[mrjoed2]

Originally Posted by natahoa

Good point. So if I have saved $1,000 a month for three years with a lease, I’ve saved $36k that is still in my IRA earning whatever (hopefully at least 9 percent). AND I’ve saved on the taxes incurred on withdrawing all of that money.

AND I’ve only spent $27k to drive a $70k car for three years. For someone living off retirement savings, this seems like a no-brainer to me. I think I’m convinced to lease and just lease a new vehicle again in three years.

Everyone's situation is different, but not sure why you consider leasing (renting) a no-brainer. You have "only" spent $27,000 to drive a vehicle for 3 years - but you now have a empty garage space & must do it all again, & again. Not really relevant what the source of the funds are.Keep in mind when you lease, your paying primarily for depreciation which is of course at it highest during the first 3 years.
I am a early retiree as well. And since I drive less miles now on my 3 cars, a lease actually makes less sense. I say bite the bullet buy something you really like, pay it off & relax. No dealers or negotiations every couple years. If someone is worried about being out of warranty, buy a extended one.

[rmorin1249]

If you like driving a new car, under warranty and with little maintenance cost leasing a new BMW makes sense. If you keep a car for 5-10 years buying is better.

[Marty in NY]

Originally Posted by natahoa

Good point. So if I have saved $1,000 a month for three years with a lease, I’ve saved $36k that is still in my IRA earning whatever (hopefully at least 9 percent). AND I’ve saved on the taxes incurred on withdrawing all of that money.

AND I’ve only spent $27k to drive a $70k car for three years. For someone living off retirement savings, this seems like a no-brainer to me. I think I’m convinced to lease and just lease a new vehicle again in three years.

Hi,
I didn't initially think this topic would go on this long I think it is cause there is no real answer but its good to hear different opinions and maybe a few lessons learned.

I know I weighed in on this early on but after reading all your posts, my advice, as another retiree, would be to consult your financial advisor. If you are indeed reaping mid teem percent returns, it should be an easy and fun discussion. Keep in mind, whether you buy or lease, you are not taking the full amount ($27K or $75K) from your accts. Your lending institution will do that, you just take a few hundred/month to make the payments.
If you were intending on paying the full amount at once from your retirement accts, seek the advice of your financial advisor.

Just for kicks, I'm a 39 yr veteran of BMW's and have never owned one I didn't love.

[Auricom]

Originally Posted by natahoa

Yes, and I don't expect the stock market to keep me in the 15% range forever - that could change for the worse at any time. But buying the car outright is nonsensical due to the tax hit. So I have to decide how to finance.

A 3-year lease would cost almost $1,000 a month less. With every dime I spend being taxable, that is a large potential savings. I feel like I will continue to want a car that is new under warranty. Trading it in at the end of the lease would probably give me a larger trade than financing for five years ( my original plan) but I'm not sure.

I'm going to get in touch with the finance manager this week and find out what all of the numbers are.

Yes a 3 year lease should be $1K or less if you're leading a 50i and $900 and less on a 40i (depending on your build and negotiated price). I'm not a financial advisor and don't know your retirement situation, but for someone living on retirement savings, the last thing you should be doing is withdrawing from an IRA and leasing a 70K+ vehicle.

[natahoa]

Originally Posted by Auricom

Yes a 3 year lease should be $1K or less if you're leading a 50i and $900 and less on a 40i (depending on your build and negotiated price). I'm not a financial advisor and don't know your retirement situation, but for someone living on retirement savings, the last thing you should be doing is withdrawing from an IRA and leasing a 70K+ vehicle.

I’m not sure why you say that. The LAST thing I should do is remove all that money at once, pay taxes on and lose out on future investment income.

Understand that I have not financed a car in more than 40 years. Gives me hives just to think about being in debt. But I’ve also never lived off an IRA before. I’ve also never splurged on a car. So this is a whole new world for me.

The best thing to do is to retain as much money in my IRA as possible. Leasing for three years is the obvious best choice-it removes the fewest dollars from my savings each month.

Financing for five years leaves me a car with little to no market value after five years (beyond what I’ve paid during the loan). And at least a year of paying out of pocket for repairs and maintenance (after the warranty expires).

With a lease, After three years I can decide if I want another BMW and/or other car and keep trading or leasing to keep my car under warranty for the rest of my life. So, as foreign as it is to me to even consider a lease, seems like the best way to part with the fewest dollars.

[amphiprion]

Originally Posted by natahoa

Understand that I have not financed a car in more than 40 years. Gives me hives just to think about being in debt. But I’ve also never lived off an IRA before. I’ve also never splurged on a car. So this is a whole new world for me.

Ah, so you're retired, my previous comment made the assumption that in addition to the earnings opportunity cost, you would be paying a penalty on early withdrawal.

If that's not the case and your financial bases are covered, then I take back questioning using IRA money for the new car. Splurge away.

