Why Buy ?

[Spinny02]

So i am in a bit of a pickle. With the low residual. Its makes me want to buy the car vs lease. I need 15k per year... that = 50% residual. payments on my car are around $18-1900 on a 36m sign and drive shopped around a bit thanks to another forum member. (MSRP US would be in the 128k range/122 Euro Del)

With such a high payment and low res. Whats to stop me from just buying that car?

Then I looked at three year old M5's an see they are only selling for $45,000. Thats less than 50% res. I know that the older M5 were not at the same MSRP... and i am sure fully loaded they were in the high 90's not 130 range.

Whats your take, buy or lease... I do get sick of cars. 4 years is the longest car i have owned (Cayenne Turbo) The only reason we are getting rid of it is because it spens lots of time in the shop (Thats ok...) But the warranty ends at 100k and that is quickly coming up.

I guess what i am asking is .... is it worth it to buy if i am going to sell in 3-4 year ? at 56% res a lease is attractive on this car but not so much at 50%

Thoughts?

[URBAN LEGEND]

If you have another car then leasing is the way to go. Use it, return it, get the latest and greatest.

[B-1Pilot]

on my numbers that I ran today, it was one payment's difference between leasing and buying (but im using 10k miles)... with the payment BMW picks up, it is literally a wash. I meant to buy, but the lease was just too attractive, especially since BMW will forgive my lease at no cost if i get deployed overseas at any time during the lease!!!

Oh yeah, my desired build date accepted --I'll pickup in Munch 9 Sep.

[M54ccibo]

With the options being equal, I'd still say lease. Two reasons that convinced me:

- Get in an accident, get it fixed and walk away at lease-end, no muss no fuss
- Bored after three years? Turn it in, get another car...with an incentive to stay in the BMW family.

[Willie_Beamen69]

Originally Posted by M54ccibo

With the options being equal, I'd still say lease. Two reasons that convinced me:

- Get in an accident, get it fixed and walk away at lease-end, no muss no fuss
- Bored after three years? Turn it in, get another car...with an incentive to stay in the BMW family.

+1

[mwlmd]

The way I look at it is if you lease then BMW tells you when you have to get rid of your car. If you buy then you decide when you unload it. Either way you get hit with depreciation.

[greentrbo95gst]

I feel the same way as I get bored with a car after 2 years. This is my second lease and I like the idea. I just have to keep all my stock parts when I modify the car.
The only car I kept for a long time is my 01 325ci with a manual and Active Autowerke supercharger, but the car has been sitting in one spot for the last 3 years.

[RPiM5]

I'm actually on the opposite side of the fence. I highly considered leasing, but opted to go with buying when the time came for the decision. Truth be told I would have never gotten out of my E60 M5 if it didn't give me so many damn problems. I loved that car, and surely would have been jealous of new F10 M5 owners, but I like keeping my cars for a real long time, but only if they are reliable. My E60 M5 ended up being one of the most unreliable cars I have ever even seen.

So when I decided to give up my E60 M5 and take a gamble on the new F10 M5, hoping that it would be much more reliable, I did consider leasing very much. I decided against leasing for a couple of reasons. The first was that the residual value was too low for me. This meant that at the end of the lease I would have a lot of positive equity in the car and couldn't just walk away from it at the end of the lease. I'm not in the habit of just throwing away good money. I really didn't believe in my gut that the F10 M5 would take that kind of decpriation hit in 3 years time. Secondly, buying the car back and then turning around and selling it to recoup that positive equity seemed like too much of a hassle for me down the road, especially since I am in the military I didn't exactly know where the hell in the world I would be in 3 years time. Thirdly, considering Multiple Security Deposits, I was going to put the full amount possible in, but then my investment portfolio have been doing much better than the savings I would have had with the max Multiple Security Deposits. Oweing to a few other smaller reasons, I decided to buy. Yeah the California tax upfront sucked, but now I have the flexibility to sell the car whenever I want, and the depreciation of the 2013 M5's are doing better than I had hoped as well. Even with the tax that I paid, I'm in good positive equity with the car right now and should I decide to sell quickly, I can easily get a return on that positive equity.

Just to give some idea my original MSRP was $108,000. As of right now, there are M5's out there for sale with around the same milage as me and the same original MSRP, selling for between $92-$94K. That's a $16K to $14K thousand depreciation in a little over 10 months since I took delivery of my car. I'm estimating another $1K to maybe $2K in depreciation at the 1 year mark. Also keep in mind that my M5 is already high milage. Going on almost 16,000 miles on my M5 now. Average M5's with 12,000 miles or less should be about $15K per year. With an average depriation of about $15K per year that's $45K in 3 years, which means the average M5 will be worth about $63K in 3 years time from a $108K MSRP. This is better than the 50% to 48% residual value that BMW put out last year when the residuals for the F10 M5 were first announced.

