Quote:
Originally Posted by jlee
Let me ask you guys a question since most of you seem to be leasing. And by the way I have both a m3 and m5 and love both.
In leasing aren't you trapping yourself into the car for 3 years. Ap these lease payments sound great but your underwater day 1. You can't get out of the car until the residual catches up to the depreciation.
And I will tell you experience on the F10 M5 that the depreciation is significant.
Jeff
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A lot of misinformation here.
No you are absolutely not trapped in the car. There is a set amortization schedule just like a purchase and you can buy it out at any time. There is no difference between this and taking a loan on the car or even buying it outright. There is still an interest rate as well, but they hide it as the "money factor". To find the true interest rate just multiply it by 2400. The value of the car is the value of the car period. If it is higher than the buyout then you can pocket the difference. If you are underwater you have to pay out of pocket for the difference. The minute you drive any car off the lot you are underwater from a cost perspective the difference is if you pay it upfront with a purchase. People paying $10K claiming they are not underwater are not looking at the true TCO. If they total the car day 1 they are out that $10K. On a lease the insurance company picks up the "gap".
The biggest difference is the amount you pay out of pocket day 1 for a lease vs. a purchase and the amount of sales tax that you pay overall. In California for example you only pay sales tax with each payment instead of on the value of the entire lease or purchase price. This is my main reason for leasing since I tend to turn and burn my cars. If I decide to sell my car after 1 year I will have saved $7K in sales tax vs a purchase. Even at full maturity of the lease I will have saved $5K in sales tax with a 61% residual.