Quote:
Originally Posted by nzafi
In the northeast you are allowed to do a security deposit/MSD that is 100% returned to you at the end of the lease. It lowers your money factor/interest on the lease. In this case, if I max out the security deposit (~$5600 - $6000) then my interest on the lease drops to 1.5%. The difference in that monthly interest is ~$40 a month. You are paying less interest on the lease than finance.
Financing is still cheaper though, because for a lease you pay a $925 acquisition fee, and if you buyout the car you will still have more interest to pay. Based on my calculations its probably about $2K cheaper over the 5-6 year period to finance instead of lease. The biggest factors I cannot account for are:
1) if something happens to the car in the first 3 years, the lease absorbs it versus you as the owner of the car
2) If the retains its value, your lease buyout will be a steal
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I've leased my last 2 BMWs so please don't think I'm one of the "leasing is dumb" crowd. That being said, I really really don't see the point of leasing an M2.
As you rightly pointed out, there is the lease acquisition fee of $925. This is $26/mo extra, almost wiping out your $40/mo interest savings with MSDs.
For #2, I don't buy that argument. If the M2 retains it's value far above the residual after 3 years (which it almost certainly will), you're not getting "a steal". It means you way overpaid for the first 3 years of having the car and get to have a "steal" for the remaining time you pay it off. Either way you're paying the full sale price of the car. The only difference with leasing is that you pay a lot more of it in the first 3 years (not counting tax) and less of it after that. But if you buy the car out after the end of the lease, you end up paying *the exact same amount*.