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      02-18-2014, 11:16 AM   #1
ska///235i
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Just wondering why everyone on this forum lease their cars?

Are you leasing for 3-4 years and returning the car or you going to purchase the car after the lease?

I know the basics of buying vs leasing but for those that do buy their car after the lease, is this the better way to buy a car...what am I missing here?
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      02-18-2014, 11:58 AM   #2
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I think most people here are leasing then turning in at lease end to lease something else. Usually leasing to buy is going to cost more than just financing it at the get-go.

I lease vs. finance because:
  • I get bored of cars after a few years and want something different by then. Cars are not appliances to me and I can afford always having a car payment.
  • I don't put a ton of miles on my car so the mileage restrictions are not an issue for me.
  • I like having something that is history-free at purchase time. No previous owner BS.
  • I like having a warranty and in BMW's case, free maintenance for the duration of the lease. All I pay for is tires and gas. BMWs are very expensive to fix out of warranty so who would want to own an old one?
  • For an equivalent monthly payment and term, I can get a better equipped car for the same price if I lease.
  • With a lease, residual is negotiated at the time of purchase so I am immune to any decrease in value. If I financed, and got hit by some dipshit in a lifted pickup truck, then tried to sell the vehicle later, it's worth significantly less and now I might be upside down on the car or don't have enough equity at trade-in to get the car I want.
Bottom line, leasing is not something that a financial analyst would give you a thumbs-up on because you spend all that money but never get to a point where you own an asset. But if you don't plan on owning the asset anyway, and can deal with the restrictiveness (mileage, condition at turn-in, etc) leasing makes a lot of sense. Does for me anyway
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      02-18-2014, 12:30 PM   #3
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Quote:
Originally Posted by ska325xi View Post
Just wondering why everyone on this forum lease their cars?

Are you leasing for 3-4 years and returning the car or you going to purchase the car after the lease?

I know the basics of buying vs leasing but for those that do buy their car after the lease, is this the better way to buy a car...what am I missing here?
+1

I was wondering the same thing. I was calculating 'Financing' vs. 'Leasing 36 months then purchase the residual'.

Personally I prefer to leasing cuz who knows what I want in 3 years; however, if I am gonna pay $650 (for a base MSRP of $49000) plus $200 monthly payment for garage parking plus $200 monthly payment for insurance (total around $1,050 for a month), why not just pay $1,400 (monthly loan payment plus parking plus insurance, with Down payment around 4K) to own the car myself forever?

There isn't much difference when you pay $1,050 or $1,400 a month, however, there is huge difference if you own a car compared to rent a car for 3 years.

Let me know what your thought is.
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      02-18-2014, 12:41 PM   #4
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Leasing is better for me because:

--I have a Ducati that I ride all summer, so no mileage issues for me;
--I get sick of cars easily (I have had nine since 2001);
--I am a mechanical special person, so I need a warranty that fixes shit;
--since you are in effect "renting" the portion of the residual that you're using over the term of the lease, you can get into a car that might otherwise be cost prohibitive;
--buying a car never made sense to me because in order for it to work financially, you must keep the car long after you have paid it off in order to realize the benefit of not having a monthly payment. Refer to point #2.
--it's an easier situation to deal with if your personal cirumstances change - you can get someone to take it over if you lose your job or have a baby on the way, etc...selling a car and not taking a bath don't go together that well...

Give it a shot--all the cool kids are doing it.
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      02-18-2014, 01:07 PM   #5
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BMW subsidizes their cars HEAVILY with very competitive lease rates, which is why if you compare the equivalent Audi to a BMW, the BMW ends up significantly better off for lease rates.

I leased my first BMW because through experience i've realised buying German cars is only good if you plan on keeping it more than 5 years. If you are going to keep it LESS than 5 years, then leasing is without a doubt the financially beneficial route. BMW lease rates are so good that it really doesn't make financial sense to buy unless the car is a collectable OR something long term----at least IMO.
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      02-18-2014, 01:20 PM   #6
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The question is more, why are people buying?

