Next Level Auto Brokers
BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read

Go Back   BMW M3 and BMW M4 Forum > BMW F80 M3 / F82 M4 Forum > F80 M3 / M4 Pricing, Ordering, European Delivery

Post Reply
 
Thread Tools Search this Thread
      03-14-2014, 09:14 PM   #1
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

My Calculations on Cost of Ownership Lease vs. Finance

Please check my work, but it seems clear to me that I'll be better off Financing than Leasing assuming the current 36 month offer and purchase at MSRP. Of course the big unknown is what a 36,000 mile 3 year-old version of the car I'm ordering would be worth.

Lease Option: For me the pro of the lease option is simple. I have a known value on what the car will be worth when it's time to turn the car in. I also tend to stress less about an accident. The big con of course is the rental argument with limits on mileage.

MSRP: $65,950
Residual Percentage at 12,000 Miles: 57%
Residual Value: $37,591.50
Percent off MSRP: 0.00%
Negotiated Price: $65,950
Down Payment: $0
Net Cap Cost (Neg. Price – Down Payment): $65,950
Depreciation: $28,358.50
Lease Term: 36 Months
Monthly Depreciation Payment: $787.74

Finance Cost = Net Cap Cost + Residual: 103,541.50
Interest Rate (APR): .00130 X 2400 = 1.944%
Money Factor: 0.00081
Monthly Finance Fee: $83.87

Monthly Payment: $871.61
Sales Tax: 6%: $52.30
Total Monthly Payment: $923.91

7 MSD: $950 X 7 = $6,650
Title, Registration, and Other Fees: ~$1,000
Incentives/Rebates: $0 (Assuming there are none.)

Drive-off (1st month’s payment + Fees + Maximum MSD): $8,573.91

3 Year Cost of Ownership: $1,000 + $33,260.76 = $34,260.76


Finance Option: The big pro to financing is open ended options. I can sell it when I want and drive it when I want. I take such good car of my cars that I never have a hard time selling them when I'm done. I can also reduce the cost of ownership on the next vehicle by trading the car and saving the future sales tax.

36,000 Miles 2.19% APR 72 Month Loan

Purchase Price: $65,950 MSRP
Tax: $4,017
Title, Registration, and Other Fees: ~$1,000
Total: $70,967

Monthly Payment: $1,052.73 including Tax

Payments Made: $37,898.28
Remaining Lien: $36,647.65 after 3 Years
Sale Price Estimate: $45,000
Net Positive Cash Flow After Sale: $45,000 - $36,647.65 = $8,352.35

Total Cash Outlay After 3 Years: $37,898.28 - $8352.35 = $29,645.93

Last edited by Money2536; 03-15-2014 at 02:41 PM..
Appreciate 1
r2087.00
      03-14-2014, 09:19 PM   #2
Benjamin
Private
Benjamin's Avatar
United_States
6
Rep
94
Posts

Drives: Camry
Join Date: Dec 2011
Location: IL

iTrader: (0)

Are you giving up the 911? IMO that's a better sports car
Appreciate 0
      03-14-2014, 09:21 PM   #3
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

Quote:
Originally Posted by Benjamin View Post
Are you giving up the 911? IMO that's a better sports car
Nope, I'm replacing the S4. M3 Daily Driver/911 Awesomeness Whenever Needed
Appreciate 0
      03-14-2014, 09:32 PM   #4
Sir Loin
M3AT LOVER
Sir Loin's Avatar
United_States
322
Rep
1,853
Posts

Drives: Silverstone F80 M3
Join Date: Aug 2013
Location: Seattle

iTrader: (0)

Did you miss adding the 1,000?

Quote:
3 Year Cost of Ownership: $1,000 + $33,260.76 = $33,260.76
Appreciate 0
      03-14-2014, 09:34 PM   #5
czarmar
Private
3
Rep
97
Posts

Drives: 1999 323i
Join Date: Feb 2012
Location: Chicago, IL

iTrader: (0)

My guess is that the lease residual values will rise sometime after launch. 57% residual is pretty painful, and I would love to pick up a low miles M3 in 3 years for $38K. The one thing to factor in is that the lease residuals probably compare well to the low trade in value, with no hassles.
__________________

1999 323i with 292K miles
Appreciate 0
      03-14-2014, 10:00 PM   #6
dave885
Private First Class
23
Rep
177
Posts

Drives: 2016 Porsche GT4
Join Date: Feb 2014
Location: Philadelphia

iTrader: (0)

Quote:
Originally Posted by Money2536 View Post
Please check my work, but it seems clear to me that I'll be better off Financing than Leasing assuming the current 36 month offer and purchase at MSRP. Of course the big unknown is what a 36,000 mile 3 year-old version of the car I'm ordering would be worth.

