[steelersfan]

Originally Posted by Sara504

What about people who rent apartments? They will never own it.


Leasing is an easy to test whether you like a brand or not without being tied down.

^^^^ What she said.

I'm brand new to the world of BMW's or "performance" vehicles in general and I wanted to make sure this is the brand or space I wanted to stay in before I committed long term. Truth be told, now that I have the 335i and I've only had it for 4 plus months, I wish I had purchased instead of leasing. I absolutely love the car, that's one of life's lessons learned.

[itrocks4u]

Originally Posted by iBeech

The big difference here of course is that houses are a great investment- cars are not. That makes the rent / buy argument a bit flawed...

THIS! Not sure how one can compare leasing a car to renting.

Originally Posted by bwsteg

The "Majority" of times, leasing is for people who want to drive a car they usually can't afford...

And that my friend is exactly why "Majority" of times, managing finances is left to professionals and not done at home.

[simianspeedster]

One thing that I haven't seen mentioned in this thread (unless I missed it) is the sizable sales tax avoidance that leasing offers in some states. When you buy a car, you pay all the sales tax up front. In a high sales tax state like California, that can represent a lot of money (around $4,500 on a 50K car depending on what county you live in).

On a California lease, you pay tax on each payment which not only defers the tax payment but it also means you only pay tax on the depreciating value of the vehicle over the term of the lease. For example, if you opt for a 36 month lease with a 64% residual, you only pay tax on the 36% of the car that you "rent" over 3 years. Not even counting the savings accrued from deferring the tax payments, that an effective savings of $2,900 on that $50K car example.

Leasing is not for everyone, but it has a sweet spot that makes sense for many people. I like to change cars every few years, I don't mod my cars, I don't like owning out of warranty cars and dealing with financial surprises (big repairs, etc.), and I don't like to hassle with selling cars. I put low miles on my car and I generally keep them free of damage, so I can do a 10,000 mile/year lease and avoid almost all back-end lease turn-in costs. I've even avoided buying a set of tires on many leased cars (though I'll definitely burn through a set on my current car -- I blame the N55!)

The right lease incentives can also make a big difference. I find, for example, that the residual on most BMWs are higher than market value. As much as I like my current car, I'm fairly certain the residual will be a few grand higher than market value when the lease is up. BMW can charge a premium by making my car a CPO that I can't obtain as a private party seller. So in addition to not paying a lot of sales tax, I don't eat that depreciation on the back end. It really makes sense for my situation.

If you keep your cars for over 3 years, leasing probably doesn't make sense. In that situation, you just need to run through the pay cash vs. finance analysis based on current interest rates and your value system (having cash on hand vs. having a payment, etc.) But for anyone to say that leasing is dumb or it's only for people who can't afford a car completely ignores the fact that everyone has their own variables. Be honest with yourself, figure out your value system and run your own numbers.

[electro-house]

Buying CPO > Buying New > Leasing

If you want to get the best value for the same product that is, and want to hold onto that car for five years.

Buying or leasing new BMWs are very costly, I did that with my first bimmer, now I stick to CPO.

[John 070]

Originally Posted by sammy_0559

Cash ALL the way.

adds less stress to monthly bills, 0 interest. + the car is completely yours.

The reason this philosophy works, is that you either already have the cash, or you have to save it up. You're spending dollars that you have, not that you don't have. Saying, "I lease and I invest the difference" is one of the most flawed statements I've seen that was recurring on this forum when stocks are real estate were rapidly increasing (like 2006-07'ish). Those people don't come around anymore because their investments went bust and what they did was effectively multiply their losses with the leverage they created.

[BMWFanatic2008]

Originally Posted by simianspeedster

One thing that I haven't seen mentioned in this thread (unless I missed it) is the sizable sales tax avoidance that leasing offers in some states. When you buy a car, you pay all the sales tax up front. In a high sales tax state like California, that can represent a lot of money (around $4,500 on a 50K car depending on what county you live in).

On a California lease, you pay tax on each payment which not only defers the tax payment but it also means you only pay tax on the depreciating value of the vehicle over the term of the lease. For example, if you opt for a 36 month lease with a 64% residual, you only pay tax on the 36% of the car that you "rent" over 3 years. Not even counting the savings accrued from deferring the tax payments, that an effective savings of $2,900 on that $50K car example.