[B-1Pilot]

Using this calculator: http://www.leaseguide.com/leasevsbuy.htm

I came up with this result, keep in mind because of the difference between US MSRP and my negotiated ED value, the value of the lease becomes clear:



The monthly savings is $430.00 a month over 36 months -- If this were placed in a 5% returning account compounded annually, it would equal $16,704 after the end of the lease term.

Now take residual value, subtract this value and the one month payment BMW NA makes and you are left with $41190. If you were to get a 24 month loan for this residual value (to equate to the 60 month purchase term), your loan payment would be $1781.35 a month! This is about 60 a month cheaper than the 60 month loan payment at the same interest rate (actual low month auto-refis are even lower rates).

Bottomline is that if you ED, have the discipline to invest the difference in payments, you actually end up cheaper with a lease and with more options.

Now that I've showed my math, Im sure I made an error somewhere one of you will catch.
For those unable to ED, I used US MSRP and a negotiated value of 4k over US Invoice -- the results are lease payment of $1558, loan payment of $1935. With investmet, actual residual cost is 44660, which equates to a 24 month loan with payments of $1931.

Bottomline: negotiate a bit below MSRP, invest the difference in payments, and a lease is equal to a loan at these money factors.

The options the lease present throughout and at the end of term seem to make it a no brainer.

What am I missing?

[RPiM5]

Originally Posted by B-1 Pilot

Using this calculator: http://www.leaseguide.com/leasevsbuy.htm

I came up with this result, keep in mind because of the difference between US MSRP and my negotiated ED value, the value of the lease becomes clear:



The monthly savings is $430.00 a month over 36 months -- If this were placed in a 5% returning account compounded annually, it would equal $16,704 after the end of the lease term.

Now take residual value, subtract this value and the one month payment BMW NA makes and you are left with $41190. If you were to get a 24 month loan for this residual value (to equate to the 60 month purchase term), your loan payment would be $1781.35 a month! This is about 60 a month cheaper than the 60 month loan payment at the same interest rate (actual low month auto-refis are even lower rates).

Bottomline is that if you ED, have the discipline to invest the difference in payments, you actually end up cheaper with a lease and with more options.

Now that I've showed my math, Im sure I made an error somewhere one of you will catch.
For those unable to ED, I used US MSRP and a negotiated value of 4k over US Invoice -- the results are lease payment of $1558, loan payment of $1935. With investmet, actual residual cost is 44660, which equates to a 24 month loan with payments of $1931.

Bottomline: negotiate a bit below MSRP, invest the difference in payments, and a lease is equal to a loan at these money factors.

The options the lease present throughout and at the end of term seem to make it a no brainer.

What am I missing?

One thing you are missing is the yearly milage factor. There are some people out there that drive A LOT! I'm talking 20,000+ miles a year. Where some of the loss comes in at is extra milage over a 15,000mile/year lease. This doesn't even account for the even lower residual for a 15K/year lease, which I think is like 48% on the M5. From my calculations a long time ago, a lease is not for people who put a lot of miles on their cars. I happen to be one of those. I for example, own the M5 and another car and I've already put 16,000 miles on the M5 and 4,000 miles on the other car, and I only have owned the M5 for a little over 10 months. Buying back extra miles on a lease is only the most efficient if you do it up front, and paying for them later negates a lot of the savings that a lease offers.

Just like you say though, if one does ED or gets a deal at or below U.S. Invoice, one can save the most money. In the end it's all about the final sale price, that is the most important factor in either leasing, financing, or paying with cold hard cash. Just my thoughts.

[AGS]

OP - read through this thread if you have not already:

http://f10.m5post.com/forums/showthread.php?t=734047

[mwlmd]

Originally Posted by B-1 Pilot

Using this calculator: http://www.leaseguide.com/leasevsbuy.htm

I came up with this result, keep in mind because of the difference between US MSRP and my negotiated ED value, the value of the lease becomes clear:



The monthly savings is $430.00 a month over 36 months -- If this were placed in a 5% returning account compounded annually, it would equal $16,704 after the end of the lease term.

Now take residual value, subtract this value and the one month payment BMW NA makes and you are left with $41190. If you were to get a 24 month loan for this residual value (to equate to the 60 month purchase term), your loan payment would be $1781.35 a month! This is about 60 a month cheaper than the 60 month loan payment at the same interest rate (actual low month auto-refis are even lower rates).

Bottomline is that if you ED, have the discipline to invest the difference in payments, you actually end up cheaper with a lease and with more options.

Now that I've showed my math, Im sure I made an error somewhere one of you will catch.
For those unable to ED, I used US MSRP and a negotiated value of 4k over US Invoice -- the results are lease payment of $1558, loan payment of $1935. With investmet, actual residual cost is 44660, which equates to a 24 month loan with payments of $1931.

