# Did you Buy or Lease?



## schley (May 26, 2005)

The debates about what to do in your decision on wether to buy or lease are endless. I have been skeptical of those claiming that if you can't BUY the car with a 3 year loan it is too expensive. I don't think many do that at all. I would be shocked if it was more than 10% as a matter of fact. 

This is a poll, not trying to piss everybody off on either side of the debate.


----------



## Cowboy Bebop (May 17, 2003)

I was going to pay cash out the door or mine, but the interest rate was 3.8% which was like free money, so I financed it for three years!


----------



## cwsqbm (Aug 4, 2004)

schley said:


> I have been skeptical of those claiming that if you can't BUY the car with a 3 year loan it is too expensive. .


We could also claim that any car you can't pay cash for is too expensive. Whether you do pay cash for it, or invest elsewhere is a different question.


----------



## Vikram (Aug 15, 2006)

Simple math. Buy if you are going to keep the car for a long time. If you change your car every 4-5 years or less, lease it. But then you must have money to burn and no other responsibilities and you mus.............


----------



## geebeemer (Jul 2, 2005)

But hey, bought mine used.


----------



## SteveinBelAir (Dec 28, 2005)

I can only vote once: 3 year lease AND company car.


----------



## Cliff (Apr 19, 2002)

5 year loan that I paid off 18 months early.


----------



## TD (Dec 19, 2001)

If they say, "if you can't BUY the car with a 3 year loan, it is too expensive" they don't mean that that's what you have to do, just that that is a good measure of whether or not you can afford the car or not. 

Personally, I'd never heard that rule before, but I've heard other similarly simple rules (such as the price of your car should not exceed 50% of your post-tax annual salary). 

But, then again, I tend not to live on the outer limits of what I can afford so these "rules" don't weight heavily on me.


----------



## saurav27 (Sep 1, 2005)

Cash Baby ))


----------



## chrisinvermont (May 13, 2006)

Cowboy Bebop said:


> I was going to pay cash out the door or mine, but the interest rate was 3.8% which was like free money, so I financed it for three years!


+1, although mine is 3.9%


----------



## Vikram (Aug 15, 2006)

You gentlemen are like Republicans on IMF loans, how you saaaay-----"fiscally Irresponsible"!


----------



## Desertnate (Mar 11, 2002)

I finance for 3~4 years, but I usually have only one car payment and tend to hold on to each car for 7, 8 or more years


----------



## Cowboy Bebop (May 17, 2003)

Vikram said:


> You gentlemen are like Republicans on IMF loans, how you saaaay-----"fiscally Irresponsible"!


I'm libertarian and I made 6 % interest on the monies I would have payed for the car!
So at 3.8 persent I was actually making an aditional 2.2% for 3 years... if that is Fiscally Irresponsible, you are correct, I am a republican!


----------



## Vikram (Aug 15, 2006)

Cowboy Bebop said:


> I'm libertarian and I made 6 % interest on the monies I would have payed for the car!
> So at 3.8 persent I was actually making an aditional 2.2% for 3 years... if that is Fiscally Irresponsible, you are correct, I am a republican!


That means you were making 6% during the last 3 years. This is news to us humble people. Pray, which bank in the US of A was giving such high rate on C/D's or other form of bank investment during these years. I would like to Know. Unless, of course, you are taking about stock market ventures where you got lucky to make that kind of ROI. But then you must have insider information or you must be junior Warren Buffet or you must........ because the market was very sick during these years and still is, thanks to the "real world" fiscal policy of the republicans. Not that I am complaining, just a fact.


----------



## Blinky330XI (Feb 21, 2005)

5 year financing @ 1.9%


----------



## scott3 (May 30, 2006)

Vikram said:


> That means you were making 6% during the last 3 years. This is news to us humble people. Pray, which bank in the US of A was giving such high rate on C/D's or other form of bank investment during these years. I would like to Know. Unless, of course, you are taking about stock market ventures where you got lucky to make that kind of ROI. But then you must have insider information or you must be junior Warren Buffet or you must........ because the market was very sick during these years and still is, thanks to the "real world" fiscal policy of the republicans. Not that I am complaining, just a fact.


