09-15-2020, 11:42 AM | #1 |
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M2C Lease vs Finance Special Considerations
Folks,
I am very close to pulling the trigger on a M2C and I was 99% sure that I was going to finance the car due to the fact that lease payments would have been $1000-1100. However, it looks like BMW is currently offering a money factor of .00099 which ~2.5%. This is crazy low. Additionally, I am in NJ which means I can do MSD which would then bring the money factor down to about 1.5%. When you considering this low of a money factor, if you find a deal on a car you can get the lease payments in the low $800s and maybe even high $700s depending on what you like to pay upfront. In comparison to financing, you will save a couple grand on interest , unless BMW decides to bring back the 0.9% financing. I am using to leasing my cars, but M2C is definitely something I see potentially holding onto for more than 3 years. When I do the numbers it literally seems like its better to do the lease and then buy versus to just finance from the start. I get the added benefit of dropping the car after 3 years if I want. I have never done a lease buyout, so I am curious if there is something I am missing here or some sort of hidden fees. To me, if the buyout is tied to the residual of 53%, the car could be a steal to buyout at lease end. If it isn't you just move on. Thoughts or considerations? |
09-15-2020, 11:46 AM | #2 | |
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09-15-2020, 01:37 PM | #3 |
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How is 2.5% crazy low? MY2020 is financing for 0.9% and MY2021 is financing for 1.9%.
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09-15-2020, 01:54 PM | #4 | |
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I wish I could get the .9% financing. Free money!! |
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09-16-2020, 12:03 AM | #5 | |
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09-16-2020, 07:30 AM | #7 | |
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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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09-16-2020, 01:36 PM | #8 | |
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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*.
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09-16-2020, 01:44 PM | #9 | |
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I bet you can sell a 5-6 year old M2 no problem. |
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09-16-2020, 02:07 PM | #10 | |
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From a pure numbers standpoint and if I did my math correctly, I come up with the following: 1) Cost of lease over first 3 years is much lower than financing (obviously because you are only paying for part of the car, i.e., usage of car). 2) If you assume you lease the car, and then buy it out after 3 years, then the least is only about $350 more than financing. This is based on assumed prices I have negotiated but also that I fully pay off the car after 3 years. If I finance that remaining amount I will spent about $1K more because of extra interest. Ultimate conclusion is that lease payments will be much lower the first 3 years which is convenient, and I will pay anywhere between $350 - $1000 more for my decision to lease over financing. However, I will get that extra piece of mind. Biggest downside is that I will not be able to do anything extra to the car due to leasing. |
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09-16-2020, 02:11 PM | #11 | |
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Is the buyout amount purely based on the residual or is it different? |
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09-16-2020, 03:58 PM | #12 | |
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09-16-2020, 06:05 PM | #13 |
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I take into account taxes, acquisition fees, doc fees, registration, etc. not hard to do.
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09-16-2020, 10:06 PM | #15 |
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You may already be considering this: If you decide to buy the car at else end, how long do you expect to finance the balance? If more than 2 years, it is less likely to be worth it. I have leased a lot too and have found it is best for cars more likely to depreciate, that I am not likely to modify in any meaningful way, or that fit a particular need (my last F31 328i for example). For me, modifying the car makes it more personal and I love it more for that reason. I bought mine in May of last year with 3,500 miles at almost 8k less than MSRP. That may be something to consider too.
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09-17-2020, 01:25 PM | #16 | |
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09-17-2020, 03:35 PM | #17 | |
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09-17-2020, 06:20 PM | #18 |
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100%. I'm just pointing out that it's the same either way. There is no "deal" when the lease buyout is way below the market value. One way or the other, lease or finance, you're paying for the entire sale price of the car.
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09-21-2021, 03:39 AM | #19 |
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When I bought my BMW, I paid the whole sum to the auto salon. In my opinion, leasing it is not such a good idea. I am spending too much on the car monthly. This is why I got a loan from remonttilainaa.com to pay the whole sum of the vehicle. I got my car in 2016, and I am still driving it. I have two more months to pay for the loan, and I calculated that I had to spend additional two thousand dollars above the price of the car because I got the loan. In my opinion, it is a good deal and better than leasing the vehicle.
Last edited by ismaelyork; 09-23-2021 at 02:55 AM.. |
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10-20-2021, 05:54 AM | #20 | |
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