330 Lease vs buy

[uber_3er]

So as a car guy, I can usually advise others very easily on their new car decision, but get confused just as easily when trying to figure things out for myself... so here are my thoughts:

I can lease my 2004 330Ci with ZHP for $1900 to start (includes $600 sec dep and 2 months' lease payments in advance- a rule for Euro delivery), 36 months, 12K/yr for $518+tax (558 Total)

or put about $4K down and buy it for about $630 ((FOR 72 MONTHS!!)).

Presuming I get my $600 sec dep back, I will have paid out- $20,272 for the lease.

If I buy the car and sell it after 36 months at approx $27000 (a conservative estimate) and pay off the loan balance of $21,268 I will have paid out $26,680 in payments, MINUS the $5732 profit from the sale, making the total cost $20,948, which is more or less the SAME expense as the lease.

What I save is the hassle of selling the car and lower monthly payments and less out of pocket, but I lose the comfort of not worrying about miles.

I think for me the benefit of the lease outweighs those of the purchase... But that's just my crazy logic. Does anyone see any different for me, or did a similar math in their head with a different logic??

 

[MyHarley]

My lease is 15,000 miles per year, have you asked what is the cost to have the 15,000 versus 12,000 since this is a concern of yours?

We have debated the issue here several times on lease versus purchase. If you don't plan to keep the car, my opinion is leasing. In my case, I write off the lease, so its advantangeous to me. If you plan on keeping the car for a long period, then purchase is your answer.

 

[flashinthepan]

Both work IMO,

I was lucky I bought, just decided on an M3, if it were a lease, it would have been messy.

Scenario's support both ways.

Good luck !!

 

[MrElussive]

uber_3er, your logic is fine. Whether you buy or lease a BMW, either way it is a smart choice. BMW's have strong residual value so their lease programs are very appealing. Your best bet is to decide whether you want to keep the car for a strict 3 years (36 months) or if you want to keep it for longer or shorter. Leasing doesn't necessarily limit but your options, but let's say after 2 years, you want to get rid of the car, it is a bit harder than if you owned it. Personally, I always encourage people to lease for several reasons. The monthly payments are easier (and shorter), you don't have to deal with selling the car, you can drive the shit out of it and not worry about accidents because the resale value doesn't matter to you when the lease is over, and you get a brand new car every 3 years.
I think leasing is very economical for some people, and it can be very flexible. The only concern is watching your mileage, but at the beginning of the lease, you can choose how much mileage you want (10K/year, 12K/year, 15K/year, 18K/year, etc.). I would only advise someone to stay away from leasing if they like to hold on to the car for more than 3 years or if the car does not have a strong resale value (anything less than 58-60% after 3 years is not strong).

 

[uber_3er]

Good stuff!

Thanks fellas- it makes all the more sense to lease. In theory, yeah sure I'd like to keep the car for a while, but in practice, I know that I'll be itching to drive something different in 2007, not to mention the new 3 will be out as well as who knows what else.

A 15000 mile lease adds 26 dollars per month more. I will just do that to be safe- I'm sure I'll need it- I have at least one road trip planned from Seattle to LA!

There isone suckky thing- I will be making lease payments starting one month prior to pick up in Munich, so I will only be driving the car for about a week in the first 8 to 12 weeks of payments...

oh well, at least the per month mileage is going down the whole time!!

 

[MrElussive]

How does it work out like that? That sounds like a sucky way to start off...why do you have to pay for the car if it's under your posession? You're not supposed to sign your lease contract until the day you pick it up!
But in terms of the lease, I think you'll be happy with it. Good move on the 15K miles per year if you do a lot of driving. Just think of it this way...the US average is 12K miles per year, which is 33 miles per day. If you drive more than that on a daily basis, it's definitely worth it to up your mileage. The only con(s) of leasing is the mileage and the fact that you are really "renting" the car, you don't officially own it. A few members on this forum lease their cars, including myself.

 

[flashinthepan]

A planned and certain 3 years ?

Go Lease !

 

[nasa43]

I went through the same thought process. With the high money factor in December (.0024), I was going to purchase. However, the MF dropped to .0010 in January for the 330i so leasing became much more appealing. I'm going 36 months, 12K per year. I'm getting the ZHP option also, but on the sedan.

 

[bmwbozo]

Maybe this has the answer:

http://www.dinkytown.net/java/BuyvsLease.html

This web page analyzes everthing in a lease...never used it..tell me what you think. Just remeber to factor in the insureance rate for new cars versus cars that have been owned for some time)

All I know that is that the longer you own a car, the more money you save. Most money experts recommend buying used a car with very low miles and then owning for ten years. (I'm on year number 14...with no accidents/tickets and just liability insureance...costs me about 1K a year to drive in repairs and insureance). Its tough to get a new car when one is already paid for.

