Leasing vs. Buying?

AndrewAZ · 04-22-2008, 12:46 AM

Lease vs buy has no right or wrong answer it depends on the person..

If you own your own business, drive 15k miles a year or less, and prefer to have a new car every 1-3 years and not mess with a car that is out of warranty leasing in for you.

With German cars like BMW and Mercedes I realized that its not a smart thing to keep them around after the warranty is out.. You will drop that car fast after you start paying for junk as soon as you hit 4 years or 50k miles. Hence a 3 year 15k mile a year lease is usually the best bet... Side note on some of the BMW's the money factor for the 3 years is double the MF of a 2 year lease and its better to go 2 years..

Not to mention if you car is a mechanical/electrical disaster like mine is you dont have to deal with it for a long time.

Plus the residual rates placed on the leased cars for both companies are unrealistic for the market. Most leases end up being sent back to be auctioned because the residual values are set again artificially high in order to move the cars.

Last but not to be over looked and a very important thing for me is if you get into an accident.. With a lease you dont have to worry about that depreciation from an accident, and if its not totaled and they fix it you arnt stuck with a car that doesnt drive right for very long and again you can drop it off when your lease is over and not have to worry about trying to sell a crashed car..

I am sure a lot of folks who have recently been rear ended wish their car didnt have that on the car fax.. Your talking a large drop in value.

Did I mention tax write off? (for business owners)

But the stupidest thing to do is lease then buy.. Especially with artificially high residuals placed on the car.. If you can get them down to real market price at the end of 3 years then do it, but dont count on it. Like I said most dealers pass on lease returns and they are sent to auction then go to the auction and buy them at auction prices then resell them.

Get out an excel sheet and figure it out.. Thats the best thing to do.. Work out the formulas for leases and then for financing and work the numbers. Also keep in mind you should be able to get 6% return on the money saved if you totally fork over the cash for a buy, and that financing is "renting" just like a lease is "renting".

martieg · 04-22-2008, 12:47 AM

My way requires patience - save, then buy. That's what I did. I saved for 5 years, and then bought my 330i, which I plan to keep for at least five years (two down, three more to go). In the mean time, I'm saving again for my new 2011 BMW!!

Anyhow, this is a matter of choice and priorities, and buying a car for me was never a priority, just a wish, and that's why I did it that way.

I respect those though, who put their car as a first priority.

vinlikesred · 04-22-2008, 12:49 AM

i usually like to buy and keep the car for 5+ years but this time i went with leasing cuz

1. 335i's got the engine with relatively new technology and it's too soon for anyone to know the long-term reliability with certainty. by the time my lease ends, i'll have more data to decide whether to keep the car or not.

2. although i can easily take 10k or 20k for the down payment if i decided to purchase, i'd rather keep that money in my stock portfolio.

3. if i get into an accident with major damage to the car, it will be easier to dump it if i simply lease. i know some will disagree but i believe that once the car gets damaged beyond fender and bender, it cannot be repaired back to factory-fresh...

but to each his own in the end

Milisim · 04-22-2008, 12:50 AM

I leased just because the used market is tanking hard right now.

The value at the end of a lease is too high for real life pricing.

If you buy the car you will never sell it for what its worth in this current market...... a few years ago sure but no one is paying top buck right now.

N54Fun · 04-22-2008, 01:05 AM

I'm sure it's been mentioned before, but I didn't see it stated anywhere above..

One distinct advantage of leasing is that you only pay sales tax on the value of the car that you actually use. Contrast with purchase where you pay sales tax on the full purchase price.

For example, on a $48k 335i, you might pay sales tax on $20k ($48k purchase price - $28k residual value, for example) during a 3 year lease. For a purchase (regardless of how you finance or if you write a check), you pay sales tax on the full $48k. Even when you sell the car 5 year later (if, for example, buyers keep longer than lessees) for $20k, you still paid tax on the value of the car ($20k) that you won't be using.

With a tax rate of nearly 8% in CA, that can be a difference in favor of leasing of ~$2K.

(If you live in OR, you just wasted 1.5 minutes of your life that you'll not get back.)

beemersalesman · 04-22-2008, 01:10 AM

Lease it, then buy it????? That's the very most expensive way to own a car.
Try this web site. www.acvl.com.
Take the lease vs. buy quiz. It'll take 5 minutes and you can decide for yourself what works better for you.

E90330iS · 04-22-2008, 03:46 AM

great website! thank you

Lassaxi · 04-22-2008, 05:56 AM

Try doing a

. This topic has been discussed many, many, many times before, and there are a lot of very detailed threads with both points of view.

