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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 > Leasing vs. Purchasing -- I think I just switched to the leasing side...



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      06-01-2010, 08:53 AM   #23
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Quote:
Originally Posted by Takashi View Post
Leasing is only good if your car has poor resale value (e.g., Hyundai, Kia...etc). It does not make financial sense if one has to make car payments for the rest of their lives.
This is wrong. If a car has poor resale value that means its residual is very low. Further, since during the lease you're paying for it's depreciation that means your payments are high to cover that depreciation. Instead, it would be better to lease a car with a better resale and residual since the price between new and used will be less of a difference.

For example, take two cars, the first a KIA at $25,000, and the second a Toyota at $35,000. After 3 years the KIA is worth only $10,000, the Toyota is worth $25,000.

KIA depreciation = $15,000
Toyota Depreciation = $10,000

Therefore, payments to cover depreciation only and excluding interest, tax, etc.
KIA payments= $15,000/36 = $417
Toyota payments = $10,000/36=$278

The most important line to read in an advertisement or lease deal is the Total Of Payments line. I bet that there are some better quality cars that have TOPs that are equal to lower quality cars with same mileage, terms, etc.
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      06-01-2010, 08:55 AM   #24
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Quote:
Originally Posted by Takashi View Post
Don't be silly. The "FREE" maintenance is factored into the price of the car. There is no free lunch in this world. Either the company pays for it or your friends pay for it.

Leasing is only good if your car has poor resale value (e.g., Hyundai, Kia...etc). It does not make financial sense if one has to make car payments for the rest of their lives. Furthermore, you can't really call yourself "owning" a BMW since it's not really your car in the first place. But again, leasing works for an elite group of individuals.
Then how come a comparable Audi or Mercedes is in the same price range yet doesn't have the BMW warranty? Your statement only makes sense if the BMW is more expensive than its direct competition.
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      06-01-2010, 09:04 AM   #25
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I see this thread has moved into a typical leasing vs. buying FINANCIAL thread...

What I was trying to raise were the numerous hidden costs of buying...

- You have to pay for maintenance after 4 yr/50K miles
- You have to pay for extended warranty
- Suspension components and other items are more worn out (more hard-core drivers will definitely feel this)
- The navigation DVD will eventually be pretty out of date... costs a few hundred to get a new one
- Actual sale price of a bought car is often much worse than you expect when you actually go try to sell it

etc...
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      06-01-2010, 09:28 AM   #26
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Quote:
Originally Posted by Rando View Post
I see this thread has moved into a typical leasing vs. buying FINANCIAL thread...

What I was trying to raise were the numerous hidden costs of buying...

- You have to pay for maintenance after 4 yr/50K miles
- You have to pay for extended warranty
- Suspension components and other items are more worn out (more hard-core drivers will definitely feel this)
- The navigation DVD will eventually be pretty out of date... costs a few hundred to get a new one
- Actual sale price of a bought car is often much worse than you expect when you actually go try to sell it

etc...
I purchased a new e46 and kept it for 10 years and 184,000 miles. Did not buy an extended warranty, nothing broke for the first 100,000 miles. Maintenance was minimal (15,000 mile oil changes and 7500 oil filter changes). I also didn't replace a lot of items, shocks, struts, springs, coils, injectors, starter, alternator etc etc etc....

If you don't DIY, and you don't plan on keeping it for at least 7 years, and you need your car to be "perfect" (although, to me, my original shocks, springs, struts were fine) then buying is not for you.

With leasing you spent all this money and at the end of the day you have nothing to show for it.

If I was looking into a 335 I would definitely consider leasing. Too many problems and too many potential high repair costs (ie: twin turbo).
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      06-01-2010, 09:55 AM   #27
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Chriztofor: spot-on analysis, in my opinion.

I should mention, though, that my rear differential started leaking just a week after my warranty expired in my E46. That repair alone justified the extended warranty cost! And of course, with the 335i as you say, repair cost is potentially very high.
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      06-01-2010, 10:24 AM   #28
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Quote:
Originally Posted by Rando View Post
Chriztofor: spot-on analysis, in my opinion.

