# Wow, the 2 year ED lease is a pretty good deal



## Andrew*Debbie (Jul 2, 2004)

One thing that everyone here seemed to miss. BMWFS subsides some leases. The leases are a hidden rebate. 

Example: 2007 X3 12,000 miles a year / 24month lease the residual is 77%. For this example assume you can get the car for ED invoice + $2000 (including all fees). Residual is based on US MSRP. So your effective residual is more like 82%


No way is the car going to be worth residual.


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## cruise_bone (Jun 6, 2007)

Another problem I would have leasing is the 12,000 miles a year, or whatever limit would be imposed. I have driven 20K+ miles/yr for over 20 years.


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## caveatesq (Jun 23, 2005)

Andrew*Debbie said:


> One thing that everyone here seemed to miss. BMWFS subsides some leases. The leases are a hidden rebate. Right now the 2 year leases are real bargains.
> 
> Example: 2007 X3 12,000 miles a year / 24month lease the residual is 77%. For this example assume you can get the car for ED invoice + $2000 (including all fees). Residual is based on US MSRP. So your effective residual is more like 82%
> 
> No way is the car going to be worth residual.


EXACTLY - We have a 24 month lease on my wife's '07 530xit. We picked it up last November when money factors were low and residual's high. The U.S. MSRP on the car was over $60,000. Our monthly lease payment is $590 - and that includes sales tax, acquisition and registration fees - and all we paid at signing was the first month's payment. There is no way this car will be worth its 72% residual at lease end.


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## Andrew*Debbie (Jul 2, 2004)

cruise_bone said:


> Another problem I would have leasing is the 12,000 miles a year, or whatever limit would be imposed. I have driven 20K+ miles/yr for over 20 years.


Leasing isn't for everyone. If you drive > 15,000 a year, leasing is generally more expensive then purchase. We took that into account when we bought our current house. We've got a 3 mile commute to work. Saves us a ton of money.


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## 335i (Feb 23, 2007)

There is no difference between owning a depreciating asset and leasing in most instances, the money still disappears. It makes no sense to "own" something that is going to wind up being worth nothing in the end (you can't get to zero, but you get the point) People don't understand that when you buy, and your car is paid for, you are still really "paying" for it, with your car just being worth less and less each month. Now, if you own a car for 10-15 years, you may wind up on top, but I'm willing to take on a stiff bet that I can outdo in the stock market and CD's what that BMW is going to yield for a return. Tying u7p your assets when it's paid off (we'll say after a 3 year note - when most leases are up - if you've bought the car, you've got ~ 60% of the car's value tied up, and it's not making you ANY money (if it is, well, people wouldn't be leasing BMW's) Meanwhile, I've leased the car, paid less money per month than you, and invested my portion in something else, say the stock market, CD's, etc. I make 7%, wind up with over 30K after 3 years, and you've lost money on your "investment". You've got no assets "stuck", and you don't get upside down in the value/debt ratio of the car. People can have different cars more often, which, for me, will mean a constant warranty, which is important to me. I have a set budget, and can count on it monthly. From a finance standpoint, it makes no sense to buy unless you plan to put more miles on it than leases allow at a reasonable cost, or if you want to mod it or plan to keep it forever. NOW, that said, take a ED lease, and multiply the savings, and you have an even better looking deal. In KS, I also have to pay sales tax up front, and it isn't refundable. My last car I kept for 1.5 years, and sold it, and flushed the 2K in sales tax away, which makes it more desirable to lease and pay the tax for exactly how much I use of the car. 

I do "own" a 1987 jeep cherokee, but it's my second car, and I have little "invested". People are too caught up in "ownership" and not enough on the entire balance sheet. Another thing that people look at badly are interest only mortgages, which are very similar to leases... if you don't stay in a house very long, it's a VERY smart move - the interest rates are cheaper than 30yr mortgages, you can get them fixed for up to 10 years, the interest is tax deductible, and you still have an appreciating asset that you've invested NOTHING in (your assets aren't tied up) Tell me how that is a bad deal?


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## bmwfanwashdc (Feb 28, 2007)

One huge benefit of the lease that I am not sure was mentioned, there is no diminished value absorbed by you if car is involved in a collision.


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## AK (Jan 19, 2002)

cruise_bone said:


> I didn't say anybody shouldn't lease. To each his own. My only point is that it is more expensive over the long term.


Ever owned a BMW past its warranty period?

Getting back on topic, I did a 24 month European Delivery lease. It has its pluses and minuses.

Plus side is I get to do ED more often!

Minus side:
There is 2+ weeks of lost time between lease inception (signing the contract) and actually picking up the car in Munich.

Redelivery time, in my case, took *9* weeks, or over 2 months, since I'm on the west coast.

