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BMW 3-Series (E90 E92) Forum > BMW E90/E92/E93 3-series General Forums > General E90 Sedan / E91 Wagon / E92 Coupe / E93 Cabrio > lease vs purchase + options reasoning



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      01-12-2013, 05:29 PM   #23
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Buy used with cash= Title in hand.
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      01-12-2013, 06:49 PM   #24
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Quote:
Originally Posted by jacobsed
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Originally Posted by dreamingat30fps View Post
I've done both a few times and have learned I like neither. The only way I will PERSONALLY buy a car now days is used with cash.
This!!

Btw, I was being totally sarcastic in my earlier threads. Leasing is the most expensive form of financing. I'm of the opinion that if you can't afford to pay cash for a car then you really shouldn't buy it.
Paying cash up front is a great option if you can but let's face it how many people have that kind of coin. The auto industry would not be functioning if people waited to buy cars with cash only. And your car would be three times as much due to supply and demand

To answer the lease vs buy. I've done both and really the rates are not that different. The nice thing about a lease though is that If you have lemon or your car has been through an accident or two you don't have to be stuck with it.
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      01-12-2013, 08:25 PM   #25
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Some states, like MD, will make you pay full tax of the cost of the car (rolled into the lease). Then when the lease is up and you decide to buy it, you will get taxed AGAIN on the buyout price. So leasing in MD means you are taxed on portions of the car you wont be using and you will get taxed again if you buy it.
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      01-12-2013, 08:38 PM   #26
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Quote:
Originally Posted by usher93
Quote:
Originally Posted by jacobsed
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Originally Posted by dreamingat30fps View Post
I've done both a few times and have learned I like neither. The only way I will PERSONALLY buy a car now days is used with cash.
This!!

Btw, I was being totally sarcastic in my earlier threads. Leasing is the most expensive form of financing. I'm of the opinion that if you can't afford to pay cash for a car then you really shouldn't buy it.
Paying cash up front is a great option if you can but let's face it how many people have that kind of coin. The auto industry would not be functioning if people waited to buy cars with cash only. And your car would be three times as much due to supply and demand

To answer the lease vs buy. I've done both and really the rates are not that different. The nice thing about a lease though is that If you have lemon or your car has been through an accident or two you don't have to be stuck with it.
You'll never convince me that carrying debt on a throw away item is an ok thing to do for personal finance.
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      01-12-2013, 10:19 PM   #27
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Originally Posted by usher93 View Post
Paying cash up front is a great option if you can but let's face it how many people have that kind of coin. The auto industry would not be functioning if people waited to buy cars with cash only. And your car would be three times as much due to supply and demand

To answer the lease vs buy. I've done both and really the rates are not that different. The nice thing about a lease though is that If you have lemon or your car has been through an accident or two you don't have to be stuck with it.
That may be the case if you are looking to buy a $50k brand new BMW. I don't have that kind of coin myself which is why I do not buy new (that plus no reason to take that depreciation hit). I'm pretty sure everyone on this forum can afford to buy a car in cash, maybe not a BMW but they can surely find a car they can afford. I use to buy new though, because I had to have a black or grey car and I had to have all the tech gadgets and it had to be in mint condition and the lastest model. I clearly remember telling people I would NEVER drive any car that wasn't black or grey. I would NEVER drive a ragtop and no way would I EVER drive a red car (unless it was a Ferrari).

Now I drive a RED Z4 ragtop. And you know what I realized? It doesn't matter. I love my Z probably more than any car I've owned. It is something that I honestly wish I would of followed (in all aspects of my financial life) a long time ago. Believe me I still get tempted by nice new cars from time to time (the new M6 is gorgeous) however by sticking to the cash rule I keep myself out of trouble. The older I get the easier it's becoming to be content.

Anyways soapbox over. In regards to lease vs finance one other aspect to consider is the mileage restrictions on leasing. If you don't drive a lot then it's not an issue, but if you are like me and rake in the miles then it's an additional cost to consider.
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      01-12-2013, 11:45 PM   #28
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A few thoughts:

1. To me, leasing only makes sense if you are a small business owner who has tax advantages for leasing, OR BMW is having one of thier occasional ridiculously cheap lease specials on. Otherwise, especially at today's interest rates that are the next thing to free money, you are better off financing over the long run. If you are going to lease, NEVER put any money down on the car just to lower the payment - if anything happens to the car you lose that money. Do investigate the multiple refundable security deposit option though.

