Higher end car - buy or lease?

[Mr._Graybeard]

I've been a BMW owner for 25 years. IMO the company has lost its way. Get a Lexus.

 

[Music Lover]

Hmmmmm. Perhaps because it is a moving target. All Cars are different, interest rates are different from company to company, so are fees etc., so how can one provide the data? I can answer one of them, that is in 30 years of leasing I have NEVER paid a down payment. $0 down, $0 due at signing is the only way to go, and 95% of the time, Registration, Title, and first months payment were all included. Anything else is just moving the payment from one pot to the other and IMHO should not be considered.

Yes, every lease is different which is why we need more information. What your down payment was is irrelevant.

Maybe the OP has a $0 down payment and low monthly payments...or maybe they're putting down $10,000 and with high payments. Until those numbers are provided along with the other missing information it's impossible to say whether or not it's a good deal or a better option than buying.

 

[Jerry1]

I loved to lease when working and driving a lot of miles. I would lease a car for two years 50K miles. I never had a payment over $600 so that means I never paid more than $.29 to drive a nice new car ever two years. Now that I’m retired, I can’t imagine leasing would be a good option. I just don’t drive enough. Take a 10K annual lease. At $300 per month, that would be over $.36 per mile. You’d have to get in under $250 to get under $.30 per mile.

Of course, that also means ownership will require a lot of miles, a good trade in value and long term ownership to get the cost per mile down below $.30. To me, car cost is all about the cost per mile. That’s what I’m paying for. Of course I have to consider what level of comfort I’m willing to pay for, but the metric for comparison is cost per mile. The good thing about a lease is that your cost per mile is determined upfront.

 

[Qs Laptop]

But 36 - 39 months is usually the "Sweet Spot", that combined with a 0% Money factor makes it a no brainer. Leasing is good when money is cheap, and money is very cheap now.

Never lease a vehicle beyond the factory warranty period. Most vehicles have 36 months or 36,000 bumper-to-bumper warranties. I would not lease beyond this time frame.

 

[ShokWaveRider]

Never lease a vehicle beyond the factory warranty period. Most vehicles have 36 months or 36,000 bumper-to-bumper warranties. I would not lease beyond this time frame.

Ah yes, but my friend, the last car I leased was 39 months and in the lease contract the DEALER guaranteed they would cover warranty items during that extra 3 month period, I got it in writing.

Like any purchase it is the duty of the buyer to cover his/her A$%.

 

[Jerry1]

Never lease a vehicle beyond the factory warranty period. Most vehicles have 36 months or 36,000 bumper-to-bumper warranties. I would not lease beyond this time frame.

I used to lease Buick’s. They have a 4 year 50K mile warranty so that worked perfect. My last couple of vehicles were Chevies (Impala and a truck) and I just bought extended warranties. For the little extra, the cost was minimal.

 

[Qs Laptop]

Ah yes, but my friend, the last car I leased was 39 months and in the lease contract the DEALER guaranteed they would cover warranty items during that extra 3 month period, I got it in writing.

Nicely played.

 

[ShokWaveRider]

As some have realized, I am very pro lease in retirement. We could not spend what we have if we divided but our life expectancies so we may as well "Blow the Dough" on something we like. No worry car ownership fall into that category.

Other eat Wagu Beef!

 

[davebarnes]

There is an expression "Don't drive a German car that is out of warranty".

I have heard that, but our 2007 Audi A3 has been been relatively maintenance free.
(Well, except for tires. We have lots of construction in the neighborhood and have been averaging one new tire every 8 months. This means we replacing tires with 1K-6K miles on them.)

I think we will lease our next car. A first for us. Can we expect to buy a BEV in 2022 and then drive it for 10+ years? Maybe, but what about all the technological advances in that time period?

The financially optimal action would be to drop the car and just use Uber/Lyft. We only put 2K miles/year on our car now. Wife is opposed.

 

[GTFan]

Now that I’m retired, I can’t imagine leasing would be a good option. I just don’t drive enough. Take a 10K annual lease. At $300 per month, that would be over $.36 per mile. You’d have to get in under $250 to get under $.30 per mile.

This, 100%. You're essentially in debt to the car and AND the miles. I didn't retire to go back into debt, I retired early because I carried no debt.

Some folks always want an expensive new car and I get that leasing may make sense for them, but to me it's just a point A to B appliance. And that means letting someone else take the depreciation hit.

 

[ShokWaveRider]

This, 100%. You're essentially in debt to the car and AND the miles. I didn't retire to go back into debt, I retired early because I carried no debt.

Some folks always want an expensive new car and I get that leasing may make sense for them, but to me it's just a point A to B appliance. And that means letting someone else take the depreciation hit.

It is not Debt if one can pay for it in full 100 times over. It is a life choice of convenience

 

[FIREHAPPY]

X5

I purchased a BMW X5 xDrive40i in November! I love it! My wife and I lived well below our means for the first 30 years of marriage. We always paid cash for new cars and drove them 10 years at a minimum.

