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      11-25-2013, 02:47 PM   #1
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What happens at lease-end if next car is financed

I am thinking about leasing an M235i for 36 months and at the end of that I want to get into an M4 via financing instead of leasing.

Assuming residual is 50% i'd be paying about $25,000 total for the M235i what trade in/Down payment will I have to put towards the M4?

I am unfamiliar with leasing and searched the forums but could not really find an answer to my question. I appreciate any help
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      11-25-2013, 02:53 PM   #2
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Unless the lease is worth more than the residual at the end of the lease, the two processes can be completely unrelated.

You simply turn in the lease, and go about buying the M4 as you would in any other circumstance.

If the lease car is worth MORE than the residual, you can shop the lease around and see if anyone will buy it from you for a few K more. If you can find some buyers you can either sell it, or use the equity against an M4 purchase if the dealer will play ball.

In most cases though once you turn in the car your obligation and dealings with that undertaking are over, and you go about buying or leasing something else separately.
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      11-25-2013, 04:19 PM   #3
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Unless the lease is worth more than the residual at the end of the lease, the two processes can be completely unrelated.

You simply turn in the lease, and go about buying the M4 as you would in any other circumstance.

If the lease car is worth MORE than the residual, you can shop the lease around and see if anyone will buy it from you for a few K more. If you can find some buyers you can either sell it, or use the equity against an M4 purchase if the dealer will play ball.

In most cases though once you turn in the car your obligation and dealings with that undertaking are over, and you go about buying or leasing something else separately.
Wow so in most cases I would get nothing after putting $25K into the M235i? Thats tough...
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      11-25-2013, 05:55 PM   #4
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Wow so in most cases I would get nothing after putting $25K into the M235i? Thats tough...
Uhh that's how buying cars works....99.99% of the time...you lose.
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      11-25-2013, 06:28 PM   #5
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Uhh that's how buying cars works....99.99% of the time...you lose.
Agreed. Like the "house" in vegas, the house always wins. They wouldn't be in business if they didn't always win...
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      11-25-2013, 06:59 PM   #6
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Wow so in most cases I would get nothing after putting $25K into the M235i? Thats tough...
Now you know why leasing a brand new, unreliable car every 3 years is vastly more expensive than buying a brand new (or slightly used), reliable car and keeping it for 10 or 12 years (or, ideally, just running it into the ground for as long as possible).

Unfortunately if the car in question is unreliable, then you're pretty much out of luck and you'll have to pay to play.
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      11-25-2013, 07:03 PM   #7
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Incidentally, this is also why you always have to ask yourself:

"Hypothetically, could I write a check for this car if I planned on driving it for 12 years, reliability permitting?"

If the answer is no, then the answer to the question: "Can I instead afford to lease a brand new version of this car every 3 years for the next 12 years?" should be "no."

But, too many people fall into the trap of only thinking short term by looking at down payments and monthly lease payments when assessing whether or not they can afford a car.
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      11-25-2013, 07:04 PM   #8
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And again just to be crystal clear, there's nothing wrong with leasing. You just have to go through the math long term to make sure you fully understand what the true cost to own is.
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      11-25-2013, 07:08 PM   #9
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Wow so in most cases I would get nothing after putting $25K into the M235i? Thats tough...
Yup, it's just like renting a house. You pay and pay and pay and when your lease is up you're no closer to owning that house than when you moved in.
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      11-25-2013, 07:43 PM   #10
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Now you know why leasing a brand new, unreliable car every 3 years is vastly more expensive than buying a brand new (or slightly used), reliable car and keeping it for 10 or 12 years (or, ideally, just running it into the ground for as long as possible).

Unfortunately if the car in question is unreliable, then you're pretty much out of luck and you'll have to pay to play.
Yea def realizing that now. Thing is I do not want to own the M235i for 10-12 years but an M3/M4 is my dream car and that I would not mind owning for a long period having at least one car paid off is a must in my future. I figured leasing the M235i would make sense for 2-3 years but I feel that leasing is basically like renting a car now.

