SSBaronM5

Let me first say that I read this forum, along with bimmerfest.com and m5board.com, multiple times per day - everyday. The BMW brethren who frequent these forums are some of most knowledgable and friendly people on any forum I have visited. Its a pleasure to be a part of this community.

I'm anxiously awaiting the delivery of my '08 550i. Its loaded enough for me and I catered it to suit my wants and needs, as well as, considering re-sale value in 3-5 years or more.

The purpose of this thread is to gather opinions on 2 matters:

1. Lease Vs. Buy - I am a small business owner so leasing sounds like a good idea but I would like to eliminate a car payment at some point. Also, I am shoveling out about 12K to get out of my existing lease just to grab the 550i. Together, with my 12K outlay and facing a downpayment on a finance, im looking at about 22-25K out of pocket. Even with this amount out of pocket, my monthly will most likely be higher on a finance for 60 months based on a negotiated sale price of about 66.5K (not inclusive of taxes, tag, license, etc).

I was thinking of leasing because I could take the downpayment that I would have spent and also the extra monthly savings because of the lower lease payment and investing it, earning a return, etc......instead of losing it on a depreciating asset. Has anyone else had a similar dilemma?

Also, weighing my decision in the thought of a new F10 M5 in 2011 or even the new F10 5 series equivalent of the 550i.

I guess im unsure if the amount of equity I will have in the car in say 4 years will be more of a plus than just having a lower lease payment and investing the extra money. Considering the strong resale value of the 5 series, particularly the one I opted for, its a tough decision. I would be fine driving this car for a long time.

Opinions welcome.

2. Break-in period - I was simply told that on non-///M cars, no break-in is required. I was told by a BMW engineer on my previous E39 M5 that the only reason for the 1200 mile service on M cars is for software changes. I DO understand the need for mechanical parts (rings, etc) to "come together" but I also know these motors are run at the factory. For non-///M cars, I was told to driv at varying speeds for the first 1000 miles and certainly not to beat on it, but no real sub 4400RPM break in period was necessary.

Brand new Corvettes do not require break-in periods. These are some of the most dependabloe cars on the market and are built for performance. Why are people so careful with BMW's considering the technology and dependablility these expensive German cars have?


I look forward to your opinons.

Rudy

For me, I choose to break it in because it can't hurt and it just might help. For every dealer/technician that you find that says break-in isn't needed, you can find another one that says it is. The fact that the owner's manual says to break it in is enough for me. If you think about it, the only real downside to breaking the car in for the first 1200 miles is the pain and suffering it causes as you wait to really have some fun with the car.

Keep in mind that I lease my cars so it's likely that all I'm doing is helping out the next owner(s) since I doubt that a car that wasn't properly broken-in would show any problems in the first 3 years of it's life. I just can't bring myself to abuse a car -- especially such finely engineered ones!

italia550i

I am a small business owner as well and my accountant recommended that I lease the car. With leasing, I get to write off $7,500 the first year versus only $4,000 if I were to finance it. I forget how the subsequent years differed, but I do remember that the financing write off drops to only $3000 the second year so there was still a big advantage going the leasing route.

If you take into consideration the write off and my lease payment, at least in the first year, my net payment will be around $300 for a 550 Sport, which is not too bad.

BTW... I should be picking up the car at the end of the week!

SSBaronM5

Italia, You ordered your car with M5 mirrors and 12mm spacers from the factory?

italia550i

No, I am adding them separately.

vancouverE60

I also lease because of one very important reason that my dealership told me (why did they tell me? because he is also one of my best friends)

he told me not to buy because the second i put the key in the ignition i lose 3,000 dollars and the second my front wheels leave the lot, kiss another 4-5grand good bye!! but that's not the worst part, the depreciation on the first year is the worst averaging about 5,000!! so if you are looking at brand new, then lease but if you can wait a year and let someone else take the massive hit, then buy one that's alrdy that initial ~10,000!

another personal reason why i like to lease is because while i could afford to buy it, i would like to have the money in the bank incase of emergencies and whatnot... i'm still young and i don't have millions saved up (yet!) hehe i tend to find that having the extra cash in the bank makes me more flexible if unforeseen situations "pop up" (like sweet rims and AC parts!!! lol)

btw all prices in CAD

just my 2 cents

i'm not even gonna touch the warm up, i just say to each their own! lol

Bart sMartWeed

I think it depends a little bit where you are located and if it matters where the car should show up in your bookkeeping. My accountant said: if you have the money then buy it. It seems that if you buy, you don't pay VAT (taxes) on the leasing cost etc ... My wife (and bookkeeper) said to keep a big enough reserve in case I would need it. So, I half paid the car and financed the rest for two years. Everybody happy .

About break-in: some say yes, some say you don't have to but ... if you love your car, just do what's in the manual. Give your right foot some Valium for the first few thousand miles. I did.

Good luck.

pa550

Lest we forget the old adage that there's no free lunch. The depreciation you quote above (which I don't dispute exists) is borne by the consumer whether the car is leased or purchased. A lease is merely a financing tool. The key difference with a lease vs a car loan is that with the lease your total principal payments made over the life of the lease are equal to the difference between the sales price and the estimated future residual value of the car.

With a car loan, your total principal payments over the life of the loan equal the entire sales price. In both a lease and a purchase, you pay interest on the outstanding principal (ie the sales price reduced monthly by the principal component of the payment). The reason lease payments are always less than loan payments is because you're not paying down 100% of the sales price (ie the principal component of the lease payment is lower than that of a purchase). Nonethless, the residual value estimate at the time the lease is origninated captures the concept of depreciation you reference above.

Clearly there are games played around estimated residual values and interest rates, which can make a lease look better than a purchase and vice versa. Also there are tax implications that favor a lease if you are running it through a business.

Take away message - enjoy the car.

pa550

Couldn't agree more.

Ricracing

Any virgin needs a break in period, even if it is only metal-to-metal.

Seems that incomprehension is the word today