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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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      01-13-2013, 03:38 PM   #45
QUiKSR20
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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.
I hear ya man, esp when your in that part of your career without kids and a good job etc I'm sure it's not a huge deal. You def sound smart with your money unfort most are not.
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      01-13-2013, 06:40 PM   #46
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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!!!

You try so hard to come off as financially smart but you sound like a idiot. If your loan is only 1% and you can make 4% investing that $25000 then it is a no brainer to take the loan. You would have gained an extra 3% over the time of the loan.$25000 in principal appreciatcates a whole lot more that socking away $500 a month over 3-4yrs stupid ass.
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      01-13-2013, 07:28 PM   #47
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All I've learned from this thread is 99% of the population be driving 1990's Hondas. That's the only problems with this forum, very differing financial situations. I'd shoot myself now if I had to suffer most of my life to "maybe" pay for a BMW cash on day. Live life and be happy as long as you aren't in danger of losing everything.
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      01-13-2013, 07:57 PM   #48
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You try so hard to come off as financially smart but you sound like a idiot. If your loan is only 1% and you can make 4% investing that $25000 then it is a no brainer to take the loan. You would have gained an extra 3% over the time of the loan.$25000 in principal appreciatcates a whole lot more that socking away $500 a month over 3-4yrs stupid ass.
I get where he is coming from, and also where you are. You have a great tolerance for risk, maybe you wanna call it using leverage. Maybe you even played with FB calls and made bank.

Money is basically free right now, but how much a person wants to borrow is up to them. Conventional wisdom says that borrowing less is more favorable than borrowing more. Somewhere along the line people have learned to embrace $0/$0/$0/$0.
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      01-13-2013, 10:43 PM   #49
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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.



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.
Hpfp, radio replacement, hvac fan, injectors, steering hose, pump and rack and front suspect was creaking as I got rid of it. This was all JUST under warranty.
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      01-13-2013, 11:22 PM   #50
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Hpfp, radio replacement, hvac fan, injectors, steering hose, pump and rack and front suspect was creaking as I got rid of it. This was all JUST under warranty.
Yeah I guess your right the Germans have a long way to go when it comes
to reliability compared to the Japanese. My G35 had 0 issues didnt goto the
dealer 1 time in the 50k miles I owned it and I beat the hell outta it.
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      01-14-2013, 12:36 AM   #51
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You try so hard to come off as financially smart but you sound like a idiot. If your loan is only 1% and you can make 4% investing that $25000 then it is a no brainer to take the loan. You would have gained an extra 3% over the time of the loan.$25000 in principal appreciatcates a whole lot more that socking away $500 a month over 3-4yrs stupid ass.

Idiot? Stupid ass? Really? Reread what you wrote please. You forgot to mention the fact that you acquired a pile of debt in this scenario on a depreciating asset that is eating up all of your interest and then some. And you have to pay for it every month out of your income which is preventing it from working for you. Your net worth is the total of your assets minus your liabilities. Focus on the big picture of your personal finances and not the point spreads on car loans.

If you're really a high roller then just pay cash for it and move on.
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      01-14-2013, 02:46 AM   #52
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Idiot? Stupid ass? Really? Reread what you wrote please. You forgot to mention the fact that you acquired a pile of debt in this scenario on a depreciating asset that is eating up all of your interest and then some. And you have to pay for it every month out of your income which is preventing it from working for you. Your net worth is the total of your assets minus your liabilities. Focus on the big picture of your personal finances and not the point spreads on car loans.

If you're really a high roller then just pay cash for it and move on.
I'll just let you toil in your ignorance, and I'll let my money work for me instead of working for it.
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      01-14-2013, 06:19 AM   #53
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I'll just let you toil in your ignorance, and I'll let my money work for me instead of working for it.
You do that. You probably think mortgaging your house and putting that money in the market is ok also since mortgage rates are so low and you can make more in the market.

If it doesn't make sense for a house then it doesn't make sense on a disposable item.

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      01-14-2013, 09:01 AM   #54
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I paid cash for my 2011 328, but this year I'm financing because I value the liquidity more than a couple hundred bucks in interest.

That liquidity will allow me to pounce on a rental condo if a good deal comes by.

Furthermore, in case of a job loss or illness, the lump sum of cash I have will be a great help. Try raising 20k for 3.9pct in a hurry!
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      01-14-2013, 09:16 AM   #55
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Idiot? Stupid ass? Really? Reread what you wrote please. You forgot to mention the fact that you acquired a pile of debt in this scenario on a depreciating asset that is eating up all of your interest and then some. And you have to pay for it every month out of your income which is preventing it from working for you. Your net worth is the total of your assets minus your liabilities. Focus on the big picture of your personal finances and not the point spreads on car loans.

