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      02-07-2015, 06:25 PM   #1
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Financing vs. Leasing

Hey guys,

I'm quite set on getting an M2 in 2016 and I've still on the fence as to whether I should finance or lease. I plan on keeping the car for quite a long time as this would be my first serious car. I've been playing around with the Canadian M235i configurator to get an idea about the price on the options.

My picks:

Melbourne Red
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8AT

I'd imagine that the Sat-Nav and possibly the HK will become standard equipment on the M2 in Canada if we look at the M4. I prefer the DCT so I added the 8AT to get a better price estimate. My build came out to 57.3k, so I reckon that a similar build on the M2 will be around 65-68k CAD.

Now comes the tricky bit. My understanding is that if I plan on keeping the car for the long term it's better to finance. However, even with a 30k deposit on the finance, I always end up paying more than giving a similar down payment for the lease and buy the car after 3 years for example.

Just to give you some numbers, if I do a 25k downpayment for the lease and have a 200 monthly payment, the total cost comes down to 61.9k. If I do a 30k down payment and take a 5 year finance approach, I end up paying 69.4k.

That's a wooping 7.5k difference. Obviously, these numbers will change for the M2, but even with a finance plan from BMW for the residual value I'll still pay less for the car by going down the lease route. I guess what I wanted to ask is what have you guys done on previous M purchases since to me the lease make a lot more sense.

Cheers
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      02-07-2015, 06:32 PM   #2
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If it appreciates, buy it. If it depreciates, lease it.
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      02-07-2015, 07:54 PM   #3
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DO NOT put money down on a lease.

As far as leasing vs. financing, I'll echo the generalization that has already been made. Long term ownership? Finance. Short term? Lease. I've done both and prefer leasing, especially since BMW has one of the most attractive leasing programs in the segment.
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      02-07-2015, 08:02 PM   #4
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Originally Posted by jzmundy View Post
DO NOT put money down on a lease.
+1, the only thing money should be put down on in a lease is MSD's.
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      02-07-2015, 08:06 PM   #5
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I don't think there is a general rule like that about long term vs short term. It depends very much on the specific car and the specific deal that is being given by BMW at the time. I think the original poster is doing the right thing in looking at overall cost. For example, if BMW is setting in unrealistic residual and is giving a much higher money factor as compared to financing, then the lease may not make sense even if you only intend to keep the car short-term. On the flipside, in California we only have to pay tax on the portion of the car that is leased, so that can offer some savings as well.

That said, putting $30k down on a lease is very risky to me.

My advice is to wait until BMW releases information on the M2 lease. Or you could run the numbers on a base M4 to get an idea.
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      02-08-2015, 12:28 AM   #6
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Definitely load up on multiple security deposits to lower the lease rates as much as you can. With new car models, BMW will likely use a high ~52+% residual rate but also use a high interest rate as well (~5.9%). That's what makes leasing expensive compared to financing through your bank (which may give a better interest rate than BMW FS financing).
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      02-08-2015, 08:00 AM   #7
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Quote:
Originally Posted by s3baman
Hey guys,

I'm quite set on getting an M2 in 2016 and I've still on the fence as to whether I should finance or lease. I plan on keeping the car for quite a long time as this would be my first serious car. I've been playing around with the Canadian M235i configurator to get an idea about the price on the options.

My picks:

Melbourne Red
Stock Wheels
Stock Interior
Sat-Nav
HK System
8AT

I'd imagine that the Sat-Nav and possibly the HK will become standard equipment on the M2 in Canada if we look at the M4. I prefer the DCT so I added the 8AT to get a better price estimate. My build came out to 57.3k, so I reckon that a similar build on the M2 will be around 65-68k CAD.

Now comes the tricky bit. My understanding is that if I plan on keeping the car for the long term it's better to finance. However, even with a 30k deposit on the finance, I always end up paying more than giving a similar down payment for the lease and buy the car after 3 years for example.

Just to give you some numbers, if I do a 25k downpayment for the lease and have a 200 monthly payment, the total cost comes down to 61.9k. If I do a 30k down payment and take a 5 year finance approach, I end up paying 69.4k.