Unless you exceed 15K miles a year, or feel the need to heavily mod your car, then leasing is by far the better deal. In my situation, leasing saved me 30-40% of my payment had I financed.
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      02-18-2014, 01:35 PM   #7
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Quote:
Originally Posted by unintelligible View Post
I think most people here are leasing then turning in at lease end to lease something else. Usually leasing to buy is going to cost more than just financing it at the get-go.

I lease vs. finance because:
  • I get bored of cars after a few years and want something different by then. Cars are not appliances to me and I can afford always having a car payment.
  • I don't put a ton of miles on my car so the mileage restrictions are not an issue for me.
  • I like having something that is history-free at purchase time. No previous owner BS.
  • I like having a warranty and in BMW's case, free maintenance for the duration of the lease. All I pay for is tires and gas. BMWs are very expensive to fix out of warranty so who would want to own an old one?
  • For an equivalent monthly payment and term, I can get a better equipped car for the same price if I lease.
  • With a lease, residual is negotiated at the time of purchase so I am immune to any decrease in value. If I financed, and got hit by some dipshit in a lifted pickup truck, then tried to sell the vehicle later, it's worth significantly less and now I might be upside down on the car or don't have enough equity at trade-in to get the car I want.
Bottom line, leasing is not something that a financial analyst would give you a thumbs-up on because you spend all that money but never get to a point where you own an asset. But if you don't plan on owning the asset anyway, and can deal with the restrictiveness (mileage, condition at turn-in, etc) leasing makes a lot of sense. Does for me anyway
+1

I flip cars all the time so I'm always going to have a payment. The only time in the last 15 years I haven't had a car payment was 1 year where I really wanted to keep a S2000. Leasing actually saves me money since I'm always trading in cars to get something different. The money I save from not putting a down payment on a purchased car could now be invested in something else.
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      02-18-2014, 01:45 PM   #8
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Many people take a deduction for the lease for taxes, so there is a tax effect that essentially reduces the cost of the lease to that person.

I'd prefer to spend the money that I would have on a lease after my car is paid off and put it to mods, but that's not everyone's cup of tea. Right now, both of my cars have over 170k, and are very modded. Just different views on what to do.
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      02-18-2014, 01:47 PM   #9
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Thanks for all the info about leasing.

I had my car for 9 years and it had cost me $52K (amount of the car, modifications, maintenance cost & parts/mostly DIY). This sums up to roughly $480 per month to own. If I keep it for another yr, that break it to $430 per month. So I guess purchasing makes more sense to me and if I start to part-out and trade-in...I can recoup a little $ back.

Of course this might not work out for everyone and who the hell keeps their car for 9 years lol

I thought theres a better deal for buying out a lease so that was what I was trying to ask
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      02-18-2014, 02:04 PM   #10
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I am the 0.01% that buy my car. I go new every 5 years and get my monies worth out of car and get some trade equity on end. Also I don't own a business so can't write any of car off to taxman.
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      02-18-2014, 02:22 PM   #11
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Another thing to keep in mind when owning a car, in most cases, we are talking about a rapidly depreciating asset. A lease allows you to lock in how much you are going to lose, pay a money factor on top of it, and as others have said enjoy hassle-free/worry-free driving. BMW finance is pretty smart, but either way your residual will be:

1. above market, in which case you turn the car in and let BMW finance take it on the chin (since they let you drive the car for cheaper than necessary)
2. below market, in which case you can buy if you want and still be ahead of the game

Yes, if you keep a car for 5+ years and don't have any mechanical issues, you could save some money. That said you're one blown turbo away from disaster.

Personally, I like knowing exactly what I am getting into, can get out easily in 3 years when I am bored and looking for something new, and have nothing extra to worry about out of pocket.
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      02-18-2014, 02:25 PM   #12
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So if I plan on keeping the car for 5+ Years but am not sure how reliable the car is...should I lease and if things go bad just return the lease and if all is well, purchase the lease?
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      02-18-2014, 02:28 PM   #13
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Quote:
Originally Posted by ska325xi View Post
So if I plan on keeping the car for 5+ Years but am not sure how reliable the car is...should I lease and if things go bad just return the lease and if all is well, purchase the lease?
If you do a 3-year lease and decide to buy it out at the end, you can have the dealer certify the car and extend your free maintenance for a fee (which you can negotiate). So you could have 6 years, 100k miles of no cost driving (aside from tires).