The bottom line is that you really need to run the numbers yourself. You need to take the actual numbers from the best financing deal you qualify for, and the best lease deal you qualify for, and see how much you'll be paying over the life of your car in each scenario. That is the only way to know for sure which is best. Anything else is a (more or less) educated guess.

Also, to those who say that leasing and then buying is he most expensive way to own a car: like everything else in his debate, it depends on a lot of different variables. If you can get a good lease rate, invest your residual at the outset (in relatively safe investments like CDs), and buy the car for cash at the end, leasing to buy can be a smart move. But, it depends entirely on what rates you can get, and what kind of return you can get on your residual investment. That's why there is no substitute for running the numbers.

BrianUNC · 04-22-2008, 11:55 AM

Lots of different variables. Basically, what most people are saying here is true. If you drive less than 15k per year, and like to keep a car 3 years or less, then lease. If you keep your cars 5+ years, then buy. BMW's are great cars to lease, so that's the direction I'd recommend.

As far as the lease then buy suggestion, please don't consider that. That's the dumbest financial decision anyone could make. The point of a lease is to pay the lowest rent amount you can, then turn it in.

montreal red · 04-22-2008, 12:42 PM

if youre going to change a new car in the next 3/4 years, i say lease it .... but if you lease it, you cant go too crazy with mods because you'll have to return the car stock.... i am leasing my current car but i decided that i will buy my next one so i can mod it the way i like it.

beefybmer · 04-22-2008, 01:00 PM

Quote:

Originally Posted by xT4iw4n3zx

Chances are though, getting a cheap car that's fuel efficient usually equates to something that's small, and something that's japanese. I.E, Toyota Yaris. Now, I'm willing to bet the 335i could last you WAY longer than a cheap Yaris, so it's about the same if you look at it. Plus no1's gonna keep a Yaris for 15 years, whereas people do keep their BMW's that long, because they're reliable. BTW, thanks for the help with my car the other day. I'm bringing it in to fix the clutch 2mr, and then I'm going to go ahead and get a new 328i.

Sadly, you are exactly wrong. Toyota and Honda are much more reliable than our Bimmers. And also in these days of sky-rocketing fuel prices and plummeting economy, the fuel efficient Toyota's and Honda's are going to hold their value even better than before. Who wants to buy a pre-owned premium gas sucking luxury car? Everyone is flocking to trade in their SUV's and luxury cars for something that will cost them less in gas and payments.

LEASE IT! The value of your Bimmer is going down daily (unless of course you are going to mod the hell out of it or drive tons of miles).

F32Fleet · 04-22-2008, 01:08 PM

Quote:

Originally Posted by beemersalesman

Lease it, then buy it????? That's the very most expensive way to own a car.
.

Not really. It could be about a $1-2k extra if you intended on financing for 5yrs.

Basically you lease for 3 yrs but make the 5yr financing payment and save the difference (5yr finance payment - 3yr lease pymt = X). Take the monthly difference over 3 yrs (lease term) and use as a down payment on the purchase of your leased car which u finance for 2 yrs. Total Cost will be $1-$2k higher on the lease (3yrs) -> finance (2yrs) vs Finance only. It all depends on the numbers.

injeyeo · 04-22-2008, 09:18 PM

Quote:

Originally Posted by ArmyBimmerDude

Keeping the car less than 3 years, lease. Keeping the car more than 3 years, buy.

this make sense more than anything... Thanks!

injeyeo · 04-22-2008, 09:30 PM

Quote:

Originally Posted by BMWE90

crap. You've just opened up Pandora's box. All hell will break loose when more people chime in about lease vs buy.

thank you guys for all your opinions.... yea I opened the Pandora's box.. lol but thanks thanks for thoughts and opinions.

good info! and nice website. thanks.

BrianUNC · 04-22-2008, 10:04 PM

Quote:

Originally Posted by Socom

Not really. It could be about a $1-2k extra if you intended on financing for 5yrs.

Basically you lease for 3 yrs but make the 5yr financing payment and save the difference (5yr finance payment - 3yr lease pymt = X). Take the monthly difference over 3 yrs (lease term) and use as a down payment on the purchase of your leased car which u finance for 2 yrs. Total Cost will be $1-$2k higher on the lease (3yrs) -> finance (2yrs) vs Finance only. It all depends on the numbers.