[avd3k]

Originally Posted by Penguino

That's the mindset that causes people to fall into the lease trap. "I got a $60k car for $500/month. Such a good deal!" But ideally you want to not pay $500 for rent for a vehicle. Ideally you want to pay it off, or loan for 36 months or so and keep it for 5-8 years.

This is common misunderstanding. If you carefully read my post and do the math, If I keep the car for 5-8 years (or any other period in fact) I would lose way more than lease.

[natahoa]

Originally Posted by amphiprion

Ah, so you're retired, my previous comment made the assumption that in addition to the earnings opportunity cost, you would be paying a penalty on early withdrawal.

If that's not the case and your financial bases are covered, then I take back questioning using IRA money for the new car. Splurge away.

Glad you see my point. I “live” entirely off my iras. I don’t have any other income, except SS that I plan to start toward the end of the year. The one I’m using to splurge was inherited, so it doesn’t affect my original Ira, my husband’s income stream, or the savings account we use to pay family bills.

So yeah, I’m going to splurge but I still want to choose the best financial option.

The lease is looking better to me because in three years I can splurge again, and will have some experience to help dictate my decision to lease again, or buy either outright or with financing.

Thanks for all your help and comments. It’s nice to have people to bounce stuff off of!

[natahoa]

[QUOTE=Marty in Bgm;24838338]Hi,

I know I weighed in on this early on but after reading all your posts, my advice, as another retiree, would be to consult your financial advisor.


That would be my husband. He is as uncomfortable with all this borrowing talk as I am, but he seems to be warming up to the idea of a really fun and fancy new car.

I had warned him that I was planning to splurge, but a month ago I came home and informed him I had ordered a new BMW-and not one of the cheap little scrappy ones.

After he got over the shock he fully embraced all the issues with financing. He is happy as a clam running his spreadsheets and demanding term sheets. He also will attend the signing party with me since he must drive me to the dealership anyway.

My SA has no idea what is coming. He is about 17 years old and so far he has only dealt with sweet little ol’ me. If we don’t get what we want, we WILL walk.

[TurtleBoy]

Originally Posted by avd3k

This is common misunderstanding. If you carefully read my post and do the math, If I keep the car for 5-8 years (or any other period in fact) I would lose way more than lease.

There are some circumstances where that may be true but in the overwhelming majority of cases it would not. There are quite a few reasons to lease but generally being less expensive in the long run is not one of them. Of course generalities are just that, each case needs to be analyzed to determine what is best for the person.

[TurtleBoy]

Originally Posted by natahoa

My SA has no idea what is coming. He is about 17 years old and so far he has only dealt with sweet little ol’ me. If we don’t get what we want, we WILL walk.

It is not good for you, or them, to wait until you get there to work things out. Have the conversations now, preferably by email, so each side knows exactly what the deal is before you go to pick up the vehicle. Why take the chance of surprises, disappointments or headaches?

[Penguino]

Originally Posted by avd3k

This is common misunderstanding. If you carefully read my post and do the math, If I keep the car for 5-8 years (or any other period in fact) I would lose way more than lease.

No you won't. Do you want to build some scenarios to discuss?

[avd3k]

Originally Posted by Penguino

No you won't. Do you want to build some scenarios to discuss?

Absolutely, if you re-read my post, I gave 2 own personal examples already.

(fun fact: my first BMW actually was purchased until I learned more about BMW's lease deals/process thanks to this and other forums)

[avd3k]

Originally Posted by TurtleBoy

There are some circumstances where that may be true but in the overwhelming majority of cases it would not. There are quite a few reasons to lease but generally being less expensive in the long run is not one of them. Of course generalities are just that, each case needs to be analyzed to determine what is best for the person.

Agree! That's exact point I'm trying to bring across, don't ignore and evaluate all options, sometimes results might surprise you!

[Penguino]

Originally Posted by avd3k

Absolutely, if you re-read my post, I gave 2 own personal examples already.

(fun fact: my first BMW actually was purchased until I learned more about BMW's lease deals/process thanks to this and other forums)

That's all the details you'll provide?

[mtnbiker5]

Anyone know how much a 2019 X5 would roughly be worth 7 years from now with 161,000 miles on it? Reading where BMW are one of worst cars to hold their value so Im trying to understand how buying these cars is a good investment as stated earlier. To me leasing is the way to go. Its just math and even if your a high mileage driver the numbers appear to be in your favor to lease. Yeah you can say you bought and owned the car but so what. You now own something that has little value.

[natahoa]

Originally Posted by Penguino

No you won't. Do you want to build some scenarios to discuss?

We are waiting for the dealer to provide term sheets on lease and buy scenarios so we can decide before we go to the dealership, and the transaction hopefully will be quick and smooth.

Picking up this car will be an all-day chore and I want to have plenty of time to spend inside the car setting up my profile and other settings. This forum will be very helpful if I have issues, but I’m hoping to get most of the setup done before I leave the dealer.

