[ASAP]

Originally Posted by R N M

I disagree completely - i just did the sale in June.
If things change, your equity in the financed car vs leased car will be effected the same way.

I never put any money down and my tax payment is calculated based on sum of lease payment vs full price of car if I purchased.

Now if you plan to hold on to your car for 6-7yrs than yes Buying is cheaper vs leasing. I don’t want to drive a car with 70-80k miles therefore for me leasing is a better option.

My other cars which are garage queens are all bought not leased bec I plan to keep them over 3yrs.

i don't entirely disagree w u...

just show a mathematical example... where 3 years worth of lease payments are equal to 3 years worth of financed payments and the equity that you'd gain back having an upside on the lease... outside of the rare covid instances, the answer is never... you don't own a leased car... dealers were writing checks covid and post covid for folks who got cheap leases pre covid due to massive value inflation... the buyout price is universally higher than market price except during covid...

i sold my 3 year old m2 for what i bought it for during covid so i had a Free car during that time

[R N M]

Originally Posted by ASAP

i don't entirely disagree w u...

just show a mathematical example... where 3 years worth of lease payments are equal to 3 years worth of financed payments and the equity that you'd gain back having an upside on the lease... outside of the rare covid instances, the answer is never... you don't own a leased car... dealers were writing checks covid and post covid for folks who got cheap leases pre covid due to massive value inflation... the buyout price is universally higher than market price except during covid...

i sold my 3 year old m2 for what i bought it for during covid so i had a Free car during that time

But if you financed that same car and sold it in 3yrs in Pre-Covid times, you may have taken significant loss especially if it was involved in accident.
The Lease gives you a set figure for buyout price or you can walkaway in 3yrs without worrying if market dipped or there was accident damage etc.

[bocabimmer]

Originally Posted by ASAP

Buying used and financing not common... kind of surprises me, I would expect that one to be the most common.

In an ideal world I would have done that but at the time I was searching, I could have purchased a new X-Line moderately speced for $6k more than a used one with 30,000 miles on it. That was a no brainer.

Once we started the custom ordering I wanted BG, M, Sensatec dash, digital key, larger CID. Wife wanted heated steering wheel and a few other things I can’t recall. Well that escalated quickly. 😀

[sbt007]

Originally Posted by ASAP

thats covid... when resale values were higher than ever and ending buyouts were lower that retail prices... this wont happen again...
total cost to own on a lease is always higher than buying... depreciation included... if u have a tax advantage of some sort, thats different... but all in all, lease IS always more expensive... today, that spread is even higher... if u get rid of cars every 3 years... thats the cost of convenience for u...

Originally Posted by R N M

I disagree completely - i just did the sale in June.
If things change, your equity in the financed car vs leased car will be effected the same way.

I never put any money down and my tax payment is calculated based on sum of lease payment vs full price of car if I purchased. Also interest rates are typically lower on leases while having better incentives and that was true again when I leased the new M40i in June.

Now if you plan to hold on to your car for 6-7yrs than yes Buying is cheaper vs leasing. I don’t want to drive a car with 70-80k miles therefore for me leasing is a better option.

My other cars which are garage queens are all bought not leased bec I plan to keep them over 3yrs.

I have to agree with R N M here.
Most people don't realize this - leasing in the US/Canada has all the advantages of buying and none of the disadvantages. Except for the ~$600 ish lease initiation fee.

You can still sell/trade in/buy out the leased BMW at any time. It depreciates exactly the same. It costs exactly the same as if you bought it initially. Thats because the BMW lease simply deducts the principal paid each month from the original MSRP minus any downpayments to produce a buy out value. It is like a loan where you pay less upfront and less every month so the outstanding amount is more.

If there are issues with the car, or if the car is in an accident, return it after 3 years. Let BMW take the hit.
If used car market crashes, return it after 3 years, Let BMW take the hit.
If used car market goes up like crazy, such as in the last 1-2 years, sell it and pocket the difference.