Now, we are fortunate enough to be able to drive whatever we want....within reason! I'm driving the X5 because I like it....style and driving performance.

I know it's an indulgence but so what. I did finance a small amount since BMW offered a significant discount to finance. I can pay it off at any time without penalty.

If you are in a place where you can splurge with no regrets, you might consider it. It worked well for me.

 

[Qs Laptop]

I purchased a BMW X5 xDrive40i in November! I love it! My wife and I lived well below our means for the first 30 years of marriage. We always paid cash for new cars and drove them 10 years at a minimum.

Now, we are fortunate enough to be able to drive whatever we want....within reason! I'm driving the X5 because I like it....style and driving performance.

I know it's an indulgence but so what. I did finance a small amount since BMW offered a significant discount to finance. I can pay it off at any time without penalty.

If you are in a place where you can splurge with no regrets, you might consider it. It worked well for me.

^^ This ^^

I have a friend that has a net worth of between 2 and 3 million. He retired several years ago. He finally got rid of his 10 year old Hyundai and bought a new car. OK, so it's brand new Hyundai Tucson, but it's a Limited with all the options and he paid cash for it. I kind of tease him about finally getting a new vehicle considering he could have paid cash for one for the past 15 years or thereabouts.

So many people have scrimped and saved money during their working years and now that they have a nice nest egg, what's the big deal if they spend $50K on a vehicle that they like? Same thing goes for leasing whatever you want. Just do it.

 

[homestead]

Say you lease a car for 3 years and they offer to sell you the car at the end of lease.
How does that price plus the total lease cost compare with buying the car at the outset?

 

[pjigar]

I can't advise you about leasing because I never leased one. However I will tell you couple of things I do know:
1. BMWs can be had at a great discount if you buy 3 year old. I almost bought a 3 year, 30K mile X5 Diesel for about $20K few years back.
2. BMWs are VERY expensive to repair/maintain. This applies to all other the European brands like Mercedes, Audi, etc.
3. Best luxury cars are made by Lexus. Reliable, safe, super comfortable, good value, cheaper to maintain/repair. I would buy Lexus outright any day.

PS: I have owned all of the brands mentioned in this port at some point in my life.
PS2: (After reading the post about German cars): I fix my own cars but even paying for the parts was expensive with the German cars. I can't even imagine what would be the bill if I sent them to dealer for repair. And yes, repairs starts literally right after warranty expires! I had a VW check engine light come on with an expensive repair a week after warranty expired (talk about timing)!

 

[Jerry1]

Say you lease a car for 3 years and they offer to sell you the car at the end of lease.
How does that price plus the total lease cost compare with buying the car at the outset?

Yeah, I’ve seen this mentioned in this thread a few times. I’ve never done the analysis, but I’ve always heard that it doesn’t make sense to buy your leased vehicle at lease end. I guess if the residual value is significantly greater than the buy out number it makes sense, but it goes against a rule of thumb I’ve heard many times.

 

[ShokWaveRider]

Say you lease a car for 3 years and they offer to sell you the car at the end of lease.
How does that price plus the total lease cost compare with buying the car at the outset?

I only ever purchased 3 lease cars, then sold them myself. The One that stands our was an Audi S4 TT. I sold it a month later for $10k more than the lease buyout. I made the company and offer when I purchased it less than the buyout in cash no potential loan, it had very low miles only 17k after 3 years. It came out less than the negotiated original sales price, but about break even on the total lease price. BUT, I had the Residual money (around $36k) in MY pocket for the duration of the lease.

The others were a Lexus 400 and a Jeep Wrangler. The Lexus made me about $3k (again low miles) the Jeep was purchased before the lease ended by a used Jeep dealer, he paid the car off and gave me $4k in cash. Cannot remember how they compare with the original Sales prices. BTW in a lease the Sales price is different from the MSRP, BUT the MSRP is used for the residual calculation.

I made money on these cars, unfortunately I cannot remember the exact numbers.

But that is not why I lease, or does it justify it. I lease for sheer convenience and worry free driving.

 

[DawgMan]

Luxury cars... one of my indulgences.

My perspective is that ALL cars are essentially a loosing proposition if you look at it as a pure prudent financial decision. There were definitely many years where I made (or justified) my car purchases (most all of them a couples years old) based on my projected hold/depreciation/maintenance costs/reliability. I leased a car in my early years, but did not like all the restrictions and how they can ding you when you turn it in. Fast forward to today, it's not a financial decision, but a pure indulgence decision. I still buy all my cars with cash. Bought the wife a new 2019 BMW X5 1 1/2 years ago with all the bells and whistles and she (we) love it. She will probably drive the car for a good 5 - 6 years. I bought myself a certified 2019 AMG GT 53 with 4K MI this past May. I will probably keep the car 3 - 4 years based on my hold history. Do any of these cars make financial sense... absolutely not! Do I really care if my car depreciates like a rock in 4 years... don't worry about that kind of stuff that much any more.