[MystroX5]

Originally Posted by mtnbiker5

Anyone know how much a 2019 X5 would roughly be worth 7 years from now with 161,000 miles on it? Reading where BMW are one of worst cars to hold their value so Im trying to understand how buying these cars is a good investment as stated earlier. To me leasing is the way to go. Its just math and even if your a high mileage driver the numbers appear to be in your favor to lease. Yeah you can say you bought and owned the car but so what. You now own something that has little value.

Where do you get your data??? You are thinking of German Sedans.

The BMW X5 is #4 in the top 10 highest resale value. This is beating out Lexus. The X6 is #7. I have always noticed the BMW SUV’s are still rather expensive with high miles and 10 years old compared to any other German manufacture. The Porsche Cayenne is also a good German SUV to own. On the flip side, full size German luxury sedans take the biggest hit in resale value. Factor in no one wants a car anymore and that trend is only rising. The X5 is a blue chip vehicle to own as it will always be very desirable to the 2nd tier market buyer.

https://money.cnn.com/galleries/2010...top_ten/4.html
“The X5 combines traditional SUV utility with BMW's famous driving dynamics, Kelley Blue Book says, which is why this particular vehicle's value tends to remain strong in the used-car market.”

[AustinV]

I want to jump into this whole lease vs. buy conversation. I was about to get into my first ever lease but still decided to stick with buying as I've always been doing, and here's why. Let's say total car price P = A + B where A is price at the end of lease and B is differential car value lost over the lease term.

1. When leasing, you still pay interest on whole A + B amount (at least where I live) even though you are paying off entire B amount. So pretty much the same interest as finance, although lease interest is generally higher, for example currently 2.99% finance vs. 4.49% lease on X5 in Canada. Yes you can do MSDs, but it's still temporarily giving away your money while making you more dependent at lease return time.

2. Yes you are paying more monthly when financing, but at the end you are building yourself "trade-in" capital that's going to work for you all years ahead. This is also why I don't want to lease because I can't now use this trade in value effectively for my lease.

3. Leasing adds some more fees. One of them is lease return insurance of ~ $1,500 where they turn blind eye on some extra wear and tear / "damages". You can skip it though but it adds some risk of ending up with car return fees, which can be rather high on the luxury car. Plus you need to put brand new tires on it so add here another ~ $1,500. Trading in you can just have "some" life remaining on your tires.

4. Of course mileage limitation where you always need to watch for how much you can drive "your" car, always reminding you it's not really your car after all.

5. At lease return you are pressured by time to get a new car and can't really have a freedom of making a sound financial decision of for example waiting for a new model year couple more months, or simply do some extra shopping around. THEY know it, and THEY will take advantage of it! With the trade in, you can just walk away at any moment during your negotiation. With lease return if you don't lease again, they will likely penalize you with some extra damages payments.

6. So basically with lease you are "on the hook" for a lot of things, and I hate this feeling.

7. You can still drive new car every 4 - 5 years while owning vs. leasing. And end up having more money in your pocket. If you want even "more" money, just own it for extra few years. It's your decision after all. If the new car sensation is so much burning you, go ahead after 4 years, at this point you still save on lease fees + interest + car return fees + tires + negotiation leverage. It's at least $10k - $15k in my estimate combined, if not more.

8. ONLY two things that's giving me concerns with this lease vs. own thing - 1) If I get into some serious accident, even after fully repaired my car will lose trade in value while lease will just go back to the dealer. Well, I guess it the risk you need to accept for the better financial decision. 2) If the new car has issues or you don't like it, you just get rid of it at lease end. Of course you can still trade it in, so it's less of an issue. It's just easier to live with it, knowing it's not your car after all.

So at the end I see owning as a better financial decision. Now if let's say you can charge lease back to your business it's whole another story, but generally owning is still better.

[natahoa]

Originally Posted by MystroX5

Where do you get your data??? You are thinking of German Sedans.

The BMW X5 is #4 in the top 10 highest resale value. This is beating out Lexus. The X6 is #7. I have always noticed the BMW SUV’s are still rather expensive with high miles and 10 years old compared to any other German manufacture. The Porsche Cayenne is also a good German SUV to own. On the flip side, full size German luxury sedans take the biggest hit in resale value. Factor in no one wants a car anymore and that trend is only rising. The X5 is a blue chip vehicle to own as it will always be very desirable to the 2nd tier market buyer.

https://money.cnn.com/galleries/2010...top_ten/4.html
“The X5 combines traditional SUV utility with BMW's famous driving dynamics, Kelley Blue Book says, which is why this particular vehicle's value tends to remain strong in the used-car market.”

Wow, good to know. That can definitely influence my decision to buy or lease.

[natahoa]

I get that a business expense is a huge benefit on a lease. I don’t have that.

This is a really good post. I’m still swaying with the wind, but you have reminded me why I never would have considered a lease in the past.

[avd3k]

Originally Posted by Penguino

That's all the details you'll provide?

You refuse to read my post you are quoting.