I myself bought out my MY21 lease recently btw, as I approach year 3. Car has been totally problem free, might buy a different car next year but not sure and nothing right now. Who else is going to give me a MY21 X3 M40i with 16K miles for 39K + tax?

[ASAP]

Originally Posted by sbt007

I have to agree with R N M here.
Most people don't realize this - leasing in the US/Canada has all the advantages of buying and none of the disadvantages. Except for the ~$600 ish lease initiation fee.

You can still sell/trade in/buy out the leased BMW at any time. It depreciates exactly the same. It costs exactly the same as if you bought it initially. Thats because the BMW lease simply deducts the principal paid each month from the original MSRP minus any downpayments to produce a buy out value. It is like a loan where you pay less upfront and less every month so the outstanding amount is more.

If there are issues with the car, or if the car is in an accident, return it after 3 years. Let BMW take the hit.
If used car market crashes, return it after 3 years, Let BMW take the hit.
If used car market goes up like crazy, such as in the last 1-2 years, sell it and pocket the difference.

I myself bought out my MY21 lease recently btw, as I approach year 3. Car has been totally problem free, might buy a different car next year but not sure and nothing right now. Who else is going to give me a MY21 X3 M40i with 16K miles for 39K + tax?

Again - I just want to see the exact math behind your reasoning...

Just as an example, the BMW USA M40i lease special for 36 months is $789 / mo w 6k downpayment.. w tax you are looking at a payment around $840 per month so your total cost over 36 months will be $36240. Please note, the MSRP of the car under this deal is $63K... you are paying for 57% of the vehicle in the first 36 months. The residual on this car is $35K.

Now, let's say I where to finance that at 5% for 60 mos w the same 6K down... my payment is $1075... so total cost for 3 years is $43K... except, here is the deal... the lowest 3 year old M40s are selling at this time is around 44K... so now, I have a ton of equity in my car since I will owe only approx $20k after that time... so I am now way ahead of you in any scenario.... whether I sell or keep. Hell, even if the value of the car is $35k... I am still WAY ahead of you.

The only way this works for the lease is if there are VERY cheap leases around, that of which we haven't seen for over 5 years from BMW.

Again, accidents are a different factor... we can't predict those, I'll give the leaser the upside on that since its the convenience you are paying for.

Is your math different somehow or is my math wrong?

[Jen4BMW]

Originally Posted by R N M

I disagree completely - i just did the sale in June.
If things change, your equity in the financed car vs leased car will be effected the same way.

I never put any money down and my tax payment is calculated based on sum of lease payment vs full price of car if I purchased. Also interest rates are typically lower on leases while having better incentives and that was true again when I leased the new M40i in June.

Now if you plan to hold on to your car for 6-7yrs than yes Buying is cheaper vs leasing. I don’t want to drive a car with 70-80k miles therefore for me leasing is a better option.

My other cars which are garage queens are all bought not leased bec I plan to keep them over 3yrs.

I totally agree with this!

[R N M]

Originally Posted by ASAP

Again - I just want to see the exact math behind your reasoning...

Just as an example, the BMW USA M40i lease special for 36 months is $789 / mo w 6k downpayment.. w tax you are looking at a payment around $840 per month so your total cost over 36 months will be $36240. Please note, the MSRP of the car under this deal is $63K... you are paying for 57% of the vehicle in the first 36 months. The residual on this car is $35K.

Now, let's say I where to finance that at 5% for 60 mos w the same 6K down... my payment is $1075... so total cost for 3 years is $43K... except, here is the deal... the lowest 3 year old M40s are selling at this time is around 44K... so now, I have a ton of equity in my car since I will owe only approx $20k after that time... so I am now way ahead of you in any scenario.... whether I sell or keep. Hell, even if the value of the car is $35k... I am still WAY ahead of you.

