford to buy for yourself. And why is that important? Because you suffer from status-symbolitis. You want your car to be the talk of the office parking lot, or to turn heads at the stoplight. People, wake up. You are spending money you don't have, to impress people you don't really know. Where is the logic in that?


I don't think this could be further from the truth for a couple reasons.

*First* I'm not interested in buying/leasing a 5 series (or anything for that matter) because I suffer from "status-symbolitis." I don't care what my co-workers (none of whom live in the state of Florida I might add) think about my purchase and I especially don't care about what some anonymous Kia driver thinks of my car or me. (Although, according to this article this person makes better decisions than I do in buying said Kia.)

I'm interested because I feel, through research and personal experience, the cars I'm looking at offer a better than reasonable combination of safety, reliability, performance, style, and value.

*Second*, I'm not spending money I don't have. I'm making what I (meaning my wife and I) feel to be the right financial decision based on prior experience and my own personal buying cycle. Honestly, the difference in payment on a month-to-month basis between a lease and a purchase is slight. Best case scenario we're talking $100 dollars per month. If at any time I can't burn an extra $3.00 per day I shouldn't be driving at all.

The logic is found when you discover my wife and I haven't kept any of our last 5 cars more than two years. Hell, my wife and I bought a $43000 Tahoe and kept it 6 months before we decided we wanted something else. Knowing we have such a short buying cycle we prefer not to be committed to a long-term contract. (more on that in a second)



Yahoo Article said:


> If you want a flashy car, you should be able to write a check for it. Not lease it, not finance it. That's just financial common sense. There's a reason they call them luxury cars; they should be for people who have the money to afford that luxury. If you need to lease a luxury, that's a pretty good sign you can't afford it. Actually, a lot of people who finance a luxury car can't really afford it either. I know there are plenty of folks who drive a $65,000 car even though their retirement investments are way too low, they don't have a sufficient emergency cash fund, and they aren't doing anything to save for their kid's college education. But hey, they sure look fine driving their status symbol. Give me a break.


No, give *me* a break.  I don't know about you guys but even with enough money in the bank to write a check for a car I'd never do so. Why invest a big wad of cash in a depreciating item? Why commit 10, 20, 40 thousand dollars on something that's going to be worth up to 30% less the second you finish signing the contract? Why not finance it and let your money at least earn 2% sitting in just a savings account? (this isn't even considering a wise investment.) I think the people who have enough money to pay cash also have the good old-fashioned horse sense not to. Hey, you can always light it on fire, it's essentially the same thing.



Yahoo Article said:


> When you lease a car, essentially you are borrowing it from a leasing company for a fixed period of time.


Uh, isn't that the same as a purchase? What's the difference, really, when you borrow from a bank or a leasing company other than semantics? Either way you don't technically own the car until you make the last payment. Furthermore, (and think about this before you answer) how many people do you know who actually keep their cars for the 4, 5, or 6 years they've financed the car for? I only know one person and he's still driving the same 96 Camaro he bought new in 96. I also don't know a single person who takes that "purchased" car in and tried to trade it in and NOT been upside down. (owed more than it was worth) Now, you can arguably chalk that up to factors such as down payment, realistic asking price, etc... but by and large people whom I've seen "purchase" a car usually do so with minimal down payment and the shortest period of ownership you'll ever see. I feel these are exactly the people who should lease. That way at the end of their 36-month lease they can walk away and use the money they'd spend to unbury themselves to buy or lease their next car.

Also, nationally the national statistical buying cycle for a car purchase is 33 months. Why do you think leases are set at 36?

Anyway....



Yahoo Article said:


> Whether you are planning on buying the car at the end of the lease or not, it is probably going to end up being a bad financial move. The sale price the leasing company will offer you is usually not a good deal. This price, known as the "residual value," can be inflated because of some financial sleight of hand the leasing company pulled off, under the guise of getting your monthly payment as low as possible, way back when you signed the lease.


Again, not true. The prices you pay (and the accompanying residual) are all part of the negotiation. Typically your residual is a percentage of the negotiated purchase price. I implore you to negotiate the way you would as if you were writing a check for the car, then ASK what the residual percentages are for a given term, then find out what the "lease factor" (read: interest rate) will be.

To calculate your interest rate with a known "lease factor" all you do is divide the number by 2400. It's that easy. (let me double check that number. I'm 99% sure that's right)

The residual can only be inflated when it's an "incentivized" lease program. GMAC has been doing this for years. Look at the new GTO. Here in South Florida they're running a 2000 down/ 299 a month for 36 months special.

Uh, hello... the car is 30k plus and they're giving you a $300 dollar payment. What do you EXPECT the residual to be?

The writer is right in this regard: An incentivized lease is designed to get you the lowest payment possible. In these cases you don't want to buy the car at the end. It'd probably be cheaper to buy one used off a dealer lot in the same condition.

