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      11-03-2011, 03:52 PM   #1
liborio
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Finance or Lease w/ buyout

I have a 335i xdrive sedan on order and am trying to figure which option to choose:

1) 60 month finance ~ $700/mo w/$14k down
2) 36 month lease then buy it for the residual ~ $600/mo w/ $32k due at end

I think I'll keep the car long term (unless the F30 looks better in person, not likely) and will be way under any lease mileage limits. The lease lets me defer a huge chunk of cash out of pocket right now. Essentially the down payment would be similar to the residual. The total cost of the 2 options is only $500 more for the lease.
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      11-04-2011, 06:42 AM   #2
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I leased mine, I got 8k off the msrp (loaded car) with 13k miles a year 0 down below 600 a month. I will buy the car at the end around 30k unless I go with an m3. Put your 14k in to a better investment :-)
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      11-06-2011, 09:10 PM   #3
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      11-06-2011, 10:11 PM   #4
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Of course, you won't OWN anything for 3 years leasing whereas with the finance, you'll have an asset the whole time ...

Also with the finance, you can sell the car at anytime so if something happens ... you can relieve yourself of the burden (naturally will take a hit). With the lease, you're stuck with the payments and I'm pretty sure the penalties are harsh to get out (could always do a lease trade/transfer though).

Food for thought, anyways. Best of luck.

Personally I'd purchase the vehicle from the get-go if I was planning to keep it long term. What's the APR %?
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      11-07-2011, 07:39 AM   #5
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Thanks for the replies. 60m finance is now 3.9% and lease MF is .00195.
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      11-07-2011, 02:14 PM   #6
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No chance of being able to pay the car off in 24 months, eh? BMW Financial is offering 0.9% on 335xi sedans ...

Have you looked at auto loan rates elsewhere? Might be cheaper than 3.9%, which sounds kinda high IMO.

Anyways I did some math, the final cost of the car (just looking at the dollars and cents, not taking into the time value of money, inflation, etc) when it's all paid off is pretty similar with either route.

I think the most important factor is that with the lease, you're throwing the money into nothing. Only when you buy it out do you have an asset. You have an asset from the start by financing.

About putting money down - usually it makes sense to put less down. Ex. if the loan is 3.9% APR, and you can make more than that elsewhere on that money (stock market, bond funds, and so on), you're better off not putting it down. Let's say you make 5% annually on that $14,000 ... and it cost you 3.9% to finance it = you actually come out ahead.

Edit: so I guess I'm missing some info. Do you HAVE to put $14k down? Can you get a better interest rate elsewhere? What's the negotiated price of this car?
Holiday sales are around the corner, BMW offered 1.9% last year I think so maybe wait a month or two. Only issue I see there is that the E90 sedan is no longer being produced.
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      11-07-2011, 03:06 PM   #7
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Cars already ordered just waiting for a boat. The money down on finance is what I sold my old car for. If I lease I'll hold the cash and use it to make the payments.

I understand the point about building equity with financing but if I plan to buy the car at the end of the lease does it really make a difference?
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      11-07-2011, 05:53 PM   #8
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Quote:
Originally Posted by liborio View Post
Cars already ordered just waiting for a boat. The money down on finance is what I sold my old car for. If I lease I'll hold the cash and use it to make the payments.

I understand the point about building equity with financing but if I plan to buy the car at the end of the lease does it really make a difference?
You're in a better financial position if you have more assets - you own more. Beyond that ... it sounds like you're set on the lease.