The only way this works for the lease is if there are VERY cheap leases around, that of which we haven't seen for over 5 years from BMW.

Again, accidents are a different factor... we can't predict those, I'll give the leaser the upside on that since its the convenience you are paying for.

Is your math different somehow or is my math wrong?

But You paid $8,000 more over those 3yrs for the car plus you paid tax on full price of the vehicle.
In your scenario, the lease would save you $8k in payments plus half of the sales tax. Not to mention you bear no responsibility if the vehicle is in an accident or has reliability issues.

Again you can easily sell your Leased vehicle and capitalize on that equity - I just did this last month. Its like selling any other car, a used car manager inspects it and gives you an offer. You contact BMW FS and ask for payoff figure and then see how much equity you got.

[avi66]

Originally Posted by R N M

Not to mention you bear no responsibility if the vehicle is in an accident or has reliability issues.

Is the car not insured in your name ?

Personal leasing here is similar to a long term car rental, but the user is responsible for the insurance (although not the legal owner or registered keeper), and the claims process and any subsequent insurance issues if they are involved in an accident.

Also, here you cannot sell a vehicle you lease because you don't own it or have the option to own it, hence there is no sale equity or asset ownership option, it's just a rental agreement. Here we usually pay one or more rentals up front, pay the monthly lease fee, and hand the car back at the end of the lease period, just like a car rental.

Sound like a "personal lease" is very different in the USA.

[ASAP]

Originally Posted by R N M

But You paid $8,000 more over those 3yrs for the car plus you paid tax on full price of the vehicle.
In your scenario, the lease would save you $8k in payments plus half of the sales tax. Not to mention you bear no responsibility if the vehicle is in an accident or has reliability issues.

Again you can easily sell your Leased vehicle and capitalize on that equity - I just did this last month. Its like selling any other car, a used car manager inspects it and gives you an offer. You contact BMW FS and ask for payoff figure and then see how much equity you got.

Yes, I paid more up front but I also have significant equity in my example on top of that. The only way you are getting a check for equity on your lease is if the buyout is significantly lower than the current market value of the car. This was VERY true during Covid... this will no longer be true and especially won't be true as we switchover generations.

Originally Posted by avi66

Is the car not insured in your name ?

Personal leasing here is similar to a long term car rental, but the user is responsible for the insurance (although not the legal owner or registered keeper), and the claims process and any subsequent insurance issues if they are involved in an accident.

Also, here you cannot sell a vehicle you lease because you don't own it or have the option to own it, hence there is no sale equity or asset ownership option, it's just a rental agreement. Here we usually pay one or more rentals up front, pay the monthly lease fee, and hand the car back at the end of the lease period, just like a car rental.

Sound like a "personal lease" is very different in the USA.

Yes, personal leases in the USA are far different than Europe... you are responsible for the insurance and you register. You can sell your lease here and have equity if the market value of the car is way higher than the final buyout price... historically this was never the case with BMW as the buyout was usually set far above whatever market value is... Covid turned things upside down. BMW leases used to be very cheap because they set the buyout value very high... except they stopped that when they realized they were upside down on a ton of cars in the market.

[EWL5]

Originally Posted by R N M

But You paid $8,000 more over those 3yrs for the car plus you paid tax on full price of the vehicle.
In your scenario, the lease would save you $8k in payments plus half of the sales tax. Not to mention you bear no responsibility if the vehicle is in an accident or has reliability issues.

Again you can easily sell your Leased vehicle and capitalize on that equity - I just did this last month. Its like selling any other car, a used car manager inspects it and gives you an offer. You contact BMW FS and ask for payoff figure and then see how much equity you got.

I hear what you're saying about diminished value and walking away from a lease but the responsibility of paying the insurance and any damages is identical if not worse. On a leased car, you typically have to repair any sheet-metal damage that's larger than a credit card whereas you can leave it as is on a financed/owned car. As a matter of fact, you can choose to forgo repairs as much as you want on an owned car or perform modifications (I'm sure the finance company won't be very happy but it all depends on what they know).

