2008 550i "break-in" period - Myth or Reality
07-25-2007, 11:15 AM
#11
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My Ride: E46 330, E60 550 on order: Carbon Black/Natural Brown, 6MT.
Originally Posted by pa550' post='451839' date='Jul 25 2007, 01:48 PM
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.
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.
There are tax advantages for individuals as well, depending on where you live. For example, in Michigan, I pay 6% tax on the sale price of the car if I purchase. If I lease, I pay 6% on the lease payment.
On one hand this looks like a disadvantage for leasing, as I must pay tax on the interest and fees wrapped in the lease payment, where I would not pay tax on interest with a loan. However, on a typical 3 year lease for a $60k car, the lease payments might total to about $30k. Compared to the tax on the full purchase price, I's save about $1,800 in taxes.
07-25-2007, 11:29 AM
#12
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My Ride: My ex-ride: EU '08 LCI 520dA. Space Grey, Sport Seats in Black Leather/Fabric Anthracite, Sport Steering Wheel, A/C with Extended Features, Hi-Fi Speakers, Cup Holders, Cruise with Braking function, Folding Rear Seats, Xenons, Park Distance Control.
Originally Posted by iversonm' post='451868' date='Jul 25 2007, 10:15 PM
There are tax advantages for individuals as well, depending on where you live. For example, in Michigan, I pay 6% tax on the sale price of the car if I purchase. If I lease, I pay 6% on the lease payment.
Invested money could give you a 15% income, but that will also be taxed by 29% (overhere), a net of 10%.
60 k invested money would give a net of 6 k/y even here
Must be added to expenses and deducts the lease.
07-25-2007, 01:13 PM
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My Ride: E46 330, E60 550 on order: Carbon Black/Natural Brown, 6MT.
Originally Posted by Ricracing' post='451873' date='Jul 25 2007, 03:29 PM
In Finland the turnover tax is 22% and the car is taxed 100% on the import price, whatever that is.
Invested money could give you a 15% income, but that will also be taxed by 29% (overhere), a net of 10%.
Invested money could give you a 15% income, but that will also be taxed by 29% (overhere), a net of 10%.
07-25-2007, 02:01 PM
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My Ride: 2006 550i SMG
Regarding the break in: I went out of bounds on several occassions the first day. Not used to SMG, I accidentally bumped the rev limiter ALOT...and so did everyone I let drive it. Also drove over 80mph since day one. I don't think I'm particulary hard on my baby and it has been trouble free for almost 2 years and 45K miles. 
So regarding the break in period...not sure its really neccessary but like most have said it can't hurt. Maybe if BMW really wants you to break in gently, they should program the CPU accordingly.
So regarding the break in period...not sure its really neccessary but like most have said it can't hurt. Maybe if BMW really wants you to break in gently, they should program the CPU accordingly.
07-25-2007, 06:44 PM
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My Ride: 2004 545i 6 spd Sports Package | NAV | PDC | Logic 7 | BT retrofit | SW V13.3
Break In
I followed break in rules for the first 1000 miles on my 545. You can do 100 to 110mph easily and still keep around 4000 rpm in 6[sup]th[/sup]. I regret not having broken the rule as the fist 400 miles were on the Autobahn and Autostrada. An opportunity that won't present itself again for a while. With the 550i I observed the break in rules for only 400 miles to break in the tires clutch and brakes. Then I could not contain myself. I really don?t think I have harmed the car or the shortened the life of the engine.
Lease vs. Buy
I am a small business owner and have analyzed and argued both sides for many years. Leasing is not for everyone. I feel that with my low mileage needs (13K a year), the fact that I can write off the entire lease payment and my aversion to sudden maintenance costs and driving a car out of warranty, leasing works. However, if you drive 20,000 miles or more a year and cannot take any tax advantage, although your monthly payment is lower, the long term financial cost of leasing is much higher.
I followed break in rules for the first 1000 miles on my 545. You can do 100 to 110mph easily and still keep around 4000 rpm in 6[sup]th[/sup]. I regret not having broken the rule as the fist 400 miles were on the Autobahn and Autostrada. An opportunity that won't present itself again for a while. With the 550i I observed the break in rules for only 400 miles to break in the tires clutch and brakes. Then I could not contain myself. I really don?t think I have harmed the car or the shortened the life of the engine.
Lease vs. Buy
I am a small business owner and have analyzed and argued both sides for many years. Leasing is not for everyone. I feel that with my low mileage needs (13K a year), the fact that I can write off the entire lease payment and my aversion to sudden maintenance costs and driving a car out of warranty, leasing works. However, if you drive 20,000 miles or more a year and cannot take any tax advantage, although your monthly payment is lower, the long term financial cost of leasing is much higher.
07-25-2007, 10:16 PM
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Originally Posted by Rudy' post='451793' date='Jul 25 2007, 07:47 AM
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.
07-26-2007, 06:59 AM
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I am at 1300 miles on the 08 535i. I am waiting to hit 1500 before I beging to play around. I have been working with autos for abour 15 yrs and it always makes sense to break the car in. After all it wont hurt the car any. Whats 1200-1500 miles?
I also choose to lease my car. Due to the fact that I am independant contractor and usee the car "exclusively" for work. So I am able to deduct the lease payments as an expense. And I will only put 12000 miles on the car per year.
I also choose to lease my car. Due to the fact that I am independant contractor and usee the car "exclusively" for work. So I am able to deduct the lease payments as an expense. And I will only put 12000 miles on the car per year.
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