05-18-2021, 08:37 AM | #1 |
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Cash vs finance vs lease
I’ve confused myself into a corner.
In years past, I was always a “buy what you love and drive it into the ground” guy. Most DD are depreciating assets. With the introduction into mass market turbos and their reliability issues, I switched to leasing for the business tax write off and warranty always. I’m currently awaiting a special order ‘21 M5C, and am now rethinking my stance. I special ordered everything on this vehicle with the original intent to lease for three years and hedge my bets on the future facelift of the M5 ala the M3 grill. If the car was reliable and the new grills looked terrible I would buy out this lease at the end of the term and keep the car for a while. Now I’m wondering if I should just pay cash or finance it if I’m leaning towards buying it out anyway. I suppose the lease money factor is my hedge on being able to just turn it in at the end of the term. Does anyone have any advice and is intimately familiar with current lease terms? For reference, I can afford to pay cash, but hate the idea of putting money into a depreciating asset. I would qualify for the best finance or lease rates. Any “gotchas” I’m missing? Thanks! |
05-18-2021, 10:03 AM | #2 |
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I don't really see any benefit in paying cash versus financing given the low finance rates available. BMW was and May still be offering 0.9% on the M5. Even though banks are paying less, I would park the cash somewhere else
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05-18-2021, 03:12 PM | #3 |
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I see no benefit in paying cash. Net of opportunity cost, it's the most expensive route.
I view the lease as a relatively cheap way to hedge against potential losses from either diminished value due an accident or excess depreciation due to low market value. Should you choose not to keep the car at the end of the lease you still have the opportunity to try to sell the car for an amount in excess of the residual value and get some of your money back. Selling my M3 to carmax resulted in getting about 50% of my total lease payments back. I live in a state where you pay sales tax only on monthly lease depreciation. If I keep my M5 for only the duration of the lease, this saves me $6k in sales tax. The only downside is that lease financing charges are higher at 2.064% vs .9% apr for purchase financing. |
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05-18-2021, 08:24 PM | #4 | |
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I just got my M5C on Friday. Took my E63S AMG to CarMax. $68,700 residual. CarMax gave me $76000. Pocketed $7300 plus saved the $595 disposition fee! So easy.
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1987 Buick Grand National, 2009 BMW E90 M3, 2016 Audi S6, 2018 MB E63S AMG, currently in 2021 M5 Competition
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05-29-2021, 11:21 PM | #5 | ||
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2023 M3: Isle of Man Green
2021 X7 40i: Phytonic Blue |
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06-01-2021, 01:38 PM | #7 |
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Drives: 2021 M5C
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New to this. So if I have say 4 months left on my lease, I can take it to CARMAX and just sell it to them?
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06-01-2021, 01:45 PM | #8 | |
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In my case, the dealer payoff was equal to my lease payoff less the sales tax line. |
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06-01-2021, 03:31 PM | #9 | |
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Drives: F90 M5, prior F80 M3, E60 M5
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I have a year left on my lease and only have about 13K miles. I will payoff the lease probably since I figure carmax or others should offer more |
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06-01-2021, 11:15 PM | #10 |
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Carmax always comes in low. Go online and get an appraisal done by Vroom, Carvana, Carfax, KBB. I made nearly $5k on my wife's leased Lexus RX350 when we bought my wife X5 last month. The used car market is crazy so use it to your advantage. My dealer matched the Vroom offer and made it easy for me. No brainer.
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