Buy vs. Lease?

[ARES45]

I have a question for those who have more experience purchasing new vehicles than I. I am wondering what the difference in payments would be in the following two scenarios. I will probably keep the 135 for a long time, but I am not certain since it is a new model. What I am trying to get at overall is how much more one pays total for a vehicle if they lease and purchase at the end of the lease or if they just buy it at one time.

Hit me with your expertise.

Pay no mind about the somewhat arbitrary figures, that was just a guess by my dealer who actually has no waiting list if anyone is in Alabama.

Scenario one: Lease a vehicle with an msrp of 35,499 with a residual value of 68% which means at the end of the lease I pay 24,139.32 to purchase the vehicle after say a 36 month lease my payment per month = X

Scenario two: Buy a vehicle with an msrp of 35499 with 24,139.32 down and finance the rest over 36 months with monthly payments = Y

Does X = Y or is X less that Y or X greater than Y?

[SmoothStyle1]

You can do a lot better things with your money than put $24K down on a vehicle.

Scenario 2 should not be an option.

[ARES45]

Scenario 2 isn't really an option; however, I stated the question in that manner so that it would compare the total price I would pay for the vehicle by financing the same amount.

Thank you for the response though, I will take all the input I can get.

[RU_FASTR]

If you are planning on buying out the vehicle at lease end you'd be better off purchasing it from day one. Generally the buyout is more than the car is worth.

[MrRoboto]

need to find the next apple.

[Templedogg]

Buy the car now and do not put that much down, maybe like $6000. Resale at time of sale in say three years will be high enough at that time if you want to get something else to not be upside down on the car. Really depends on how long you are going to keep it. You can really get screwed in a lease if you go over mileage or say track the car and actually damage it as well. Just buy it.

[TESLAASTRO]

leasing and buying are 2 different animals altogether, and depend on your needs and desires.....for example:

Get tired of cars easily and want a new car every few years - lease

drive over 15k miles per year - buy

plan on keeping car til wheels fall off - buy

plan on putting ANY aftermarket equipment on car - buy

want a reasonable payment and want to put that 24k to work for you in a solid investment - lease

take meticulous care of your car - lease

Like the previous posters, putting 24k down really doesnt make much sense, especially with finance deals at 6% with a good FICO score.....so, bottom line x doesnt equal y because leasing vs buying is more of a personal preference than economic decision.....also, I never recommend buying a car at lease termination.......I just never think you get a good deal doing that.....

[TESLAASTRO]

Originally Posted by ARES45

Scenario 2 isn't really an option; however, I stated the question in that manner so that it would compare the total price I would pay for the vehicle by financing the same amount.

[TESLAASTRO]

Originally Posted by ARES45

Scenario one: Lease a vehicle with an msrp of 35,499 with a residual value of 68% which means at the end of the lease I pay 24,139.32 to purchase the vehicle after say a 36 month lease my payment per month = X

Scenario two: Buy a vehicle with an msrp of 35499 with 24,139.32 down and finance the rest over 36 months with monthly payments = Y

Does X = Y or is X less that Y or X greater than Y?

ok, a couple of other things that are missing in your scenarios..... you couldnt have been specifically quoted a buyout at lease termination of $24,139 since pricing not available?....also, a critical component of a lease cost is called "money factor" which you did not provide...a lease is just not cost-residual=payment....other factors determine your monthly nut.....that figure is not available for this car as pricing is not out yet....also, just my opinion, but unless you are getting no options, you may be as much as 4k off on the price of the 135, which you assume will be 35k+-.......scenario 2 which you cited is not an actual scenario depends on the % rate financing you can get, which depends on your FICO score......

Too many variables to accurately advise you, but to risk sounding like shrill Suzi Orman, dont buy or lease the car if you cant afford it....a good rule of thumb is purchase price should be MAX 30% of your gross income.....

[imported_MPower]

It will be difficult to answer these comparison questions until we know what the MF will be on the leases. My guess would be that a purchase would make more sense financially in the first year or so of production.

[Tijuana]

Originally Posted by TESLAASTRO

Too many variables to accurately advise you, but to risk sounding like shrill Suzi Orman, dont buy or lease the car if you cant afford it....a good rule of thumb is purchase price should be MAX 30% of your gross income.....

At 30%, your saying he needs to make $116,000 a year? So a two income household needs to make over $230,000. Less than 3% of the population makes more than this. Do you reasonably expect the other 97% of the population to not consider a car costing more than $35,000? This is America, don't you know we don't follow reasonable rules of thumb?

I don't think Suzi Orman would ever tell anyone to buy a BMW unless it was going to help her sell a book.

edit: I used wikipedia as my data source.

[TESLAASTRO]

Originally Posted by Tijuana

At 30%, your saying he needs to make $116,000 a year? So a two income household needs to make over $230,000. Less than 3% of the population makes more than this.

I definitely think you should be making 115k-120k a year to buy a 40k BMW- not one doubt in my mind....if you are a 2 income household making $230,000, sure you can go ahead and buy 2 135s......My point is that if you are making 50, 60, even 75k a year, you have more pressing financial needs than a $40,000 135....and believe me, with just a few options + tax that car will be every bit of that....

Yes sir, we want it all, and we want it now...kid's education, who cares, they'll get a loan.....55" 1080P plasma, sure...retirement, who cares, that's 30 years from now....we are a debtor nation, with the worst personal savings rate of all the industrialized nations.......One thing's for sure, 30 years from now Publix will have no trouble finding qualified 65 year old bag boys and cashiers......

Suzi Orman wasnt always selling books pal...she's not my cup of tea, but she's a smart lady.....

