05-29-2019, 10:01 AM | #133 | |
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05-29-2019, 10:24 AM | #134 | |
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1. True fact, although often offset by high residual numbers by BMW and higher lease credit/incentives. 2. You pay sales tax on whole amount (you can never get it back on trade, 10% tax in our state) and losing opportunity value of investing money. Less of concern for states with low sales tax. For my case of M3, sales tax on purchase would be 7k, almost a third of total cost of lease already (27k). 3. I don't purchase this coverage. Also, you don't need to return with brand new tires, just passable 4/32. Exactly same for trade-in actually, you get dinged on value for every cosmetic or other issue, including worn tires. Also would you not fix scratches on car even if you own it? I would. Also, people invest in PPF and other protections for car paint to last long time, no need with lease, money saved. Same with extended warranties people buy. 4. True for some situations, in my case I had more miles left close to the end and couldn't burn enough I'd say this is the main hard blocker for leasing, high mileage (or very low mileage) needs - better purchase car outright. 5. Leasing adds timing issues. You can extend lease by up to 6 months on same terms if waiting for new model. Can get rid of lease on swapalese too. 6. See argument 3. Lease return criteria is very reasonable and similar to how many would keep the car (especially nice car) likely anyway. 7. 4-5 years would be advantage in less case for many situations. Don't forget maintenance costs, new tires/breaks/etc every X miles while owning car. I'm not even talking about unplanned repairs. 8. This benefit also worth some. + gap insurance covers your losses in case car gets totaled. There was gentleman on M3 forum whose car got hit by another person 1 month into lease, lost only 1 payment. Would have lost at least 10-15k if purchased (sales tax + difference between purchase cost and totalled payment from insurance). How's that not smart financial decision with leasing? For cars I leased, total cost ownership including depreciation and rest of above, by the time you trade it in, it ends up being more money sunk (lost) than with leasing. People put positive emotional feeling of owning, but at the end of the day it's about losing money over time in either case and minimizing total transaction regardless how it's called. It's not like owning appreciating asset e.g. house. |
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05-29-2019, 10:36 AM | #135 | ||
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05-29-2019, 11:48 AM | #136 | |
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Indeed great conversation!!! #1 High residual values / lease incentives can sometimes indeed make it look as a more appealing deal, however in my practical example of leasing vs buying X5 in Canada there's none, and interest rate is 1.5% higher #2 Sales tax... oh trust me, if anyone should complain here about sales tax it's a guy from Canada paying 15% I still get it back though at trade in paying for the new car (New Car - Old Car)*Sales Tax which is equivalent of not paying it at lease time. #3 Good arguments on lease return, but in general there are way more reasons to pick on your car condition during lease return where there are some strict documented guidelines than during trade in. So if any fees come up here, it's added lease cost. Extended warranties - if you get past your manufacturers warranty it's the same thing with lease, you are responsible for fixing everything. So just trade in after 4 years and you're all set in general. I keep cars for 4-5 years so taking a gamble during last year of ownership but always been fine... nock on wood #4 Miles matter #5 Extending lease / negotiating with the same dealer where you are going to obtain your next car - again they will have leverage over you because you will come back to them returning your leased car. Not saying it's going to happen, but they can hit you with some damages fees and there is not much you can do, it's all going to be by the book... tires are fraction below 4/32 or non OEM... scratch that can't be covered by the credit card etc. #6 Nothing to say here, I think #5 addresses it... #7 Tires / breaks costs will also apply to lease, so as unplanned maintenance, plus unexpected costs if you are out of warranty. #8 Yes, if you get into an accident it's a very bad luck for your car ownership where resale value goes down the drain. Here I cannot disagree with you. It's a risk everyone who buys the car takes. On the "investing money topic", you can also loose money you know Pleasure talking to you!!! Last edited by AustinV; 05-29-2019 at 12:42 PM.. |
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05-29-2019, 01:43 PM | #137 | |||||||
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05-29-2019, 04:13 PM | #138 | ||
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#2 You have to trade in car and dealers know that and offer less value too. #3, #7 That's the point - your are never out of warranty and you avoid many services/replacements/repairs vs. keeping car for 5-8 years. (You only keep car for 3 years and then get brand new one) #5 If you are running into very picky dealer, you can return to another dealer, but generally BMWFS is pretty lax as they want you to come back (note the same with bank leases, e.g USBank lease is pretty picky). Also, extending lease while waiting is directly with BMWFS, dealer not involved. |
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05-29-2019, 05:33 PM | #139 | |
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For hypothetical scenarios of owning car for 6 years: - Lease 2 x 3year terms, 23k total per each = total 46k spent over 6 years, 0 equity "left". - Finance I had 8k discount and 10% sales tax. Purchase cost: 60k + 6k tax + finance interest = conservatively I put it to 70k initially spent. Over 6 years, I *very* conservatively put 4K maintenance costs (tires, brakes, some services). Total: Spent 74k. (And this is best case scenario actually, no major repairs etc) The value of the car after 6 years should be at least 28k to make it equal ( ! ) to lease cost and even more to make it better than lease. Realistically KBB puts it at 20k at best. KBB shows my trade-in value is 30k right now, at almost 3 years into lease. (Insane depreciation on 5 series) So even in best case scenario I come out ahead by 8k with lease. Even more if I would get unlucky with car being more repair prone. |