As a matter of fact, the stock market as measured by the S&P 500 has returned over 11% per year over the last 3 years. 
Interesting little calculator here: http://www.moneychimp.com/features/market_cagr.htm
Sure the finance guys on the board can explain this much better, but I would have fired my investment advisor (me) if I didn't make 6% during the last three years


----------



## BayAreaBMWFan (Aug 8, 2004)

Vikram said:


> Simple math. Buy if you are going to keep the car for a long time. If you change your car every 4-5 years or less, lease it. But then you must have money to burn and no other responsibilities and you mus.............


In high sales tax states, buying does not make sense unless you plan to keep the car for at least six years. If you are planning to keep the car for 8-10 years, then buying definitely makes sense.

But how about the people who value their time and do not want to be taking their 6-7 year old bimmers for shop visits once every few months, when they can have an in-warranty bimmer with an annual visit to the dealer?

Most people who buy new cars tend to change them every 5-6 years and there is a strong reason for that.


----------



## Vikram (Aug 15, 2006)

BayAreaBMWFan said:


> In high sales tax states, buying does not make sense unless you plan to keep the car for at least six years. If you are planning to keep the car for 8-10 years, then buying definitely makes sense.
> 
> But how about the people who value their time and do not want to be taking their 6-7 year old bimmers for shop visits once every few months, when they can have an in-warranty bimmer with an annual visit to the dealer?
> 
> Most people who buy new cars tend to change them every 5-6 years and there is a strong reason for that.


You must must have been eating hashish cakes when you wrote this. I have owned BMW's for last 20 years and never had "shop visits once every few months" with any of the cars. I have many friends who buy BMW's because they are rock solid. Just regular maintenance and occasional part replacement. For you to say that old bimmers are taken for shop visits once every few months shows how little experience you have with these machines. But then again may be you are one of those with new moneyliving on McDonald's or maybe you........


----------



## Vikram (Aug 15, 2006)

BayAreaBMWFan said:


> In high sales tax states, buying does not make sense unless you plan to keep the car for at least six years. If you are planning to keep the car for 8-10 years, then buying definitely makes sense.
> 
> But how about the people who value their time and do not want to be taking their 6-7 year old bimmers for shop visits once every few months, when they can have an in-warranty bimmer with an annual visit to the dealer?
> 
> Most people who buy new cars tend to change them every 5-6 years and there is a strong reason for that.


You must must have been eating hashish cakes when you wrote this. I have owned BMW's for last 20 years and never had "shop visits once every few months" with any of the cars. I have many friends who buy BMW's because they are rock solid. Just regular maintenance and occasional part replacement. For you to say that old bimmers are taken for shop visits once every few months shows how little experience you have with these machines. But then again may be you are one of those with new money living on McDonald's or maybe you........


----------



## hockeynut (Apr 14, 2002)

Cowboy Bebop said:


> I was going to pay cash out the door or mine, but the interest rate was 3.8% which was like free money, so I financed it for three years!


Same here...I got 2.9 for 5 years so financing was by far better than paying cash.


----------



## hockeynut (Apr 14, 2002)

Vikram said:


> You must must have been eating hashish cakes when you wrote this. I have owned BMW's for last 20 years and never had "shop visits once every few months" with any of the cars. I have many friends who buy BMW's because they are rock solid. Just regular maintenance and occasional part replacement. For you to say that old bimmers are taken for shop visits once every few months shows how little experience you have with these machines. But then again may be you are one of those with new money living on McDonald's or maybe you........


Those who have problems will post like crazy. Those who have a perfectly running car will never be heard from.


----------



## BayAreaBMWFan (Aug 8, 2004)

Vikram said:


> You must must have been eating hashish cakes when you wrote this. I have owned BMW's for last 20 years and never had "shop visits once every few months" with any of the cars. I have many friends who buy BMW's because they are rock solid. Just regular maintenance and occasional part replacement. For you to say that old bimmers are taken for shop visits once every few months shows how little experience you have with these machines. But then again may be you are one of those with new money living on McDonald's or maybe you........


How do you define regular maintenance? An oil-change every 7500 miles as most long term owners recommend? If you are driving 15000 miles an year that is at least two visits. Throw in another visit or two for repair issues, and it becomes 3-4 visits an year. Or on an average a visit every 3-4 months. I guess once you are on hashish cakes 3-4 months is not the same as "a few".

OTOH, a guy leasing or keeping the car under CPO warranty, will feel fine doing the oil change every 15,000 miles as recommend by BMW.