Lease Option: For me the pro of the lease option is simple. I have a known value on what the car will be worth when it's time to turn the car in. I also tend to stress less about an accident. The big con of course is the rental argument with limits on mileage.

MSRP: $65,950
Residual Percentage at 12,000 Miles: 57%
Residual Value: $37,591.50
Percent off MSRP: 0.00%
Negotiated Price: $65,950
Down Payment: $0
Net Cap Cost (Neg. Price – Down Payment): $65,950
Depreciation: $28,358.50
Lease Term: 36 Months
Monthly Depreciation Payment: $787.74

Finance Cost = Net Cap Cost + Residual: 103,541.50
Interest Rate (APR): .00130 X 2400 = 1.944%
Money Factor: 0.00081
Monthly Finance Fee: $83.87

Monthly Payment: $871.61
Sales Tax: 6%: $52.30
Total Monthly Payment: $923.91

7 MSD: $950 X 7 = $6,650
Title, Registration, and Other Fees: ~$1,000
Incentives/Rebates: $0 (Assuming there are none.)

Drive-off (1st month’s payment + Fees + Maximum MSD): $8,573.91

3 Year Cost of Ownership: $1,000 + $33,260.76 = $33,260.76


Finance Option: The big pro to financing is open ended options. I can sell it when I want and drive it when I want. I take such good car of my cars that I never have a hard time selling them when I'm done. I can also reduce the cost of ownership on the next vehicle by trading the car and saving the future sales tax.

36,000 Miles 2.19% APR 72 Month Loan

Purchase Price: $65,950 MSRP
Tax: $4,017
Title, Registration, and Other Fees: ~$1,000
Total: $70,967

Monthly Payment: $1,052.73 including Tax

Payments Made: $37,898.28
Remaining Lien: $36,647.65 after 3 Years
Sale Price Estimate: $45,000
Net Positive Cash Flow After Sale: $45,000 - $36,647.65 = $8,352.35

Total Cash Outlay After 3 Years: $37,898.28 - $8352.35 = $29,645.93
Assuming you could sell the car for $45k at the end of three years, wouldn't you exercise the purchase at the end of the lease and recapture the equity by selling it and reduce your total lease cost. Otherwise you're letting BMW FS get paid twice by having a lower residual. If you ignore that benefit it's not really an apples to apples cost of ownership analysis. The question is how much of a risk you feel comfortable taking on the residual.
Appreciate 0
      03-15-2014, 04:18 AM   #7
Grock
Banned
Switzerland
2
Rep
99
Posts

Drives: RS5
Join Date: Feb 2014
Location: CH

iTrader: (0)

Leasing cost is always going to be worse compared to financing. There is no need for any formulas.

Leasing means renting a car so you are paying for something that's not yours.
Appreciate 0
      03-15-2014, 11:13 AM   #8
dave885
Private First Class
23
Rep
177
Posts

Drives: 2016 Porsche GT4
Join Date: Feb 2014
Location: Philadelphia

iTrader: (0)

Quote:
Originally Posted by Grock View Post
Leasing cost is always going to be worse compared to financing. There is no need for any formulas.

Leasing means renting a car so you are paying for something that's not yours.
IMO, I think that it's more complicated than that and you need to consider a couple of things, but most importantly your long term intention for the car.

If you only want to keep it for 3 years, your total cost of ownership (cash on cash) may be better with a lease. The OP's example only makes financing work better because he assumes equity in the financing scenario vs. no equity that he could realize in the lease.

Residual vs. expected market, money factor vs. interest rate, tolerance for uncertainty, miles driven per year, etc. all come into play.

If you intend to keep a car long term, financing (or paying cash assuming your cost of funds exceeds your expected rate of return on the funds) is generally the way to go.

I know there are people that would "never lease" or "never finance", but I've done both and fall into the depends on circumstances camp.
Appreciate 1
      03-15-2014, 02:37 PM   #9
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

Quote:
Originally Posted by dave885 View Post
IMO, I think that it's more complicated than that and you need to consider a couple of things, but most importantly your long term intention for the car.

If you only want to keep it for 3 years, your total cost of ownership (cash on cash) may be better with a lease. The OP's example only makes financing work better because he assumes equity in the financing scenario vs. no equity that he could realize in the lease.