If you're really a high roller then just pay cash for it and move on.
Play nice boys. You have no idea what this guys financial situation is. Leasing works for some and not others. Simple.
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      01-14-2013, 09:21 AM   #56
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Yeah I guess your right the Germans have a long way to go when it comes
to reliability compared to the Japanese. My G35 had 0 issues didnt goto the
dealer 1 time in the 50k miles I owned it and I beat the hell outta it.
I'm not saying that really but had I done my research I would have know going in that all of these problems were going to happen...pretty much guaranteed....and thats ridiculous. For this reason, leasing a BMW is the right thing to do imo. I leased a Saab (open ended...mistake #1) years ago and determined that closed ended lease on a Saab was the only way to drive one of those things. Well about 5 years ago they (GM) were offering ridiculous purchase opportunities. 0% for 5 years.....didnt listen to my own advice and now own a Saab that nobody will ever want.
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      01-14-2013, 09:27 AM   #57
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Paying cash upfront is pretty dumb when BMW is offering 0.9%(Pretty much interest Free). This is why everyone needs to take Finance 101
For example. Loan= $50,000, term 5 years
1) Interest paid through out 5 years if financed = $1,152.18
2) Cumulative earning at Triple AAA stocks 5% yield = $13,814 (does not reflect tax).

Pretty much, for the 50k you paid up front cash.. you could earn $13k from safe investment throught out 5 years and paid 25% of the car value just from interest rate. This is a just a simple calculation since real life involves more factors like federal tax rate and blah blah.. but seriously.. take advantage of the 0% PEOPLE
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      01-14-2013, 10:22 AM   #58
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Pay now or pay later scenario. Your money might make some interest if you keep it but that new car's depreciation wipes it out. And you have a lien on the car and monthly payments on it. You could have 0% interest and its still a bad deal to finance. Simple net worth calcs.

Those convinced against their will are of the same opinion still. There is no such thing as good debt in any scenario. People have a hard time with that concept because it means they can't have what they want which really means they can't afford it.
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      01-14-2013, 12:27 PM   #59
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People, 6% or more in the investment is not guarantee! You could lose it all or break even after taxes. Just saying...


Just follow what your heart say.
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      01-14-2013, 06:04 PM   #60
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Paying cash upfront is pretty dumb when BMW is offering 0.9%(Pretty much interest Free). This is why everyone needs to take Finance 101
For example. Loan= $50,000, term 5 years
1) Interest paid through out 5 years if financed = $1,152.18
2) Cumulative earning at Triple AAA stocks 5% yield = $13,814 (does not reflect tax).

Pretty much, for the 50k you paid up front cash.. you could earn $13k from safe investment throught out 5 years and paid 25% of the car value just from interest rate. This is a just a simple calculation since real life involves more factors like federal tax rate and blah blah.. but seriously.. take advantage of the 0% PEOPLE
Lol some of us with Ivy League MBAs don't understand this safe investment theory. Guess our da** schools never got down to the basics. . They skipped right to the fact that dividends are taxed as ordinary income, not what many BMW drivers want.

P.s. do you folks really believe that captive financing offers the same out the door cost as cash?
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      01-14-2013, 06:07 PM   #61
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People, 6% or more in the investment is not guarantee! You could lose it all or break even after taxes. Just saying...


Just follow what your heart say.
Lose money on an investment? Nah, that never happens.
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      01-15-2013, 08:40 AM   #62
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Lose money on an investment? Nah, that never happens.
Well.. Someone's gain is someone's loss... I take advantage of them! haha
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      01-15-2013, 08:41 AM   #63
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FYI.. I usually make a higher return betting against the market short term
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      01-15-2013, 03:07 PM   #64
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I'm leasing for the first time and it's freaking me out I don't even want to think about it.

I don't think payments are neccessarily a bad thing. They permit you to keep your money longer. Whether it is just for holding on to it longer, investing it, getting something else etc... When you pay an expensive car right off, a lot of money is gone, you don't have easy access to it anymore.

So payments allows you to slowly pay for it and still be able to use the money for something else. Big problem occurs when you start to stretch out that money, if you even really had it in the first place, and it wasn't just money that was going to be coming in the future as paychecks.

What is freaking me out with my first time lease is that at the end of the term, I will have nothing to show for it, but I paid lots of money already, for a car that would otherwise still be a great car after 4 years. And if I want another car, I would need to pay more money. When that lease is over, once again I pay again. A car is not an investment. It depreciates and needs maintenance. But when I buy it, if I pay it right off, I don't need to worry about payments. Anything can happen finacially and I still own the car. No bank can come and take my car back, a car for which I may have already put a lot of money towards in downpayment and monthly payments. I can choose to keep it, sell, drive it, unregister it and store it the garage until I can afford to get it back on the road. With a lease or payments you can't do that. If you don't pay it off right away, at leas with finance payments,at the end of the financing, you have something. That something depreciated in value. But now you own a car. You don't need to make payments anymore. and it still has a value, or serves a valuable functions of you being able to drive it around. It now in fact serves the valuable function of allowing you to save those monthly payments for how ever long until you get another car. Now you are actually making and saving money. a lease doesn't save money, it wastes money. A 400$ lease payment saves you 200$ over a 600$ purchase payment, but you keep paying 400$ into your next lease, so you will end up paying more. It also then gives the stealership some nice, used cars to sell as higher cost certified used cars. Dam stealerships...!!!