2. Currently interest rates are so low that it makes absolutely NO sense to me to even contemplate paying cash for a new car. Use BMW's money, and put yours to work for you. Put it in your retirement account, the market, whatever. Leave it in the bank in case of emergency. Pay off a chunk of your mortgage or higher rate debt. At .9% on a 60 month loan the interest cost is negligable. Of course this assumes you have the credit rating to get the best deal out of BMW finance or your bank/credit union. I've averaged a 6% return over the past 4-5 years, no way would I have ever taken $35K out of the market to buy my car, plus I would have had to pay capital gains taxes on some of that money.

3. New versus used. I have bought 30+ used cars in my life, and 3 new ones. I currently own 4 vehicles I bought used, and my BMW that I bought new. I have no problem at all with buying used cars, BUT there are certainly intangibles that go with buying new. And ESPECIALLY for buying a new BMW.

#1 is that when I am paying over $40K for a car, I want it exactly the way *I* want it. Not the way that the dealership thinks will sell fastest or be the most popular, or how someone else wanted it. Luckily, BMW is happy to build one just for YOU! I can pretty much guarantee that I have the only '11 Tasman on Chestnut RWD 328i wagon with 6spd stick, Winter and Premium packs, no sport pack, no iDrive, and no Xenons. Exactly the way I wanted for minimum hassle over the long run that I plan on owning the car. Depreciation is irrelevant if you keep the car long enough. I can't even imagine spending this much money and buying the typical gray on tan, black on tan, or silver on tan sedan that is littering the dealer lots.

#2 is I know exactly how this car has been treated since day one. Particularly important these days since BMW has decided that the cars don't really need maintenance anymore. My car has 18K miles on it, was broken in carefully, and has had three oil changes, one transmission oil change and one diff oil change already. It has also had the brake fluid changed once already. A typical used BMW with 18K on it just got the orginal factory fill oil changed...

Finally, #3, buying new gives you the option of doing European Delivery. Get a substantial discount on the car and the vacation of a lifetime - a win-win there.
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      01-13-2013, 02:43 AM   #29
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Quote:
Originally Posted by krhodes1 View Post
A few thoughts:

#1 is that when I am paying over $40K for a car, I want it exactly the way *I* want it. Not the way that the dealership thinks will sell fastest or be the most popular, or how someone else wanted it. Luckily, BMW is happy to build one just for YOU! I can pretty much guarantee that I have the only '11 Tasman on Chestnut RWD 328i wagon with 6spd stick, Winter and Premium packs, no sport pack, no iDrive, and no Xenons. Exactly the way I wanted for minimum hassle over the long run that I plan on owning the car. Depreciation is irrelevant if you keep the car long enough. I can't even imagine spending this much money and buying the typical gray on tan, black on tan, or silver on tan sedan that is littering the dealer lots.

#2 is I know exactly how this car has been treated since day one. Particularly important these days since BMW has decided that the cars don't really need maintenance anymore. My car has 18K miles on it, was broken in carefully, and has had three oil changes, one transmission oil change and one diff oil change already. It has also had the brake fluid changed once already. A typical used BMW with 18K on it just got the orginal factory fill oil changed...

Finally, #3, buying new gives you the option of doing European Delivery. Get a substantial discount on the car and the vacation of a lifetime - a win-win there.
Thats just it the sticker of my car was 41k.. 328i with sport package and all options except NAV... Am I going to pay 41k " HELL NO " Bought my car for 22k w/39k Miles.. Still a baby for half the price.. To buy new is a HUGE WASTE OF MONEY. My car is mint condition and 39k miles = a baby still.

