[njavier03]

For those that leased early, did you buy out or return it at lease end? I'm in the market for a G80, and I'm trying to determine between leasing or purchasing. I know that the general rule of thumb is never lease to buy, so I'm wondering if that holds true for this platform. I've never leased before, but with current interest rates, I might consider it. I also tend to jump into something new every 2-3 years, so leasing in general might be the best option for me. However, if I decide to stick with this platform at lease end, do I just buy/lease another G80 or buyout the current leased vehicle? The next generation M3's might be hybrids, so I might not have a chance to lease another ICE M3 in 3 years. Just looking for advice for those that have leased this current platform. TIA

[Berzerker]

Holds true for everything.

With leasing, your interest is built into your payments. If you buy out, no matter when it is, the payoff is always full payment + the interest you would have paid over the 3-year period (or however long your lease is).

Since, on a finance, your interest is accrued, each payment you make lowers the accrual over the lifetime of the finance.

That being said, if you know you're going to want out in 3 years, then leasing may be a better option. It's tough to say what's the better position as car prices are still going up, though that may slow to stop in the next 2-3 years due to the, more or less, halting of inflation over the last year or so.

If the expected value of the car after 3 years is a normal amount of depreciation, financing and trading in after 2-3 years can save you a couple thousand in interest, provided you don't have any negative equity in the car, an advantage of leasing being the structure to have $0 in equity (positive or negative) by the time your term ends.

[Delmoney335]

I leased back in 2021 with a good discount and when the MSRP was less. Lease is coming to end July this year and I plan to buy it out. With low miles , even being a RWD Comp there is a good amount of equity in it. Would not make sense to just return to BMW. So I most likely keep it a bit longer and have the option to sell if I change my mind after.

With the current lease rates, it probably does not make sense to lease if you plan to buy it out at the end.

[jbirb305]

i leased and when i did the math, it was slightly cheaper to lease then buy rather than finance.

[njavier03]

Originally Posted by jbirb305

i leased and when i did the math, it was slightly cheaper to lease then buy rather than finance.

I'm thinking the same thing.

MSRP for my spec is $85,845. With $10k down and 5.29% for 60 months, my monthly would come out to ~$1500.

A 36 month 10k mile term would come out to ~$1300.

If I were to instead put the $10k into a savings account in addition to the delta between the monthly payments, I'd have $17,200 when the term ends, and that's not accounting for any accrued interest.

With a RV of 57%, buyout would be ~$49k, assuming break even and no equity. I'd then finance the remaining $32k over 36 months. Let's assume interest is still 5.29% for consistency, resulting in a purchase monthly payment of ~$960.

Even with a total longer term to payoff of 72 months, total cost to purchase after lease is ~$81k, vs financing for 60 months at $90k.

Someone please correct me if my math/logic is off.

[njavier03]

Originally Posted by Berzerker

Holds true for everything.

With leasing, your interest is built into your payments. If you buy out, no matter when it is, the payoff is always full payment + the interest you would have paid over the 3-year period (or however long your lease is).

Since, on a finance, your interest is accrued, each payment you make lowers the accrual over the lifetime of the finance.

That being said, if you know you're going to want out in 3 years, then leasing may be a better option. It's tough to say what's the better position as car prices are still going up, though that may slow to stop in the next 2-3 years due to the, more or less, halting of inflation over the last year or so.

If the expected value of the car after 3 years is a normal amount of depreciation, financing and trading in after 2-3 years can save you a couple thousand in interest, provided you don't have any negative equity in the car, an advantage of leasing being the structure to have $0 in equity (positive or negative) by the time your term ends.

You have a point. Interest on financing is accrued, so I'm not paying any interest upfront whereas with a lease lease, I'm forced to pay interest over the term. The appeal of leasing is not having to put down any cash upfront to get in the seat. I'm more concerned with what happens after 3 years and my lease term is up. Did I cost myself more if I decide I want to keep the car or do I pony up on the down payment to lessen the monthly liability with financing?