It's for these reasons that leasing expensive cars just don't make sense for me. You pay so much, for the use of it, but you lose it at the end, and have to give it back, only to start over again. But leasing small inexpensive cars like a civic or corrolla, that makes more sense. They for sure do not have the same handling or prestige, but from the perspective of having simple transportation it makes more sense.
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      01-15-2013, 04:07 PM   #65
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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.
you want to know what kind of wear it could have in 40k miles? well someone like me could have owned it, i am currently financing an 11 335i with the option to turn it in at contracts end. and thats what i planned on doing from the day i drove it off the lot, if i had planned on keeping it i would have done at least twice as much maintenance but since i am not why waste the money. in the year and a half i have had this vehicle i have put 17k miles, i have had it at the drag strip twice and have done numerous downshift to third at 80mph, on a single oil change. one time when i was stuck in traffic i got pissed and dropped the hammer while rolling in 1st, it destroyed my clutch, when i had it replaced there were smooth spots on the flywheel, but why would i change the flywheel when im not going to keep the car. the car runs and drives like new, it pulls just as hard as it did the day i bought it, unless you have the maintenance records pulled you would never know it was beaten up. it may loose a sale or two from cautious people but i guarantee the car will sell in a year and a half, and it will most likely give years of trouble free driving, but most people would be uneasy to purchase a vehicle knowing this information.

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      01-15-2013, 04:09 PM   #66
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Wow, it looks like the majority of this thread has been wasted arguing, not about the topic inquired upon, but whether financing makes any sense at all. I'd like set that aside for a moment, because really, there's no sense in debating it. Jacobsed is right about a lot of things. If you want to put rational finance decisions above all else, then follow his advice. For my part, I want to balance rational financial decisions with some degree of enjoyment. Fortunately, this is a free country, so we can all squander our income if we choose. Yay!

On to the matter of lease versus finance. The first thing to understand is that leasing and buying are actually very similar. When you buy a car, you're financing the entire cost of the car. If you decide to sell the car part of the way through the finance term, you get to collect the money for the sale, which may -- or may not -- be more than the remainder of your principal owed. What you "paid" for the car is actually the sum of the payments, less the amount you recovered from the sale, plus any maintenance you paid for.

When leasing you are pre-negotiating two additional factors: when you are going to "sell" it back to the finance company, and for how much.

It's that simple. Everything else about leasing is the same (more or less). There are other things to look out for though. The finance deals offered on lease and purchase are often separate. So when you go to the dealer, don't just ask for the final payment amount (which is really common with lease negotiation). Ask what your finance rate is. Have the finance department run the numbers for both lease and purchase. Most dealers will give you a term sheet that outlines the specific terms like finance rate, term, and principal amount. If you don't understand the numbers on these sheets, then talk to someone who does before you make the purchase.

So, with that in mind, we have to raise the question: how does leasing often result in a lower payment? The answer has to do with the way lease financing is structured. Remember that with a lease, you're negotiating the future amount of the car at the same time you're buying it. This is called the residual value. Roughly speaking, you're financing the difference in the purchase price and the residual over the term of your lease; the depreciation. The finance company publishes a list of residual values for each model over a varying set of terms (measured in months).

When I financed (lease) my 135i, the residual for my car was 62% (if I recall correctly) at three years. If I were to purchase the car under typical terms (60 month financing), I would be financing 100% cost of the car over 5 years. Because I leased, I was only financing 38% of the cost of the car over 3 years. So... less than half the principle financed over more than half the original term. Spreading a smaller amount over a longer term results in a lower payment.

The thing is, you could do the same with purchase financing, assuming that you were able to sell the car for the same amount that you could negotiate as a residual. In this case, you would have paid more in payments, so you'd pocket some on the back end. I find that residual amounts are on the generous side though, and selling a car privately is a pain in the ass. In short, it's never worked out very well for me, so I don't want to deal with it.

The main drawbacks of leasing are that you have to agree to the terms up front, which means you need some degree of predictability in your life. Going over on your miles with a BMW is not nearly as big a deal as it is with other makes. If you finance through BMW, you can buy additional miles later (there are some restrictions near the end of term) at the same buy rate as the day you bought the car. It's also ill-advised to mod the car. If you void your warranty and break something, you're really screwed.

I hope this helps you understand leasing a little better. Leasing appears to be some kind of voodoo magic to a lot of people, so be sure that whoever you're seeking advice from really understands what's going on.
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