Its not worth buying new ESP a BMW I dont care what kinda piece of mind you want. How much abuse could the car of possibly taken in the first 40k miles? Im an enthusiast if it passes PPI im and is physically in great shape im good to go.
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      01-13-2013, 08:34 AM   #30
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Quote:
Originally Posted by krhodes1 View Post
A few thoughts:

1. To me, leasing only makes sense if you are a small business owner who has tax advantages for leasing, OR BMW is having one of thier occasional ridiculously cheap lease specials on. Otherwise, especially at today's interest rates that are the next thing to free money, you are better off financing over the long run. If you are going to lease, NEVER put any money down on the car just to lower the payment - if anything happens to the car you lose that money. Do investigate the multiple refundable security deposit option though.

2. Currently interest rates are so low that it makes absolutely NO sense to me to even contemplate paying cash for a new car. Use BMW's money, and put yours to work for you. Put it in your retirement account, the market, whatever. Leave it in the bank in case of emergency. Pay off a chunk of your mortgage or higher rate debt. At .9% on a 60 month loan the interest cost is negligable. Of course this assumes you have the credit rating to get the best deal out of BMW finance or your bank/credit union. I've averaged a 6% return over the past 4-5 years, no way would I have ever taken $35K out of the market to buy my car, plus I would have had to pay capital gains taxes on some of that money.

3. New versus used. I have bought 30+ used cars in my life, and 3 new ones. I currently own 4 vehicles I bought used, and my BMW that I bought new. I have no problem at all with buying used cars, BUT there are certainly intangibles that go with buying new. And ESPECIALLY for buying a new BMW.

#1 is that when I am paying over $40K for a car, I want it exactly the way *I* want it. Not the way that the dealership thinks will sell fastest or be the most popular, or how someone else wanted it. Luckily, BMW is happy to build one just for YOU! I can pretty much guarantee that I have the only '11 Tasman on Chestnut RWD 328i wagon with 6spd stick, Winter and Premium packs, no sport pack, no iDrive, and no Xenons. Exactly the way I wanted for minimum hassle over the long run that I plan on owning the car. Depreciation is irrelevant if you keep the car long enough. I can't even imagine spending this much money and buying the typical gray on tan, black on tan, or silver on tan sedan that is littering the dealer lots.

#2 is I know exactly how this car has been treated since day one. Particularly important these days since BMW has decided that the cars don't really need maintenance anymore. My car has 18K miles on it, was broken in carefully, and has had three oil changes, one transmission oil change and one diff oil change already. It has also had the brake fluid changed once already. A typical used BMW with 18K on it just got the orginal factory fill oil changed...

Finally, #3, buying new gives you the option of doing European Delivery. Get a substantial discount on the car and the vacation of a lifetime - a win-win there.

The problem with option 2 is that you now have debt. I'm sorry but millionaires didn't become rich by playing spreads on car loans and going $45k - $50K into debt for one. Unless you already have all your other debts paid (house included), have an emergency fund and already have a solid retirement plan you really have no business financing a car this expensive.
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      01-13-2013, 10:39 AM   #31
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Originally Posted by Canada Jeff View Post
I have friends that do nothng but lease because they can get more car for les monthly payment. They are not looking long term. Finacing is the way to go. Finance for 5 years, at the end of the term you have something with value. You then trade that car in and finance again for 5 years with a lower monthly due to trade in. The more this is done, the less the monthly patment gets ! Simple math. Leaseing is OK for business owners only, even then I don't believe leaseing is a smart long term way to go.
Only flaw here is you will be driving a BMW out of warranty for quite a while and
that's not good. To me, major benefit is that your costs are fixed for lease term.ultimately I think it probably costs more to lease........but again, costs are fixed and you just give it back.
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      01-13-2013, 10:41 AM   #32
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Originally Posted by jacobsed View Post
The problem with option 2 is that you now have debt. I'm sorry but millionaires didn't become rich by playing spreads on car loans and going $45k - $50K into debt for one. Unless you already have all your other debts paid (house included), have an emergency fund and already have a solid retirement plan you really have no business financing a car this expensive.
Whatever mate, you run your finances your way, I will run mine my way. Why would I take $35K out of the market where it is earning me 5% (and have to pay 15% capital gains tax on some portion of it) to save .9% interest? I certainly COULD have paid cash for it, but having more than a couple thousand laying around in a non-earning account would be foolish. Even my emergency fund money is making more than .9%. Millionaires also did not get that way by being foolish with their money.