Leasing is not for everyone, but it has a sweet spot that makes sense for many people. I like to change cars every few years, I don't mod my cars, I don't like owning out of warranty cars and dealing with financial surprises (big repairs, etc.), and I don't like to hassle with selling cars. I put low miles on my car and I generally keep them free of damage, so I can do a 10,000 mile/year lease and avoid almost all back-end lease turn-in costs. I've even avoided buying a set of tires on many leased cars (though I'll definitely burn through a set on my current car -- I blame the N55!)

The right lease incentives can also make a big difference. I find, for example, that the residual on most BMWs are higher than market value. As much as I like my current car, I'm fairly certain the residual will be a few grand higher than market value when the lease is up. BMW can charge a premium by making my car a CPO that I can't obtain as a private party seller. So in addition to not paying a lot of sales tax, I don't eat that depreciation on the back end. It really makes sense for my situation.

If you keep your cars for over 3 years, leasing probably doesn't make sense. In that situation, you just need to run through the pay cash vs. finance analysis based on current interest rates and your value system (having cash on hand vs. having a payment, etc.) But for anyone to say that leasing is dumb or it's only for people who can't afford a car completely ignores the fact that everyone has their own variables. Be honest with yourself, figure out your value system and run your own numbers.

+1 Very good summary. 90% of people I spoke to about leasing don't know all the details, that's why you hear lots of "assumptions".

I said it before and I will say it again. Buying new is a HUGE risk. 1 accident and your car's value goes down the drain.

[itrocks4u]

Originally Posted by simianspeedster

One thing that I haven't seen mentioned in this thread (unless I missed it) is the sizable sales tax avoidance that leasing offers in some states. When you buy a car, you pay all the sales tax up front. In a high sales tax state like California, that can represent a lot of money (around $4,500 on a 50K car depending on what county you live in).

On a California lease, you pay tax on each payment which not only defers the tax payment but it also means you only pay tax on the depreciating value of the vehicle over the term of the lease. For example, if you opt for a 36 month lease with a 64% residual, you only pay tax on the 36% of the car that you "rent" over 3 years. Not even counting the savings accrued from deferring the tax payments, that an effective savings of $2,900 on that $50K car example.

Leasing is not for everyone, but it has a sweet spot that makes sense for many people. I like to change cars every few years, I don't mod my cars, I don't like owning out of warranty cars and dealing with financial surprises (big repairs, etc.), and I don't like to hassle with selling cars. I put low miles on my car and I generally keep them free of damage, so I can do a 10,000 mile/year lease and avoid almost all back-end lease turn-in costs. I've even avoided buying a set of tires on many leased cars (though I'll definitely burn through a set on my current car -- I blame the N55!)

The right lease incentives can also make a big difference. I find, for example, that the residual on most BMWs are higher than market value. As much as I like my current car, I'm fairly certain the residual will be a few grand higher than market value when the lease is up. BMW can charge a premium by making my car a CPO that I can't obtain as a private party seller. So in addition to not paying a lot of sales tax, I don't eat that depreciation on the back end. It really makes sense for my situation.

If you keep your cars for over 3 years, leasing probably doesn't make sense. In that situation, you just need to run through the pay cash vs. finance analysis based on current interest rates and your value system (having cash on hand vs. having a payment, etc.) But for anyone to say that leasing is dumb or it's only for people who can't afford a car completely ignores the fact that everyone has their own variables. Be honest with yourself, figure out your value system and run your own numbers.

Well said.

[simianspeedster]

Originally Posted by John 070

The reason this philosophy works, is that you either already have the cash, or you have to save it up. You're spending dollars that you have, not that you don't have. Saying, "I lease and I invest the difference" is one of the most flawed statements I've seen that was recurring on this forum when stocks are real estate were rapidly increasing (like 2006-07'ish). Those people don't come around anymore because their investments went bust and what they did was effectively multiply their losses with the leverage they created.

What if you wanted a new car every 3 years? Would you still buy a car cash every 3 years, pay full sales tax and eat the most major chunk of depreciation all by yourself?

Before anyone says "just keep the car longer," that's great if it works for you, but that's not what everyone wants. Buy Cash vs. Finance vs. Lease is ALWAYS situational. There is no single right answer or "philosophy."

And for the record: stocks and real estate are not the only investments available. What if that same buyer had invested in gold?

[simianspeedster]

Originally Posted by electro-house

Buying CPO > Buying New > Leasing

If you want to get the best value for the same product that is, and want to hold onto that car for five years.

Buying or leasing new BMWs are very costly, I did that with my first bimmer, now I stick to CPO.

Agreed, based on the scenario you describe. A 2-3 year old BMW is not exactly old, you get an extended warranty and the biggest depreciation bite has been swallowed by someone else.