That's a wooping 7.5k difference. Obviously, these numbers will change for the M2, but even with a finance plan from BMW for the residual value I'll still pay less for the car by going down the lease route. I guess what I wanted to ask is what have you guys done on previous M purchases since to me the lease make a lot more sense.

Cheers
Did take into account the tax you would have to pay on the residual?
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      02-08-2015, 01:28 PM   #8
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Quote:
Originally Posted by moltenfire View Post
Definitely load up on multiple security deposits to lower the lease rates as much as you can. With new car models, BMW will likely use a high ~52+% residual rate but also use a high interest rate as well (~5.9%). That's what makes leasing expensive compared to financing through your bank (which may give a better interest rate than BMW FS financing).
Lower residuals and higher money factors have usually been the standard case for M cars, but I'm wondering if that's changing. The M3/4 have current programs at 60% and a .0013 for 39 month lease. That's significantly better on rates that I was quoted for the E92 M3 and what my dad got for his Z4MC.

It will be interesting to see where BMW positions this car (M2) from that standpoint.
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      02-08-2015, 03:26 PM   #9
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If it appreciates, buy it. If it depreciates, lease it.
/thread
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      02-08-2015, 06:27 PM   #10
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Quote:
Originally Posted by moltenfire View Post
Definitely load up on multiple security deposits to lower the lease rates as much as you can. With new car models, BMW will likely use a high ~52+% residual rate but also use a high interest rate as well (~5.9%). That's what makes leasing expensive compared to financing through your bank (which may give a better interest rate than BMW FS financing).
Granted, I was looking only at BMW Finance as I wanted a rough estimate. BMW Canada has a 4.99% rate for the M235i, I've yet to go to the bank and get an estimate for what rate I might get as I wanted to run through the configurator before getting the quote.
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      02-08-2015, 06:35 PM   #11
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Quote:
Originally Posted by dmboone25 View Post
Lower residuals and higher money factors have usually been the standard case for M cars, but I'm wondering if that's changing. The M3/4 have current programs at 60% and a .0013 for 39 month lease. That's significantly better on rates that I was quoted for the E92 M3 and what my dad got for his Z4MC.

It will be interesting to see where BMW positions this car (M2) from that standpoint.
I think the E92 was at 52% residual after 36 months, someone correctly me if I'm wrong. If the M2 is closer to 60%, then leasing becomes more attractive personally since I also plan on buying a condo for renting purposes.
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      02-08-2015, 08:47 PM   #12
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Quote:
Originally Posted by s3baman View Post
I think the E92 was at 52% residual after 36 months, someone correctly me if I'm wrong. If the M2 is closer to 60%, then leasing becomes more attractive personally since I also plan on buying a condo for renting purposes.
I think it might have been in the 55/56 range when I was looking - I am sure that it changed many times over the course of the lifecycle. I am almost certain my dad's Z4MC was 55% after 36 months.

Totally agree - they get close to 60% and the MF is reasonable (which you can always "buy" down w/MSDs), then it might be worth it to lease.

Although, if the car is as good as we are all hoping, well then keeping it forever is definitely the better option.
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      02-08-2015, 09:31 PM   #13
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Still wondering what the US base price will be... My estimate continues to fluctuate... now thinking 52k.
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      02-08-2015, 09:36 PM   #14
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Originally Posted by Adem1534 View Post
Still wondering what the US base price will be... My estimate continues to fluctuate... now thinking 52k.
That's probably going to be about right...50 is too low/close to the 235 and 55 as a starting point is too close to the M3.

Although, if we go coupe to coupe comparison, the M2 could slide in at 54 since the 235 starts at 44 and the M4 starts at 64...the Germans might like how well that lines up to be honest.

I really think it depends on where they make the cuts so to speak to save money - what will it not have that the M3/4 have standard? The more that's cut, the less it should cost. We shall see...
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      02-08-2015, 09:53 PM   #15
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Quote:
Originally Posted by dmboone25 View Post
That's probably going to be about right...50 is too low/close to the 235 and 55 as a starting point is too close to the M3.