Your argument makes perfect sense if interest rates were at the historical norms of 7-9%. Particularly if one was planning to be in an endless cycle of trading one car for another. I have no intention of doing that, this car will be paid off in a couple years, and I plan to keep it for the foreseeable future. After all, BMW seems disinclined to sell me another one - I don't do automatics. I may keep this car so long it starts to appreciate - I have owned one of my cars for 19 years now.
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      01-13-2013, 10:44 AM   #33
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Originally Posted by jacobsed View Post
The problem with option 2 is that you now have debt. I'm sorry but millionaires didn't become rich by playing spreads on car loans and going $45k - $50K into debt for one. Unless you already have all your other debts paid (house included), have an emergency fund and already have a solid retirement plan you really have no business financing a car this expensive.
Most of them became extremely wealthy by using other people's money. Cars are depreciating assets and a necessity.f we were to follow your logic then we would all buy used Honda civics and drive them forever.
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      01-13-2013, 10:54 AM   #34
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Cars are depreciating assets and a necessity.f we were to follow your logic then we would all buy used Honda civics and drive them forever.
Yes
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      01-13-2013, 11:01 AM   #35
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Originally Posted by QUiKSR20 View Post
Thats just it the sticker of my car was 41k.. 328i with sport package and all options except NAV... Am I going to pay 41k " HELL NO " Bought my car for 22k w/39k Miles.. Still a baby for half the price.. To buy new is a HUGE WASTE OF MONEY. My car is mint condition and 39k miles = a baby still.

Its not worth buying new ESP a BMW I dont care what kinda piece of mind you want. How much abuse could the car of possibly taken in the first 40k miles? Im an enthusiast if it passes PPI im and is physically in great shape im good to go.
If there had been an e91 in the right spec and condition for sale when I was looking I might have bought it and rented a car in Europe (I was going anyway). There wasn't. Ultimately the difference between your car and mine is $5K a year for 4 years. But I get 10K miles of use for each of those $5K. Expensive, but not ridiculous. As I have said, in general, I buy used cars. This time I wanted a new one, and I can very easily afford it. I'm lucky enough to be middle-aged, single, no kids, have a small mortgage and a great job. Cars are literally my only vice - I neither smoke nor drink. I don't even have the $5-10/day fancy coffee problem most of my peers seem to have.

And ultimately, someone has to buy BMWs new or there would be no nice used ones to buy. BMW would be in the same boat as Saab. Saab owner's were very enthusiastic too, but they all bought used Saabs.
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      01-13-2013, 11:09 AM   #36
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Quote:
Originally Posted by krhodes1 View Post
A few thoughts:

1. To me, leasing only makes sense if you are a small business owner who has tax advantages for leasing, OR BMW is having one of thier occasional ridiculously cheap lease specials on. Otherwise, especially at today's interest rates that are the next thing to free money, you are better off financing over the long run. If you are going to lease, NEVER put any money down on the car just to lower the payment - if anything happens to the car you lose that money. Do investigate the multiple refundable security deposit option though.

2. Currently interest rates are so low that it makes absolutely NO sense to me to even contemplate paying cash for a new car. Use BMW's money, and put yours to work for you. Put it in your retirement account, the market, whatever. Leave it in the bank in case of emergency. Pay off a chunk of your mortgage or higher rate debt. At .9% on a 60 month loan the interest cost is negligable. Of course this assumes you have the credit rating to get the best deal out of BMW finance or your bank/credit union. I've averaged a 6% return over the past 4-5 years, no way would I have ever taken $35K out of the market to buy my car, plus I would have had to pay capital gains taxes on some of that money.

3. New versus used. I have bought 30+ used cars in my life, and 3 new ones. I currently own 4 vehicles I bought used, and my BMW that I bought new. I have no problem at all with buying used cars, BUT there are certainly intangibles that go with buying new. And ESPECIALLY for buying a new BMW.