Side note - cash is NOT king in the car buying business. In fact, it's a negative to the dealers. When I bought my wife's BMW, I got the deal I got because I was willing to finance the min (+/- $5K if I can remember) for a couple of months and then just paid it off. Silly manufacturer/dealer games to get rebates/discounts.

Enjoy the car!

 

[Qs Laptop]

Say you lease a car for 3 years and they offer to sell you the car at the end of lease.
How does that price plus the total lease cost compare with buying the car at the outset?

There are a lot of variables. Typically, the leasing company sets the residual value very close to what the vehicle will be worth in three years, but not always. I've done very well with my past three leases, buying my previous one out and likely buying my current lease as well. Or I might sell my vehicle to a dealer or Carvana and keep the excess money.

One thing any person that leases a vehicle should do is insist on a "true zero" down lease. (This requires a very good credit rating.) This means absolutely no money comes out of your pocket. No first payment, no tax and license fee, no damage deposit, nothing. Another way to describe this is "sign and drive", meaning when you close the deal you bring a pen and nothing else, no checkbook, no credit card.

I've done so many leases over the years, and get so many questions from friends and family that I've written a guide on how to do it, including tips on how to negotiate.

 

[38Chevy454]

I've done so many leases over the years, and get so many questions from friends and family that I've written a guide on how to do it, including tips on how to negotiate.

I will suggest you should make it available to others here, since it seems leasing is used by many E-R.org members. You can potentially help them save on a new deal.

 

[TrvlBug]

... ...

I've done so many leases over the years, and get so many questions from friends and family that I've written a guide on how to do it, including tips on how to negotiate.

Would you mind sharing? DH and I will be leasing our next cars. We have previously been buy new and hold until it falls apart, 17-20 years. Recently, we've bought new at year 9. We have decided to lease the SUV every 3 years. Reasons: Convenience, convenience, convenience. Having the latest safety features. No out of warranty repairs to worry about. No smog certification!

We have a 2016 Acura SUV and 2017 Lexus ES350. Love the Acura's bells and whistles and interior layout, however, the local dealer's repair facilities are awful and we won't be buying Acuras. DH loves his Lexus and I also love its ride. However, the interior layout is awful and the blind spot warning is visual only which for me is a dealbreaker. The Acura's is visual as well as audible. We'll keep the Lexus until it or us falls apart and lease new SUV every 3 years. I'm hoping Lexus SUV will meet my needs. We'll also look at BMV, Mercedes and Audi.

 

[Qs Laptop]

Would you mind sharing?

I sent you a PM.

DH and I will be leasing our next cars. We have previously been buy new and hold until it falls apart, 17-20 years. Recently, we've bought new at year 9. We have decided to lease the SUV every 3 years. Reasons: Convenience, convenience, convenience. Having the latest safety features. No out of warranty repairs to worry about. No smog certification!

All are very good reasons. It's hard to put a price on the peace of mind that comes with no out of warranty repairs. Looking forward to my next vehicle with adaptive cruise, blind spot detection, lane keeping assist, and other features.

We have a 2016 Acura SUV and 2017 Lexus ES350. Love the Acura's bells and whistles and interior layout, however, the local dealer's repair facilities are awful and we won't be buying Acuras. DH loves his Lexus and I also love its ride. However, the interior layout is awful and the blind spot warning is visual only which for me is a dealbreaker. The Acura's is visual as well as audible. We'll keep the Lexus until it or us falls apart and lease new SUV every 3 years. I'm hoping Lexus SUV will meet my needs. We'll also look at BMV, Mercedes and Audi.

Never had any of those luxury brands but I've driven and been in them. I like Lexus and Mercedes.

 

[Qs Laptop]

I will suggest you should make it available to others here, since it seems leasing is used by many E-R.org members. You can potentially help them save on a new deal.

It's a ten page MS Word doc. At first glance I don't see a way to attach a file in private messages. I will look to see if this is an option.

 

[snorkeldorf]

Hmmmmm. Perhaps because it is a moving target. All Cars are different, interest rates are different from company to company, so are fees etc., so how can one provide the data? I can answer 2 of them, that is in 30 years of leasing I have NEVER paid a down payment. $0 down, $0 due at signing is the only way to go, and 95% of the time, Registration, Title, and first months payment were all included. I usually get 10,000 miles a year as all I really do is drive locally or to the Airport. Anything else is just moving the payment from one pot to the other and IMHO should not be considered.

Without a down payment aren’t you exposing extra dollars to a potentially higher interest rate (money factor)?

 

[Qs Laptop]

Without a down payment aren’t you exposing extra dollars to a potentially higher interest rate (money factor)?

Doubtful. Credit rating is the metric used to determine interest rate.

Even if no down payment resulted in a higher money factor, how much of a difference could it be? One-quarter or one-half percent? I'd rather keep the down payment money working for me somewhere, where it will certainly earn more than 0.5%.