I should mention, though, that my rear differential started leaking just a week after my warranty expired in my E46. That repair alone justified the extended warranty cost! And of course, with the 335i as you say, repair cost is potentially very high.
Thanks. Nice seeing a former e46 owner here. I know that car like the back of my hand. Hopefully I will know the e90 the same way, just not too soon.

Extended warranty is definitely a hit or miss. Since I DIY, I like to gamble on that. To fix that differential leak would have cost about $15 (cost of the gasket) if you DIY, Dealer $350, INDY $150, and warranty "free".
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      06-01-2010, 10:28 AM   #29
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I'm 1 1/2 years into my 3 year lease. I usually get a new car every 3 years, and when I trade my car in, I am ALWAYS upside down. I already know I am going to be about 5,000 miles over when I turn my car in. I like knowing that I might end up paying $2,000 out of pocket to cover the milage instead of being $8,000 upside down like I was on my last car. It makes sense to lease for me if I want a new car every 3ish years.
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      06-01-2010, 10:33 AM   #30
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With leasing you are renting basicly

Renting with obligations and restrictions. What if you need to drive more than the 15k a year because you suddenly want to go on a long vacation or your commute changes. Also you are locked into high monthly payments forever if you continue on the lease cycle.
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      06-01-2010, 10:41 AM   #31
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Quote:
Originally Posted by Blubaron79 View Post
I'm 1 1/2 years into my 3 year lease. I usually get a new car every 3 years, and when I trade my car in, I am ALWAYS upside down. I already know I am going to be about 5,000 miles over when I turn my car in. I like knowing that I might end up paying $2,000 out of pocket to cover the milage instead of being $8,000 upside down like I was on my last car. It makes sense to lease for me if I want a new car every 3ish years.
I love buying a new car. It's great shelling out $5K upfront and have the value of the car plummet as soon as I drive it off the dealer's lot. Also, I love it that my monthly payments are at least 20% higher than if I leased the thing. Oh wait, I forgot about the expensive maintenance after the warranty expires.

Seriously, there are pros and cons of both methods and it depends on the individual situation.
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      06-01-2010, 11:07 AM   #32
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Quote:
Originally Posted by Rando View Post
I had always thought it made more financial sense to buy instead of lease.

But now it's time for my extended warranty and a few advantages of leasing have occurred to me:

1. With leasing, you don't have to worry about actually selling your car. In practice, it's really hard to get the "right" trade-in value for the car... it seems like the dealer can always get you there.

2. With a lease, all items (like wear-and-tear) are accounted for, coz you get a new one.

3. Extended warranty is a significant hidden cost, and it also has asterisks about what is fully covered.

4. Maintenance. If you lease, you get full maintenance all the time, and don't have to worry about all those extra hidden costs later.

5. New technology. If you lease, obviously you get a new car and new tech every 3 years, with updated nav discs, safety features, engine tech, comfort features, etc...

So... seems like IF you can guarantee your mileage, it's sort of a no-brainer, no?

"Buy-to-own" folks... please tell me something that'll make me feel better.

I think I'll lease my next car, but for now I think it wouldn't be financially smart to switch. So just feeling better about the whole purchasing thing would be nice. And I know you guys are all out here to help everyone feel better...