Overall, about 3 months of time elapsed between signing the lease and actually having the car here on US soil. BMWFS gives you a lease payment for free but ultimately you're making 23 payments on something you only have for 21 months. With a 3 year ED lease, that's 35 payments for 32 months, or less "ED overhead". Let me tell you, it is painful having to explain to people how you're making payments on something you don't actually have.

I'm trying to rationalize the lost 3 months by saying my lease is based on mileage moreso than time. I have 24K miles to dump on the car in 21 months. I'm still almost 3K miles behind schedule on my lease, given an average of 1K/mo of driving. That leaves me an opportunity for a nice, big road trip in this car before I turn it back in, which frankly I'm looking forward to.

Next time I'll have an active BMWCCA membership in place so I'll be eligible for the $500 rebate; this will help counteract the payment I have to make during that extra month my car is on the boat.


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## 335i (Feb 23, 2007)

Asteroid said:


> :thumbup::thumbup:
> 
> I am with you Galun. Especially on the part about being in debt.
> 
> I will chime in with "any savings realized by ED is negated by the money you're spending on the vacation, so it's not financially wise thing to do".


I went to Europe, spent 9 days, drove, and after ALL costs, still wound up 1K on top (saved $1000 after costs of ED) Plus, I got a vacation (and an engagement) out of it 

People don't generally do ED just for the savings, it's more about the experience. 1100 miles proved that to me. You're basically passing up a free vacation or a heavily subsidized vacation at that - staying here doesn't "save" you any money...

I still love the look on people's faces when I tell them I went to Europe to pick it up :bigpimp:

(I'm 22, their jaws literally hit the ground!!) - then again, they use the same rationale - "you don't really save any money... leases are a bad idea..."


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## Galun (Aug 14, 2002)

AK said:


> I'm trying to rationalize the lost 3 months by saying my lease is based on mileage moreso than time. I have 24K miles to dump on the car in 21 months.


That is exactly the way I look at it. Plus, in my case, I would have driven around 1800 - 2000 miles in Europe already


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## cruise_bone (Jun 6, 2007)

People are too caught up in "ownership" and not enough on the entire balance sheet. Another thing that people look at badly are interest only mortgages, which are very similar to leases... if you don't stay in a house very long, it's a VERY smart move - the interest rates are cheaper than 30yr mortgages, you can get them fixed for up to 10 years, the interest is tax deductible, and you still have an appreciating asset that you've invested NOTHING in (your assets aren't tied up) Tell me how that is a bad deal?[/QUOTE]

I'll tell you how that is a bad deal - I'm sure you are fully aware of how the sub-prime market has tanked? This is mainly because too many people who wanted to buy more house than they could afford(very similar to a lease, as you say) got sucked in to the Interest only loans, and then when the rates changed they couldn't afford the higher payments. They couldn't refi they have little quity since the market has done much. In case you haven't hear, the current situation is pretty bad.

I have friends you did the Interest only deal in SFO, sold it after 4-5 years, moved to a different part of the country and paid cash for a house.  I know it has worked for some, but for many it's been very bad indeed.


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## bimmer_fam (Apr 16, 2007)

Man, you are truly restless! Now you are taking on the entire community of "interest only" borrowers...  I wonder what would be the next topic...
What happened to "time to make some money"? :bigpimp:


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## DCJAX (May 21, 2007)

Galun said:


> If you plan on owning until you car dies then of course it's better to buy. Duh!
> 
> Mr simple math and others, I welcome any challenge and rebuttals that you have. I would love to be proven wrong on what had work out very well for me twice (about to be the third time). Thanks for reading.


The numbers are pretty close, which makes sense. If leases were bad deals then fewer would do them, if they were too good of a deal BMW would raise the prices.

Some states tax the full value of the car, not just the lease cost too. That shifts the math a bit.

Also, with a lease you are locked into owning the car, not so with buying. Lease vs Buy represent different forms of risk.


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## Galun (Aug 14, 2002)

DCJAX said:


> The numbers are pretty close, which makes sense. If leases were bad deals then fewer would do them, if they were too good of a deal BMW would raise the prices.
> 
> Some states tax the full value of the car, not just the lease cost too. That shifts the math a bit.
> 
> Also, with a lease you are locked into owning the car, not so with buying. Lease vs Buy represent different forms of risk.


I agree on the state tax. However, you may be surprised at how easily you can get out of a lease if you negotitate a good deal to begin with - like an ED lease. My current lease is about 70% of the average monthly payment of a similar car. I posted my car on a lease trading website, and based on the response it generated, I think it would take probably 2 weeks to unload my lease if I wanted to.