The reason so many people get "screwed" when they lease (or buy, really) is because they're uneducated consumers. If you don't know what you're doing or don't put in your due diligence you *should* pay too much. Hell, I'm no doctor so I don't operate on myself, that's for sure. If I did I certainly wouldn't wonder why my leg needs to be amputated then blame my doctor.



Yahoo Article said:


> If you don't return the car in pristine condition, you are going to get charged some extra fees.


Also, not true. I can't tell you how many cars I've taken in as lease returns with after market radios, wheels, performance parts, etc that have never been hassled. You get hassled when you have the "lease=rental" mentality and don't take care of the car as if it's your car, which it is. When the car comes in banged and beaten up you're going to pay. Dented fender? Jelly stained carpet? Bald tires? Pay up Dilbert...

Anyway, I've prattled on long enough. Does this stuff make any sense to anyone?

Alan


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## samps (May 17, 2004)

Just to add a quick note. I purchased my 2001 540i from my father, who replaced it with an 04 530i. We both test drove both the 545i and the 530i. I KNOW he wanted the 545i, and he has no problem purchasing either one. The ONLY reason he got the 530i was because it's primarily driven by my mom, and he usually drives the 4runner. She didn't want the power (didn't see the NEED for it).

Anywho, I lucked out, cause my 540i has the whole M package, and I told them that I wouldn't be taking their new 530i off their hands in a few years, I'd rather have a 545i.

That being said, the 530i is no slouch, not too bad for power. I just wouldn't want one personally cause I need the V8.


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## shabbaman (Dec 16, 2002)

Big Top Gt said:


> [
> 
> I don't think you're hijacking at all. Thanks for the info.
> 
> ...


I'll bite. Alan, are you speaking emotionally (as a car enthusiast) or financially? Financially you don't make any sense. As a car enthusiast you make a lot of sense. Trying to mix one with the other...things get a little hazy.

If I'm not mistaken, that article is from Suze Orman (If it's not then it's very similar to her article that's been on yahoo finance for a while.). Yes, her article was a pretty strong lease bashing article, however, there were points in that article that were not addressed here, mainly that in her opinion instead of leasing the right thing to do is buy a slightly used 1 year old car with very little mileage and let the original owner absorb the initial depreciation. And that's exactly what several people here have recommended to you. Her main problem with leasing is that it forces you into perpetual payments which you reinforce by stating that you've changed your car many times in the past 7 or 8 years and plan on continuing into the future. Your argument against the lease is that the average turnover for a car is 33 months and financees would still be perpetually paying for a car under this model. If your facts are accurate then this is a valid argument. She also makes an case for keeping your car 10, 15 , 18 years which is absolutely absurd but keeping a car five, six or seven years - if it's the right car - is perfectly fine. With BMW's new program you can extend your original warranty and maintenance to 6 years/100000 miles for about $3500 on a 5 series. She also makes a case for not upgrading your car every time a new body style is introduced. Obviously this is an subjective statement. If a new body style brings new safety features to the table, for example, then there's a very strong case to upgrade to a new body style. With the new 5, there hasn't been a strong advance in safety primarily because the E39 is very safe to begin with.

Are you the right candidate for leasing? Based on your answers I don't think so. You're a free spirit. You like the freedom of being able to change your cars any time you like. Take your Tahoe as an example. After six months you realized that this is not the right vehicle for you so had you leased it, it would have cost you a lot of $$$ to get out of that lease. I was in the same situation several years ago when I had a Land Rover and a 328. My wife found a job in the city and as a result our driving needs changed. Unfortunately, I still had a year to go on the Rover and didn't really need it, yet it didn't make sense financially to get rid of it so we kept it until the lease matured.

Take that same Tahoe and apply Suze Orman's advice. Instead of paying 43K for it you buy one for 35K slightly used and decide to sell it six months later. Your loss would be significantly less than had you bought a new Tahoe or had you leased it realizing that you need to get rid of your lease 6 months later.

Obviously, I'm playing Monday Morning quarterback with the Tahoe but if it's indicative of your car purchasing patterns where you pretty much know that you'll be changing your cars around less than every 2 years then buying a slightly used car is probably in your best interests.

I'm not criticizing you Alan, just trying to offer a different perspective


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## 'Cane (Jun 16, 2003)

I know you are loaded. Just hold out for the M5. :dunno:


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## shabbaman (Dec 16, 2002)

330Cane said:


> I know you are loaded. Just hold out for the M5. :dunno:


Yes. Getting the M5 invalidates everything I have said.....But only the M5


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## Big Top Gt (Oct 22, 2004)

I typed a reply to this thread and my computer ate it.  

I'll retype it tomorrow when I'm not so mad nor tired. (mad at the computer, not the post. I think this is a great conversation and I appreciate a fresh prospective.) 

Alan


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