[lipek]

Originally Posted by Lucid4000

I lease... and I don't worry about any of that. Also, I don't have to worry about how I drive my car. As they say... I drive it like I stole it...

slow and watching for cops?

[triton.]

Originally Posted by flush01

bank owns the car either way until it's payed off... and once it's payed off it's no longer under warranty, dropped in price more then 50% and its a 4-5 year old car... i used to be anti-lease before, but now my opinion changed

I would think most people that finance probably pay it off alittle early too. Mines paid off after 2 years. Now I have way too much money to mod

[SUperfunkMF]

[calleballe]

Cash is king. The cheapest way to drive any car is to pay flat out cash!

Or as my granpa used to say "If you can't pay $10,000 now, why would you be able to afford $12,000 tomorrow for the same thing....

[Lucid4000]

Originally Posted by lipek

slow and watching for cops?

Probably should drive slower. But what's the fun in that. You live once. LOL!

[MDCTFTW]

Originally Posted by calleballe

Cash is king. The cheapest way to drive any car is to pay flat out cash!

Or as my granpa used to say "If you can't pay $10,000 now, why would you be able to afford $12,000 tomorrow for the same thing....

Unless you can make more with your money than the interest you would pay. Then the choice is obvious.

To the OP ... where are you getting 3.9%? I need to get a loan soon too.

[triton.]

Originally Posted by MDCTFTW

Unless you can make more with your money than the interest you would pay. Then the choice is obvious.

To the OP ... where are you getting 3.9%? I need to get a loan soon too.

I think BMW is running the promo right now for cert pre owned.

[HennarotM3]

Originally Posted by lem144

That 5-year old car is still worth $6-12,000 (if kept up well and with low enough miles) whereas the leased car after 5 years is not worth anything, as it belongs to the dealer.

That's true, but after 5 years on a finance you've paid for the entire purchase price; with a lease you've only paid for the depreciation. Either way, you're paying for the difference between the purchase price and the value when you get rid of it. IMHO, the lease just lets the dealer assume the risk that the car will hold its value. You can always buy out the car at lease's end and flip it if you can beat the residual. If it's worth less than the residual, you're not stuck with it - just turn it in and walk away.

[Appropriate]

Originally Posted by 3BANGER

You should put $10,000 down as well

If your gonna finance, why put anything down? Either you think 3.90% is a good rate, or you don't. If it is a good rate, put zero down. If it's a shitty rate, you want to pay it off as fast as possible and should go ahead and put down anything you can afford. I pick mine up next week and I ain't payin shit. Hell, e*trade has a 3.25% checking account... it's a virtual wash, plus $10k is about 10 payments you can have as a cushion in case next week you decide you want to become a monk and stop working... a monk with a BMW that is...

[Mondolemite]

Originally Posted by Appropriate

If your gonna finance, why put anything down? Either you think 3.90% is a good rate, or you don't. If it is a good rate, put zero down. If it's a shitty rate, you want to pay it off as fast as possible and should go ahead and put down anything you can afford. I pick mine up next week and I ain't payin shit. Hell, e*trade has a 3.25% checking account... it's a virtual wash, plus $10k is about 10 payments you can have as a cushion in case next week you decide you want to become a monk and stop working... a monk with a BMW that is...

I agree with some of your reasoning except for a couple points. I do agree that if you get a good rate you should pay minimally on the loan and use the extra cash for better investments.

For example: I have a school loan at 2.75%. Logically, I should only pay the minimum on that loan and use extra cash to invest in anything with a return higher than 2.75% (like a basic ING savings account, etc.)

The complication for cars is that the finance term is usually pretty short, 48-72 months, unlike school loans which are 20-30 years. With the short finance period the monthly payments are higher, even when paying the minimum. Some people will have monthly cash flow problems with such a high payment so they save up and make a large down payment so that their monthly cash flow is manageable.

[Appropriate]

No, that still doesn't make any sense. If a person can save up the cash needed for this big down payment your talking about, they certainly have the discipline and wherewithall to put that money in savings/cd's, and use it to supplement their monthly cash flow to be able to make their car payments. The advantage of making no down payment is liquidity. If something were to happen (job/medical/whatever) you would have cash on hand to deal with everything. Once BMW finance gets the money, it's gone, and you'll have to rely on credit after the emergency since you gave BMW finance all the hard cash you had.

If we figure that the car is $50k after taxes and everything else, then the monthly payment on a 60 month 3.9% loan is $919. If a person puts $10k down, then the monly payment becomes $735. A difference of $184. The $10k in a bank account earning NO interest would cover that difference for 54 months.