Plus there is the added aggravation of trusting whatever the mechanic is telling you about what is wrong with the car and how much it would cost to fix it. If you know and trust someone very well, well and good. But is you do not it adds another element of uncertainty. For a person working 50-60 hours a week, this added excitement is not worth it. They would rather spend a bit more to get peace of mind, so that they can focus on activities which give a better return on their time. Often some of the more uncommon BMW parts are hard to get and may take a long time to arrive. So your car might be out of commission for a week or more at a time.


----------



## MG67 (Aug 19, 2003)

SteveinBelAir said:


> I can only vote once: 3 year lease AND company car.


:stupid:


----------



## spots (Apr 11, 2006)

BayAreaBMWFan said:


> How do you define regular maintenance? An oil-change every 7500 miles as most long term owners recommend? If you are driving 15000 miles an year that is at least two visits. Throw in another visit or two for repair issues, and it becomes 3-4 visits an year. Or on an average a visit every 3-4 months. I guess once you are on hashish cakes 3-4 months is not the same as "a few".
> 
> OTOH, a guy leasing or keeping the car under CPO warranty, will feel fine doing the oil change every 15,000 miles as recommend by BMW.
> 
> Plus there is the added aggravation of trusting whatever the mechanic is telling you about what is wrong with the car and how much it would cost to fix it. If you know and trust someone very well, well and good. But is you do not it adds another element of uncertainty. For a person working 50-60 hours a week, this added excitement is not worth it. They would rather spend a bit more to get peace of mind, so that they can focus on activities which give a better return on their time. Often some of the more uncommon BMW parts are hard to get and may take a long time to arrive. So your car might be out of commission for a week or more at a time.


Vicious circle. You work 60 hrs a week to pay for your new lease BMW. Try working 35 hrs or 40 hrs a week and keeping your car a few more years. You'll have plenty of time to bring it in for an oil change.


----------



## Vikram (Aug 15, 2006)

spots said:


> Vicious circle. You work 60 hrs a week to pay for your new lease BMW. Try working 35 hrs or 40 hrs a week and keeping your car a few more years. You'll have plenty of time to bring it in for an oil change.


Spots, you are a wise, and witty!:thumbup:


----------



## BayAreaBMWFan (Aug 8, 2004)

spots said:


> Vicious circle. You work 60 hrs a week to pay for your new lease BMW. Try working 35 hrs or 40 hrs a week and keeping your car a few more years. You'll have plenty of time to bring it in for an oil change.


Looking at my post count does it look like I work 60 hours/week.:rofl: :rofl: :rofl:

OTOH, there are a lot of folks whose profession require long work hours as an initial investment which hopefully would lead to big payoffs in the future. (e.g. a management consultant, an Investment Banker, even an MD during the residency). The long hours come with the job. The initial compensation is not too high but these folks are hard-pressed to find the time to maintain cars.

A lot of these folks will be compensated at an hourly rate well over the $100 the dealer charges for an oil change. These folks just do not want to devote their spare time to maintain cars.

There is a monetary value of time. For most of us, the money saved is worth it. For many others the time saved is worth more. That is why comments like "eating at McDonalds" sound very parochial. If you like to work on cars, or do not mind the additional risk of a car breakdown or the hassle of dealing with mechanic, it certainly makes economic sense to own for a long time. For others it does not.


----------



## Vikram (Aug 15, 2006)

BayAreaBMWFan said:


> Looking at my post count does it look like I work 60 hours/week.:rofl: :rofl: :rofl:
> 
> OTOH, there are a lot of folks whose profession require long work hours as an initial investment which hopefully would lead to big payoffs in the future. (e.g. a management consultant, an Investment Banker, even an MD during the residency). The long hours come with the job. The initial compensation is not too high but these folks are hard-pressed to find the time to maintain cars.
> 
> ...


For someone who speaks a lot about time, it is a commodity *you* seem to have a lot of. Hammering the same infinitesimal issue to death.


----------



## chuck92103 (Oct 9, 2005)

Here is a secret. BMWFS does not lease more than approx. 1/3 of the cars BMW's sells in the U.S. No manufacturer does. They can't. If everyone leased, BMW would have a flood of cars on the resale market with no buyers.

If leasing was more popular, you would see residuals and resale values plummet. 

Leasing is just one avenue that BMW uses to increase car production and have a CPO fleet but they have to go easy on the sauce or the house of cards collapses.


