[Never_Enough]

Originally Posted by glennQNYC

That is exactly my point. I don't want to feel like I have a lease to consider when deciding on modifying my car. I find great comfort in knowing it's my car, and I can do whatever I want with it.

Bank still owns it if you're making payments

[Dog Face Pony Soldier]

Originally Posted by Never_Enough

Bank still owns it if you're making payments

True, but the bank isn't inspecting a car after the loan matures... Besides, I never said anything about making payments on my BMW.

[Run Silent]

Originally Posted by Alfisti

Here are my numbers;

• Based on purchase of loaded CPO 35i X3 in May 2016
• Row D is budget, E Actuals to date, F Estimate and G comparable lease
• All numbers include all taxes, fees and charges
• Wife is a partner so can write off
• Utilising a 50% work useage claim at a 48% marginal rate (has increased to 53% recently just to fuck with my numbers)
• The more aggressive than budgeted depreciation hurts the resale but not the claimable amounts as there are limits to claiming depreciation
• One can claim more on a lease
• BMW at the time included servicing in the lease

I believe numbers to be quite accurate and IMHO show that a lease, an expensive one at that, is not that far off of a CPO purchase. The $1150 upcoming is for brakes but tyres were replaced by dealer for CPO purposes so when they are due in a couple of years and the water pump fails, am i better off having the wife lease?

I don't have time to work through this right now, but there are two major issues here.

1) Assuming you are deducting based on business use, if your company made a profit in the year of purchase, you can use Sec 179 bonus depreciation and expense 100% of the value of the vehicle in year one if you buy versus lease. That would demolish any lease savings.

2) You are assuming a 2% finance rate. I was assuming a cash purchase, since the most fiscally sound way to purchase anything is with cash.

[jmg]

Originally Posted by glennQNYC

That is exactly my point. I don't want to feel like I have a lease to consider when deciding on modifying my car. I find great comfort in knowing it's my car, and I can do whatever I want with it.

I modify my leases because whether or not the car is leased or purchased, I will have voided part of my warranty regardless. Additionally, since I tend to return my cars to stock and sell my mods because you get a better return, then returning to stock in the case of a lease is a moot point.

Additionally, with ownership comes the responsibility of additional depreciation. If I get into an accident on a lease, it does not affect my depreciation because the residual has already been set by the lease terms. On a purchased vehicle, the value goes down, so when I go to sell the car I will lose some of the residual.

Don't get me wrong, I own 2 cars, I know the financial benefits and comforts of owning, especially if the maintenance is low and you get a lot of use out of the car, but each car buying decision I make, I weigh the legitimate advantages of the lease in my decision because it is in my best interest to do so to see what works best of the situation.

[Alfisti]

Originally Posted by usshelena725

I don't have time to work through this right now, but there are two major issues here.

1) Assuming you are deducting based on business use, if your company made a profit in the year of purchase, you can use Sec 179 bonus depreciation and expense 100% of the value of the vehicle in year one if you buy versus lease. That would demolish any lease savings.

2) You are assuming a 2% finance rate. I was assuming a cash purchase, since the most fiscally sound way to purchase anything is with cash.

1) I'm in Canada so our tax laws are different, the numbers i have are accurate according to my accountant.

2) Well no it isn't, a) some of the interest can be claimed and b) why am I paying $42k out of pocket when i can beat that 2% in a 3 year term deposit saving account (no gambling)?

I fundamentally agree with your point of view, i am just surprised how the numbers are falling out.

I actually think CPO may not be the way to go but buying 5 years is instead. $22k for this car, with 75,000KM and loaded the way it is and with full service records is insane value, even accounting for brakes, tyres, water pump, it's a great deal.

[Flacht3]

Originally Posted by usshelena725

since the most fiscally sound way to purchase anything is with cash.

Should we open this can of worms too? Anyone? Anyone? I'll start:

With interest rates still exceptionally low, why would I ever put that cash into a car when I can invest it? I just opened a new auto loan two weeks ago at 3% APR. Let's assume it's a $100k car, and I can receive 9% return from my investments. By paying cash I just lost $6k in returns that I would have had if I took the loan and invested the cash.

YMMY and it depends on your financial situation, market factors, etc. but I'll use my credit all day long while rates are still what they are.

[Run Silent]

Originally Posted by Alfisti

1) I'm in Canada so our tax laws are different, the numbers i have are accurate according to my accountant.

2) Well no it isn't, a) some of the interest can be claimed and b) why am I paying $42k out of pocket when i can beat that 2% in a 3 year term deposit saving account (no gambling)?

I fundamentally agree with your point of view, i am just surprised how the numbers are falling out.

I actually think CPO may not be the way to go but buying 5 years is instead. $22k for this car, with 75,000KM and loaded the way it is and with full service records is insane value, even accounting for brakes, tyres, water pump, it's a great deal.

I didn't realize you were in Canada. I cannot speak to Canadian tax law or interest rates, rate of return.

As such, I will withhold future comments.

