BMWDoug

I have went over leasing with a fine tooth comb, and every time I run the numbers I find it is better to buy. You just do not come out ahead on a lease, no matter how you slice it. After the lease period, you have nothing, zilch. When you buy, you have the market value of the car, and if you sell at about 3 and 1/2 years, you hit a sweet spot, where you get a very good price for your BMW, which can be rolled over into another BMW.

Every Scenario I ran showed the following: buying would save $5000 to $9,000 over a lease. I was using low ball resale values as well. So, the only reason to lease would be if you did not want to outlay a large sum of money for a down payment, or you are in your own business and you can deduct the lease payment from taxes.

Simple1

as you said, everyone is in a different financial situation. but for some people it's not even about whether they can afford it or not, because some people like to change cars every 2 or 3 years. For those people it makes absolutely no sense to buy the cars, they pay less than half what the car is worth and get to pick up a new car ever so often. so yea IMHO buying is better than leasing, and to others ITHO it pays them to lease.

BMWDoug

DOH!! I may have pulled a Homer Simpson with my original post above. Someone please check this scenario out:

Okay, lets say that you buy a 2006 530 for a Selling Price of $51,500. Your out the door total is $56,000, including a California Tax rate of 7.97%, and license and doc fees. You put a down payment of $31,000. You go to a credit union and obtain 72 month financing at 5.85%. After three years you have paid out: $31,000 down payment + $13083 ($363.42/36months), which is a total of $44,083.

Now, the car after three years is worth $33,000. The amount owed is $15519. So, at the end of three years if you sell your car you would have $17481 in your pocket. Thus, the car has cost you $44,083 -$17481, which equals $26,601. Is this correct? Or, am I missing something?

Now, if you lease for three years. Lets Say the MSRP of the Car is $54500, the selling price is $51,500. So, you would have the following:

MSRP 54500
sell price 51500
down 0
security deposits 3000
Acquisition 625
registration 490
tax rate 7.97%
miles per year 12,000
lease term 36 months
residual 62%
money factor 0.00115 (reduced to this amount because of six extra security deposits)
Base payment $608.11
tax 48.47
total payment $656.57

Total Lease Cost
$4146 is Drive off
$22,980.09 is monthly payments
$27,126.41 is total payments
$ 3,000.00 is Refund of Security Deposits
$24,126.41 is cost of three year lease

So, in this case it would be cheaper to lease?????? What am I missing???? Is this correct??

Simple1

well, you might be on to something over there member Stream & Das would know more about these things all those numbers you listed they are more likely to understand. As a said some people are more comfortable with leasing because of the ease with which one can change cars and not having to worry about how to sell the car. and the money saved doesn't hurt either as you pointed out above.

stream

Several BMW models (including the one in your example) have special lease rates on 24 & 36 month leases, which are less than half the normal rates. 0.0014 equals 3.36% interest rate, plus you reduced it by the additional security deposit to 0.00115 or 2.76%. Without taking the time to check all you math, it's not surprising at all that leasing with those rates is cheaper than buying with a 5.85% loan. The lease would look even more favorable, since in the cost of buying you neglected to include the opportunity cost (interest that could have been earned) on the $31,000 down payment.

markt540i

I would have to agree. I paid $55,000 for my 2001 540i and after over 4.5 years and over 92,000 I traded it in for $18,500 and could have sold it for more probably (not worth the hastle) It cost me $36,500 to drive that car for nearly 5 years. Not bad.

alexnyc

IMHO advantage of buying versus leasing depends on several factors:
-how long you are planning to keep the car-some cars have better
residual values than others at different stages of its life
-what portion of the lease money(if not all of it) you can deduct from your income/business
-do not forget that when you are buying you are paying taxes on full amount versus only cost of the lease in the case of lease
-do you really want to get involved with selling/trading used vehicle when it is about to go out of warranty?
In my case i don't keep cars for longer than 3 years(get bored with them,they go out of warranty),i deduct lease almost fully,i would not have time and patience to negotiate/sell the vehicle for the "right" price.
Besides that,my calculations show this(assuming general rule of thumb-most cars will lose slightly more than half their original value at 3 yrs of age-give or take, depending on the model and brand,
leasing:36 mos @865$=31,140$-cost of the lease(deductable!)-without headaches
buying:64,000$ after 3 years will probably retain less than half,i.e 30,000$ will be its market value,again give or take couple Gs,
now,it is worth the headache?
and if your car has been hit/damaged/repainted-you will have to sell it for less than that,which is not the case with the lease.So for me,as long as i plan to drive new cars every 3 or so years ,buying new car does not make much sense.
my 2 cents


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alexnyc

this is not so,i am not sure you can get 33,000$ for a 3yrs old car that was 51,500$ when new.