Thanks for sharing your insight!
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      11-25-2013, 07:44 PM   #11
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Yup, it's just like renting a house. You pay and pay and pay and when your lease is up you're no closer to owning that house than when you moved in.
yea and i don't know how I feel about that
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      11-25-2013, 07:56 PM   #12
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Wow so in most cases I would get nothing after putting $25K into the M235i? Thats tough...
Uhh that's how buying cars works....99.99% of the time...you lose.
You're right. I might consider doing a lease takeover on an e92 m3 instead
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      11-25-2013, 07:56 PM   #13
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Uhh that's how buying cars works....99.99% of the time...you lose.
Agreed. Like the "house" in vegas, the house always wins. They wouldn't be in business if they didn't always win...
I guess that's why some people refer to them as "stealerships"
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      11-25-2013, 08:21 PM   #14
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yea and i don't know how I feel about that
You're not alone. That is why most of us like to finance our cars instead. However, if you are not planning to keep the M235 long-term then there may be an advantage to leasing. When the lease is up you can turn it in, or you can also buy it out by paying an agreed percentage of the residual value. An advantage to the buy-out is that it gives you ownership of the car and you know its history. It's sort of like buying an used car except that you know how it was maintained/driven and you rented it in the meantime. Of course this will cost you more money overall. However if you are not planning on keeping the M235i long-term then by leasing it you effectively get to drive your car of choice for a much much lower price. You just won't be building any equity in it; it isn't "your" car.

Assume you picked up two identical cars at the same time, leasing one and buying the other outright. The leased car will only cost you $25k over 3 years but at the end of that 3 years it still belongs to BMW. The one which you bought/financed will cost you $50k over those 3 years, but at the end of it you have a car in your driveway. You'll have to work out if it is cheaper to lease the M235i and then start anew in financing the M4, or if you'd be better spent in starting your financing with the M235i and trading/selling it towards the M4 in a few years. A lot of that depends on your individual budget.

FYI, financing or buying is always cheaper than leasing in the long run.
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      11-25-2013, 08:27 PM   #15
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You may be better off buying a gently used 135, and selling it in 2 years. Leasing a new car is very expensive.
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      11-25-2013, 10:18 PM   #16
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I am thinking about leasing an M235i for 36 months and at the end of that I want to get into an M4 via financing instead of leasing.

Assuming residual is 50% i'd be paying about $25,000 total for the M235i what trade in/Down payment will I have to put towards the M4?

I am unfamiliar with leasing and searched the forums but could not really find an answer to my question. I appreciate any help
i'm not sure where you are getting 50% from. when i signed my intent to lease in July and ordered my 135is to be built from the factory----the 3 year residuals were around 60%. I'm sure the M235i will also be like that. If you are going to keep a car for 10 years, then by all means buy it. If you want to get different cars every 2-3 years-----by all means LEASE. buying will make you lose even more money usually.......

with BMW, it's foolish not to lease if you are going to keep a car 2-3 years. They subsidize their leases SO well. It's a leaser's market with BMW.....waaaaaaaay better than almost any other company.

I already have a car i've had over 11 years now (TT).....so my DD needs to be reliable, under warranty, and fun...leasing works out great. Not everything in life is about money; some things should be about enjoyment as well
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      11-25-2013, 10:48 PM   #17
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Yup, it's just like renting a house. You pay and pay and pay and when your lease is up you're no closer to owning that house than when you moved in.
That's actually a terrible analogy. When you lease a car, you are essentially paying down the expected depreciation of the vehicle. You can then purchase it for that predetermined figure or walk away. With a rented house, you have no such agreement and the value, in many cases, appreciates, but there is no agreement regarding a purchase at the end of your lease term. The value of a house does not decline due to age or use - the exact opposite occurs with a vehicle.
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      11-26-2013, 12:55 AM   #18
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That's actually a terrible analogy. When you lease a car, you are essentially paying down the expected depreciation of the vehicle. You can then purchase it for that predetermined figure or walk away. With a rented house, you have no such agreement and the value, in many cases, appreciates, but there is no agreement regarding a purchase at the end of your lease term. The value of a house does not decline due to age or use - the exact opposite occurs with a vehicle.
Fair point, maybe it was a bad analogy. I'm speaking generally here to make a point about not building equity by renting a house versus buying it, the same for leasing vs buying a car.
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      11-26-2013, 02:43 AM   #19
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I am thinking about leasing an M235i for 36 months and at the end of that I want to get into an M4 via financing instead of leasing.