I tried selling my leased Acura TLX to Carmax but Acura is one of those companies that has restrictions so I ended up taking less money trading it in to a BMW dealer. The ease of selling a leased car highly depends on demand and manufacturer restrictions. As others have said, the current atmosphere is abnormal in that equity can be had even towards lease end. The only way this can continue is if the supply chain is artificially limited.

With the sale of the TLX, I broke a leasing cycle that lasted over 10 years so I'm very familiar w/the pros and cons of leasing vs owning.

[avi66]

Originally Posted by ASAP

Yes, personal leases in the USA are far different than Europe... you are responsible for the insurance and you register. You can sell your lease here and have equity if the market value of the car is way higher than the final buyout price... historically this was never the case with BMW as the buyout was usually set far above whatever market value is... Covid turned things upside down. BMW leases used to be very cheap because they set the buyout value very high... except they stopped that when they realized they were upside down on a ton of cars in the market.

So what’s the difference between a a personal lease and other common purchase finance products in the USA ?

https://www.truecar.com/l/lease-a-car/

[Oldgixxer]

Originally Posted by ASAP

...The only way you are getting a check for equity on your lease is if the buyout is significantly lower than the current market value of the car. This was VERY true during Covid... this will no longer be true and especially won't be true as we switchover generations.

Just to clarify,when you say during covid does that include present day,like right now?

[ASAP]

Originally Posted by avi66

So what’s the difference between a a personal lease and other common purchase finance products in the USA ?

https://www.truecar.com/l/lease-a-car/

It USED to be that... the leases (especially the way BMW did them), the lease payments were lower for the duration of the lease due to artificially pre set high residual values than actually purchasing for the first 36 months. This never put the owner into a position of ownership as he NEVER gained any equity as the residual was almost universally set higher than the market value of the car. Equity in a lease is a very new thing that happened during Covid as market values were way over residual or buyout values. So in the past, the person leasing the car would just rent the car and it would function as effectively a 3 year rental with no ownership equity... they just return the car, the depreciation is irrelevant and its the cheapest way to get a car for 3 years. That was the advantage... they also don't worry about resale value if car gets hit etc as what they pay in 3 years is it.

The current equity situation is because residual values are lower than market values (BMW couldnt predict Covid)... which means the person leasing the car can just buy the car and resell it for more. They have priority to do that as that is stipulated in the lease contract... Dealers now are just passing that process and writing a check for the equity difference to forego the hassle of buying, selling, trading etc. In no other situation would this be true outside of Covid and will be back to the old days soon.

[ASAP]

Originally Posted by Oldgixxer

Just to clarify,when you say during covid does that include present day,like right now?

Well values for used cars are still inflated so yea... i could see this going for another year but compared to what we saw a year ago... the scale has tipped drastically... my M2 was worth 60K on trade 1.5 years ago... its barely worth 46 now... good luck w an X3 in that scenario lol.... if you still have the old residual values, you will still be in a good spot...

[Oldgixxer]

Originally Posted by ASAP

Well values for used cars are still inflated so yea... i could see this going for another year but compared to what we saw a year ago... the scale has tipped drastically... my M2 was worth 60K on trade 1.5 years ago... its barely worth 46 now... good luck w an X3 in that scenario lol.... if you still have the old residual values, you will still be in a good spot...

Ok got it. Yes I agree it has cooled off a bit compared to 2 summers ago when I sold back my M550i lease to BMW and got a nice chunk of equity back.

I'm now 2yrs into my X3MC lease and getting ready to make a move to an LCI X5MC when an allocation comes my way. As of this morning,my BMW dealer offered me $6500 more for my X3 than what my payoff is. Non-BMW dealers have offered as much as $8k above my payoff but,thats a non issue due to BMWFS really cracking down on that whole scenario as you know.