You can purchase the additional prepaid maintenance any time before the original 4-years, 50k expires so if leasing makes zero sense to do up front.
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      02-18-2014, 05:33 PM   #14
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Hate to say it but BMWs are a dime a dozen...let's face it. You see them everywhere and anywhere. And that's one of the reasons why I'm leasing one. I also bought my last two vehicles and wanted to lease for a change. My current vehicle is going on year #8. I still love driving it but just like a 12 year old dog...eventually you just have to let it go and put it to sleep.

Every 2 years (give or take) as you know the German manufacturers are notorious for having another replacement model that makes yours look like a completely outdated pos...both inside and out. Headlights or halos or angel eyes or better exterior lines...more power better handling on the same model...better tech...etc.

Oh and down the line when the bimmer is out of warranty...maintenance repairs and parts won't exactly be cheap either.

If I fell in love with a car...I would consider buying/financing it if I knew it was going to be somewhat less common and offer some extent of an exclusivity factor.
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      02-20-2014, 07:05 AM   #15
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all good and informative messages here..thanks...I think maybe 4 year lease...time of the original warranty is way to go...since BMW..will surely have new models to choose then..i hope people continue on this board to share driving experiences after purchase...
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      02-22-2014, 04:12 PM   #16
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I lease because now I view a car as an appliance. Similar to my cell phone the technology/design/performance will likely be very dated in 3 years time. If not, and I love the car, I can still buy it!
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      02-22-2014, 09:21 PM   #17
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Leasing is always better if the total depreciation of the vehicle will be the same or more if you financed over the same period. In a typical 3 year period on a brand new car that is usually the case, especially if you can find or negotiate a good lease.
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      02-24-2014, 12:44 AM   #18
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Don't forget that when you pay $50k to buy a 235, you get to pay all the sales tax up front (9% = $4,500). When you lease, you pay the tax each month, for only the months you have the car. Those of us who buy and then sell in 2-3 years take the depreciation hit and we likely paid for another 1-2 years of sales tax even though we no longer have the car.
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      02-24-2014, 05:43 AM   #19
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Quote:
Originally Posted by wdlfbio View Post
Don't forget that when you pay $50k to buy a 235, you get to pay all the sales tax up front (9% = $4,500). When you lease, you pay the tax each month, for only the months you have the car. Those of us who buy and then sell in 2-3 years take the depreciation hit and we likely paid for another 1-2 years of sales tax even though we no longer have the car.
Not always true. It depends on your state.

Some states tax you on the entire purchase price, regardless of whether or not it is a lease. How this makes any sense other than just an opportunity to get more revenue, I don't know.

I know this because my state of Virginia is one of those states that taxes the full price. You can do a 12 month lease and you pay the same tax as if you bought the car.

Doing a quick search reveals the following states that tax full price and not just the leased amount: Arkansas, Illinois, Maryland, Oklahoma, Texas and Virginia. There may be others

Last edited by five3three; 02-24-2014 at 05:52 AM..
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      02-24-2014, 06:40 AM   #20
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Also if you trade in the car for $20k, that $20k is subtracted from the purchase total so you're not paying tax again
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      02-24-2014, 07:13 AM   #21
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Quote:
Originally Posted by ska325xi View Post
Also if you trade in the car for $20k, that $20k is subtracted from the purchase total so you're not paying tax again
That also depends on your state as well. Quite a few don't care about that and consider trade ins to be unrelated to the purchase price of a vehicle, for which you get taxed on.

The main thing I guess should be for each person to do their homework and know their state's rules because each state operates and taxes differently.

Example: Virginia has low up front sales tax by percentage but taxes you on the full purchase price (regardless of lease or buy and doesn't care about trade ins) and you get charged a hefty annual property tax on vehicles that is based on the car's value (regardless of purchase or lease). So clearly, when it comes to taxes in Virginia, buying is better than leasing because you actually own something that you paid all the taxes for and your property taxes decrease as the value of the car depreciates.

Last edited by five3three; 02-24-2014 at 07:55 AM..
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      02-24-2014, 09:36 AM   #22
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South Carolina sales tax is only $300 even if its a $100K car. We do pay property tax based on the car value every year.
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