#1 is that when I am paying over $40K for a car, I want it exactly the way *I* want it. Not the way that the dealership thinks will sell fastest or be the most popular, or how someone else wanted it. Luckily, BMW is happy to build one just for YOU! I can pretty much guarantee that I have the only '11 Tasman on Chestnut RWD 328i wagon with 6spd stick, Winter and Premium packs, no sport pack, no iDrive, and no Xenons. Exactly the way I wanted for minimum hassle over the long run that I plan on owning the car. Depreciation is irrelevant if you keep the car long enough. I can't even imagine spending this much money and buying the typical gray on tan, black on tan, or silver on tan sedan that is littering the dealer lots.

#2 is I know exactly how this car has been treated since day one. Particularly important these days since BMW has decided that the cars don't really need maintenance anymore. My car has 18K miles on it, was broken in carefully, and has had three oil changes, one transmission oil change and one diff oil change already. It has also had the brake fluid changed once already. A typical used BMW with 18K on it just got the orginal factory fill oil changed...

Finally, #3, buying new gives you the option of doing European Delivery. Get a substantial discount on the car and the vacation of a lifetime - a win-win there.
I agree for the most part, but I would add that there should not be a single person driving a new BMW who isn't putting 17,500 into their 401, and then another 5,500 into a Roth if qualified (many BMW drivers make too much to qualify). That money needs to come out of salary, not borrowed. Even if a typical cu car loan is 1.49.

If you cannot meet long term goals, push yourself to make more money. Going into debt has become the easy way out IMHO....

And to your notion of paying down a mortgage....how about driving your car into the ground, taking the money that would have been spent on a car and paying down the principal?

We are too much in a live for today reverse mortgage tomorrow society.
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      01-13-2013, 11:15 AM   #37
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You'll never convince me that carrying debt on a throw away item is an ok thing to do for personal finance.
Nobody is trying to convince you. If it doesn't work for you dont do it. Just don't try to tell everyone how stupid it is because you dont know everyones financial situation. For some it's a write off, others might just want to switch cars every 3 yrs and have the money to do so. Sadly others are just pissing money they can't afford out the window.
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      01-13-2013, 11:33 AM   #38
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I've always been afraid to lease. It would probably be good for me since I trade in my cars after a year and a half to two years almost every time and am wasting money by doing so. I'm just worried that I'll go over on mileage. Plus, I really like modding and would constantly be worried about that.
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      01-13-2013, 11:36 AM   #39
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Originally Posted by 335BBS View Post
Most of them became extremely wealthy by using other people's money. Cars are depreciating assets and a necessity.f we were to follow your logic then we would all buy used Honda civics and drive them forever.

Does the truth hurt?
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      01-13-2013, 11:49 AM   #40
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Originally Posted by krhodes1 View Post
Whatever mate, you run your finances your way, I will run mine my way. Why would I take $35K out of the market where it is earning me 5% (and have to pay 15% capital gains tax on some portion of it) to save .9% interest? I certainly COULD have paid cash for it, but having more than a couple thousand laying around in a non-earning account would be foolish. Even my emergency fund money is making more than .9%. Millionaires also did not get that way by being foolish with their money.

Your argument makes perfect sense if interest rates were at the historical norms of 7-9%. Particularly if one was planning to be in an endless cycle of trading one car for another. I have no intention of doing that, this car will be paid off in a couple years, and I plan to keep it for the foreseeable future. After all, BMW seems disinclined to sell me another one - I don't do automatics. I may keep this car so long it starts to appreciate - I have owned one of my cars for 19 years now.
Your most powerful wealth building tool is your income. If it is tied up making payments then you can't use it to build wealth (even on 0% loans.) If you have debt then its a pay now or pay later situation and somebody else is getting your money and its not working for you. And you're making payments on a very expensive throw away item. People crack me up when they think going into debt playing spreads financing car loans is the smart way to go. The big picture of the whole scenario is laughable. I'm not calling anyone stupid but they are wrong regardless of being ignorant or not.

The smart play is to pay cash for a car you can afford and move on. People hate hearing this because the reality is they don't actually have any money. But somehow they can justify making payments!!!