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## cruise_bone (Jun 6, 2007)

bimmer_fam said:


> Man, you are truly restless! Now you are taking on the entire community of "interest only" borrowers...  I wonder what would be the next topic...
> What happened to "time to make some money"? :bigpimp:


Oh, I made it already. Doesn't take long, and it's Friday, so I'm done for the week.

I am not taking on the "entire community of "interest only" borrowers". Geez. But, too many people fell into the trap of Interest Only and the whole sub-prime market has hit the bottom. Hopefully it's the bottom. The current situation is not good, and it's because people used interest only to get into houses they wouldn't be able to afford otherwise and then got bit when the rates changed. :tsk:


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## bimmer_fam (Apr 16, 2007)

cruise_bone said:


> Oh, I made it already. Doesn't take long, and it's Friday, so I'm done for the week.
> 
> *Good for you!*
> 
> I am not taking on the "entire community of "interest only" borrowers". Geez. But, too many people fell into the trap of Interest Only and the whole sub-prime market has hit the bottom. Hopefully it's the bottom. The current situation is not good, and it's because people used interest only to get into houses they wouldn't be able to afford otherwise and then got bit when the rates changed. :tsk:


Well, let them fall "into the trap", as everyone is capable of making grownup decisions on their own...

I personaly know people that used this so-called trap to get into 10s (!!!) of realestate deals. They have properties in several states and can retire now without any fear of being at the bottom, and a lot of it thanks to the "interest only trap".

Rates are still very low. Every interest only loan has a life cap. There are plenty of people who got into houses they can't afford with 30 or even 40 year mortgages...

You don't know everything... No one does.

Good luck!


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## ProRail (May 31, 2006)

cruise_bone said:


> I didn't say anybody shouldn't lease. To each his own. My only point is that it is more expensive over the long term.


....oh yes, and that a person who leases a Bimmer is very close to being a poser.


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## Fredric (Mar 29, 2007)

cruise_bone said:


> Another problem I would have leasing is the 12,000 miles a year, or whatever limit would be imposed. I have driven 20K+ miles/yr for over 20 years.


I think that you have made my point here. So that for YOU leasing may not be a good option. But everyone's circumstances and needs are different. In my case, e.g., this is my first BMW after driving Saabs for many years. I took a two year lease to see how much I like the car. And I generally drive less than 5,000 miles a year. Could have bought it, but put the cash in an investment that has been yielding a very good rate of return, and don't have to worry about selling it. If I love the car (as I expect), then at the end of the lease I will either lease again, or purchase, depending upon my needs and inclination at the time. BTW: there is something to be said for not having to be concerned about maintenance and repairs, and always having the latest technological advances.


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## chrischeung (Sep 1, 2002)

cruise_bone said:


> I didn't say anybody shouldn't lease. To each his own. My only point is that it is more expensive over the long term.


Cruise_bone - let me flip this around.

Is there ever a situation where a personal lease would make sense over the long term? Say you could get a 335i for $100/month with zero down. Would that be financially beneficial compared to purchasing? My point is, is there a price point, say $x/month, below which a lease would make financial sense?

I'm currently happy with my 525i at less than $360/month (0 down) rather than the $49K including tax it would have cost me if I had paid cash (that was my negotiated price). I guess I'm missing the benefits of purchasing, but I'm still quite pleased with what I did.


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## BumBMW (Feb 8, 2007)

Galun said:


> Yeah, the problem is that you are not open minded enough to see otherwise.


No, no, no... I think I am. You guys do have a point. After all I was trained as a scientist, not an investor but I have to learn. I will look into it and thank you for this.


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## BayAreaBMWFan (Aug 8, 2004)

cruise_bone:
I noticed that you joined the fest recently. Welcome.

There are a number of threads on this forum which have debated this issue. I believe one of them is a sticky in either this or the Ask a Dealer forum.

Before you reveal more of your ignorance, please go through the threads.

The executive summary is: With ED, BMWCCA rebates, high residual values, low money factors, sales tax savings, it is a no-brainer to lease a BMW. The only time buying makes sense is if you keep the car for a long time (> 7-8 years). If you keep them for 5-6 years, lease. You will be better of financially, even with your money invested in low risk investments. If you have a larger appetite for risk you could make a lot more. 

Tons of very smart, capable, and affluent people have done the analysis, running spreadsheets and doing the math, before coming to the conclusion above.


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## bimmer_fam (Apr 16, 2007)

cruise_bone said:


> With all this said, if people don't want to recognize or admit that the only way many, maybe most of them can afford to drive a 3er is by leasing, because alternatively the same payment would only allow the purchase of an Accord, they are kidding themselves. Those people who are kidding themselves are posers. Poser's get angry when you tell them they are faking it. I don't care if people don't want to admit there are better financial decisions that could be made to help plan for their future.