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05-29-2019, 07:23 PM | #140 |
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Sorry guys with my post earlier, didn't mean to offend on the depreciation factor of BMW's. I think the person who responded to my post on how SEDANS depreciate more is accurate. If you Google BMW X5 depreciation it doesn't score well but most articles are factoring in owning older X5's with redesigns like the 2019 hitting market so people getting good deals on older x5's. In any case, it seems like no matter how we slice and dice the buy vs lease its almost a lose lose, sort of. I've always bought my cars due to high mileage sales job. Now due to new tax law I get ZERO DEDUCTIONS on my car (I don't own my business). So much for considering a Land Rover (their claim to fame on deductions). I think in the end, the one person above is right. My dealer quoted me around $1300 month on a 25k 3 year lease deal. After factoring in downpayment and all after 3 years I've spent around $50k and left with nothing. If I re up and lease again for another 3 years now I'm clearly spending over $100k in 6 years for 2 new cars BUT, I don't have to deal with oil pans leaking and everything else. Hate to even say this here, at this kind of price point you almost wonder if its worth it to just buy an $85k Land Cruiser or Lexus and call it a day. Bullet proof. We shall see. Thanks guys. Cheers
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05-29-2019, 08:47 PM | #141 | ||
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05-29-2019, 08:56 PM | #142 |
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I think the million dollar question really is, a 2019 or 2020 x5 6 years from now with approx 138k miles on it is worth how much? If I'm doing 23k miles per year x 6 years, if I jump into a 3 year lease now, then re up again in another 3 years, compared to just buying it now, whats the trade in value. Seems to me leasing over a 6 year period is gonna cost me a lot more out of pocket. I can calculate additional rough estimates on repairs, tires, etc. Because I'm a high mileage driver,I dunno if it makes sense. Then they throw in all this talk about just getting me out of a lease early if i want to get me into a new one. One salesman even said how I don't want to keep a BMW for longer than 4 years because he knows. When things go bad they go REALLY bad. Its not like a Lexus where if you need a new water pump it'll cost you $1500 and just be done with it. Why can't these German car companies just buy their parts from Toyota!!!!!!???? Its like if you need a new timing belt you need to take out a second mortgage. My eyes are glazing over. Its all just math and this is giving me a headache.
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05-29-2019, 09:10 PM | #143 | |
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I've tried to stay away from this thread as it has gotten to be too subjective. I'm interested now, because you have introduced a primary driver that determines which scenario is better (for the scenario); time horizon. This scenario is unique as it needs more assumptions; once past warranty what would be the upkeep/repair cost? This is a primary reason for many to lease - avoidance of liability. I'm curious and interested in helping here; but do not have time to research all of the necessary assumptions. Let me know if you track down some useful data points. Additionally, useful math that can be done here (and applicable per your outline of usage/miles driven) is; cost per mile. |
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05-29-2019, 10:39 PM | #144 | |
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When I first started this reply I typed - "I don't think there is any question that purchasing would be the way to go" but after running some numbers I'm not so sure it is that clear cut. While there should be a decent margin between the two whether it is enough to make up for service/maintenance costs and give you a level of comfort with the decisions and driving that high mileage vehicle would be a personal decision. What I did was take my lease and changed it to be 15k, took off my MSDs and other incentives to gives us something to work with. My MSRP was about 76k and selling price almost 71k. Working with all of that, the lease will be about 1,075 a month and assuming you can get the same deal on the next lease it will total 77,400 before the mileage overage charge. Since you will be a total of 48k miles over that should cost 12k at 25 cents a mile but I think you may be able to get them for 20 cents before turn-in. You lease total would be 89,400. Financing the 71k plus taxes and fees at 2.99% for 5 years will cost you about 81k. For the trade-in value estimate I looked at the current trade-in value on Kelly Blue Book for a 2013 X5 with the 138k miles in good condition. I took the middle of the range and it worked out to being about 15% of the original MSRP. Applying that to this example it would mean the trade-in would be about 11,400. I do not have a clue as to the service and maintenance costs but I'm sure others on here do. So when comparing the two, the lease will cost you in the example 89,400 while the net pre-maintenance/service cost for purchasing will be 69,600. That would be about a $20k difference that could be applied to maintenance/service. One could thing though, they don't have timing belts so you don't have to worry about that. Obviously there are a lot of assumptions in here and also probably things I missed. I'm just trying to give a general idea of the difference. |
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05-30-2019, 06:09 AM | #145 |
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[QUOTE=TurtleBoy;24848282]When I first started this reply I typed - "I don't think there is any question that purchasing would be the way to go" but after running some numbers I'm not so sure it is that clear cut. ...