Thanks!
thinking about leasing when getting an x6 or the new cayenne
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      06-01-2010, 11:25 AM   #33
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Quote:
Originally Posted by ctuna View Post
Renting with obligations and restrictions. What if you need to drive more than the 15k a year because you suddenly want to go on a long vacation or your commute changes. Also you are locked into high monthly payments forever if you continue on the lease cycle.
Leasing isn't for everyone. For people who don't drive much, enjoy getting new cars every 3 years, take advantage of the tax benefits then leasing is a great option. I have another vehicle that I can balance my mileage on so I can drive my car on a few vacations if I please. I paid $1500 at signing and pay $599 a month, hardly a high payment at all.
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      06-01-2010, 11:29 AM   #34
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Quote:
Originally Posted by Blubaron79 View Post
I'm 1 1/2 years into my 3 year lease. I usually get a new car every 3 years, and when I trade my car in, I am ALWAYS upside down. I already know I am going to be about 5,000 miles over when I turn my car in. I like knowing that I might end up paying $2,000 out of pocket to cover the milage instead of being $8,000 upside down like I was on my last car. It makes sense to lease for me if I want a new car every 3ish years.
Among my various hobbies: cycling, running, hiking, and camping, I also enjoy flushing 20 dollar bills down my toilet. I like flushing the 20 dollar bills because I can flush more of them than the 100 dollar bills before my money runs out.
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      06-01-2010, 11:32 AM   #35
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Originally Posted by kgb1637 View Post
Leasing isn't for everyone. For people who don't drive much, enjoy getting new cars every 3 years, take advantage of the tax benefits then leasing is a great option. I have another vehicle that I can balance my mileage on so I can drive my car on a few vacations if I please. I paid $1500 at signing and pay $599 a month, hardly a high payment at all.
Exactly, I put down nearly 23k to get my payment down to $480's. We've all seen the arguments, you shoulda leased your 335i and bought Google stock with that 23k instead of putting it into a depreciating asset. How about putting that 23k into the S&P 500? Woulda been a bad move....the index is 16% lower today than it was in Dec. 2006.
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      06-01-2010, 11:35 AM   #36
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Quote:
Originally Posted by msrothwell View Post
Among my various hobbies: cycling, running, hiking, and camping, I also enjoy flushing 20 dollar bills down my toilet. I like flushing the 20 dollar bills because I can flush more of them than the 100 dollar bills before my money runs out.
I've in my mind thought of it as throwing a giant bag of money out of the window while driving in the Turnpike. Maybe flushing is more like it?

Think about it, we get nickeled and dimed on a home refi--the 20 y.o. kid who dropped out of HS charges $85 to act as a notary. We pay those fees because we have no choice. Why in the world does anybody allow a leasing co. to charge them paperwork fees? Isn't that all generated by a pc in the finance mgrs. office?
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      06-01-2010, 11:35 AM   #37
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i went ahead and bought my 06 325xi privately last year. i searched about 2 months to get the best deal possible. i finally got it for 22500$ and only had to pay 1 tax. Here in montreal the dealers were asking for 30-31000 plus taxes (2 taxes).. Sold my old audi so the bmw actually cost me 18000 out of pocket. Anyway, the idea was to put the cash i saved towards future repairs. Also, the repair prices people factor in are all dealer prices. Since onwing the car for almost a year, ive had my oil changed, rear brake pads done, and cabin filter done, for about 250$ from my mechanic. Dealership rates would of easily been triple that.

if i held on to it for 5 more years id still get 10k if i sold it privately. So spending 8k for 6 years of ownership is a pretty decent deal.
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      06-01-2010, 11:46 AM   #38
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it's all about what you value and your personal situation.

Quote:
1. With leasing, you don't have to worry about actually selling your car. In practice, it's really hard to get the "right" trade-in value for the car... it seems like the dealer can always get you there.
we all know you're not going to get value in trading in your car to the dealer, but it's worth the effort for some people to sell their car themselves to get more $.

Quote:
2. With a lease, all items (like wear-and-tear) are accounted for, coz you get a new one.
sounds like math of a person who wants to buy something :-)

Quote:
3. Extended warranty is a significant hidden cost, and it also has asterisks about what is fully covered.
not to re-hash the issue of whether or not to buy an extended warranty, but for some people, this isn't worth it or it's challenging to get full value out of the extended warranty. this is not a hidden cost as it's optional.

Quote:
4. Maintenance. If you lease, you get full maintenance all the time, and don't have to worry about all those extra hidden costs later.
as mentioned several times already, this is built into the price of the car.

Quote:
5. New technology. If you lease, obviously you get a new car and new tech every 3 years, with updated nav discs, safety features, engine tech, comfort features, etc...
buyers would argue that the cost of this is ongoing lease payments. again, back to what you value more - end of the tunnel with car payments or having the latest gadgets?

i've only leased a car once - a 2000 bmw m roadster - and have financed every other vehicle. i realized i'm the type to keep cars for long runs and don't mind DIYing. i do minor mods here and there so i tend to buy.

by contrast, a good friend of mine always leases, despite the economic means to buy. he's not much of a DIYer so i'm certain having the cars under warranty is a huge factor. he's a banker so i'm sure the lease into things that depreciate weighs in on it too.
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      06-01-2010, 11:48 AM   #39
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I have thought about leasing in the past. But, it seemed like everytime I do the calculations, it didn't make sense for me to lease.