[ibeam81]

Originally Posted by TESLAASTRO

I definitely think you should be making 115k-120k a year to buy a 40k BMW- not one doubt in my mind....if you are a 2 income household making $230,000, sure you can go ahead and buy 2 135s......My point is that if you are making 50, 60, even 75k a year, you have more pressing financial needs than a $40,000 135....and believe me, with just a few options + tax that car will be every bit of that....

Yes sir, we want it all, and we want it now...kid's education, who cares, they'll get a loan.....55" 1080P plasma, sure...retirement, who cares, that's 30 years from now....we are a debtor nation, with the worst personal savings rate of all the industrialized nations.......One thing's for sure, 30 years from now Publix will have no trouble finding qualified 65 year old bag boys and cashiers......

Suzi Orman wasnt always selling books pal...she's not my cup of tea, but she's a smart lady.....

Ditto!!!

[Tijuana]

Originally Posted by TESLAASTRO

Suzi Orman wasnt always selling books pal...she's not my cup of tea, but she's a smart lady.....

I'm not saying she isn't providing valuable lessons and getting people to understand how to use money and make their money work for them, but she does make a lot of generalizations.

We agree in principal on everything you've said. I just wanted to comment on how difficult it would be for BMW, or any luxury car maker, to survive if everyone followed your 30% rule.

[TESLAASTRO]

'New car, caviar, 4 star daydream, think I'll buy me a football team'

Tijuana, listen to Pink Floyd's 'Dark side of the Moon' from start to finish.....everything I ever wanted to know about life, put into crystal clear perspective, is all there"

[TESLAASTRO]

Originally Posted by Tijuana

I'm not saying she isn't providing valuable lessons and getting people to understand how to use money and make their money work for them, but she does make a lot of generalizations.

We agree in principal on everything you've said. I just wanted to comment on how difficult it would be for BMW, or any luxury car maker, to survive if everyone followed your 30% rule.

people dont!......and people carry huge credit card balances too.....do you know what credit card companies call those customers?: "our best friends"....as long as there are Joneses to keep up with, BMW and the premium auto companies will do just fine......

Suzi Orman is not our personal financial planner, so yes, she speaks in generalizations....but, with regard to American's excessive debt load, she's so on point

Just for my edification Tijuana, how much do you think should one's gross personal household income be to go out and buy a 135?......of course I'll forego asking you if it is important to save for your child's education, an emergency, or retirement.....

[ibeam81]

Originally Posted by TESLAASTRO

'New car, caviar, 4 star daydream, think I'll buy me a football team'

Tijuana, listen to Pink Floyd's 'Dark side of the Moon' from start to finish.....everything I ever wanted to know about life, put into crystal clear perspective, is all there"

Hey... You're showing your age, but I can relate. That's one of my favorite albums.

Suzi Orman does definitely generalize and obviously one size does not fit all, yet she does make some good points. Unfortunately America is living on credit and the "I want it now" demands have become epidemic.

Most people need a car for transportation, but they are notoriously lousy investments. In fact I don't think that investment and car have much in common, unless you're talking about a classic automobile. Basically, you need a car. You don't however really need a BMW, since a more basic vehicle will provide adequate transportation.

If you have the extra dough for the Bimmer, go for it. Just remember that you can't live in it or have it for dinner. :wink:

[atr_hugo]

Originally Posted by ibeam81

If you have the extra dough for the Bimmer, go for it. Just remember that you can't live in it or have it for dinner. :wink:

But as hot as those two turbos get I betcha you can cook on it!!

Manifold Destiny - the car cookbook!!

[TESLAASTRO]

DSOTM is timeless...In fact, my 11 year old just learned to play Money on his guitar.....it is one of his favorite albums.....I'm 40, so I was only 6 when DSOTM was released, but since a teen, I've always been drawn to it's wisdom and perspective on life....

I agree with your post, and see nothing wrong with vehicles like a Civic, Corolla, or Scion Tc if you do not have the income to support a 135......Conversely, for those who do, God bless....this is just my opinion that spending 50% or more of your annual income to try to be something you're not is just woefully misguided......

[ibeam81]

Originally Posted by atr_hugo

But as hot as those two turbos get I betcha you can cook on it!!

Good point.

Manifold Destiny - the car cookbook!!

And great link!

[ibeam81]

Originally Posted by TESLAASTRO

DSOTM is timeless...In fact, my 11 year old just learned to play Money on his guitar.....it is one of his favorite albums.....I'm 40, so I was only 6 when DSOTM was released, but since a teen, I've always been drawn to it's wisdom and perspective on life....

I agree with your post, and see nothing wrong with vehicles like a Civic, Corolla, or Scion Tc if you do not have the income to support a 135......Conversely, for those who do, God bless....this is just my opinion that spending 50% or more of your annual income to try to be something you're not is just woefully misguided......

I'm 48 with two daughters, 4 and 6. Thankfully they keep me young. I'm of the same mindset regarding finances and despite the uphill battle, I'm trying to impart that bit of wisdom to them as well.

[Tijuana]

Originally Posted by TESLAASTRO

Just for my edification Tijuana, how much do you think should one's gross personal household income be to go out and buy a 135?......of course I'll forego asking you if it is important to save for your child's education, an emergency, or retirement.....

What if I don't have kids, own my own home, shun credit cards, and don't like caviar or cable television? That's certainly different than a young couple that just bought their first house, has a ton of student loan debt, and a baby on the way.

Even the second scenario depends. The cost of living in SoCal or Miami is significantly higher than it is in middle-of-America. Would $250,000 be enough if your first house cost $800,000? What if it was only $100,000?

But this is an car enthusiast web site and not a financial planning web site. A lot of people on this forum are going to be making bad financial decisions, but smiling nonetheless.