Dude, your logic makes no sense. It seems to me the only reason you would buy a BMW is to maintain an image for your clients, friends, etc. And you are calling other posers? :thumbup: You are just pissed that others can drive BMW for less...

On the other hand, if your plan is to live your life as cheap as possible and retire ASAP, than why not buy Accord? Well equipped Accord is between 25 - 30K, so get it, pay it off, drive 20 years (you will probably have less issues with this fine automobile after the warranty period is over).

As someone already noted, if they are driving bimmers - they are affording them. Period.

PS. One more point, BMW is not the cheapest car to own even if you pay it off. Consider Ford Taurus, etc., as the insurance will be a lot cheaper too...


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## rprasad (Nov 11, 2005)

bimmer_fam said:


> On the other hand, if your plan is to live your life as cheap as possible and retire ASAP, than why not buy Accord? Well equipped Accord is between 25 - 30K, so get it, pay it off, drive 20 years (you will probably have less issues with this fine automobile after the warranty period is over).
> 
> As someone already noted, if they are driving bimmers - they are affording them. Period.


Nice.


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## jnmit12 (May 4, 2007)

*Responsible 1 year lease*

It looks like this amusing thread is losing steam.. let me toss some fuel on the fire.

In line with the OP's point, a 2 year maximizes the benefit of an invoice +$XXXX ED procurement upsetting conventional wisdom that a 3 year lease is less expensive.

Well, extend the thought further - you can keep the car 12 or 18 months in some cases and do even better. Buyers can utilize balloon financing to enjoy the benefits of low cash payments and guaranteed residuals while retaining the ability to sell the car before term maturity should it become desireable.

While the rates are slightly higher than leasing, you can avoid the lease inception fee (correct me if I'm wrong on this) and still get the BMWCCA rebate. Ignoring the travel costs for a moment, the first year depriciation is more or less covered by the ED discount (especially on an early model year car, like the 08 E60) You can trade/sell the car each year and potentially get your original cap cost or close to it. In a tax-unfriendly state like TX, this allows me to perpetually roll over the taxes I pay on the first car into the second, and so on. The bottom line leaves you with holding costs (interest) and minimal or no depriciation. Worst case, you keep the car for the full term and end up no worse than where you originally expected.

While I'm not anxious to get a new car every year, I do enjoy the fun of figuring out ways to minimize my net cost - the perpetually new car is a nice benefit.

Adding back in the time and cost of the trip could make this a wash or an additional expense for many, but I've already got more miles & points than I could ever use and personally ENJOY vacations & new cars

Fair disclosure - I'm not yet 30, can afford the cars, and understand the concept of financial decision making reconciled with personal values & preferences. (I'm going to buy a BMW not a used Honda - that said, how might I do so in the most economical way possible)

Ps - Another point possibly not stated explicitly: If you want to buy a new BMW and keep it 10 years, consider leasing and buying upon term maturity. While you have the inception fee to absorb, the subisized rates and alleviated opportunity cost of capital should put you ahead in net terms.


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## jnmit12 (May 4, 2007)

*Put your car on a credit card...*

forgot to mention another option: Credit Cards. Put the car on a card via balance transfer check(s) and enjoy little or no interest for a year or whatever promo your bank offers. Sell the car in a year, and do it again - each time weighing the prevailing financing options at your disposal.

The opportunity cost in this case is taking the card money and investing it elsewhere during the promo term. Borrowing $50k @ 0-1.99% and sticking it in a CD is free money!


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## griffmac (Sep 29, 2006)

n


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## Galun (Aug 14, 2002)

jnmit12 said:


> Well, extend the thought further - you can keep the car 12 or 18 months in some cases and do even better. Buyers can utilize balloon financing to enjoy the benefits of low cash payments and guaranteed residuals while retaining the ability to sell the car before term maturity should it become desireable.
> 
> While the rates are slightly higher than leasing, you can avoid the lease inception fee (correct me if I'm wrong on this) and still get the BMWCCA rebate. Ignoring the travel costs for a moment, the first year depriciation is more or less covered by the ED discount (especially on an early model year car, like the 08 E60) You can trade/sell the car each year and potentially get your original cap cost or close to it. In a tax-unfriendly state like TX, this allows me to perpetually roll over the taxes I pay on the first car into the second, and so on. The bottom line leaves you with holding costs (interest) and minimal or no depriciation. Worst case, you keep the car for the full term and end up no worse than where you originally expected.


Interesting. How does the sales tax work out in balloon financing? It seems like I have to pay for the full sales tax up front, but when I trade / sell I will won't get an sales tax credit. Maybe it's different by state?


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## jnmit12 (May 4, 2007)

In Texas and a number of other states, tax is assessed on the full purchase price of the car (less any trade in value). This obviously dilutes the conventional benefits of leasing in most cases, but if the scenario I proposed plays out, it could allow me to minimize the pain of TX taxes.