Last edited by jacobsed; 01-13-2013 at 12:27 PM.
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      01-13-2013, 12:21 PM   #41
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Originally Posted by jacobsed View Post
Your most powerful wealth building tool is your income. If it is tied up making making payments then you can't use it to build wealth (even on 0% loans.) If you have debt then its a pay now or pay later situation and somebody else is getting your money and its not working for you. And you're making payments on a very expensive throw away item. People crack me up when they think going into debt playing spreads financing car loans is the smart way to go. The big picture of the whole scenario is laughable. I'm not calling anyone stupid but they are wrong regardless of being ignorant or not.

The smart play is to pay cash for a car you can afford and move on. People hate hearing this because the reality is they don't actually have any money. But somehow they can justify making payments!!!
Agreed, that's why a failing small business with a fleet of nice cars makes no sense, as if leasing is automatically justified. Business owners are always looking to lower expenses, not increase them.

The avg 3 buyer had an income of 140k+ back in 2005, I saw marketing material which stated that. The figure today should be considerably higher. Given the current state of the economy, it may not be the case.
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      01-13-2013, 01:36 PM   #42
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Agreed, that's why a failing small business with a fleet of nice cars makes no sense, as if leasing is automatically justified. Business owners are always looking to lower expenses, not increase them.

The avg 3 buyer had an income of 140k+ back in 2005, I saw marketing material which stated that. The figure today should be considerably higher. Given the current state of the economy, it may not be the case.
I'm sure it's not. The smart thinking would be "Hey, I can't afford this car, so I'm not going to buy it." Unfortunately, the more common line of thought is "Hey, if I eat ramen every day and live under a bridge I can buy this 5 year old BMW and afford the payments, then take out a personal loan and mod it!"
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      01-13-2013, 02:05 PM   #43
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Originally Posted by AndyR83 View Post
I'm sure it's not. The smart thinking would be "Hey, I can't afford this car, so I'm not going to buy it." Unfortunately, the more common line of thought is "Hey, if I eat ramen every day and live under a bridge I can buy this 5 year old BMW and afford the payments, then take out a personal loan and mod it!"
I guess the same was going on with houses 5-10 yrs ago, 3-5% down, finance the rest, your house is your ATM. Some folks were able to walk away pennies on the dollar and used their spouses to get another home. Almost premeditated
imho. It's a Lucy goosey time to handle finances I suppose...
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      01-13-2013, 03:32 PM   #44
QUiKSR20
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Originally Posted by 335BBS
Quote:
Originally Posted by Canada Jeff View Post
I have friends that do nothng but lease because they can get more car for les monthly payment. They are not looking long term. Finacing is the way to go. Finance for 5 years, at the end of the term you have something with value. You then trade that car in and finance again for 5 years with a lower monthly due to trade in. The more this is done, the less the monthly patment gets ! Simple math. Leaseing is OK for business owners only, even then I don't believe leaseing is a smart long term way to go.
Only flaw here is you will be driving a BMW out of warranty for quite a while and
that's not good. To me, major benefit is that your costs are fixed for lease term.ultimately I think it probably costs more to lease........but again, costs are fixed and you just give it back.
Last time I checked this is an enthusiast site so we can do some work on our own cars or pay an Indy for work thats over your head...
Do people really depend on warranty that much or is there that much lack of faith in the " German engineering"
I've never had to even use my warranty on past cars.

Quote:
Originally Posted by John 070 View Post
The avg 3 buyer had an income of 140k+ back in 2005, I saw marketing material which stated that. The figure today should be considerably higher. Given the current state of the economy, it may not be the case.
SHeeet I wish I made 140K+ I have a 401k, a savings account and a manageable mortgage, a hobby car, my daily driver which I finance for less than what a honda civic would cost most ( only 4 year loan ).

I have no credit cards, My only debt is my car payment and my mortgage.

I feel that im doing pretty good to even be able to own a BMW & a mortgage with a son and wife under 35 years old in NJ which is very expensive.

Its all about being smart with your money, Yeah technically I dont need a BMW that has a loan attached to it
but there comes a point where you want to enjoy things and buying cash would never happen.

Do I need a 50k loan for a car? Hell no! But a sub $300 a month ( 14k ) loan for 4 years with a small interest rate isnt going to kill anyones financial goals.
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Last edited by QUiKSR20; 01-13-2013 at 03:56 PM.
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