[ASAP]

Originally Posted by Oldgixxer

Ok got it. Yes I agree it has cooled off a bit compared to 2 summers ago when I sold back my M550i lease to BMW and got a nice chunk of equity back.

I'm now 2yrs into my X3MC lease and getting ready to make a move to an LCI X5MC when an allocation comes my way. As of this morning,my BMW dealer offered me $6500 more for my X3 than what my payoff is. Non-BMW dealers have offered as much as $8k above my payoff but,thats a non issue due to BMWFS really cracking down on that whole scenario as you know.

Yea, remember he is getting you into a new car that is near twice the value... I think dealers are still living on high resale values of 2021... and X3M is a very hard car to sell, i see a ton of 22s listed in the 70s on cars.com and none are selling... so I am very curious to see who will be left holding the bag soon.

[avi66]

Originally Posted by ASAP

It USED to be that... the leases (especially the way BMW did them), the lease payments were lower for the duration of the lease due to artificially pre set high residual values than actually purchasing for the first 36 months. This never put the owner into a position of ownership as he NEVER gained any equity as the residual was almost universally set higher than the market value of the car. Equity in a lease is a very new thing that happened during Covid as market values were way over residual or buyout values. So in the past, the person leasing the car would just rent the car and it would function as effectively a 3 year rental with no ownership equity... they just return the car, the depreciation is irrelevant and its the cheapest way to get a car for 3 years. That was the advantage... they also don't worry about resale value if car gets hit etc as what they pay in 3 years is it.

The current equity situation is because residual values are lower than market values (BMW couldnt predict Covid)... which means the person leasing the car can just buy the car and resell it for more. They have priority to do that as that is stipulated in the lease contract... Dealers now are just passing that process and writing a check for the equity difference to forego the hassle of buying, selling, trading etc. In no other situation would this be true outside of Covid and will be back to the old days soon.

Thanks.

To compare, in the UK there is PCP (personal contact purchase) and PCH (personal contract hire).

PCP is essentially financing the deprecation over a set period, rather than the total car value. The depreciation amount is set upfront based on a guaranteed future value (GTV). The contact is usually over 36-48 months and is based on a set mileage. At the end of PCP, you can 1) pay the GTV (balloon payment) and own the car or sell it for equity, 2) use any equity between GTV and market value towards your next car without owning it, 3) hand the car back and walk away (subject to over mileage and damage charges).

PCH is a personal lease and is just an extended car rental with no ownership option.

My current PCP saved me well over £20k compared to “leasing”over the same period.

What you call a lease sounds very similar to PCP……

[ASAP]

Originally Posted by avi66

Thanks.

To compare, in the UK there is PCP (personal contact purchase) and PCH (personal contract hire).

PCP is essentially financing the deprecation over a set period, rather than the total car value. The depreciation amount is set upfront based on a guaranteed future value (GTV). The contact is usually over 36-48 months and is based on a set mileage. At the end of PCP, you can 1) pay the GTV (balloon payment) and own the car or sell it for equity, 2) use any equity between GTV and market value towards your next car without owning it, 3) hand the car back and walk away (subject to over mileage and damage charges).

PCH is a personal lease and is just an extended car rental with no ownership option.

My current PCP saved me well over £20k compared to “leasing”over the same period.

What you call a lease sounds very similar to PCP……

So the reason it's KIND OF weird in the USA... is because you aren't the owner in a lease BUT you have priority to purchase the car at a preset value. If the preset value just so happens to be lower than the current market value (BMW did the wrong calc due to Covid or whatever)... it would be dumb for you not to purchase it and make some $ on it. Now with supply chain problems, dealers want priority to purchase that car, so they often just skip the middle man and pay the difference to the leaser since the leaser has priority to purchase... its still 100% a rental, you can give it back no holds barred but the option to purchase exists for you.... in the past it never made since to purchase lease since you could go out and by a similar car to yours for less money that your buyout in the market.