In other states, you can pay a lump tax on the deprication of the car, or pay on the payment itself. Obviously, in a conventional lease w/turn in, this is preferred.


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## Galun (Aug 14, 2002)

jnmit12 said:


> In Texas and a number of other states, tax is assessed on the full purchase price of the car (less any trade in value).


Ah, I see how it can work out. That's the rationale for your comment on taking the hit on the first car but not after that. Unfortuantely in CA I think we have to pay sales tax on the sale price of the car, not the difference between the sale price of the car and the trade in, which is effectively a sales tax credit for your trade in vehicle.


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## jnmit12 (May 4, 2007)

I'm not positive, but I think In CA you pay on the monthly payment for a lease. I guess that doesn't do much good if you wan to do the balloon, with an early exit though, as I bet you have incur the full tax burden upfront. I didn't realize that you couldn't get a trade in credit - figured that was ubiquitous.

At any rate - in a state with monthly tax on lease payments, leasing can provide greater savings (as long as you recognize that it is still more expensive than buying an 83 Honda and keeping it for the rest of your life  )


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## Galun (Aug 14, 2002)

jnmit12 said:


> I didn't realize that you couldn't get a trade in credit - figured that was ubiquitous.


I am not 100% sure either, since I had never traded in a vehicle before - always sold private party.


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## jnmit12 (May 4, 2007)

Same here, but I've never sold a 50k car either. Once the value gets up there, the tax benefit can outweigh the benefit of private sale. Past purchases and sales have usually allowed me to drive with little or no depiciation. The challenge is extended this into the realm of expense cars.


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## jnealon (Jun 19, 2007)

A new car every two years. Nothing like renting....


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## BumBMW (Feb 8, 2007)

dunderhi said:


> One more thing - another generalization quoted by some: Never skimp on your house, car, or bed, because you will spend most of you life in these places. I'll also add a suggestion, include your office chair in that list. :bigpimp:


Very wise words:

That is why we are looking to buy a new bed (Crate and Barrel, possibly) and a nice Sealy viscoelastic cell bed thingy. My office chair is brand new high quality leather, which also makes me a poser I suppose.

I would like to add: also don't skimp on your wife. Good wifes are expensive these days but some of them are worth the price especially if you do an european delivery... ok I am falling asleep now.


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## JSpira (Oct 21, 2002)

BumBMW said:


> That is why we are looking to buy a new bed (Crate and Barrel, possibly) and a nice Sealy viscoelastic cell bed thingy.


The best is the Dux bed



BumBMW said:


> My office chair is brand new high quality leather, which also makes me a poser I suppose.
> 
> .


Depends. Did you lease it?:angel:


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## bimmer_fam (Apr 16, 2007)

Jspira said:


> The best is the Dux bed


Depends on the taste and your needs... :fruit: We like Kluft, which is hand-made in LA area:

http://www.kluftmattress.com/

McRoskey in SF also make a very nice hand-made product.

http://www.mcroskey.com/

Both are pricey, but like with cars, you get what you pay for...


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## dunderhi (Dec 10, 2006)

Jspira said:


> The best is the Dux bed


I really liked the Dux's when we were shopping last time around, but chose to go with SelectComfort. They are a bit gimmicky, and the box spring/platform is a bit cheap for my taste, but as advertised I do sleep better after I dialed in my preferences.


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## dunderhi (Dec 10, 2006)

BumBMW said:


> I would like to add: also don't skimp on your wife. Good wifes are expensive these days but some of them are worth the price especially if you do an european delivery... ok I am falling asleep now.


I second that notion. :thumbup:


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## jacksonhunter31 (Jan 25, 2007)

*Buy an Aeron...*

One more thing - another generalization quoted by some: Never skimp on your house, car, or bed, because you will spend most of you life in these places. I'll also add a suggestion, include your office chair in that list. :bigpimp:[/QUOTE]

Love the office chair reference...


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## footballer (Mar 12, 2007)

It's both pointless and inaccurate to state that leases are better or vice versa because there are many unknown variables involved in the calculation and many intangilbes that are hard to place a value on. Sure there are some that drive 90K/year and others that must have the latest and greatest, but for many of us the decision isn't as clear. 

For example, if the car turns out to be a lemon, you are going rack up repairs (outside of warranty) and the residual value will drop. In this case leasing would have been better. If the car turns out to be very reliable, and future models are significantly more expensive (check the trend on the US dollar), and interest rates higher, then buying was a better decision. There are hundreds of other factors as well.