[Sonic RR]

I use leasing as a stop gap. If the car has any sort of paint mishap my ocd will not allow me to love it anymore, I can turn the car in and walk without the danger of carfax costing me significant resale value. If the market does something crazy up or down I'm protected. If it drops I can negotiate a lower buy. If it's up I'm protected and could just buy to retail it myself or keep at a value. 3yrs is a long time and if the new one is great I can turn in to get that. I try to balance the dollars and enjoyment.

Just my thoughts. Hope this helps.


Sonic

[mdr955]

Originally Posted by njavier03

I'm thinking the same thing.

MSRP for my spec is $85,845. With $10k down and 5.29% for 60 months, my monthly would come out to ~$1500.

A 36 month 10k mile term would come out to ~$1300.

If I were to instead put the $10k into a savings account in addition to the delta between the monthly payments, I'd have $17,200 when the term ends, and that's not accounting for any accrued interest.

With a RV of 57%, buyout would be ~$49k, assuming break even and no equity. I'd then finance the remaining $32k over 36 months. Let's assume interest is still 5.29% for consistency, resulting in a purchase monthly payment of ~$960.

Even with a total longer term to payoff of 72 months, total cost to purchase after lease is ~$81k, vs financing for 60 months at $90k.

Someone please correct me if my math/logic is off.

Something seems off. Your total in your example to lease and then pay interest on another loan is 4K less than the original msrp.

[mdr955]

Originally Posted by njavier03

I'm thinking the same thing.

MSRP for my spec is $85,845. With $10k down and 5.29% for 60 months, my monthly would come out to ~$1500.

A 36 month 10k mile term would come out to ~$1300.

If I were to instead put the $10k into a savings account in addition to the delta between the monthly payments, I'd have $17,200 when the term ends, and that's not accounting for any accrued interest.

With a RV of 57%, buyout would be ~$49k, assuming break even and no equity. I'd then finance the remaining $32k over 36 months. Let's assume interest is still 5.29% for consistency, resulting in a purchase monthly payment of ~$960.

Even with a total longer term to payoff of 72 months, total cost to purchase after lease is ~$81k, vs financing for 60 months at $90k.

Someone please correct me if my math/logic is off.

I think maybe you forgot to add back in the 17k so your total would be 98k which sounds closer to real.

[wtwo3]

It's a pretty nuanced answer on whether you should lease vs. buy vs. lease to buy.

I wouldn't say "never" lease to buy, but generally that'll be the most expensive way to own this car. If you know you're going to buy, then just buy.

I think leasing makes sense in a couple use cases:

- You KNOW you're going to swap cars every 2-3 years and have no intention to mod
- Strong lease support from the manufacturer - this one is critical. If residuals are high (which has been the case many times in the past) and incentives are aplenty, and money factor isn't egregious, then leasing is a great option.

There's other reasons as well, but these would be my top 2. I don't subscribe to the "never lease" or "never own a depreciating asset" mentality. It's really not that black and white. You have to really evaluate what's the best option for you.

If you're looking to do lease-to-buy, in my experience that's rarely the best way to go about purchasing a car, unless there's some crazy incentive that's only applicable on a leased car. If you're doing lease-to-buy because you can't afford to buy the car right now, then I wouldn't buy the car right now.

[Berzerker]

Originally Posted by njavier03

You have a point. Interest on financing is accrued, so I'm not paying any interest upfront whereas with a lease lease, I'm forced to pay interest over the term. The appeal of leasing is not having to put down any cash upfront to get in the seat. I'm more concerned with what happens after 3 years and my lease term is up. Did I cost myself more if I decide I want to keep the car or do I pony up on the down payment to lessen the monthly liability with financing?

You're never required to put any money down on any lease or finance, so that shouldn't be a factor.