One more thing before you go with that though - consider the interest rate on the $32k buyout. That's not chump change and definitely adds money to the end result.
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      11-07-2011, 06:06 PM   #9
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Quote:
Originally Posted by Sam335ix View Post
I leased mine, I got 8k off the msrp (loaded car) with 13k miles a year 0 down below 600 a month. I will buy the car at the end around 30k unless I go with an m3. Put your 14k in to a better investment :-)
how did you get that deal? i want that!
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      11-07-2011, 06:06 PM   #10
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Quote:
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Thanks for the replies. 60m finance is now 3.9% and lease MF is .00195.
don't take the finance at 3.9 for 60months... it may be bmw's special finance but its not that special it all if you have excellent credit....does your dealer use wells fargo or citizens... they will blow that rate out of the water and even for up to 75 months we are seeing as low as 2.29 buy rate if your credit score is upper 700's.. dealers mark up the rate as much as 2.5 points (bigger profit center for dealers then the actual front end.. we call it back end $ .. just lie to your dealer and tell them another dealer said they could do much better if your score is there... I am a sales manager at a new car dealer... sending a deal down for finance right now.. haha... just don't tell my owner I am posting to thread in the process even if I need to give the customer buy rate as I am fighting payment, the bank still kicks us back a flat $300 reserve, much better then the customer going to their credit union or other financial institution and getting nothing... funny thing is all my "real friends" always get buy rate... benefit of being friends with someone in the business..

if you get a super low rate extend it to where your payment is comftorable as overall if your rate is low the total finance charges won't amount to much anyhow.. and use the banks money, keep yours in your pocket..

BTW this comment will self destruct in T minus 10 minutes as its not good for business

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      11-07-2011, 08:02 PM   #11
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biggest mistake people make..

1) a car is not an asset. (extremely rarely, and you will not know it until it is classic)
2) you can sell a leased car
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      11-08-2011, 09:57 AM   #12
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biggest mistake people make..

1) a car is not an asset. (extremely rarely, and you will not know it until it is classic)
2) you can sell a leased car
All depends how you buy them I bought my old lady a 2008 3lt trailblazer SS (black/black) with 44k miles for $16,000 14 months ago wholesale through the dealership I work for... bought it when gas was high.. now a year later and 11k more miles on it after doing absolutley nothing to it but change the oil I sold it a week ago for $19,850 (gas coming down a bit helped... and we owed $0 on it via I have rolled her into 6 new vehicles in the last 7 years and made money on each one... so basically if you keep your eyes out for a good deal, take care of your vehicle (body wise VERY important because its what EVERYONE sees and gets excited about) then you can do just fine 6 vehicles ago I rolled $7k worth of credit card debt into her first rig... today she owes $9,000 on a 2008 Escalade, shes happy with her $162 month payment @ 2.5 % apr on her slade, and when shes happy... you know who else is happy
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      11-08-2011, 10:27 AM   #13
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Given your history with ownership, you're probably better off not getting this car, since it looks like you'll break 100k pretty easily. HPFP is still a problem on the N55s, albeit a much lower rate, but still a problem.

Why not just wait for the F30? It's only a few months off.
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      11-08-2011, 03:31 PM   #14
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Quote:
Originally Posted by slider86 View Post
Given your history with ownership, you're probably better off not getting this car, since it looks like you'll break 100k pretty easily. HPFP is still a problem on the N55s, albeit a much lower rate, but still a problem.

Why not just wait for the F30? It's only a few months off.
Are you really suggesting that an e90 is trash after 100k or if there is hpfp failure?
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      11-12-2011, 08:45 AM   #15
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For the guy whom asked how I got the deal... I spent my weekend going from a dealer to dealer until I got what I wanted. One more thing, you put down 14k and buy the car and god forbid you have an accident and it's reported on carfax, good luck selling your car after that, you ll take a major hit. Car is not an asset, never will be unless you buy it at an auction and then sell it for a profit! So do the calculations, 14k down and 700 + monthly payments vs lease with no money down Low payment and after 3 years you ll buy it with a more reasonable price. Go to penfed and look at their rates.

Good Luck
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      11-12-2011, 09:19 AM   #16
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Yeah, I am leaning toward lease. Dealer says the buyout is the residual, no negotiating at the end. You think that's true or chance of haggling down the buyout price at the end?
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      11-15-2011, 11:05 PM   #17
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You can haggle at the lease end... It all depends on the mileage and the condition of the car... Take it back really dirty and beat up inside lol. Within 3 years you probably want the new 335 model.
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