Here's my analysis of 2-3 year leases vs 72 month finance and sell the car after 6 years (the idea being I don't want to own a BMW outside of the extended warranty.). I will be settling on my ED purchase in a couple weeks and I still haven't decided but I'm leaning toward the lease. Based on my estimates, I came up with the lease costing about 3000 more over six years, but changing any number of unknown variables (e.g. residual) can swing the result back and forth between lease and buy. My calculation doesn't put a price on having a new car in 3 years and perhaps the 3K is worth it for this and the continuous bumper-to-bumper warranty.


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## bimmer_fam (Apr 16, 2007)

The topic started by OP was about 2 year lease calculations coming up better than 3 year ones....

Then, out of blue Mr. cruise_bone called everyone who leases posers that can't see the big picture of future happy retirement and went on to "make more money"... :bs: He also managed to smear people with interest only loans in the process... 

Bottom line, as you said, do your own calculations, and make a decision you are comfortable with. Wanna pay cash for your bimmer, do it! Having your father/mother/other relatives give it to you as a present - good for you! Leasing some nice wheels for a few years - way to go!

As several of us stated here, lease is another form of financing your "time" with the car. Some of us are not so attached to the word "ownership" when it comes to cars :thumbup: To be clear, if you finance, it's not full ownership, and the bank will have something to say about it too.  

Good luck!


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## BumBMW (Feb 8, 2007)

footballer said:


> It's both pointless and inaccurate to state that leases are better or vice versa because there are many unknown variables involved in the calculation and many intangilbes that are hard to place a value on. Sure there are some that drive 90K/year and others that must have the latest and greatest, but for many of us the decision isn't as clear.
> 
> For example, if the car turns out to be a lemon, you are going rack up repairs (outside of warranty) and the residual value will drop. In this case leasing would have been better. If the car turns out to be very reliable, and future models are significantly more expensive (check the trend on the US dollar), and interest rates higher, then buying was a better decision. There are hundreds of other factors as well.
> 
> Here's my analysis of 2-3 year leases vs 72 month finance and sell the car after 6 years (the idea being I don't want to own a BMW outside of the extended warranty.). I will be settling on my ED purchase in a couple weeks and I still haven't decided but I'm leaning toward the lease. Based on my estimates, I came up with the lease costing about 3000 more over six years, but changing any number of unknown variables (e.g. residual) can swing the result back and forth between lease and buy. My calculation doesn't put a price on having a new car in 3 years and perhaps the 3K is worth it for this and the continuous bumper-to-bumper warranty.


Footballer,

To each its own of course but there are a few things that you are perhaps missing in your calculation. This is not a complete list but from glancing at your spreadsheet you are forgetting the very important factor of having extra cash for investments in the lease deal. You also won't need a new set of tires or breaks in a 2 year lease, which can run close to $2600 combined. Anyhow... just a few things to consider.


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## Stuka (Jul 17, 2002)

Either you pay on the lease payment, or you pay on the maintenance.

As someone who has owned the unreliable E36 M3 out of warranty, and a 19 year old E30, let me just say that if you think these cars are no big deal to operate post 50K miles, you really should think twice.

Ever had to replace the half shaft boot?

The clutch?

Perhaps the power steering pump?

A new radiator?

Be the unlucky bastard to have the plastic water pump go in the E36 M3?

Pay for rotors and pads change?

Drive shaft (my E46 M3 drive shaft died after only 20K miles)?

BMW's don't cost nothing to run out of warranty. I have certainly spent a fair amount keeping the E30 running. It's a fun little car, and after 100K, the cost per mile is pretty insignificant. But it still cost a few hundred bucks every time you need something done.

All this trouble versus paying what? 5500 bucks a year for a car that you only have to put gas in it?


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## asianspeed (Jun 12, 2007)

I think that there is no wrong answer. There's a right answer for each individuals situation. Beside the fact that a car is a depreciating asset, leasing can be good for some and owning can be good for others.

I think I'm a good example. I just bought (financed @ 2.9%) an 04' 330i. I financed the car because #1 I wanted to own the car because I plan on mod'ing it, #2 I've got better things to spend $30,000 on, like remodeling my home, #3 I don't have to pull cash out of investments that is earning me returns, #4 I won't have to pay tax on the interest earned when I pull those investments out, #5 I'm fairly mechanically inclined to do most repairs and maintenance to save money.

However, on the exact same day that I bought my car, I also helped my mom lease an 07 325i. This is great for her situation because #1 She't not mechanically inclined and she'd end up paying $100+ for an oil change, #2 She's older and she's planning on leasing 2 cars for 3 years each and then purchase a car. Why? Because she's expecting to drive for approx 15 more years. She know's if she buys a car, she's going to have to sell it and history shows that when she "sells" cars, she's really just gives them away because she's not a sales person and she doesn't mind selling a car at a great deal to someone that can really use that car more than she could. #3 Repairs are covered by the warranty...not to mention maintenance.