I think, personally, you always end up paying more on a lease. In 3 years, the car market won't have wildly destroyed itself so much that the value in your car will tank further than if you had just financed and traded in after 3 years. We may see situations like COVID where the values all skyrocketed because of supply, but I don't think the opposite is true. Even during the 2008 recession, people were still buying cars, just smaller ones. Worst case, you could always wait it out a bit and sell later.

[wtwo3]

Originally Posted by Berzerker

You're never required to put any money down on any lease or finance, so that shouldn't be a factor.

I think, personally, you always end up paying more on a lease. In 3 years, the car market won't have wildly destroyed itself so much that the value in your car will tank further than if you had just financed and traded in after 3 years. We may see situations like COVID where the values all skyrocketed because of supply, but I don't think the opposite is true. Even during the 2008 recession, people were still buying cars, just smaller ones. Worst case, you could always wait it out a bit and sell later.

Keep in mind it's not so much the car market 3 years from now which will dictate if your lease would have cost more vs. financing it. It's at the front end where that's determined. Sometimes there's lease based incentives that drive the price down well below what you'd have gotten with a financed car, plus lease support in the form of inflated residuals (BMW did this often in the past to incentivize leasing).

That being said, I don't think leasing is currently very attractive - albeit I haven't been in the market recently.

[Berzerker]

Originally Posted by wtwo3

Keep in mind it's not so much the car market 3 years from now which will dictate if your lease would have cost more vs. financing it. It's at the front end where that's determined. Sometimes there's lease based incentives that drive the price down well below what you'd have gotten with a financed car, plus lease support in the form of inflated residuals (BMW did this often in the past to incentivize leasing).

That being said, I don't think leasing is currently very attractive - albeit I haven't been in the market recently.

This was true when interest rates were near 0 as they were for about 15 years, so we all had a sense of expectation based on that. Now that interest rates are high again (though they are starting to level off) that understanding isn't the same since interest payments are a real consideration now, which a lease aims to maximize.

[road rage richie]

Originally Posted by njavier03

I'm thinking the same thing.

MSRP for my spec is $85,845. With $10k down and 5.29% for 60 months, my monthly would come out to ~$1500.

A 36 month 10k mile term would come out to ~$1300.

If I were to instead put the $10k into a savings account in addition to the delta between the monthly payments, I'd have $17,200 when the term ends, and that's not accounting for any accrued interest.

With a RV of 57%, buyout would be ~$49k, assuming break even and no equity. I'd then finance the remaining $32k over 36 months. Let's assume interest is still 5.29% for consistency, resulting in a purchase monthly payment of ~$960.

Even with a total longer term to payoff of 72 months, total cost to purchase after lease is ~$81k, vs financing for 60 months at $90k.

Someone please correct me if my math/logic is off.

If you are buying the car it makes no sense to lease first.

To buy with NO CASH DOWN: @ 5.29% (not including tax and fees)

Payment Every Month $1,631.43
Total of 60 Payments $97,885.88
Total Interest $12,040.88

To lease (assuming $1300 is accurate): (not including tax, fees, acquisition fee)

36 x $1300=$46,800 + RV $49,000=$95,800

The lease acquisition fee ($925) will eat almost half the difference between the total cost to finance @ 0 down vs lease to buy w/o factoring in the $49K RV finance cost.

We used to lease only and our accountant deducted 5/7th of the lease through our business but I think the laws have changed.

[njavier03]

Thank you all for the replies. Just to clarify, I’m not intending to lease to buy. I’ve never leased before, but I tend to move on to something new every 2-3 years, so I’m considering if it’s worth leasing with the potential of buying. Hard to say what will happen in 3 years. May hate it and move on or decide to keep it. Ultimately, it seems like the advantage of leasing is negated if I want to keep it for more than 3 years.

[Cloudplay]

Originally Posted by mdr955

I think maybe you forgot to add back in the 17k so your total would be 98k which sounds closer to real.