Originally Posted by nwvalleyjock
Here's my two cents. based on my recent experience. I'm interested in trading up to an X3 from my loaded 2007 328xi in excellent condition with only 32K miles on it. I was shocked at the low trade-in value that the dealer quoted (around $20K) for a vehicle I paid $45K for, has low mileage, and is in mint condition. So much for the "high resale value" that was sold to me along with the car! Doing the math, I've had the car 54 months and lost $25K in value, equating to $463/month. The leases I've seen advertised over the past couple of years for a 3-series were about $100/month cheaper than that. I would think it should be more expensive to lease than buy, but it sure worked the opposite way in my case! I knew when I started seeing 3's all over the place a couple of years ago that it seemed BMW was just cranking them out like crazy, devaluing my car ...
Same mindset here… Bought my car in 2006 and handed the dealer a $46,000 check. Current value of the car is say ~$18,000. The write-off is $28,000 in 55 months of ownership; this is $509/month. Under the assumptions that:
-I want (and would still like) a new BMW and not a CPO (Yes a CPO is a smarter purchase, but a different discussion)
- BMW keeps being my choice for owning and driving (and not Honda, Toyota, or any other brand)
In my mind, leasing is in favor of purchase for the following reasons:
-Looking back it’s about the same monthly payment (owners depreciation versus lease amount), with less worries, I would have had a new car by now (36 months vs 55), I would not have taken care of it as much as I babied mine (hand wash only, apply wax and Zaino regularly), I would not have modded at all, I would probably have done ED on a 335d by now.
-A good mutual fund returns 7-8% average on annual basis, this result is doubling you investment every 10 years. Invest $46k in 10 years, this becomes $92k – timing the marker permitted without being a day trader. Car value after 10 years: 8k? This is a depreciation of $38,000 – or $316/month. Even worse, the 2009 stock market was an opportunity of a life time to invest, but I had no money for it.
-After 4 years I’m out of warranty and free maintenance. I’m on the verge of maintaining my car per BMW recommended maintenance (a bit cheaper but more expensive repairs later) versus doing it the “old school way”, meaning more preventive maintenance to prevent expensive repairs. Either way, I currently reserve $100/month for maintenance and repairs after 4 years of ownership. This could be deducted from a new lease…
-Paid $46k for the car and assume I keep it for 10 years: Depreciation is $38,000 + 6 years of paid maintenance and repair budget (6 x $1,200) = $45,200 total ($376/month). The same amount a $46k investment would have returned at 7-8%, but this is on the + side of the balance versus – (negative) side for the car.
-Assume to lease new BMW's for a 10 year period: Even at $550/month: this is $66,000 over a 10 year period. Far less ($92k-$66K = $26k) than what the investment would have netted but $20k more than keeping the same car for 10 years – assuming the car holds up that long (no major repairs or accidents).
-Looking back - I would have opted for a lease. From where I am now (my 2006 330i is a great car, low miles (38k), not a ding, dent or peep), I’m probably a long term owner since I purchased and I don’t want to face the write-off.
On a side note: Texas is very lease unfriendly - sales tax applies to the entire purchase price (@ 6.25%) so I don’t know what that would do to the monthly payments that I see being posted in this forum ($2,875 on a $46k sale price).
I keep having discussions with a coworker telling me I did the right thing but based on the above I’m not convinced. Leasers may look at this from a diffenent angle though...