But more importantly, why did she lease one for 3 years and not 4 or not 2? Because of the residual value. Your lease payments are determined by the residual value of the car. The residual will change depending on the term you lease your car for.

I haven't even touched on the benefits of leasing vs buying for business vehicles. Or leasing with the intent of buying.

So there needs to be intangible benefits that are factored in, and personality traits, and financial situations, and many other factors. The bottom line is, leasing does not imply that it's a way to use something that you can't otherwise afford. For example, I would lease a car for my child in high school (if I had one). Not because I couldn't afford to buy them a car, but because I'd probably get them a car their Sophomore year (like my parents did) and I'd lease it for 3 years. Because when they're done with high school and off to college, I don't want to be stuck with a car that I have to sell that I never got to use. Nor do I want to send them off to college and hinder their growth and independance as a new college student. After they're 18 the independance kicks in and their on their own.

So don't judge people and their financial situation based on the fact that they lease a car.

But back to the primary topic of this post. A 2 year lease can be less than a 3 year because they're based on the residual value of the car. fyi, BMW's have great residual values that probably why somone said that 70% of BMW owners lease compared to other car manufacturers.

That's just my 2 cents for free.

Aloha


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## footballer (Mar 12, 2007)

BumBMW said:


> Footballer,
> 
> To each its own of course but there are a few things that you are perhaps missing in your calculation. This is not a complete list but from glancing at your spreadsheet you are forgetting the very important factor of having extra cash for investments in the lease deal. You also won't need a new set of tires or breaks in a 2 year lease, which can run close to $2600 combined. Anyhow... just a few things to consider.


I used the Present Value finanical formula in my calculation so actually I was taking into account the time value of money. Now the rates to plug into the calculation are anyone's guess -- mine was a 9% rate of return. If I lease it is about $115 savings per month, until the next lease which will undoubtably be more.

Brakes? Aren't brakes convered by the free scheduled maintenance in both leases and purchases? As for tires, I already accounted for the tire purchase in the lease.


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## dunderhi (Dec 10, 2006)

jacksonhunter31 said:


> Buy an Aeron
> 
> Love the office chair reference...


Some co-workers have Aerons, but I have pair of Allsteel #19's - one for work and one for home. :bigpimp:


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## BumBMW (Feb 8, 2007)

footballer said:


> I used the Present Value finanical formula in my calculation so actually I was taking into account the time value of money. Now the rates to plug into the calculation are anyone's guess -- mine was a 9% rate of return. If I lease it is about $115 savings per month, until the next lease which will undoubtably be more.
> 
> Brakes? Aren't brakes convered by the free scheduled maintenance in both leases and purchases? As for tires, I already accounted for the tire purchase in the lease.


Ow! Good calculation then!


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## Andrew*Debbie (Jul 2, 2004)

Stuka said:


> Either you pay on the lease payment, or you pay on the maintenance.
> 
> As someone who has owned the unreliable E36 M3 out of warranty, and a 19 year old E30, let me just say that if you think these cars are no big deal to operate post 50K miles, you really should think twice.


We have. Twice. I just sold my 1990 535i. We also had a 1996 318ti. Older BMWs are quite reasonable if you do the work yourself. As long as you stay away from M/// parts prices are often lower than domestic. I can do a brake job for a few hundred dollars. I've got the tool for the suspension bushings, so that only costs about $40 every 3 years. Water pump costs me less than $100. All the stupid plastic parts for an e36 cooling system are only a few bucks each. Radiators are expensive but they last about 7 years.

[I've got a spare 11 53 1 714 738 sitting on my desk. someone shoot me a PM if they need it]

There is also the question of the value of your spare time. If you enjoy working on cars, having one old BMW is a good value. I wouldn't get an e30 just to save money.


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## eyhab27 (Jun 22, 2007)

I personally like to purchase 2 year old Certified BMW's with low mileage, and typically try to get them for a steal... drive them for a couple of years, and sell it while it is still under warranty. The car only depreciates 5,000 to 6,000 max. Of course, I do take care of my cars


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## BumBMW (Feb 8, 2007)

eyhab27 said:


> I personally like to purchase 2 year old Certified BMW's with low mileage, and typically try to get them for a steal... drive them for a couple of years, and sell it while it is still under warranty. The car only depreciates 5,000 to 6,000 max. Of course, I do take care of my cars


How much you figure I could get a 2-3 year old CPO 355i Coupe loaded with MSRP ~ 49k?


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## JSpira (Oct 21, 2002)

BumBMW said:


> How much you figure I could get a 2-3 year old CPO 355i Coupe loaded with MSRP ~ 49k?