Regarding cash vs loan - even at current rates, in the USA the typical loan rate will not exceed the best short term CD rate, so it doesn't wash. Investments will have a greater ROI but also have risk. Factoring in risk to the equation usually nets out any gains.

Originally Posted by Chris_DM

Should we open this can of worms too? Anyone? Anyone?

Let's not. I am tired of trying to overcome the ego's of people who think that leasing or financing a car is a great financial decision. You all do what you want with your money. Me? I'm gonna do what rich people do, which is not lease a car when your net worth doesn't exceed $1M.

https://www.daveramsey.com/blog/midd...s-millionaires

https://www.daveramsey.com/blog/habi...d-billionaires

https://www.daveramsey.com/blog/millionaire-secrets

[jmg]

Originally Posted by usshelena725

Please offer one example where leasing a vehicle would be a better financial decision versus buying a very slightly used CPO, with the exception of a zero emissions vehicle in certain states such as California and the like?

That's comparing apples to oranges.

1) I don't want a CPO car for 7 years, I want a brand new car every 3 years.

2) My preference for a new car every 3 years is analogous to preferring to have a car over just using public transportation. Isn't public transportation a better financial decision? It's certainly cheaper.

3) The point is, we are paying for a product/service/luxury. Most of us choose to get a car over using the bus NOT because it's a better financial decision, but because the convenience of a car outweighs the savings over the bus and we generate enough income to allow us that luxury. I feel I make enough money to want to drive a new car every three years. I don't want a CPO, I don't want to keep certain cars over 7 years. So with MY conditions in mind, I have come to the conclusion, in several occasions, to lease a car because the small increase in expense on two 3 year leases is worth the luxury of a new car every 3 years over owning a car for 6 years.

4) I never said leasing is always advantageous hence I own 2 cars and I lease 2. You insinuated that leasing is ALWAYS a bad financial decision, and I disagree.

Originally Posted by usshelena725

I wouldn't say it is boring. We have two cars, and each gets replaced every 7 years or so, so there is a new(ish) car in the garage every 3 or 4 years. Not too shabby.

Again, I have 4 cars. 2 are owned and we have a similar situation, and it's not bad. However, that's not enough for me personally. I wanted a fun weekend car and a commuter that gets me in the carpool lane. So I also lease an i3 and an M3.

Lets break it down:

MSRP is $80k. I paid $78k. The residual on the lease was 61%. Total expense on the lease including tax, interest, fees etc is $42k.

If I had paid cash for the M3, the total expense after tax is $84,400 - residual value. Currently kbb is showing a trade-in value of $40k. $84,400-$40k=$44,400.

As you can see in this case, purchasing is more expensive than leasing if I want a new car every 3 years because the RV on the lease was high.

I won't even get into the i3 which saves me enough gas to cover my monthly. My only out of pocket is the insurance, a small price to pay for the convenience the car provides.

[Red Bread]

But you shouldn't want a new car. Or a nice car. Pay cash for a shitbox and live in a cardboard box. If you're doing it differently you're doing it wrong. This is the worst moving target argument I've seen recently.

And honestly, why would having a million of assets be the tipping point for almost anything? If you're over 40 with a college degree, you'd almost always have a million in assets just by the nature of things. I'd argue that a threshold for being excessively liquid is likely ten or twenty times higher than $1m.

[Run Silent]

Originally Posted by Red Bread

And honestly, why would having a million of assets be the tipping point for almost anything? If you're over 40 with a college degree, you'd almost always have a million in assets just by the nature of things. I'd argue that a threshold for being excessively liquid is likely ten or twenty times higher than $1m.

Nearly 80% of all college graduates over the age of 40 don't have a months pay in the bank. Less than .001% of those over 40 have a net worth in excess of a million dollars. You are wrong.

[jmg]

Originally Posted by usshelena725

Nearly 80% of all college graduates over the age of 40 don't have a months pay in the bank. Less than .001% of those over 40 have a net worth in excess of a million dollars. You are wrong.

Why are you driving a used BMW? The maintenance is horrible. That's a poor financial decision. You should have gotten a CPO Toyota Camry.

...if we were going by your logic.

[Red Bread]

Originally Posted by usshelena725

Nearly 80% of all college graduates over the age of 40 don't have a months pay in the bank. Less than .001% of those over 40 have a net worth in excess of a million dollars. You are wrong.

Cool. I misread net worth as assets. My bad.

Yet with 11m US millionaires, I think your stat for those in their 40's is low.

[Alfisti]

Originally Posted by jmg

Why are you driving a used BMW? The maintenance is horrible. That's a poor financial decision. You should have gotten a CPO Toyota Camry.

...if we were going by your logic.

Well not really, even by my numbers above where the lease can be written off quite aggressively for business owners vs a purchase, the CPo still comes out in front even if by less than i would imagine.

[Flacht3]

Originally Posted by usshelena725

I didn't realize you were in Canada. I cannot speak to Canadian tax law or interest rates, rate of return.

