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lease vs purchase + options reasoning
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01-12-2013, 05:49 PM | #24 | ||
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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, 07:25 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, 07:38 PM | #26 | |||
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01-12-2013, 09:19 PM | #27 | |
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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, 10:45 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, 01:43 AM | #29 | |
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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, 07:34 AM | #30 | |
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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, 09:39 AM | #31 | |
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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, 09:41 AM | #32 | |
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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, 09:44 AM | #33 | |
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01-13-2013, 09:54 AM | #34 |
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01-13-2013, 10:01 AM | #35 | |
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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, 10:09 AM | #36 | |
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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, 10:15 AM | #37 |
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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, 10:33 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, 10:36 AM | #39 |
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01-13-2013, 10:49 AM | #40 | |
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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 11:27 AM.. |
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01-13-2013, 11:21 AM | #41 | |
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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, 12:36 PM | #42 | |
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01-13-2013, 01:05 PM | #43 | |
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imho. It's a Lucy goosey time to handle finances I suppose... |
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01-13-2013, 02:32 PM | #44 | |||
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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:
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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