Bottomline: negotiate a bit below MSRP, invest the difference in payments, and a lease is equal to a loan at these money factors.

The options the lease present throughout and at the end of term seem to make it a no brainer.

What am I missing?

Your interest rates are wrong. Loan rates are 1.75-2%

Lease MF is closer to 3.6% converted.

[Spinny02]

AGS thanks. Can you 7 SD would be short of 13k. Can you tell me how you got to the 9%? I may consider this.

[B-1Pilot]

Originally Posted by mwlmd

Your interest rates are wrong. Loan rates are 1.75-2%

Lease MF is closer to 3.6% converted.

Ya I know made them quite conservative... Anything lower only magnifies my point.... Especially if you go 7MSD --- but I prefer not to lock the cash up that way.

[B-1Pilot]

Originally Posted by RPiM5

One thing you are missing is the yearly milage factor. There are some people out there that drive A LOT! I'm talking 20,000+ miles a year. Where some of the loss comes in at is extra milage over a 15,000mile/year lease. This doesn't even account for the even lower residual for a 15K/year lease, which I think is like 48% on the M5. From my calculations a long time ago, a lease is not for people who put a lot of miles on their cars. I happen to be one of those. I for example, own the M5 and another car and I've already put 16,000 miles on the M5 and 4,000 miles on the other car, and I only have owned the M5 for a little over 10 months.

I wish I would be able to put that many miles on the car! Your right of course that with different miles and residual it won't be as good... If you are going to put he car to so much good use, it def makes sense to buy!

[Bimmer6]

Originally Posted by Spinny02

So i am in a bit of a pickle. With the low residual. Its makes me want to buy the car vs lease. I need 15k per year... that = 50% residual. payments on my car are around $18-1900 on a 36m sign and drive shopped around a bit thanks to another forum member. (MSRP US would be in the 128k range/122 Euro Del)

With such a high payment and low res. Whats to stop me from just buying that car?

Then I looked at three year old M5's an see they are only selling for $45,000. Thats less than 50% res. I know that the older M5 were not at the same MSRP... and i am sure fully loaded they were in the high 90's not 130 range.

Whats your take, buy or lease... I do get sick of cars. 4 years is the longest car i have owned (Cayenne Turbo) The only reason we are getting rid of it is because it spens lots of time in the shop (Thats ok...) But the warranty ends at 100k and that is quickly coming up.

I guess what i am asking is .... is it worth it to buy if i am going to sell in 3-4 year ? at 56% res a lease is attractive on this car but not so much at 50%

Thoughts?

This has been an interesting topic for years, and never a clear cut solution. The the last time I leased a car was 2005, and I got tired of watching the miles and in three years looking for another car. I agree it's cool to have the latest and greatest, but it's old after you buy it. I see it this way if would have leased my car I would have set fire to 50k, and have nothing vs. spending 92k with taxes (ED) plus a 3k for late delivery 89k all in. I drive 3k miles a year, and I will keep the car for 5/6 years so my savings is over 100k due to ownership. Based on that scenario I bought a 991S, and she's a keep for a long time. My logic purchasing the M5, and keeping the car vs. leasing purchased a 991.

I avoided renting a car for 50k, and avoided the second rental for another 50k while still driving the M5 with less than 20k miles. Now my situation is different because of the low miles, and I don't view cars as an investment so I never consider deprecation. I only believe in paying interest on a home, and nothing else because it bleeds cash flow .........call me cheap but I don't burn the Franklin's. Good luck with your choice which ever way you go!

[AGS]

Originally Posted by Spinny02

AGS thanks. Can you 7 SD would be short of 13k. Can you tell me how you got to the 9%? I may consider this.

No problem. Just take the difference in the monthly payment with and wothout the MSDs - for me this was $77. Multiply that by 12 months ($924) and divide by the MSD amount (for me $9,800). So $924/$9,800 = 9.4%.

[Spinny02]

Got it. Thanks for the info I did some googling last night. I will be getting all 7 =). It's about $100 per month works out around 8.5% not taking in to acct the tax savings on gains as well.

MF of .00127 will now be .00078

Thanks again.

[dhirm5]

My approach has always been buy used, lease new. That way you avoid the massive depreciation haircut the second it has been titled once. I suspect '13s will be available for 25% less than their original sale price once the 14s start coming around, so for those of you who are looking to save a buck, buy one of those.

[Spinny02]

You are correct my local steeler had three M5's and two M6's on the showroom that they were ready to get rid of when i ordered mine last month. i am willing to pony up for the 14 but still want a good deal.

[6SpeedM5]

You should grab this '08 with high miles. Its in your area.

http://www.globalautosports.com/car/...dan-88682.html

[Spinny02]

UGLY and old!