It always seemed like after 3 years of ownership, the depreciation on the car was less than what you paid during the three year lease; i.e., you would probably lose less in depreciation versus what you "lost" in monthly payments...especially b/c BMWs tend to keep their resale value relatively high compared to other makes.

Not am not in anyways an "expert" in this area, but just my observations.
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      06-01-2010, 11:49 AM   #40
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Quote:
Originally Posted by Rando View Post
wj4: Actually what I meant is that you get all-new things, like engine, suspension, bushings, etc... all the little under-the-skin things that makes the cars great.

Also, I'm curious about the lease return inspections... do you have to pay for paint chips, interior wear, and that kind of thing? I'm guessing not...

Thanks!
I lease my 335 . I think I paid $900 (instead of security deposit)when I took delivery which covers $7000 damage at lease end. I've leased for about 16 years and never had a problem on return. I always get dings fixed and take good care of my cars.
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      06-01-2010, 11:51 AM   #41
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Quote:
Originally Posted by Rando View Post
wj4: Actually what I meant is that you get all-new things, like engine, suspension, bushings, etc... all the little under-the-skin things that makes the cars great.

Also, I'm curious about the lease return inspections... do you have to pay for paint chips, interior wear, and that kind of thing? I'm guessing not...

Thanks!
Quote:
Originally Posted by wj4 View Post
A good number of members on here lease their cars and modify them.

What's the difference of parting out a leased car and a car you bought? It's the same thing. When you trade in a car or sell a car, you revert back to stock because the aftermarket stuff you have on are useless.

Parts will always be able to sell unless somehow every single E9x in the world are wiped out.
After a 3 or 4 year lease youre probably not going to re-use your mods.
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      06-01-2010, 11:53 AM   #42
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Quote:
Originally Posted by Michael Schott View Post
I love buying a new car. It's great shelling out $5K upfront and have the value of the car plummet as soon as I drive it off the dealer's lot. Also, I love it that my monthly payments are at least 20% higher than if I leased the thing. Oh wait, I forgot about the expensive maintenance after the warranty expires.

Seriously, there are pros and cons of both methods and it depends on the individual situation.
If I want a new car, and I can afford it, that is my decision; so let me get back to wiping my ass with Ben Franklins..
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      06-01-2010, 11:54 AM   #43
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Originally Posted by Rando View Post
John 070: But you can really compare the TOTAL $ spent for the lease vs the TOTAL $ spent for the purchase, no? That's how I think, at least. Monthly payment is sort of a meaningless way of thinking to me. (But I realize it works well for some folks.)

It's not that a car can't be kept after 3 years, but with fancy cars, no doubt more electronic gremlins start showing up... your shocks will be more worn, bushings, bearings, etc.. so, all things equal, you'd rather have a new one. And these days with nav and all, the improvements are pretty big! The 2007 nav versus the 2010 nav is a big jump! (Not to mention 2007 vs. 2004!)

Oh, and for me, modding is not something I want to do. (Though I understand many folks here do it. In my opinion, that's fine, I just don't like it when people are actually lying about it to the dealer, because of course they are bumping up against various tolerances and basically increasing costs for everyone else when they don't accept responsibility for their choices.)
On a 3 year lease your costs are fixed for the duration. Really simple. It costs a bit more but you can get in and out of them fairly easily.
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      06-01-2010, 11:57 AM   #44
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Quote:
Originally Posted by Leaker View Post
On a 3 year lease your costs are fixed for the duration. Really simple. It costs a bit more but you can get in and out of them fairly easily.
That's why it's great. If I want to buy the thing when it is up too, and wait for the F32 to come out, I can do that!!

Leasing gives your more options. People also need to realize a car is NOT an investment.
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