----------



## chuck92103 (Oct 9, 2005)

BayAreaBMWFan said:


> But how about the people who value their time and do not want to be taking their 6-7 year old bimmers for shop visits once every few months, when they can have an in-warranty bimmer with an annual visit to the dealer?


You are perpetuating a myth. No car (except Jaguar :rofl: ) is that bad. My used bimmers in the past saw the dealer once or twice year for service/repairs.

If you look at the statistics, more new BMW's go to the dealer or indy for issues during the first couple years than used ones. All the bugs, rattles, glitches, free maintenance, etc. promote dealer visits.


----------



## Vikram (Aug 15, 2006)

chuck92103 said:


> You are perpetuating a myth. No car (except Jaguar :rofl: ) is that bad. My used bimmers in the past saw the dealer once or twice year for service/repairs.
> 
> If you look at the statistics, more new BMW's go to the dealer or indy for issues during the first couple years than used ones. All the bugs, rattles, glitches, free maintenance, etc. promote dealer visits.


You are absolutely right and I agree 100%! And by the way so do all the bimmer owners I know. This is my personal experience for past 20 yrs as well. Like I said earlier, "Bay AreaFan" belongs to the "New Money Group living in McMansions", he still has to learn how to spend it and has to learn a lot about the ultimate driving machine:rofl: . Case closed.


----------



## BayAreaBMWFan (Aug 8, 2004)

Vikram said:


> For someone who speaks a lot about time, it is a commodity *you* seem to have a lot of. Hammering the same infinitesimal issue to death.


Are you logically impaired or what? I never claimed that I am short of time. However your condescending statements about people who lease having "new money" or "living in McMansions", living in "McDonalds" clearly show an inability to realize that for a lot of people time is money. I know people who have had the same Bimmer for 9 years, but after a change of career do not have the time to keep it in shape anymore.

chuck: It is a case of YMMV. Talk to anyone who has an E38 and how many trips they have to make per year. The rule of the thumb with E38s is to budget $1500-2000 per year to keep the car in shape. A few trips an year are not by itself a big deal; it is the time the car of commission waiting for a part, along with dealing with unexpected repair bills which they have no idea are true or not.

For people who do not want to keep a car for more than 5-6 years leasing BMWs makes a lot of sense with the ED leases, the BMW CCA rebates, included maintenance, sales tax savings etc. For people who want to keep the car for a long time, clearly buying makes the biggest sense. Even for these folks, it makes sense to lease the car if the money factor being offered on the lease is good. Right now Z4s can be had for 1-2% on leases, and it makes a lot of sense to lease them initially and then buy them at the end of the lease. There is also the reduced riks of diminished value or lower resale value. After three years you can always buy the car, many times below the residual through a friendly dealer. The money you would have put down on the car, can be invested. With a 5% spread on a $45K car, over three years, you are talking about a $7K savings in interest costs by just by leasing the Z4 for three years, and then buying it if you want it.


----------



## HGilmore (Oct 27, 2005)

schley said:


> The debates about what to do in your decision on wether to buy or lease are endless.


Great thread BTW. In life, regarding major purchases such as a car, there are basic rules that one can follow to achieve their financial goals. One that stands out is: 
Never, never, never *own* a depreciating asset.


----------



## schley (May 26, 2005)

HGilmore said:


> Great thread BTW. In life, regarding major purchases such as a car, there are basic rules that one can follow to achieve their financial goals. One that stands out is:
> Never, never, never *own* a depreciating asset.


Many of us love to analyze buy vs. lease deals. For some it maybe the highlight of their day if they find a great lease deal when running the numbers for a car they will never get.

Knowing that everyone needs to have the use of this depreciating asset complicates the picture. You really have to weigh out both scenario's and then decide. Blindly choosing one or the other doesn't ensure a good decision.

The only way to get ahead by buying is if you plan on owning it for 4 or more years, generally when running numbers on non ED sales. Now this can change if you live in a tax free state. I hate all of you btw.

That is far and away the #1 consideration IMO. But situations change, life happens and the decision you were so proud of before turns out to not be the best. Don't beat yourself up over it as long as you made the best decision with the info you had at that point in time.


----------



## spots (Apr 11, 2006)

HGilmore said:


> Great thread BTW. In life, regarding major purchases such as a car, there are basic rules that one can follow to achieve their financial goals. One that stands out is:
> Never, never, never *own* a depreciating asset.


