08-20-2012, 05:41 PM | #1 |
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Lease or Purchase
So I've seen the residual is pretty low on the M5's has anybody made a comparison chart on what the better move is financially?
My dealership is giving me 3.79% interest with 10k down for 60 months on my purchase How's everybody else doing? |
08-20-2012, 06:32 PM | #2 |
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I always purchase so I have the freedom to trade in whenever I choose. Generally after 1 or 2 years. If u can swing it, pay cash. It's always a good idea to avoid financing a depreciating asset.
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08-20-2012, 07:59 PM | #3 |
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I will drive the car about 5k miles per year so a lease would be a waste for me. I will purchase and keep it, and go from there. I agree with the othe post why lease something that loses value? The end of the day it's a toy, and not a home so enjoy it for what's it worth a M5(: my 650 2006 has 53k ad looks new, and a keeper not really into flipping cars trying be like the Jones. Buy what I like and keep it fir awhile.
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08-20-2012, 08:02 PM | #4 | |
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The only downside is what Tourbillion mentioned - you give up some flexibility to get rid of the car before the lease ends.
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08-20-2012, 08:12 PM | #5 | |
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There are websites like swapalease.com to get out of a lease earlier, but I have no idea what the success rate is. |
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08-20-2012, 08:19 PM | #6 |
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Yes, that's why I said "some" flexibility. "Most" flexibility is probably more accurate. I spent a lot of time on swapslease in feb/march when it was not clear if the F10 M5 would be here before my E60 lease expired. I talked to a few guys and they all said the lease swap experience was miserable. A lot of tire kickers trolling for a cut rate deal. Plus BMW is very tough on credit approval for people trying to assume a lease. One guy said he had 6 people denied by BMW FS to assume his lease.
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08-20-2012, 09:23 PM | #7 | |
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08-20-2012, 09:44 PM | #8 |
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Buy the M5 - leasing game is over for BMW, the residuals are just too low for it to make sense anymore.
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08-21-2012, 07:47 AM | #9 | |
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In Scenario 1, it runs the base lease vs. finance decision based on BMW FS's current rates. At the end of three years, you would have to sell the car for just over $52k to breakeven versus the lease. This selling price equates to a 52% residual vaule - could be a decent risk to take. However, in Scenario 2, if you decide to take advantage of the multiple security deposit option to buy down the lease rate, then the breakeven selling price versus the lease jumps to $55k, or the equivalent of a 55% residual. This may not be such a good risk to take. BMW FS had been running 56% residuals on 3 yr/12k leases for the E60 M5, and dropped that to 50% for the F10 M5 lease so it is likely that they we losing money with a 56% residual. At the end of the day, each person's level of risk tolerance is different. One person may say it's worth going the lease route in order to know with 100% certainty what their out-of-pocket cost will be. Another person, such as yourself, would prefer to take the market risk for the opportunity to pay less. To each their own, that's what makes the world go round.
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08-21-2012, 07:54 AM | #10 | |
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Additionally, I have used swap-a-lease twice without a hitch. Both of my M3's. For me the upside of a lease is the "put" referred to above. A guaranteed way to get out of the car if there is something you hate about it after 3 years, like it being in a collision. |
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08-21-2012, 08:00 AM | #11 | |
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Agree with you 100%. This is a huge benefit (at least in my opinion) of a lease that many people overlook.
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08-21-2012, 08:13 AM | #12 |
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[quote=AGS;12541108]You are correct, however in practice the immediate depreciation hit you take for driving the car off the lot is frequently greater than the amortization of the lease for the first year or two.
I'm feeling pretty good about where I will be with ED and additional discounts. However, MSD issue may be interesting as it is going to be around $10k in my estimation. |
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08-21-2012, 09:05 AM | #13 | |
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08-21-2012, 09:06 AM | #14 | |
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well said!!!
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08-21-2012, 09:36 AM | #15 |
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If I'm not mistaken, I'm going to be able to finance my car for significantly less than BMW's 3.79% rate. (Need the VIN in order to finalize.) It pays to shop around if you have good credit.
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08-21-2012, 10:44 AM | #16 |
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I think the most important question to answer is how long do you plan on keeping the M5. If you plan on a 3 year hold time and don't expect to put on more than say 36k miles , than I think that a lease with MSD is the best way to go simply because of the ease of returning the car and than moving on to the next toy (as opposed to playing the trade-in, I'm at the dealers mercy game. Also remember these early cars do not have some options that will be available later in the year. ) If you plan on holding more than 3 years ,or less, than buy. The problem is when you are not sure on hold time. In that case buying maybe your best option because it provides the most flexibilty .
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08-21-2012, 10:51 AM | #17 | |
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08-21-2012, 10:54 AM | #18 |
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You got it. Just weigh what's more important to you given your personal circumstances and you'll be able to figure out the best route to go!
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08-21-2012, 11:30 AM | #19 |
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Finance rates @ 1.99%, crappy residual and mileage limitations, no brainer for me. Purchase all the way based on what I'm used to and expected hold period. Leasing has just never been for me.
Am I correct in thinking those that do ED have a higher residual right off the bat?
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08-21-2012, 11:47 AM | #20 | |
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I am leasing because the M5 will be my business vehicle, and the tax advantage of leasing over a purchase is significant. |
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08-21-2012, 11:51 AM | #21 |
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No, same residual as US delivery cars. 50% of US MSRP, that's why the ED program is such a huge benefit on leases because 100% of the purchase price differential comes out of the amortized amount.
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08-21-2012, 12:57 PM | #22 |
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ED vehicles still have the residual based off of US msrp, which as stated earlier lowers your cap cost, effectively your monthly payments.
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