For the trade-in value estimate I looked at the current trade-in value on Kelly Blue Book for a 2013 X5 with the 138k miles in good condition. I took the middle of the range and it worked out to being about 15% of the original MSRP. Applying that to this example it would mean the trade-in would be about 11,400. So when comparing the two, the lease will cost you in the example 89,400 while the net pre-maintenance/service cost for purchasing will be 69,600. That would be about a $20k difference that could be applied to maintenance/service. . . . . . Your numbers align exactly with ours. My husband ran a net-present-value analysis of the balloon versus 60-month finance. If my Ira continues to earn 6% or more, I’m better off with the balloon. Below that, better off with traditional financing. Currently it is earning 15% because of the crazy stock market and compounded earnings, but I know that is unlikely to last. And there also is the reality it could go DOWN in value if the markets crash and remain low for more than a few months. I don’t have my car yet, but my plan is to trade in after fours years to keep a car under warranty. I’ll still owe about $12k on the loan, but the car should be worth at least $25k (it will probably have low mileage, but also won’t be garaged). So I will have $12k, or possibly more, toward a trade. My next question is the wisdom of buying the maintenance add ons - I’ll start a new thread for that. |
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05-30-2019, 08:16 AM | #146 |
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Did he include the $2,000 credit you would lose with the balloon financing?
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05-30-2019, 09:02 AM | #147 |
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The car is priced with the incentives and I can choose any finance option I want. I still get the $2000 with balloon financing. It’s actually $2750 because I’m a new bmw owner. I’d lose that if I lease, presumably.
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05-30-2019, 09:04 AM | #148 |
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Didn't realize that BMW offered the balloon financing. I thought you posted that the balloon financing was from a bank. The $2k credit is only available when you use BMW financing.
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05-30-2019, 09:33 AM | #149 | |
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The reason I did that was because BMW finance initially declined my credit app and then agreed to finance me if I put down $32k I don’t really have any income - just what I take out of the IRA. Makes sense that they would decline me with little to no income, but it was still frustrating. Turns out they hadn’t even looked at my credit score, which the dealer told me would have been an automatic approval. The dealer intervened and I was able to get any financing I want. Mostly I wanted it for the $2,000 incentive. Which I got. What I don’t have yet is the f**kn car. Last edited by natahoa; 05-30-2019 at 09:34 AM.. Reason: Typo |
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06-03-2019, 08:02 PM | #150 |
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Good forum. If you own your business you get the tax deductions under the new tax law. If you don't own your business and are in sales you don't get the auto deductions anymore.
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06-04-2019, 07:31 AM | #151 | |
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In my case I would have financed $65k. Payments $840 for five years then a $21k balloon. At that point the car would probably be worth about $23k. So that leaves little equity for a trade - but I plan to trade at 4 years. Haven’t run the numbers, but doing that would provide maybe $9k for trade. You can also pay it off at any time, just like the standard financing. I decided on the 5-year standard financing. Payment will be $1,170 a month roughly. At four years payoff will be $13.8k and value should be about 45%. So at four years equity for a trade should be $15k or so. |
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06-05-2019, 08:46 PM | #152 |
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Anyone know when they start building the 2020 X5's? End of summer? I want to rest a little easier thinking maybe they got the kinks out of the first run. I also see Lexus just announced their re fresh on the RX. Nothing like throwing a wrench into this now. I still can't get over the price of the new X5's. Seems a little high for a car that will be bleeding oil once you hit 70k. What I still don't understand, why doesn't BMW buy their parts like valves and seals from Toyota/Lexus and then just build all the German tech around it. Who the heck do they get their parts from and then charge $70k for an X5 that explodes? I've literally gone through 2 BMW's and I swear someone in Germany presses a button once you hit a certain mileage and says "times up!" They're great when you drive out of the showrooms but wow....
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06-05-2019, 08:49 PM | #153 |
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August is the first build but don't expect to rest easier, it will just be a different set of teething issues.
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