It will be more than that - don't forget to add the $825 bank fee. If you're going to buy it in the end, just buy it up front. If you don't, you can't afford the car to begin with.

bubbletea 4 me · 04-22-2008, 10:32 PM

Quote:

Originally Posted by xT4iw4n3zx

Chances are though, getting a cheap car that's fuel efficient usually equates to something that's small, and something that's japanese. I.E, Toyota Yaris. Now, I'm willing to bet the 335i could last you WAY longer than a cheap Yaris, so it's about the same if you look at it. Plus no1's gonna keep a Yaris for 15 years, whereas people do keep their BMW's that long, because they're reliable. BTW, thanks for the help with my car the other day. I'm bringing it in to fix the clutch 2mr, and then I'm going to go ahead and get a new 328i.

you are kidding right? ANY toyota will outlast a bmw. BMW = reliability? u still living in the 80s? BMW has nothing to do with reliability in any way for quite some time now.. sorry to break that to you. don't get me wrong, bmw is a great car but i wouldnt really wanna own it after the first 4 years (after the warranty runs out) unless there is a good extended warranty.

if you really want a car that's reliable, good on gas, and will last FOREVER - get a Toyota or Honda.. i know cuz i had one and i'm sure many can attest to that. on the other hand, my bud who has an 04 M3 is already on his second engine, 3rd tran.. i dont think i'll be able to afford maintaining a car like that if it's outta warranty (and he doenst even drive it much nor drive it hard).

if u think u can keep ur modern bmw for 10-15 years, i'm willing to bet u will be paying outta ur ass to keep it running.

