03-23-2018, 06:23 PM | #133 |
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You can try to explain this until you're Long Beach Blue in the face, some people will never get it. This thread, and any concerns anyone has about N55 M2 resale, is but one example of why leasing this particular car is smart. People make the mistake of basing all the value of the lease on the % residual assigned - yes to a lease if the car will be worth less than the residual in their mind, and no if the car will be worth more, as illustrated by the bet Doug wants to make. That's missing the bigger picture. Of course the car will be worth more than BMW thinks, I'd say there's a 99% chance Doug is right. It's a sucker's bet, and it misses the point. If you're dumb enough to take that bet, you'll probably get lost trying to figure out where on the steering column you should insert the M2's key.
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03-23-2018, 06:55 PM | #134 | |
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Or are you saying "if you are worried about the residual, and the OP certainly is, then lease the car and forget about your worries"? Because that makes sense - kind of like flood insurance in the desert - probably never going to need it, but if it helps you sleep better, then it is worth every penny.
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03-23-2018, 07:33 PM | #135 | |
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For the CS or CSL, if they ever make either/both.
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03-23-2018, 08:01 PM | #136 | |
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03-23-2018, 08:22 PM | #137 | ||
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The point of my post is that you stated "Because when BMW puts the residual at 46%, you walk from the lease", and I believe that basing a lease decision solely on whether the ratio of contracted residual amount to your expected lease-end market value is greater than 1 misses the bigger picture and is a far more simplistic approach than anyone should take with a $60K purchase. Akkando would like to see a virtual handshake, but I'm comfortable saying that F87_LCI wouldn't shake on this bet not because he's afraid of being on the wrong end but because he couldn't care less about the outcome. Which isn't to say that he doesn't care about the car's resale value, because of course we all do, but rather to say that his decision to lease likely was not contingent upon the residual-to-expected market value ratio being greater than 1. You may as well ask him to bet on how many carpet fibers it takes to make a BMW floor mat. To be clear, I'm not trying to speak for F87_LCI, just speaking in general terms for those who appreciate the nuances of leasing the way I believe he does. My apologies to F87_LCI if I'm not speaking generally enough and overstepped my boundaries. |
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03-23-2018, 08:23 PM | #138 |
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No way - now you are in on it too - if the dollar amount is between $28,001 and $29,999 YOU are buying us both dinner!
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03-23-2018, 08:40 PM | #139 | |
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In short, if the residual on the M2 was somewhere between 55 and 62 percent, we could have all sorts of fun with "will it be worth that" - I mean BMW pegs the 3-series up near or above 60 percent and while you might argue that is high, it makes leasing a truly attractive thing to do from a financial standpoint at a minimum. Now at 55 percent - well that's getting into the "I'm leasing for a lot of reasons but most of them are not really about money - the 55% is fair" But when you get down to 46% residual for the base lease - and we have past history that gives a strong indication that this number is artificially low, then while you certainly could lease - it is not one of the smarter moves you can make with your money -in fact, it appears (and yes, we will know more in a few years) to be a complete waste of money - so unless your argument is "I buy flood insurance wherever I live" and "I like to throw money away" - then it gets really hard to come up with a solid reason to lease this car at a 46% residual. The really funny thing is, some people leased their 1M..... That had to really hurt. anyway... we digress, and no, the M2 CS will not make the M2 worthless. In fact, it probably won't hurt it at all. But that's just my belief.
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03-23-2018, 09:04 PM | #140 |
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Can you clarify this? There is a higher performance n55 than the one in the current m2? I thought the n55 in the m2 is at near peak performance and there can't be much ore squeezed out of it because of its open deck design. Also, i thought they're getting rid of the n55 because it can't meet emission standards tuned or detuned.
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03-23-2018, 09:04 PM | #141 | ||||
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I have no clue what your analysis is supposed to mean. It's simple, the M2 is a great car to drive but it's not a special car as some past M cars have been. Therefore it's a simple analysis; lease it, drive it, give them the keys at the end. Period. Therefore I don't give a shit about LCI, CS or the value of the car as a result of multiple factors. It's Kleenex. Disposable. |
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03-23-2018, 09:20 PM | #142 | |
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03-23-2018, 09:24 PM | #143 | |
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03-23-2018, 09:32 PM | #144 |
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Speak for yourself - I couldn't possibly care less about its resale value.
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03-23-2018, 09:52 PM | #145 | |
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03-23-2018, 10:02 PM | #146 | |
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You know what...I'm comfortable tabling this particular discussion here. In your mind, you were able to come up with only those two possibilities. I came up with more. I had to read a lot of boring tax, accounting and finance material to open my mind and get there, so during that time I was probably having less fun than some of you, but I came up with more. You've got your 2, I've got mine, I'm good leaving it at that. I won't revisit this topic again on this forum, but I'm happy to just talk cars from here on out. |
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03-23-2018, 10:59 PM | #147 |
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IDK, M2 still feels like an analog throwback car from years gone by, IMO. I love the sound, the stiff suspension, lack of features, at the time extremely affordable, that novelty might be worth more than some think.
