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#1 (permalink) Old 02-22-2005, 10:15 AM
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Hey guys thanks for reading this and trying to help. I just ordered a new 2005 325ci BMW and I am tossing around the idea of leasing it instead of buying it. I know that leasing has its advantages and disadvantages which I have read about all over the internet, but it sounds like it would be best for me. Has anyone leased from BMW and can you tell me about your experience with it; both good an bad. Any info would be appreciated.
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#2 (permalink) Old 02-22-2005, 10:02 PM
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Sorry for being so blunt, but dont be a dumb fuck. Leasing, at least by my opinion is by far the worst option. Basically its just renting the car. You pay and x amount of dollars each month and it usually adds up to the actual retail of the car and when youre done with it you get to gladly give it back to the dealership. So what youre left with is paying for the car and having an empty garage at the end of the lease. Although it may be a tax benefit or if you cant afford the car cash please dont lease, just get a loan and pay for it over time. At least you will something to show for it at the end. Furthermore the loan process also helps your tax bracket.

Do understand I have no gain or loss of you leasing or loaning but my honest personal opinion is dont lease.

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#3 (permalink) Old 02-23-2005, 12:28 AM
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Yeah, don't lease....get a loan and buy the car.

Lets say you decide to lease....you make the payments....and after your lease is up....what do you get?
Answer: nothing.

If you decide to buy the car, lets say you get a loan with obviously interest. After you pay the CAR off first, then the interest....what do you get?
Answer: Ownage.

Moral of the story.......Do not lease.
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#4 (permalink) Old 02-23-2005, 08:54 AM
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Thanks for your openion on the subject, but basically the way that a lease works is you only pay for the amount that the car depreciates; no more, no less. My arguement is that the car is going to depreciate the same amount reguardless of whether you buy it or lease it. Plus at the end you have the option to buy the car at the set residual value. Also, I didn't pay retail even though they had to order my car; I still negotiated on the price.

So in my case the payment goes from buying the car over 36 months @ $950 w/ $2500 down (Principle and Interest) or $413 w/ $2500 down (depreciation) if I lease the car. Thats a hell of alot of money. Plus you really don't have much money out of pocket each time you buy.

I have had four new cars in the last 24 months, (two BMW's, an A4 Audi, and a Nissan Altima) so I know that I like to drive new cars constantly and will always have a payment. I am almost sure that leasing is right for me.

Has anyone here ever leased from BMW and what are the Pro's and Con's of it?
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#5 (permalink) Old 02-23-2005, 10:44 AM
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Quote:
Originally posted by jwkiser2@Feb 23 2005, 09:54 AM
....
Has anyone here ever leased from BMW and what are the Pro's and Con's of it?
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I just leased a 325i. I think the lease is decent. I didn't go for the advertised lease, I did a no-money-down 15,000 mile lease.

I think many people misunderstand leasing. It's really just another way of financing. The problem with leases is it's very easy for the dealer to bury what's really happening in the "monthly payment."

This is only me second leased car, but here's is what I've learned so far. (The below refers only to typical manufacturer-offered closed-end leases, like BMW's.)

1. Always negotiate the starting price as if you're going to buy the car. NEVER negotiate to a montly payment.

2. The cost of leasing consists of, usually, 4 parts, that make it different from buying:
a. The agreed-upon depreciation of the car. You are paying, by the month, for the agreed decrease in value from the selling price to the time you turn it in (the "residual value.") One way a car manufacturer can move cars is by allowing a high residual value (higher than the car is likely to be worth at the end.) This is to your advantage unless you buy the car at the end, in which case you would lose the advantage.
b. The interest you are paying. This is referred to as the "rental charge" on the lease. It is based on the "money factor." For example, the money factor on my lease is .00225. You multiply that number by 2400 to get a rough idea of what the comparable interest rate is (.00225 x 2400= 5.4%). Another way a manufacturer can make a lease attractive is by allowing a lower-than-market money factor.
c. The acquisition charge, if any. This is usually buried in the fine print, but is real money. BMW leases, AFAIK, currently have acquisition charges in the high hundreds. This is pure money out of your pocket (sort of like points on a mortgage).
d. The disposition fee, if any. This is frequently about $350, and is money you pay out at the end if you don't buy the car.

So, why is leasing said to be a bad deal? If you don't do your howework or know what you're doing, you can get ripped off without you knowing it. That's the biggest problem, IMHO. Secondly, you are paying that acquistion fee and disposition fee, that generally you won't pay if you finance. Third, you are often paying a higher interest rate than you would if you were financing (e.g., I could probably have gotten a 4.5% +/- interest rate if I had financed. Fourth, you need to be careful of mileage. If you buy too many miles up front, you lose that money. If you buy too few miles up front, then you are left with the choice of either paying an often-inflated charge at the end, or buying the car (which means you are most likely paying more for it than it is worth, but then again, you did get all those extra miles out of it without paying for them).