 

[nasa43]

There's no question that it is much cheaper to buy a car and keep it for 7-10 years. The car I have now I bought new and have had for 6 years now. I haven't had a payment on it for 4 years. It still runs great and looks perfect, no dents, scratches, etc... However, I want a new car. Some people like driving nice, new cars. The key to leasing is to research/watch the rates for the car you are interested in. When the Money Factor is really low and residual is high, leasing makes a lot of sense when you know you will probably want another car in 3 years anyway. We all also know that the next generation 3 series will be out in a year and a half which will certainly affect the re-sale value of the current 3 series. Leasing protects you from that. It all depends on each person's desires and unique circumstances. I currently lease a Jeep Grand Cherokee for wife. That was the first vehicle I have ever leased. I have always bought, drove for 5-7 years, then sold it myself. With the lease rates on the 330i right now, though, I feel leasing is the right way to go. In three years, if I like the new 3 series, I will get another one. I don't know if I will lease or not though. It will depend on the lease rates at the time. There is no single right/wrong answer for everybody.

 

[uber_3er]

sucky situation

How does it work out like that? That sounds like a sucky way to start off...why do you have to pay for the car if it's under your posession? You're not supposed to sign your lease contract until the day you pick it up!

That is on account of the Euro delivery situation. Finances are due one month before pickup and they want the lease payments through the time the car makes it back to the US.

I believe the BMW officially calls it- CYA (Covering Your A$$) [fake]

Anyway, looking back at my car ownership lengths, I see a trend that is definitely conducive to leasing... I think that history is worthy of its own post...

 

[William330]

Leasing from manufacturers that do not offer promotions is just throwing money out the window. BMW rarely offers leasing promotions.

For example, if you can lease a 30,000 Mazda for $0 down $275 a month, that's a good deal.

But to lease a 30,000 BMW for $0 down and $575 a month, is not a good deal.

I have leased several cars, all with manufacturer promotions.

When it came time to get a BMW, since they do not offer lease promos, I bought it.

You are saying you will pay out $21,000, and after three years have absolutely nothing to show for it.

Have you considered buying an Acura RSX, which costs almost exactly $21,000:

http://www.acura.com/models/model_index.asp?module=rsx

Then, after three years, you will own a very nice a car, instead of air. ;-)

 

[uber_3er]

I beg to differ

but your logic doesn't hold water-

Firstly BMW IS offering a promotion, in the form of a subsidised lease- with a .0013 lease rate and jacked up residual of 60%, this is a much better deal than comparably priced cars

Second, this is a $45,000 car, not a $30K car

and thirdly, what driving pleasure would I get from an piece of tin ricebox Acura? My current car (2002 GTI 337 Edition) is better put together and feels much more expensive than the Acura. To me, that car would be a step down.

No thanks, bring on the Bimmer anyday.

 

[estrauss]

Call me stupid, but could someone explain the MF or 0.0013 lease rate? I'm looking into ordering a ZHP sedan in April and I'm still working the numbers to see what will be the best.

 

[William330]

Hey, it's your money.

I just used a $30K vehicle as an example. My 330Ci was 'only' $38K, though, but leasing wasn't even considered. Paid it off in six months, and now have $0 monthly payment, and a car sitting in the driveway.

I test drove an Acura RSX while car shopping. It's a very nice car.

Good luck, and hope you get the vehicle you want in either case.

 

[MrElussive]

William330, it is a common misconception that leasing is very expensive and not worth the money. But for a lot of people, it is very worth it. The monthly payments are easier, you don't have to worry about resale value after accidents, you get a brand new car every 3 years, you don't have to deal with selling the car, etc.

 

[Bryan330i]

I agree MrE!

Leasing is great, it gives a good out if you want another car. And it can be the cheapest way to "buy" a car also, most companies will even finance the residual at a good rate.

The down side of cars is we all have nothing in the end. The value drops the same if we buy or lease.

 

[Felicia68]

Well, it's kind of hard for me, a CPA by trade, to ever tell anyone to lease a car unless you...

1 - Want a car that you can't really afford through a traditional loan
2 - Write the lease off as a business vehicle
3 - Like to drive a new car every 3 years and don't mind always having a payment

Ask yourself what looks so good to you regarding leasing?

Now, this is just my humble opinion. So, for those who are leasing, please don't take any offense!

Felicia

 

[Bryan330i]

Hi Felicia68 ...as a CPA, don't you also agree that a good lease is a great way to pay down the principal because the shorter-term cost of money is cheaper?

When I compare a good lease deal with a good purchase deal I find a similar principal balance at month 37 for the leased vehicle. I also find that the purchase often resulted in more cash layout.

 

[William330]

William330, it is a common misconception that leasing is very expensive and not worth the money. But for a lot of people, it is very worth it. The monthly payments are easier, you don't have to worry about resale value after accidents, you get a brand new car every 3 years, you don't have to deal with selling the car, etc.

I've leased several cars before. Each total lease cost was about $8,000 for a 36 month lease.

This individual is talking about spending $21,000 on a three year lease, and having nothing to show for it. (And when income taxes are taken into account, you have to earn over $30,000 before you can actually bring home $21,000.)

If you have the money to burn, go for it. But I'd much rather own an Acura RSX outright, with $0 car payments, than have nothing but air after three years of payments.

I guess it comes down to each individual's 'tolerance level'. I can tolerate throwing away $8,000 for three years of maintenance-free new car ownership, but tossing $21,000 out the window sends me over the edge. Even for a BMW.

To each his own, and to each his own budget.