It will be interesting how the competition debuts (reviews/comparisons) and how allocations and deliveries are disbursed. One could be number one on a list and still have a long wait ahead of them. The M2’s sitting on lots will move during this time, especially if the price is increased as much as people think (plus new model mark-up). |
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03-23-2018, 11:22 PM | #148 | |
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My sense is that from a purely financial standpoint, leasing an M2 doesn't make sense since the lease payments exceed what they are worth, because the remaining value of the car at lease-end is understated. On the other hand, US tax laws are a complicated morass, that many of us have to deal with on a day-to-day basis, and when one tries to work with them one often ends up making "uneconomical decisions." I'm in that situation constantly, I try to work within those parameters, so I get that also. When one is leasing a vehicle to be used in a business, it often makes sense to lease even if a straightforward, uncomplicated analysis of the lease itself might not make a lot of sense. My impression is that the disagreement being voiced here has its basis in this reality. I buy really nice computers for my business use, that are nicer than what I "need," however I write them off so in the end it is worth it to me to buy them, vs. some Acer or whatever that I would hate but which would probably do the job. There are other things I spend money on in my business that from a straightforward cost-benefit analysis might not make perfect sense, but in the context, they do make sense. I have way too many cars, and the great majority of the mileage I put on them are business miles, which I write off at the current rate. Would it make more sense for me to just go lease an expensive car, and write that off? Maybe, but that's not what I want to do, I enjoy having a bunch of cars and being able to choose each time what I am going to drive. There is a constant interplay between common sense, straightforward accounting, and the tax system, and everyone who is an entrepreneur who runs a business, will have their own take on how to work with that. Am I making sense?
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03-23-2018, 11:42 PM | #149 | |
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and as a small business owner who has leased cars, I can teach you a thing or two there as well 1. The notion that a lease works out better is bunk - it works out differently depending on a lot of factors - what it does do is spread out the spend (write-off) over the lease. With a purchase you get about the same darn thing - just more on the back end and less during. 2. Arms length transaction is a fun thing to learn about too - and any business owner looking to buy their company car - either from a purchase or a lease should know and understand this stuff, cause the tax man can be unforgiving. So really, we are back to the fact that leasing the M2 is not a smart financial move. And if the truth makes me arrogant, so be it.
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03-24-2018, 08:14 AM | #150 |
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My 02 cents on leasing, since I have done it several times.
The reason I leased, and why I think many still do, is because it lowers your payments and you need very little money down. With leasing you can afford more car, plain and simple. We are car guys and we use every rationale to justify the means, even if it costs more in the end. Not that it always does, and if you don't keep your car for more than 2-3 years, then leasing does make sense because of the tax savings, if you live in a state that has high sales tax. The idea behind leasing was so that businesses could write off the cost of a vehicle, and not so individuals can afford more car, but it sort of morphed in to that. Like I said, I've done it several times, and I have come out ahead at times, when the residual was set way too low. I just ended up selling the car, paid the residual and pocketed the left over. For example, one of the cars I leased was a 97 M3. After 42 months the residual was $27.5k and I sold it for $32.5k, and then kept the $5k. So I recovered some of the money I spent on interest over the time of the lease and drove relatively cheap. This should be very similar scenario with the M2's, since they are holding their value exceptionally well also. Although I think once some of these lease returns are hitting the used market and people will need to unload the car at the end of a lease, it will drive prices down (at least a little from where they are now). But still way above average and still way above the residual value. In that sense leasing a M2 is not a bad idea. My issue with leasing, and why I don't do it anymore, is that you are NEVER done paying for a car. Whatever you tell yourself you are saving, you do spend on interest, and then some. I stopped doing it 6 years ago and now I own all my cars free and clear. They are currently not all the latest and greatest ('11 Acura MDX, '13 VW GTI & '04 M3) but having no payments is so nice. Then again, it does make a lot more sense doing this if you keep your cars longer than just 2-3 years, which is something I never did before. One does get older and wiser and priorities change. ;-). I do have a deposit down on a M2 Comp Pkg now, and if I follow through, I will buy, not lease it. I don't want to rent cars anymore, I want to own them. I should also mention that there are certainly people out there with lots of money, that lease cars, because they want their money to grow an keep it invested. But those people tend to drive much more expensive cars and I don't buy the argument, when you are paying a fairly high money factor. There is no guarantee that you will earn more money than what you are "wasting" in interest. I'd say if you are wealthy enough to afford the car you want to drive, you are better off getting one of those 0.9 or 1.9% financing rates. Lease rates typically equate more to ~5% APR, if you convert, so the above stated argument is really not a good one. Last edited by norMcal; 03-24-2018 at 09:19 AM.. |
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03-24-2018, 09:10 AM | #151 | |
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1. You are paying tax on the lease payment - which is a lot more than the delta between the cap cost and the residual (interest, fees, etc.). 2. You do still have to buy the car at the end of the lease in this case, so you take a hit on the $27.5K to the tune of $2K+ in taxes, so it is more of a $3K gain (my point here of course is that by now, you probably would have been better off buying at a low APR if you could have afforded the monthly) 3. And yes, looks like CA has a very cool thing where if you can dump that car within 10 days of purchase, you don't pay tax. So if you DID have a buyer lined up, well then, you do pocket the full $5K (if I read this right and I think Calif is one of the few states that do this - I know here in IL they would be like - cool! Double sale, double tax! )
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03-24-2018, 09:17 AM | #152 | |
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I also got out of a 335d lease a year early this way. Did not make any money on it, but found a buyer that was willing to pay the car off. It is a bit harder to do, as people get nervous sending in $35k with a cashiers check, and not getting a pink slip in return on the spot. |
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03-24-2018, 09:20 AM | #153 |
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I like the idea of leasing, but the interest and taxes kill the economics for me. I always price out a lease vs buy and so far I've always chosen to buy.. if I had a car allowance or business that might be different.
GA changed the law a couple years ago to tax the MSRP on leases which made leases less attractive versus purchase. That law didn't last long. |
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