I don't know which is harder to come by, a 2-3 year old 355i coupe or a 2-3 year old 335i coupe :rofl:

both equally i would surmise


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## bimmer_fam (Apr 16, 2007)

BumBMW said:


> How much you figure I could get a 2-3 year old CPO 355i Coupe loaded with MSRP ~ 49k?


You probably meant 335, not 355...

The only way to find out is to wait 2 -3 years...even then, don't think there will too many of them for sale...

Good luck!


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## 335i (Feb 23, 2007)

another good reason to lease - you have no risk for depreciation - and if it's worth a ton more, you stand the chance to make a little money...

If it helps, residuals (coming off of lease) would be around 59-61%, depending on mileage. That's what BMW agreed to though, so it could be higher if they are still in high demand - these things may end up like the Supras, selling for almost MSRP 10 years later (We can hope can't we?)


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## Stuka (Jul 17, 2002)

Andrew*Debbie said:


> We have. Twice. I just sold my 1990 535i. We also had a 1996 318ti. Older BMWs are quite reasonable if you do the work yourself. As long as you stay away from M/// parts prices are often lower than domestic. I can do a brake job for a few hundred dollars. I've got the tool for the suspension bushings, so that only costs about $40 every 3 years. Water pump costs me less than $100. All the stupid plastic parts for an e36 cooling system are only a few bucks each. Radiators are expensive but they last about 7 years.
> 
> [I've got a spare 11 53 1 714 738 sitting on my desk. someone shoot me a PM if they need it]
> 
> There is also the question of the value of your spare time. If you enjoy working on cars, having one old BMW is a good value. I wouldn't get an e30 just to save money.


True, except I would say most probably don't work on their own BMW's.

And like you said, the value of your spare time. We are so busy nowadays that it is worth it for me to pay someone to do the work than me spending a Saturday doing what needs to be done, then drive to Pep Boys and dump the waste fluid.

But at the end of the day, if you don't have a trust worthy mechanic, you are going to spend more on a BMW post warranty.

And the way they design the drive shaft, WTF? You have to replace the whole thing when it breaks?

As far as the plastic implellers go, if you are not on the boards, how would you know?

There is something to be said about paying 5500 a year for a car that you only put gas in.


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## BumBMW (Feb 8, 2007)

335i said:


> another good reason to lease - you have no risk for depreciation - and if it's worth a ton more, you stand the chance to make a little money...
> 
> If it helps, residuals (coming off of lease) would be around 59-61%, depending on mileage. That's what BMW agreed to though, so it could be higher if they are still in high demand - these things may end up like the Supras, selling for almost MSRP 10 years later (We can hope can't we?)


The 335i will never end up like supras because unlike the supra it has had strong sales just like previous coupes.

I also don't think it will be too hard to find one with more or less the options one wants for sale. Just look at the fact that 70% of the drivers lease them and option them pretty nicely.


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## Andrew*Debbie (Jul 2, 2004)

Jspira said:


> I don't know which is harder to come by, a 2-3 year old 355i coupe or a 2-3 year old 335i coupe :rofl:
> 
> both equally i would surmise


Just for fun I did a quick model search. Found 5 CPO *2007* 335i coupes.


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## JSpira (Oct 21, 2002)

Andrew*Debbie said:


> Just for fun I did a quick model search. Found 5 CPO 2007 335i coupes.


uh, but did they fall into bum's criteria for being 2-3 years old?


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## bimmer_fam (Apr 16, 2007)

Jspira said:


> uh, but did they fall into bum's criteria for being 2-3 years old?


+1 :rofl:


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## BumBMW (Feb 8, 2007)

Jspira said:


> uh, but did they fall into bum's criteria for being 2-3 years old?


One would assume that I am talking about buying it 1 to 2 years from now no? If you wanna troll around at least say something funny.


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## 335i (Feb 23, 2007)

BumBMW said:


> The 335i will never end up like supras because unlike the supra it has had strong sales just like previous coupes.
> 
> I also don't think it will be too hard to find one with more or less the options one wants for sale. Just look at the fact that 70% of the drivers lease them and option them pretty nicely.


Does the coupe not have stong sales? :dunno:

Last time I was up at the dealership, I didn't see many on the lot, and on here, it seems like dealers aren't marking them down too much stateside (Coupes)

I was referring to the fact that many of the Supra TT's are sought after for their potential.


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## BumBMW (Feb 8, 2007)

335i said:


> Does the coupe not have stong sales? :dunno:
> 
> Last time I was up at the dealership, I didn't see many on the lot, and on here, it seems like dealers aren't marking them down too much stateside (Coupes)
> 
> I was referring to the fact that many of the Supra TT's are sought after for their potential.


Dear 335i:

I said they HAVE strong sales, unlike the supra, which became a rarity. But sure, it is supra-like for the modding potential.


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