[DM1]

Hi everyone,

Well, I've been a little worried about the situation that I have with the car and was a bit shy to expose it but I think here I can get as much info and good advice as can be. Please read before anything.

OK, a year ago I got to the US from Mexico with about 16K to buy a car, a good job and all in order. So I went to the BMW dealer because it was my dream to have one, all my life I've wanted a 3 and this was the chance because in the US it is simply easier and cheaper that in MX. So I went and decided to lease the car so I could have lower payments, of course I didn't know anything about the credit stuff or what to be better for me, I've bought cars in MX before, but paid'em in full. So I did what was more logical to me, I said, I give 10K down and have my payments to be in 275 mo, for 24 months since my work visa expires in two years before I can get my residency, so... I was very happy cuz it wasn't that much monthly and I could afford to do more things with my salary than spending 600 in the car.

Now, I've read a lot of threads about NOT putting any money down on a lease,... however it is done and I want some advice,... I think I will HAVE to re lease the car for another 24 months, however I always regret that I didn't get the xenons and that I could have gotten a 330i and have more power.

Right now I'm in the dilemma of investing about 3K in the xenons and a set of wheels and keeping the 325i for 4 years before I can sell it and pay the bank and get another one,...

OR,... sell it next year, pay the bank and get a 335i,.... but I'm scared that I just screwed up so bad putting so much money down that I won't be able to change the car ever, and that there's no way I can think of getting a 335i,...

I simply like the engine power and would love to have one,... The 335i I won't mind keeping for 5 to 7 years,... since I feel like something is missing with the 325i.(Power)

Anyway, I just wanted to expose my situation to you and see what kind of advice I can get from you.

What would you do?????

Thanks for your help!!!

[doubleapex]

the only negatives to putting money down on a lease are as follows:

That money is no longer liquid and can't be pulled out for other uses.

If the car is wrecked, and deemed totaled, you loose your down payment.


However, if the lease is taken to term, then putting money down up front means you'll be paying less total for your car. This happens just as it would on a normal loan...you're financing a lower amount by putting 10k down--so you're going to pay less interest.

Essentially, you're basically paying the same thing no matter what you do...more up front and a lower payment is only totals slightly less than, less up front and a higher monthly payment.

I wouldn't go investing a ton of money into a xenon swap...isn't that big of a deal.

Suck it up for two years, it'll go by fast...then go get yourself a new 335...

[John 070]

imho satisfy the lease requirements and walk away. If you want a 335, evaluate at that time if it's feasible to buy it.

Your question reminds me of the age old question on Wall St., where people lose money and ask if they should cut their losses in Dec. for the write-off. Answer is you evaluate the transaction based on its merits, not its tax-consequences. If you were going to sell anyway, yes, Dec., is a convenient time to do so. But you don't merely sell it in Dec. because you want to write it off.

Whether or not you made a mistake with the 10k, or in leasing, that's water under the bridge. You don't extend such an agreement just because imho.....

[bmrfam]

DM1 - I see you are listed as a Texas resident. If you bought your car in Texas, I would strongly advise you to not release or refinance your current car. If you leased your car in Texas, then you paid taxes on the entire value of the car (not just what you consumed in your lease). This could have been paid up front as part of your downpayment or may have been spread across your payments in some way. If you release or refinance the car in Texas, you will pay the taxes again on the residual value of the car. This means that if you do this, you will have paid tax on 150% of the value of the car. You pretty much end up paying tax on your residual value twice.

I am pretty sure on this, but a financial person on Texas may be able to correct me if I am wrong. I lease in Texas, but only because I only put about 5-6k miles on a car in a year and never keep a car past a 2-3 year term. Even on a lease, I can usually trade mine in versus turning it in and then I get a tax credit on my trade in towards my new lease. So for my first one, I paid more tax than most states, but my susbsequent leases mean I only paid tax on residuals instead of the whole vaue. For me it works out, but I would never refinance one of my own leases because of the large tax hit.

Good luck! It is great to see someone reap just rewards for their hard work in a new country.

[thegeneral101]

Just don't put that much money down on a lease ever again. And I wouldn't refinance either. Good Luck though!

[DM1]

Thank you guys, I really appreciate a good advice from all of you,... I really do, it is never easy to change countries and know everything about the financial strategies.

I think I'll do what bmrfan says and not release the car because the tax issue and because maybe I will be able to get another car.

I think that I can sell that car for some good $28K next year with about 18K to 20K miles, pay the residual value and keep about $3k to $5k and with that start a new lease, BTW,... Is this a good plan???

[IrvRobinson]

Don't buy the lease car,it's usually a bad value.Call me and I'll explain why,if you're going to lease again, you should be using MSD's , multiple security deposits , you get them all back and you lower the money factor by .00049 if you do the max ( 7 )

[DM1]

Thank your Irv, I will give you a call soon so you can explain that to me and probably give me some other advice,.... Thanx for your help and interest, I really appreciate it!