Why is leasing a good deal? First, you are only paying sales tax on the monthly payments (not up front, thus not financing it. Also remember, if you sell your used car privately, as opposed to trading it in, you are losing the sales tax you paid up front). Second, the risk of depreciation is shifted to the leasing company. Since you have an option to buy the car at the end of the lease at the residual value, if they underestimated what the car will be worht at the end, you can buy it and sell it at the higher value. If they overestimated, then just turn it in, and it's their problem.
(Then, of course, there are also possible tax advantages if you are using the car for business.)

That business about owning the car at the end: this is true if you intend to keep the car a long time. However, if you plan to give it up after 3 or 4 years anyway, you will have been paying more per month (let's say you pay $100 more per month to finance the car than lease it: that's $3600 over 3 years. You have to ask yourself if you will get that back if you try to sell your financed car yourself after three years. Maybe, maybe not. Conversely, though you don't own a leased car, you generally do have a an option to buy it at the end, which is like having an ownership interest in it.

Assuming you go into a lease knowing what you are doing, and assuming you get a decent money factor, then the only real cost over buying is that acquisition fee, and possibly the excess in effective interest rate compared to financing. At least part of that might be made up for in sales tax savings. In exchange, you are getting lower monthly payments plus a reduction in the risk of depreciation.

I kind of like leasing.

David
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#6 (permalink) Old 02-23-2005, 10:49 AM
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thanks a ton david
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#7 (permalink) Old 02-23-2005, 12:16 PM
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Leasing makes sense when you are in constant need of a reliable vehicle covered by a full manufacturers warranty. In particular, now that BMW is running free maintenance for the first 4 years, it certainly makes leasing more attractive. The drawback to leasing is, once it's up, you have nothing to show for the car. This wouldn't be bad if the car was nearing the end of it's lifespan by the end of lease term anyways, but we know a BMW is more likely to run for 150K+ miles past it's end of lease.

I would honesly suggest purchasing a used BMW (certified or not). From my research, I found that most BMW's tend to come off the factory line either error free or riddled with problems. Buying/Leasing new, you can't tell a cherry from a lemon, but used cars have a history. I opted to buy a 4-year old used car and haven't regretted it. Even managed to get it $2K below blue-book.

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#8 (permalink) Old 02-23-2005, 12:49 PM
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Quick math lesson -

Purchasing a $30K BMW @ 3.9% interest and paying over 5 years yields $36,482 total cost. Cost per month = $608. Resale @ 5 years is approx. $20K. Which means, if you sold the car after completely paying for it, you would have lost a net of $16,482.

Leasing a $30K BMW @ $399 per month for 36 months (plus assume $3000 down) would net you a loss of $17,364.

Financially, you're better option will be to purchase. For ease of maintenance and warranty peace of mind, leasing is better.

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#9 (permalink) Old 02-24-2005, 09:37 AM
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Quote:
Originally posted by Hootie361@Feb 23 2005, 01:49 PM
Quick math lesson -

Purchasing a $30K BMW @ 3.9% interest and paying over 5 years yields $36,482 total cost. Cost per month = $608. Resale @ 5 years is approx. $20K. Which means, if you sold the car after completely paying for it, you would have lost a net of $16,482.

Leasing a $30K BMW @ $399 per month for 36 months (plus assume $3000 down) would net you a loss of $17,364.

Financially, you're better option will be to purchase. For ease of maintenance and warranty peace of mind, leasing is better.
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But your calculation makes some assumptions that aren't necessarily true. For example, the residual on my lease after 3 years (and 49,500 miles total) is $18,440. (That's the amount I am paying the depreciation down to, and that's the amount I could buy it for at that point. ) How can a 3-year old with 50,000 miles be worth less than you say a 5-year old (let's say, also with 50,000 miles?) If what you're saying is true, then I could buy my car at the end of the lease and resell it at a profit, reducing my net cost. You are also forgetting sales tax. At 6% you are adding $1,800 to the cost of the car (and only $860 to the lease payments). You won't get any of that $1,800 back if you sell the car privately.

Based on that depreciation rate, the 5-year old would probably be worth closer to $15,000 (or less). If you sell it before the 5 years are up, (say after 3 years), then don't forget that you still owe money on the loan.

You can't escape depreciation, whether you lease or buy. And if you lease, you are capping the depreciaiton you will be suffering.

On the other hand, it's always going to be cheaper (aside from maintanance ane repair) to drive a car for 5 or 7 or 10 years than for 3 years. But, don't forget that means for part of that time you are driving a 5 or 7 or 10-year-old car, so it should be costing you less.

David
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