Residual vs. expected market, money factor vs. interest rate, tolerance for uncertainty, miles driven per year, etc. all come into play.

If you intend to keep a car long term, financing (or paying cash assuming your cost of funds exceeds your expected rate of return on the funds) is generally the way to go.

I know there are people that would "never lease" or "never finance", but I've done both and fall into the depends on circumstances camp.
Well said. I'm simply attempting to balance an equation that has many variables. I have also done both and am not sold on one option versus the other. I'm trying to decide which will work better for me on this particular purchase.
Appreciate 0
      03-15-2014, 02:39 PM   #10
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

Quote:
Originally Posted by dave885 View Post
Assuming you could sell the car for $45k at the end of three years, wouldn't you exercise the purchase at the end of the lease and recapture the equity by selling it and reduce your total lease cost. Otherwise you're letting BMW FS get paid twice by having a lower residual. If you ignore that benefit it's not really an apples to apples cost of ownership analysis. The question is how much of a risk you feel comfortable taking on the residual.
That is a great point.

Also, I bought a similarly optioned/priced E92 M3 in 2011 and traded it after 15,000 miles for $48,500. I'm thinking my $45,000 assumption is a bit optimistic.
Appreciate 0
      03-15-2014, 02:41 PM   #11
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

Quote:
Originally Posted by Grock View Post
Leasing cost is always going to be worse compared to financing. There is no need for any formulas.

Leasing means renting a car so you are paying for something that's not yours.
Sorry man, but you're incorrect.
Appreciate 1
      03-15-2014, 03:54 PM   #12
filip75
Facetious
filip75's Avatar
United_States
109
Rep
530
Posts

Drives: '15 AW M4
Join Date: Nov 2013
Location: San Antonio, TX

iTrader: (0)

Quote:
Originally Posted by Money2536 View Post
That is a great point.

Also, I bought a similarly optioned/priced E92 M3 in 2011 and traded it after 15,000 miles for $48,500. I'm thinking my $45,000 assumption is a bit optimistic.
I see no way for the 3 year old M3/4 with 36K miles to retail for less than $42-45K
__________________
Current: '15 BMW M4 (6MT), '08 HD Dyna Street Bob
Previous: '06 BMW 330Ci; '06 Mercedes CLK-350; '04 Acura TL A-Spec; '95 BMW 318ti; '92 Mercury Cougar; '94 Honda Accord
Appreciate 0
      03-15-2014, 06:38 PM   #13
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

Quote:
Originally Posted by filip75 View Post
I see no way for the 3 year old M3/4 with 36K miles to retail for less than $42-45K
That's what I was hoping.
Appreciate 0
      03-15-2014, 11:15 PM   #14
mister2d
Captain
156
Rep
598
Posts

Drives: F10 M5
Join Date: Dec 2013
Location: USA

iTrader: (1)

Quote:
Originally Posted by Money2536 View Post
Well said. I'm simply attempting to balance an equation that has many variables. I have also done both and am not sold on one option versus the other. I'm trying to decide which will work better for me on this particular purchase.
I would lease in your case since a) you will not be upside down at the end of the lease, b) You know the residual value up front. No need to speculate as you would with financing, and c) using MSDs will net you a return on your money at lease end.

Maybe if the F80 was NOT a brand new platform would it make sense to finance (maybe). But the first year? Heck no, lease that sucker.
Appreciate 0
      03-16-2014, 03:14 AM   #15
Powaup
Brigadier General
Powaup's Avatar
United_States
1252
Rep
3,688
Posts

Drives: 2021 Supra 3.0 (Past: 2015 M23
Join Date: Aug 2012
Location: San Francisco, CA

iTrader: (0)

Garage List
2015 BMW M4  [10.00]
Leasing is still less expensive. You forgot that you get your MSDs back at the end. Or did you already factor it in?


Also what about BMW Select? I've decided I'm going that route after doing plenty of these types of calculations.