[sgc335c]

Just clearing up a misconception:

You're not actually financing the depreciation amount on a lease, as some may believe. What's happening in a lease, is you're paying a montly rent charge plus depreciation. No matter how much you pay up front on a lease, that monthly rent charge stays the same. It's equal to the Money Factor x (Residual Value + Negociated Price).

For example with a MF of .00175, NP of 45,000, and R of 27,000, the monthly rent charge would be:

.00175 * (45,000 + 27,000) = 126

The rest of your payment is based on tax and depreciation. You can reduce the amount you pay per month for depreciation by putting money up front. You'll give yourself a nice looking payment, but in the long run you're costing yourself the money you could have been making with it.

Taxation on leases varies by state. In CA, we pay tax on the payment amount. For us, putting the money in a decent savings account will more than cover the difference in tax paid between nothing down and 10,000 down.

[DM1]

Thank you sgc335c that makes it more clear, I think I did make a mistake, however I understand that I would've ended up paying that amount of money anyway,... next time I will just get more advised before the buy and that way I can be more relaxed about it, cuz honestly, this has been taking away my sleep as I thought that I will have to loose the car at the end and not be able to still drive a BMW which I would hate.

I just hope that next year I can sell and still be able to lease another one, maybe a 135 instead.

[e90fanatic]

Originally Posted by DM1

Hi everyone,

Well, I've been a little worried about the situation that I have with the car and was a bit shy to expose it but I think here I can get as much info and good advice as can be. Please read before anything.

OK, a year ago I got to the US from Mexico with about 16K to buy a car, a good job and all in order. So I went to the BMW dealer because it was my dream to have one, all my life I've wanted a 3 and this was the chance because in the US it is simply easier and cheaper that in MX. So I went and decided to lease the car so I could have lower payments, of course I didn't know anything about the credit stuff or what to be better for me, I've bought cars in MX before, but paid'em in full. So I did what was more logical to me, I said, I give 10K down and have my payments to be in 275 mo, for 24 months since my work visa expires in two years before I can get my residency, so... I was very happy cuz it wasn't that much monthly and I could afford to do more things with my salary than spending 600 in the car.

Now, I've read a lot of threads about NOT putting any money down on a lease,... however it is done and I want some advice,... I think I will HAVE to re lease the car for another 24 months, however I always regret that I didn't get the xenons and that I could have gotten a 330i and have more power.

Right now I'm in the dilemma of investing about 3K in the xenons and a set of wheels and keeping the 325i for 4 years before I can sell it and pay the bank and get another one,...

OR,... sell it next year, pay the bank and get a 335i,.... but I'm scared that I just screwed up so bad putting so much money down that I won't be able to change the car ever, and that there's no way I can think of getting a 335i,...

I simply like the engine power and would love to have one,... The 335i I won't mind keeping for 5 to 7 years,... since I feel like something is missing with the 325i.(Power)

Anyway, I just wanted to expose my situation to you and see what kind of advice I can get from you.

What would you do?????

Thanks for your help!!!

since u have 16k and just started working not too long ago...why would you want to blow it all into a car? just save it and then get a 3. I suggest you to get a second hand to start off first...why bother leasing? you miss couple of payments and you are out of a car. I am not sure if you're thinking straight becuase appearently you want to lease a car then BUY a brand new 335....i dont see any common sense in that unless you had a typo...instead of 16k it's 160k? you plan is not financially sound at all

[DM1]

Originally Posted by e90fanatic

becuase appearently you want to lease a car then BUY a brand new 335....i dont see any common sense in that unless you had a typo...instead of 16k it's 160k? you plan is not financially sound at all

Well, I wish I had 160K but it is not a typo ,..... what I'm trying to say/ask is:

I'm already in the contract and I will finish it next year, I gave $10K with 24 mo. of $275 means I spent $16,168, my residual value will be around $24K at the end of the lease. I sell the car for about $28K to somebody and with that money, I pay the car to the bank and the car is gone with it's new owner,...
Then, I will have around $4K to get myself another car, that could be a down payment or no down payment and lease another car.

BTW I lease since I think it is better than finance,... but I'm not here to discuss that. It's simply my way of thinking.

Am I missing something ???
Is it possible / feasible ???

[flush01]

Originally Posted by IrvRobinson

Don't buy the lease car,it's usually a bad value.Call me and I'll explain why,if you're going to lease again, you should be using MSD's , multiple security deposits , you get them all back and you lower the money factor by .00049 if you do the max ( 7 )

hey irv, but what if the market value will be higher then the buyout price ? then it's a good idea to buy it out at the end ?

[DM1]

I reviewed my contract and found that it is an Owner's Choice, I simply didn't remember that. I guess this makes a big difference, does it???