Basically, here's how it works. Super low finance rate, don't put anything down. Okay finance rate, do whatever makes you feel good, but know your financial liquidity is affected. Bad finance rate, put everything you have down.

[Mondolemite]

Originally Posted by Appropriate

No, that still doesn't make any sense. If a person can save up the cash needed for this big down payment your talking about, they certainly have the discipline and wherewithall to put that money in savings/cd's, and use it to supplement their monthly cash flow to be able to make their car payments.

Most people actually DON'T have the discipline to do this. Many people are able to make large down payments because of a windfall of some sort: Large gifts from the parents, bonus at the job, tax return, etc. Not because they were disciplined.

The other point you aren't mentioning is that if you put nothing down on a brand new car then you are upside down on your loan for some time while you are driving it around. That means that if you drive your brand new car for a couple of days then total it in an accident there is a good chance the insurance will not cover how much you still owe on the car, only how much the car is worth at that time. We all know that a brand new car (especially ones in the $45-50K range) loses thousands of dollars of value as soon as you drive it off of the lot. At that point you would be stuck making payments on a car that doesn't exist anymore.

eg.

Car costs: $50K
Loan amount: $50K
Value after purchase:$45K
Amount insurance will reimburse after totaling:$45K
Amount you still owe on a car that doesn't exist:$5K (plus interest, minus any payments already made)

[gtrokin330]

damn am i the only person that thinks anything over 5K down is redic?

[Appropriate]

No, your not... I think anything over $0 is ridiculous at 3.9%.

The answer to the upside-down question is easy... gap coverage on your insurance policy... costs almost nothing.

Annnnnnnd... DONE. Friggan amateur night around here.

[Mondolemite]

Originally Posted by gtrokin330

damn am i the only person that thinks anything over 5K down is redic?

Despite my arguments, I actually think anything over $5K is a little much as well.

[Appropriate]

Sold. I can agree on $5k down.

I pick mine up this week hopefully...

[rdsport323]

Originally Posted by Appropriate

Sold. I can agree on $5k down.

I pick mine up this week hopefully...

wow appropriate... despite the fact that you cheer for the wrong basketball team, your comments in this thread are quite intelligent and make a lot of sense.

[Appropriate]

Originally Posted by rdsport323

wow appropriate... despite the fact that you cheer for the wrong basketball team, your comments in this thread are quite intelligent and make a lot of sense.

Okay THAT'S IT... I'm not putting ANYTHING down! Go Nuggets!

p.s. I went to the game on Saturday.... ugh. At least I got to see the Nuggets mascot make fun of Jack Nicholson. He blindfolded him and put him in front of the basket holding the ball so he could grab it from him while dunking off a trampoline... as soon as they got him in position they cleared the trampoline and left him standing out there with the ball held up in the air... finally a Nugget player went over and pulled his blindfold off. He wasn't happy. Kinda not cool, but how often do you get to see someone like Jack Nicholson be the brunt of a joke? YOU CAN'T HANDLE THE JOKE!

[Mondolemite]

Originally Posted by Appropriate

Sold. I can agree on $5k down.

I pick mine up this week hopefully...

The idea about gap coverage is a good point. Some people know about this for leases but people forget about using it for financed cars. It's what I did but I figured most people didn't know about it.

In reality, whenever I get a sum of money I decide where it should go to get the most bang for the buck. When I was stuck with 7% interest on one of my previous cars but couldn't get comparable value on investments I put the extra cash into the car note.

It's actually a little hard right now to find safe investment vehicles that will return higher than 3.5%. bankrate.com shows CD's at less than 3.5% and the stock market is struggling a bit. Even ING Direct is at only 3% right now so you could make the argument that putting extra cash into a car note (barring any high interest credit cards or school loans) is not a bad deal.

I'm not going to comment on the basketball stuff so not to...

(especially since I've been a Lakers fan for over 20 years)

[Appropriate]

Inflation also affects this whole analysis...

[slant83]

whichever suits one the best is the way to go. After all it'll get you into the Bimmer you want. My feeling is to buy. It gives you the latitude to keep,sell,mod, ect, especially at 3.9%

If leasing is such a good deal, think who really benefits the most? They push it FIRST(the dealer who is volume driven, commissioned, bonused, control all ends of the sale, loan, resale upon return, ect)


Think about if you were to get Lasik eye surgery from an eye surgeon who wears glasses? Hmmmmm!

[Mondolemite]

Originally Posted by slant83

Think about if you were to get Lasik eye surgery from an eye surgeon who wears glasses? Hmmmmm!

That's an interesting take on the situation.