04-22-2008, 12:46 AM	#23
AndrewAZ Major 141 Rep 1,243 Posts Drives: 335i Join Date: Jan 2007 Location: CA iTrader: (0)	Lease vs buy has no right or wrong answer it depends on the person.. If you own your own business, drive 15k miles a year or less, and prefer to have a new car every 1-3 years and not mess with a car that is out of warranty leasing in for you. With German cars like BMW and Mercedes I realized that its not a smart thing to keep them around after the warranty is out.. You will drop that car fast after you start paying for junk as soon as you hit 4 years or 50k miles. Hence a 3 year 15k mile a year lease is usually the best bet... Side note on some of the BMW's the money factor for the 3 years is double the MF of a 2 year lease and its better to go 2 years.. Not to mention if you car is a mechanical/electrical disaster like mine is you dont have to deal with it for a long time. Plus the residual rates placed on the leased cars for both companies are unrealistic for the market. Most leases end up being sent back to be auctioned because the residual values are set again artificially high in order to move the cars. Last but not to be over looked and a very important thing for me is if you get into an accident.. With a lease you dont have to worry about that depreciation from an accident, and if its not totaled and they fix it you arnt stuck with a car that doesnt drive right for very long and again you can drop it off when your lease is over and not have to worry about trying to sell a crashed car.. I am sure a lot of folks who have recently been rear ended wish their car didnt have that on the car fax.. Your talking a large drop in value. Did I mention tax write off? (for business owners) But the stupidest thing to do is lease then buy.. Especially with artificially high residuals placed on the car.. If you can get them down to real market price at the end of 3 years then do it, but dont count on it. Like I said most dealers pass on lease returns and they are sent to auction then go to the auction and buy them at auction prices then resell them. Get out an excel sheet and figure it out.. Thats the best thing to do.. Work out the formulas for leases and then for financing and work the numbers. Also keep in mind you should be able to get 6% return on the money saved if you totally fork over the cash for a buy, and that financing is "renting" just like a lease is "renting".
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04-22-2008, 12:47 AM	#24
martieg Texas 343 Rep 769 Posts Drives: 330i Black Sph PP/SP/NV/MTk Join Date: Mar 2006 Location: Texas iTrader: (0) Garage List 2006 330i [0.00]	My way requires patience - save, then buy. That's what I did. I saved for 5 years, and then bought my 330i, which I plan to keep for at least five years (two down, three more to go). In the mean time, I'm saving again for my new 2011 BMW!! Anyhow, this is a matter of choice and priorities, and buying a car for me was never a priority, just a wish, and that's why I did it that way. I respect those though, who put their car as a first priority.
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04-22-2008, 12:49 AM	#25
vinlikesred Private First Class 51 Rep 168 Posts Drives: 335i '08 Join Date: Mar 2008 Location: usa iTrader: (0)	i usually like to buy and keep the car for 5+ years but this time i went with leasing cuz 1. 335i's got the engine with relatively new technology and it's too soon for anyone to know the long-term reliability with certainty. by the time my lease ends, i'll have more data to decide whether to keep the car or not. 2. although i can easily take 10k or 20k for the down payment if i decided to purchase, i'd rather keep that money in my stock portfolio. 3. if i get into an accident with major damage to the car, it will be easier to dump it if i simply lease. i know some will disagree but i believe that once the car gets damaged beyond fender and bender, it cannot be repaired back to factory-fresh... but to each his own in the end
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04-22-2008, 12:50 AM	#26
Milisim Enlisted Member 5 Rep 32 Posts Drives: 2013 BSM F30 Join Date: Mar 2008 Location: CANADA iTrader: (0)	I leased just because the used market is tanking hard right now. The value at the end of a lease is too high for real life pricing. If you buy the car you will never sell it for what its worth in this current market...... a few years ago sure but no one is paying top buck right now.
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04-22-2008, 01:05 AM	#27
N54Fun Private First Class 8 Rep 100 Posts Drives: Black Saph E90 Join Date: Dec 2007 Location: Riverside iTrader: (1)	I'm sure it's been mentioned before, but I didn't see it stated anywhere above.. One distinct advantage of leasing is that you only pay sales tax on the value of the car that you actually use. Contrast with purchase where you pay sales tax on the full purchase price. For example, on a $48k 335i, you might pay sales tax on $20k ($48k purchase price - $28k residual value, for example) during a 3 year lease. For a purchase (regardless of how you finance or if you write a check), you pay sales tax on the full $48k. Even when you sell the car 5 year later (if, for example, buyers keep longer than lessees) for $20k, you still paid tax on the value of the car ($20k) that you won't be using. With a tax rate of nearly 8% in CA, that can be a difference in favor of leasing of ~$2K. (If you live in OR, you just wasted 1.5 minutes of your life that you'll not get back.) __________________ Banner-Free since 8/3
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04-22-2008, 01:10 AM	#28
beemersalesman new member Jason 0 Rep 2 Posts Drives: 2006 530I/2007 X3 3.0(wife) Join Date: Apr 2008 Location: ALABAMA iTrader: (0)	Lease it, then buy it????? That's the very most expensive way to own a car. Try this web site. www.acvl.com. Take the lease vs. buy quiz. It'll take 5 minutes and you can decide for yourself what works better for you.
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04-22-2008, 03:46 AM	#29
E90330iS Major General 151 Rep 6,333 Posts Drives: BMW M4 Join Date: Jan 2006 Location: Arcadia, California iTrader: (56) Garage List 2006 330i [0.00]	great website! thank you __________________ 2017 BMW M4 DCT Lease Transfer: https://f80.bimmerpost.com/forums/sh...8#post23736398
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04-22-2008, 05:56 AM	#30
Lassaxi Major 10 Rep 1,035 Posts Drives: April ED - E90 328xi Join Date: Nov 2006 Location: Boston iTrader: (0)	Try doing a . This topic has been discussed many, many, many times before, and there are a lot of very detailed threads with both points of view. The bottom line is that you really need to run the numbers yourself. You need to take the actual numbers from the best financing deal you qualify for, and the best lease deal you qualify for, and see how much you'll be paying over the life of your car in each scenario. That is the only way to know for sure which is best. Anything else is a (more or less) educated guess. Also, to those who say that leasing and then buying is he most expensive way to own a car: like everything else in his debate, it depends on a lot of different variables. If you can get a good lease rate, invest your residual at the outset (in relatively safe investments like CDs), and buy the car for cash at the end, leasing to buy can be a smart move. But, it depends entirely on what rates you can get, and what kind of return you can get on your residual investment. That's why there is no substitute for running the numbers. __________________ May 3, '07European Delivery, Redelivered on 6/11/07 - Monaco Blue/Beige, Steptronic, ZPP, ZCW, PDC, iDrive/Navi with RTTI, Logic 7, Xenons, HD Radio
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04-22-2008, 11:55 AM	#31
BrianUNC Second Lieutenant 358 Rep 263 Posts Drives: 2023 911, 2025 Z4 PB 6MT Join Date: Mar 2008 Location: NC iTrader: (0)	Lots of different variables. Basically, what most people are saying here is true. If you drive less than 15k per year, and like to keep a car 3 years or less, then lease. If you keep your cars 5+ years, then buy. BMW's are great cars to lease, so that's the direction I'd recommend. As far as the lease then buy suggestion, please don't consider that. That's the dumbest financial decision anyone could make. The point of a lease is to pay the lowest rent amount you can, then turn it in.
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04-22-2008, 12:42 PM	#32
montreal red chris 294 Rep 12,141 Posts Drives: White Boat Join Date: Jun 2007 Location: Toronto iTrader: (31)	if youre going to change a new car in the next 3/4 years, i say lease it .... but if you lease it, you cant go too crazy with mods because you'll have to return the car stock.... i am leasing my current car but i decided that i will buy my next one so i can mod it the way i like it. __________________ Current: 2013 F10 M5 & 2016 Mini JCW 2013 GLK350 (gone), 997.1 GT3RS (gone), 2009 WRX STI (gone), e92 M3 (gone)
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