I really wanted to lease then buyout at the end of the lease so I can upgrade to an LCI model in 3/4 years specially If I can get invoice ED and Frozen color for ~$3,600. But I would much rather enjoy this M4 as if I will ride it to the wheels fall off and not worry about resale value as much at this point. Plus residuals suck right now
__________________
Check out my YouTube Channel Powaup
Instagram: @ Powaup
Appreciate 0
      03-16-2014, 07:48 PM   #16
kitw
Colonel
kitw's Avatar
471
Rep
2,991
Posts

Drives: F91 M8, 991.2 GT3
Join Date: Jun 2007
Location: Bay Area, CA

iTrader: (20)

I also didn't see the acq fee in your calculations.
Appreciate 0
      03-18-2014, 10:19 PM   #17
M4 Dream
New Member
11
Rep
25
Posts

Drives: X5 Twin
Join Date: Mar 2014
Location: NY NY

iTrader: (0)

What is MSD and How a BMW dealer can make the different in a lower payment for leases?
Appreciate 0
      03-19-2014, 11:17 AM   #18
Money2536
Colonel
Money2536's Avatar
1584
Rep
2,148
Posts

Drives: '13 E92 M3 | 992 GT3 Touring
Join Date: Feb 2010
Location: The Villages, FL

iTrader: (1)

Quote:
Originally Posted by X5 turbo View Post
What is MSD and How a BMW dealer can make the different in a lower payment for leases?
MSD stands for Multiple Security Deposits. Most dealerships don't have a clue, so you have to go into it knowing your stuff.

http://www.bmwconfig.com/post/2011/0...nvestment.aspx

Last edited by Money2536; 03-19-2014 at 11:27 AM..
Appreciate 0
      03-19-2014, 11:25 AM   #19
GotEM4
General
31
Rep
235
Posts

Drives: EM4
Join Date: Feb 2014
Location: Sweet Home Chicago

iTrader: (0)

Quote:
Originally Posted by dave885 View Post
IMO, I think that it's more complicated than that and you need to consider a couple of things, but most importantly your long term intention for the car.

If you only want to keep it for 3 years, your total cost of ownership (cash on cash) may be better with a lease. The OP's example only makes financing work better because he assumes equity in the financing scenario vs. no equity that he could realize in the lease.

Residual vs. expected market, money factor vs. interest rate, tolerance for uncertainty, miles driven per year, etc. all come into play.

If you intend to keep a car long term, financing (or paying cash assuming your cost of funds exceeds your expected rate of return on the funds) is generally the way to go.

I know there are people that would "never lease" or "never finance", but I've done both and fall into the depends on circumstances camp.
True. Lease for short term. Finance for long term. I would think if you kept this 1st production forever, it will be worth a good price It's the same concept with homes. Rent or lease for short term (variable loan), Own or finance for long term (fixed loan)
Appreciate 0
      03-19-2014, 11:44 AM   #20
Powaup
Brigadier General
Powaup's Avatar
United_States
1252
Rep
3,688
Posts

Drives: 2021 Supra 3.0 (Past: 2015 M23
Join Date: Aug 2012
Location: San Francisco, CA

iTrader: (0)

Garage List
2015 BMW M4  [10.00]
FYI this is what BMW Select numbers look like using $65,950 price tag, 3.5 years seems like the sweet spot to resell the car here

Please let me know if corrections need to be made

At the end of 36 months money put into the car= $29064
Amount still owed on the car= $42,429
Profit if car sold at $45K= $2,571

At the end of 42 months money put into the car= $33,780
Amount still owed= $37,713
Profit if car sold at $45K=$7,287
Attached Images
 
__________________
Check out my YouTube Channel Powaup
Instagram: @ Powaup

Last edited by Powaup; 03-19-2014 at 12:07 PM..
Appreciate 0
      03-20-2014, 12:42 PM   #21
///Mperative
Second Lieutenant
///Mperative's Avatar
United_States
16
Rep
281
Posts

Drives: like grandma
Join Date: Jul 2010
Location: New England

iTrader: (0)

Garage List
2014 BMW 550xi  [0.00]
2011 E92 M3  [0.00]
Do you own a business? If so, then leasing is the only way to go for tax reasons.
__________________
Appreciate 0
      04-03-2014, 06:05 PM   #22
symple84
First Lieutenant
83
Rep
316
Posts

Drives: 18' SMB M3CS
Join Date: Jan 2007
Location: Miami, FL

iTrader: (0)

Quote:
Originally Posted by Powaup View Post
FYI this is what BMW Select numbers look like using $65,950 price tag, 3.5 years seems like the sweet spot to resell the car here

Please let me know if corrections need to be made

At the end of 36 months money put into the car= $29064
Amount still owed on the car= $42,429
Profit if car sold at $45K= $2,571

At the end of 42 months money put into the car= $33,780
Amount still owed= $37,713
Profit if car sold at $45K=$7,287
Where did you get the calculations for BMW Select??
Appreciate 0
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 07:04 AM.




f80post
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST