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BMW 3-Series (E90 E92) Forum > BMW E90/E92/E93 3-series General Forums > New & Preowned BMW Ordering / Pricing / Tracking Information Forum (including European Delivery) > Lease paid in full upfront?



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      09-07-2011, 05:01 PM   #1
JBE90335
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Lease paid in full upfront?

Has anyone ever done this or is it a bad idea? I'm looking at leasing a 328i and since I don't have that much credit built up I was thinking of just doing a one time lease payment. I'm estimating the payment would be around $450/mo. and would rather just pay for the whole 3 years instead of worry about credit issues and payments each month. Not sure how this works though, it's either that or buy a CPO but I'd rather have a new car ordered to my specs. Any opinions?
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      09-07-2011, 05:05 PM   #2
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you might as well get a cpo or even pay a ~50% (assuming 36 month lease) down payment on a brand new 328i and sell it 3 years later.
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      09-07-2011, 05:12 PM   #3
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I dont see the point. You will pay interest in advance; makes no sense. Pass the credit check first and if it fails, ask the dealer as to what kind of security deposit they need to pass the test. I'm sure it wont be over 6 months deposit except if you went bankrupt.

If you're a business or self employed, you can also loose serious tax credits doing so; but i'm not familiar with US based taxes system but that's something you should look into (if it applies).

Why arent you buying one if you can afford those kind of payments? If you can pay a CPO in cash, you can get some serious negociation gains and also save big time on interest. Or even buy brand new right now and sell in 3 years to get like half of the brand new price.

Lots of options are there for you. But paying lease in advance will make your dealer rub his hands with an evil smile.
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      09-07-2011, 05:16 PM   #4
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Jesus, I was offered a Tier 1 lease with no money down on a loaded 335. Why is your credit so poor?
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      09-07-2011, 05:18 PM   #5
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If you pay a lease in full up front, what happens if your car is damaged or totaled?
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      09-07-2011, 05:27 PM   #6
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That's what gap insurance is for.
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      09-07-2011, 05:37 PM   #7
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Quote:
Originally Posted by PKL View Post
If you pay a lease in full up front, what happens if your car is damaged or totaled?
he'd be fucked, GAP insurance only covers the gap between what the car is worth and what is owed. The main problem here is that insurance doesn't cover down payments on leases. If his car was totaled he'd never get back the money he put down as a payment. This is a terrible idea for many reasons.
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      09-07-2011, 06:12 PM   #8
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Put all the money in a savings account, set up auto ACH at the end of every month, and earn interest on the balance. You'll never miss a payment, and you'll come out a little ahead...
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      09-07-2011, 06:13 PM   #9
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Quote:
Originally Posted by PKL View Post
Jesus, I was offered a Tier 1 lease with no money down on a loaded 335. Why is your credit so poor?
Its just that your credit is good.. over 720
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      09-07-2011, 06:52 PM   #10
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+1

If it's totaled you are out a lot of dough. Bad idea.


Quote:
Originally Posted by dday View Post
he'd be fucked, GAP insurance only covers the gap between what the car is worth and what is owed. The main problem here is that insurance doesn't cover down payments on leases. If his car was totaled he'd never get back the money he put down as a payment. This is a terrible idea for many reasons.
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      09-07-2011, 07:18 PM   #11
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In addition to comments above, cash is king, so bad idea IMO to spend on a lease + interest that you'll have to give back, put that money down on a purchase if you've got $16K+ you don't mind putting down..
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      09-09-2011, 08:22 PM   #12
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450x36 = 16200. Honestly...I would just buy a car for that price. Put some money down, have a car payment and build up your credit.
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      09-13-2011, 01:29 PM   #13
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Quote:
Originally Posted by djsniggedy View Post
450x36 = 16200. Honestly...I would just buy a car for that price. Put some money down, have a car payment and build up your credit.
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      09-16-2011, 07:50 AM   #14
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Like others have said this seems like a terrible idea. Seems like your best options are

1. Put the total lease amount into an interest bearing account and setup auto pay. At least then you make some interest.

2. Put $10,000 down on a car you can afford to buy and pay it off over the next 36 months. That would be better if you are looking to build credit.
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      09-16-2011, 07:52 AM   #15
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You can also just set up automatic payments with BMW. They just take my car payment from my checking account every month, no thought involved.
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      09-16-2011, 09:14 AM   #16
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It is called a OnePay lease, and actually, to certain customers, it makes a bunch of sense.

Basically, you are paying basically a fraction of the intrest that you normally would. From my experience, on a typical 328i lease, it will save you almost 2k over the course of the lease. For people that have the cash (and have the self confidence that they wont be in an at-fault accident over the term) it is the way to go.

Personally, I would do a one pay myself.

Let me know if you have anymore questions.
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      09-17-2011, 09:21 AM   #17
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I have to agree with most of the above posts, this is a bad idea. Not only are you risking your entire investment with the possibility of an accident, but you're forgoing 3 years worth of interest if that money was invested elsewhere. The earnings on that should well exceed the $2k savings. Time value of money.
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      09-17-2011, 11:52 AM   #18
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Ended up buying a CPO'd 328i coupe. I'll try out leasing when the F32 comes out. Thanks for the advice guys, I didn't even think about the having an accident thing.
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      01-04-2013, 10:04 PM   #19
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Figured I'd post this question in here rather than start a new thread.

Leased car gets totaled, gap insurance covers it. They cut you a check, is it expected that you use the whole amount on a new car purchase or could you pocket some and use the rest for a new car?
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      01-05-2013, 03:57 AM   #20
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Quote:
Originally Posted by InTheNightKitchen
Figured I'd post this question in here rather than start a new thread.

Leased car gets totaled, gap insurance covers it. They cut you a check, is it expected that you use the whole amount on a new car purchase or could you pocket some and use the rest for a new car?
No one will give you a check if you totaled your lease car.
You will not get anything back. No deposit, no money down, nothing.
Gap insurance is just so you don't 'owe' the bank more money of you totaled the car. If you owe more than the car is worth, the gap insurance covers the 'gap'.
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      01-05-2013, 05:21 AM   #21
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Quote:
Originally Posted by bmw View Post
It is called a OnePay lease, and actually, to certain customers, it makes a bunch of sense.

Basically, you are paying basically a fraction of the intrest that you normally would. From my experience, on a typical 328i lease, it will save you almost 2k over the course of the lease. For people that have the cash (and have the self confidence that they wont be in an at-fault accident over the term) it is the way to go.

Personally, I would do a one pay myself.

Let me know if you have anymore questions.
You seem to know quite a bit about this, wouldn't mind learning more

Quote:
Originally Posted by jopa489 View Post
I have to agree with most of the above posts, this is a bad idea. Not only are you risking your entire investment with the possibility of an accident, but you're forgoing 3 years worth of interest if that money was invested elsewhere. The earnings on that should well exceed the $2k savings. Time value of money.
How is a car (let alone a leased car) any way an investment..? it's a depreciation liability with no investment value whatsoever..

Just using the numbers in this thread: if the 3 year lease payments are $16k, and you save $2k total, that's ~4% interest.
While you can easily make more than 4% in a decently-high paying dividend stock or bond, you can't really make nearly that much having your money sit in a bank.
My CitiGold barely yields me 1%, let alone my Chase which leads me .01%!.
Bonds/stocks can easily lose value... so even if it's at over 4%, if the value of the security drops more than what the dividend paid, you lose money (yes yes I know, risk vs reward).

You can look at it as a 3 year CD earnign 4%/year. Not bad at today's rates.

On my M3, I did 7 MSDs (multiple security deposits) and $900 drive off for the lease. The MSDs were $6k, but IIRC, my payments drop about $50/month due to the lower MF (money factor). on a $83k car, a drop in MF is quite meaningful.

Assuming one doesn't get in an at-fault accident, then there aren't any negative aspects (that I can see anyways) to a OnePay lease.

Telling the op to put that $16k down and then make payments is a bit... ubsurd in my opinion
cause then instead of taking a $16k liability, he is taking a 40-50k liability (whatever the car costs)
And then he's still making payments after putting $16k out upfront...
If the op plans to keep the car, different story (I know he got a CPO, just saying)


Quote:
Originally Posted by smashhell View Post
Gap insurance is just so you don't 'owe' the bank more money of you totaled the car. If you owe more than the car is worth, the gap insurance covers the 'gap'.
This is true

IIRC though, depending on your insurance and your coverage, you may be entitled to your lease payments minus depreciation. Though I'm not in insurance and am rather ignorant in this area, I could be completely mistaken. I will ask my insurance agent later as I'm curious to know..
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      01-05-2013, 07:40 AM   #22
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Quote:
Originally Posted by bmw View Post
It is called a OnePay lease, and actually, to certain customers, it makes a bunch of sense.

Basically, you are paying basically a fraction of the intrest that you normally would. From my experience, on a typical 328i lease, it will save you almost 2k over the course of the lease. For people that have the cash (and have the self confidence that they wont be in an at-fault accident over the term) it is the way to go.

Personally, I would do a one pay myself.

Let me know if you have anymore questions.
When me and the wife bought our bimmers, this idea came up in the discussions about financing.

Our very good salesman shared that the only people he did that for were people who came in, and wanted to buy the car cash. He said it avoided the massive IRS paperwork you have to do with such a large sum of money.
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