Although, if we go coupe to coupe comparison, the M2 could slide in at 54 since the 235 starts at 44 and the M4 starts at 64...the Germans might like how well that lines up to be honest.

I really think it depends on where they make the cuts so to speak to save money - what will it not have that the M3/4 have standard? The more that's cut, the less it should cost. We shall see...
Agreed. If we are going to do these cuts such as CF roof and trunk (among other things), them I hope that is reflected on the price. MSRP of $52k sounds great to me
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      02-08-2015, 10:10 PM   #16
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      02-09-2015, 12:22 AM   #17
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If I were your big brother giving you advise on this, I'd say cash ONLY. If you can't buy it cash yet, save first. I'm not trying to be a dick.

Now, if you've already made up your mind between either, PLEASE DO NOT lease. =)
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      02-09-2015, 04:29 AM   #18
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Quote:
Originally Posted by Purple88Gold
If I were your big brother giving you advise on this, I'd say cash ONLY. If you can't buy it cash yet, save first. I'm not trying to be a dick.

Now, if you've already made up your mind between either, PLEASE DO NOT lease. =)
I bet 7 out of 10 will be leased.
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      02-09-2015, 06:25 AM   #19
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Quote:
Originally Posted by dmboone25 View Post
That's probably going to be about right...50 is too low/close to the 235 and 55 as a starting point is too close to the M3.

Although, if we go coupe to coupe comparison, the M2 could slide in at 54 since the 235 starts at 44 and the M4 starts at 64...the Germans might like how well that lines up to be honest.

I really think it depends on where they make the cuts so to speak to save money - what will it not have that the M3/4 have standard? The more that's cut, the less it should cost. We shall see...
a friend of mine who is considering an f80 m3, was telling me that it has a lithium ion battery instaed of a lead-acid which probably saves 15lbs of weight.

and it costs $1500 as a replacement part. i'd hope they make cuts in things like , not to mention the different electronics to charge a lithium battery etc.

im guessing the cuts will be, CF stuff, lithium battery and just a tuned n55, not a S engine. and we'll get everything else . i don't think DCT will be super expensive for them to fit to a n55, since well... the z4 sdrive35is has the same DCT with an n55 that puts out 335hp (it is also only a $500 option too, i'd love it if DCT was only $500 extra on the F87)
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      02-09-2015, 07:28 AM   #20
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Originally Posted by hans007 View Post
a friend of mine who is considering an f80 m3, was telling me that it has a lithium ion battery instaed of a lead-acid which probably saves 15lbs of weight.

and it costs $1500 as a replacement part. i'd hope they make cuts in things like , not to mention the different electronics to charge a lithium battery etc.

im guessing the cuts will be, CF stuff, lithium battery and just a tuned n55, not a S engine. and we'll get everything else . i don't think DCT will be super expensive for them to fit to a n55, since well... the z4 sdrive35is has the same DCT with an n55 that puts out 335hp (it is also only a $500 option too, i'd love it if DCT was only $500 extra on the F87)
That's a great point about the battery, an obvious savings area, plus the DCT. Yes I forgot all about the Z4 here in the UK, it is not very much to add that vs near £3000 UK for the M4.

Will Bimmerpost offer a prize for the M2 fan nearest to weight and price estimates?!
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      02-09-2015, 08:19 AM   #21
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NEVER PUT MONEY DOWN ON A LEASE. Say you put down 10K on a lease, you leave the dealer lot and a truck comes and totals your car. You are out that 10K immediately. I know that is a grim scenario but it is reality.
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      02-09-2015, 08:38 AM   #22
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Quote:
Originally Posted by Purple88Gold View Post
If I were your big brother giving you advise on this, I'd say cash ONLY. If you can't buy it cash yet, save first. I'm not trying to be a dick.

Now, if you've already made up your mind between either, PLEASE DO NOT lease. =)
..............here we go..............
Does it make sense to take $55,000 out of the market where it is earning 8-10% when you can leave it there and pay BMW +/-4% on a lease and have all of your costs fixed for the time you have the car? Leasing isnt for everyone but it makes a lot of sense for a lot of people.
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