Assuming residual is 50% i'd be paying about $25,000 total for the M235i what trade in/Down payment will I have to put towards the M4?

I am unfamiliar with leasing and searched the forums but could not really find an answer to my question. I appreciate any help
i'm not sure where you are getting 50% from. when i signed my intent to lease in July and ordered my 135is to be built from the factory----the 3 year residuals were around 60%. I'm sure the M235i will also be like that. If you are going to keep a car for 10 years, then by all means buy it. If you want to get different cars every 2-3 years-----by all means LEASE. buying will make you lose even more money usually.......

with BMW, it's foolish not to lease if you are going to keep a car 2-3 years. They subsidize their leases SO well. It's a leaser's market with BMW.....waaaaaaaay better than almost any other company.

I already have a car i've had over 11 years now (TT).....so my DD needs to be reliable, under warranty, and fun...leasing works out great. Not everything in life is about money; some things should be about enjoyment as well
I just threw 50% out there because I thought it was an average number. But 60% is even better. Eventually I plan on having 2 cars just like you one leased and one paid off, I think it's a great combo.

Another thing that has me hesitant about leasing is the down payment insurance if my car gets totaled or stolen
[url/]http://www.realcartips.com/leasing/0...ar-lease.shtml[/url]
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      11-26-2013, 02:44 AM   #20
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Yup, it's just like renting a house. You pay and pay and pay and when your lease is up you're no closer to owning that house than when you moved in.
That's actually a terrible analogy. When you lease a car, you are essentially paying down the expected depreciation of the vehicle. You can then purchase it for that predetermined figure or walk away. With a rented house, you have no such agreement and the value, in many cases, appreciates, but there is no agreement regarding a purchase at the end of your lease term. The value of a house does not decline due to age or use - the exact opposite occurs with a vehicle.
You make a good point. Leasing a car is not as bad as a house
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      11-26-2013, 10:59 PM   #21
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Leasing is a terrible idea if you cannot write off the monthly expenses from your taxes. Leasing makes it so that your car does not become part of your assets and therefore it is non-taxable. The way I see it, is that leasing is only there for people to take advantage of the tax write offs.(otherwise you are throwing away hard earned money) Financing is for people who want to keep that car long term but would rather pay for it slowly rather than lump sum if they don't have the cash.

I would suggest that if you ultimately want a M brand in 2-3 years. To buy a car that will only run for the next 2-3 years into the ground. By that time you will have saved up enough to finance or buy your dream car. Meanwhile not wasting your $$$ by paying interest to the dealership for no reason. Save those monthly payments and interest and fully load that M car.
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      11-26-2013, 11:15 PM   #22
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i'm not sure where you are getting 50% from. when i signed my intent to lease in July and ordered my 135is to be built from the factory----the 3 year residuals were around 60%. I'm sure the M235i will also be like that. If you are going to keep a car for 10 years, then by all means buy it. If you want to get different cars every 2-3 years-----by all means LEASE. buying will make you lose even more money usually.......

with BMW, it's foolish not to lease if you are going to keep a car 2-3 years. They subsidize their leases SO well. It's a leaser's market with BMW.....waaaaaaaay better than almost any other company.

I already have a car i've had over 11 years now (TT).....so my DD needs to be reliable, under warranty, and fun...leasing works out great. Not everything in life is about money; some things should be about enjoyment as well
I agree with this 100%!
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