 In your scenario I would be leasing all of my furnishings, computers, construction equipment, appliances etc.
Realistically the only asset that will (hopefully) appreciate is our real estate.
I am at the point in my life that I am financially comfortable and I am financially
set for the rest of my life. Having a car payment when I can pay for the car cash was not something I wanted. Now if BMW was offering 0% or 2% for purchase rate then I would have a car payment.  
I tend to keep my cars 8 to 10 years and my company trucks a bit less.
I am glad people do lease. My father always buys lease returns/CPO vehicles. The money he saves will one day pad up my bank accounts. :thumbup:


----------



## schley (May 26, 2005)

spots said:


> I am glad people do lease. My father always buys lease returns/CPO vehicles. The money he saves will one day pad up my bank accounts. :thumbup:


Don't push him into the grave


----------



## spots (Apr 11, 2006)

schley said:


> Don't push him into the grave


I'm not. He is in that generation that thinks they should leave an inheritance to their kids. :dunno:

I'm hoping that when I die the check to the undertaker bounces.


----------



## schley (May 26, 2005)

spots said:


> I'm not. He is in that generation that thinks they should leave an inheritance to their kids. :dunno:
> 
> I'm hoping that when I die the check to the undertaker bounces.


I think that is what all kids should expect. Make your life the best it can be without relying on your parents. They have helped you their whole lives now they have to lease you 200k for an inheritance? I have encouraged my parents to live life now. When me and my bro and sis were growing up they were very conservative to make sure they were able to provide for us through college.

Now is there time! They went to Hawaii a year ago (first time outside the US). This coming year they are going on a cruise (first time as well). They are only 60 but all my dad's family has passed away in their early 60's. As someone who loves them, I would want to know that they were able to live life without worrying about leaving what THEY earned for us kids.


----------



## srobmw (Jul 17, 2006)

Getting back to the subject at hand:

3 year lease, 15k per year.


----------



## Vikram (Aug 15, 2006)

That is one kick ass car man!


----------



## srobmw (Jul 17, 2006)

Vikram said:


> That is one kick ass car man!


I'm lovin' it!


----------



## jetstream23 (Mar 9, 2004)

I got 3.9% for 5 years in 2005 so I financed instead of buying and kept my money in stocks and bonds.


----------



## Double-S (Nov 30, 2006)

Leased mine for three years for many reasons but the most important one was the comfort in knowing that when I take it in for service and the entire staff take turns driving it around town and on the track I can just return it to them after the lease is up or stop pymts if they total it! :rofl:


----------



## TDT (Nov 15, 2006)

SSIMON said:


> Leased mine for three years for many reasons but the most important one was the comfort in knowing that when I take it in for service and the entire staff take turns driving it around town and on the track I can just return it to them after the lease is up or stop pymts if they total it! :rofl:


You know, that is the best reason for leasing that I have ever heard. Seriously. I think you are a genius.


----------



## A320 Scott (Jan 19, 2007)

I used to be on the "lease treadmill" for many years even though I drive roughly 17,000 miles per year and structured them accordingly. In my dumber years the 3-4 year leases were an avenue to drive "more car for less money." Until I grew tired of the vehicle and bought myself out of it! More recently a slew of 2-year leases were selected. Note: I can't write-off any of my driving. So....

The last 3 cars were paid in cash. Despite an 840 credit score ultra-low financing was not available for my desired rides. While this has been an interesting debate, my comfort level is to restrict debt to a home mortgage. FYI I was a charter member of the Citi Drivers Edge Mastercard to extract 2% from all purchases to an auto refund account. They've paid me many thousands of $ over the years - and I've never paid a cent in finance charges. BTW, the program was recently liberalized to grant payment for used vehicles, dealer or pvt party.


----------



## Imola.ZHP (Jan 29, 2007)

I'm actually glad I didnt lease an e90 330i sport. At the time I purchased my ZHP, I had not even heard of the 335i...

At time of purchase BMW Finance was running a special, 3.9% for 60 months, and they PAID, NOT DELAYED, my first two payments...

When its said and done, I'll have it paid off 48 months, give or take a month or two, from purchase...


----------



## Ladis540 (Sep 14, 2005)

19.1%right now have a 5year loan, with BMW 2.9%financing it would be stupid not to. 540i ROCKS!!!!!!!!!!!!!!!!!!!!!!!


----------