Me? I'm gonna do what rich people do, which is not lease a car when your net worth doesn't exceed $1M.

Isn't that sentence completely contradictory? If your net worth doesn't exceed $1M aren't you inherently "not rich" therefore this isn't what rich people do...it's what not rich people do...

[Run Silent]

Originally Posted by Red Bread

Cool. I misread net worth as assets. My bad.

Yet with 11m US millionaires, I think your stat for those in their 40's is low.

Yeah, my fault - I added a couple of zero's on accident. I meant .1% - which might still be a little low, but one would imagine that the bulk of millionaires don't reach that level till near age 60.



For all others - I've said my piece. If someone wants to lease a vehicle knowing that it isn't the cheapest way to drive a car, then that is up to them. If they disagree that it isn't the cheapest way to buy a car, then they are welcome to continue with that belief. The facts speak otherwise.

[Red Bread]

I'd still posit that for a three year ownership window, leasing is frequently cheaper. That requires accepting that three years is a viable amount of time to possess a car, which you seem unlikely to accept.

For us, we got our recently returned F30 right after the LCI. So a CPO would have been a (slightly) worse car and held less of its value. We could have paid cash for it, but then that raises the opportunity cost of taking that money out of the market, which outperformed the interest rate of our lease comfortably for those three years, and we'd still have lost money on that deal ignoring that.

When new models appear, they tend to both be better than their predecessor (F30 excluded) and ramp up the depreciation curve for the previous model. We're likely about to see another example of a leased G20 outperforming a purchased CPO F30. I admit that I'm using one of the worst recent BMW's here, but it still shows that your "facts" are not actually so.

[Red Bread]

However I do think that just as our F30 created an ideal lease situation because of high residuals at the time we got it giving way to much lower than expected retained value because of the market shift to CUVs, we're likely about to see another tidal shift to 48V hybrids and straight EV's creating an unexpected drop in demand for used ICE cars, thus creating a sizable delta between lease residuals and actual market valuation at the end of those leases. At least in the middle of the market where pricing will be relatively similar.

[cmyx6go]

Originally Posted by jmg

That's comparing apples to oranges.

1) I don't want a CPO car for 7 years, I want a brand new car every 3 years.

2) My preference for a new car every 3 years is analogous to preferring to have a car over just using public transportation. Isn't public transportation a better financial decision? It's certainly cheaper.

3) The point is, we are paying for a product/service/luxury. Most of us choose to get a car over using the bus NOT because it's a better financial decision, but because the convenience of a car outweighs the savings over the bus and we generate enough income to allow us that luxury. I feel I make enough money to want to drive a new car every three years. I don't want a CPO, I don't want to keep certain cars over 7 years. So with MY conditions in mind, I have come to the conclusion, in several occasions, to lease a car because the small increase in expense on two 3 year leases is worth the luxury of a new car every 3 years over owning a car for 6 years.

Couldn't agree more!

[jmg]

Originally Posted by usshelena725

If they disagree that it isn't the cheapest way to buy a car, then they are welcome to continue with that belief. The facts speak otherwise.

I gave you specific real world numbers. Those facts spoke for themselves.

[Red Bread]

Originally Posted by jmg

I gave you specific real world numbers. Those facts spoke for themselves.

I think the disconnect is that he appears to be using Presidential v45 facts. If you believe in them hard enough and say them frequently enough, they must be true.

[jmg]

Originally Posted by Red Bread

However I do think that just as our F30 created an ideal lease situation because of high residuals at the time we got it giving way to much lower than expected retained value because of the market shift to CUVs, we're likely about to see another tidal shift to 48V hybrids and straight EV's creating an unexpected drop in demand for used ICE cars, thus creating a sizable delta between lease residuals and actual market valuation at the end of those leases. At least in the middle of the market where pricing will be relatively similar.

Agreed. It is extremely short sighted to not consider the residuals when weighing the financial viability of a lease. It's unconditional blanket statements that encourage ignorance instead of real investigation and analysis that I have a problem with. It's just not constructive.

[G35POPPEDMYCHERRY]

Originally Posted by usshelena725

Let's not. I am tired of trying to overcome the ego's of people who think that leasing or financing a car is a great financial decision. You all do what you want with your money. Me? I'm gonna do what rich people do, which is not lease a car when your net worth doesn't exceed $1M.

bro, you drive a 328
you honestly shoudn't be buying a BMW. Since you can walk to work! Rich as fuck

Originally Posted by usshelena725

Nearly 80% of all college graduates over the age of 40 don't have a months pay in the bank. Less than .001% of those over 40 have a net worth in excess of a million dollars. You are wrong.

you are on a BMW fourm let alone the damn m3 subfourm. I am sure most of us are very successful. Go preach to people who lease simply because they can't afford to buy a car any other way.

And for someone who said buy your big purchases in CASH. WTF you are an accountant?

0.9% financing vs at 5% conversative return in stocks.

anywayz, another lease vs buy thread; always a charm