[avi66]

Originally Posted by ASAP

So the reason it's KIND OF weird in the USA... is because you aren't the owner in a lease BUT you have priority to purchase the car at a preset value. If the preset value just so happens to be lower than the current market value (BMW did the wrong calc due to Covid or whatever)... it would be dumb for you not to purchase it and make some $ on it. Now with supply chain problems, dealers want priority to purchase that car, so they often just skip the middle man and pay the difference to the leaser since the leaser has priority to purchase... its still 100% a rental, you can give it back no holds barred but the option to purchase exists for you.... in the past it never made since to purchase lease since you could go out and by a similar car to yours for less money that your buyout in the market.

Same with the PCP here, you are not the owner unless you elect to pay the GTV at the end of the contact, or settle the PCP at anytime. However, you have the option to own if you want, which is different here to PCH (lease), which is just lease rental.

Hence, if my PCP GTV is £27k and at the end of the PCP the market value of the car is £40k, I’ll cash in on the equity. However, if the market value is £20k, I’ll just hand it back and walk away.

So still sounds very similar to what you call a lease but we call a form of hire purchase.

[Oldgixxer]

Originally Posted by ASAP

Yea, remember he is getting you into a new car that is near twice the value... I think dealers are still living on high resale values of 2021... and X3M is a very hard car to sell, i see a ton of 22s listed in the 70s on cars.com and none are selling... so I am very curious to see who will be left holding the bag soon.

I see your point,but that's not entirely true. I'm confident I would get that $6500 above payoff if I sold it back and walked out the door without ordering the X5MC. The in-laws sold back their 2020 X3 30i 2wks ago for $4k over buyout to the same BMW dealer and walked away and ordered a M-B GLC 300.

Anything is possible in this market,Id like to cash out and move up before the bubble bursts entirely since I remember how difficult it was pre-covid to get out of a lease early(meaning more than a few months early),dealer wanted ALL the remaining payments first or they'd simply roll em over onto the new vehicle you were leasing(purchasing);getting equity out of a lease was nonexistent..at least for us it was lol

[ASAP]

Originally Posted by Oldgixxer

I see your point,but that's not entirely true. I'm confident I would get that $6500 above payoff if I sold it back and walked out the door without ordering the X5MC. The in-laws sold back their 2020 X3 30i 2wks ago for $4k over buyout to the same BMW dealer and walked away and ordered a M-B GLC 300.

Anything is possible in this market,Id like to cash out and move up before the bubble bursts entirely since I remember how difficult it was pre-covid to get out of a lease early(meaning more than a few months early),dealer wanted ALL the remaining payments first or they'd simply roll em over onto the new vehicle you were leasing(purchasing);getting equity out of a lease was nonexistent..at least for us it was lol

Exactly... this is a specific market where this works... I can't say it will 3 years from now for folks getting into leases now... BMW sets the residual of the lease online right now at 35K on the X3 m40i... so they are expecting the values to drop very significantly when the new gen comes out... maybe it won't happen because people will hate the all digital interiors .

[rob175]

Because in 2020 (just a few weeks before the pandemic took full effect) BMW was offering all sorts of incentives. One of which was a $1,500 discount IF I FINANCED. I took advantage of that $1,500 discount and financed.....BUT knowing full well that I was going to make only 2 payments and THEN pay off the balance (no prepayment penalty).

So technically, I financed, but only for two months.

BTW back in 2020, not only did I get the $1,500 discount for financing, but I also got another BMW $1,500 discount because my wife owns a Mini Cooper (a BMW product). So those incentives, plus another $6,000 from the dealer discounting the MSRP (remember dealer discounts???...lol) along with my crappy old car trade in.....my $51,000 2020 X3 x30i cost me $37,000 out the door............so YES, I paid off the loan almost immediately, in essence I paid "cash".

Lets hope the good old days return!!