Whats your lease payment?

[Shaw]

Originally Posted by chrisny

That's the thing, the whole purpose of a lease is for those that want a new car every 3 years or so. To keep it longer blows the equation.

Leases are also a better tax advantage, if you're able to write it off as a business expense.

that's a valid point...but if you are willing to work on it a bit (keep your car in a great form, find your own buyer and deal through trade-in), I think you can change your car whenever you want and still be able to sell the way you want it and own a new car...
I sold my X3 $5,000 above market value (around $8,000 above trade-in price) and also saved $6,000 on X5's tax savings...That's around $14,000k added value right there...

[chrisny]

Originally Posted by Shaw

my installments are as low as lease...I have a residual value (just like lease) that I need to pay at the end(the balloon)...I also have the option to trade-in the car for another if I decide not to pay for that balloon...I can find a buyer outside just like I did for my X3 and sell it for more than the residual value...just like lease...and I've checked both scenarios: a car under finance has a higher residual than a leased one (by around $2,000 to $3,000)...

So wait, this isn't just a normal financing situation just another form of a lease, right? An alternative, but not straight ownership/financing (thus the balloon you mentioned) either.

[chiefmike]

Originally Posted by darksilkx1

Not sure I understand. You didn't put 15k down on a lease did you?

Did put 15k down.

[chrisny]

Originally Posted by chiefmike

Did put 15k down.

I used to be against putting cash down on a lease, but it's really just personal preference. "pay me now or pay me later..." Doesn't change the overall equation, just gives you a smaller payment, I can see the value in that, flexibility etc. putting 15k down he got a tiny payment and his buyout will be lower than trade-in value every day of his lease. Still better than buying if he doesn't plan to keep the car longer than 3 years or so.

[AEC]

One disadvantage to putting money down, is if the car is totaled, you don't get that money back. With no down payment, you don't risk losing that money.

[chrisny]

Originally Posted by AEC

One disadvantage to putting money down, is if the car is totaled, you don't get that money back. With no down payment, you don't risk losing that money.

Not true. You've paid down the buyout of the car. So when you get a check from your insurance company for present value when it's totaled, it will be higher than what you owe. Thus you get your money back..

[AEC]

Originally Posted by chrisny

Not true. You've paid down the buyout of the car. So when you get a check from your insurance company for present value when it's totaled, it will be higher than what you owe. Thus you get your money back..

Not sure what you mean by "buyout". Money down reduces the capitalized cost. For most of the lease, the owner is "upside down" so that the value of the vehicle is less than what is owed. You will lose some if not all of the money you put down.

[chrisny]

Originally Posted by AEC

Not sure what you mean by "buyout". Money down reduces the capitalized cost. For most of the lease, the owner is "upside down" so that the value of the vehicle is less than what is owed. You will lose some if not all of the money you put down.

"Buyout" as in pay off amount, in other words, what you owe if you want to buy the car at anytime before the end of the lease, or if you total the car. Putting 15k down on a car, you most certainly are never upside down on it, you'll always owe less than it's worth. It's all the same in the end. Put the money up front and you pay less in interest. Don't put it down, you'll probably owe more than market value if the car is totalled. If you have gap insurance, it should cover the difference. If not, you do.

The overall math doesn't completely change whether you pay it up front or in the end. The only variable is the gap insurance. If you put zero down you'll end up owing when you total the car (like you said, you're upside down, at least for the first half or 2/3 of the lease). Gap insurance avoids or helps avoid that, but that's not free either.

Long winded response when all I really needed to say was putting money down is exactly what keeps you from being upside down. If you owe less than its worth, that's where you get the money back. It doesn't just disappear.

[AEC]

Say, for the sake of argument, you drive a $50,000 car off the lot and total it within the first month. Let's say the value of the car when it it totaled is $45k. If you have put no money down, the gap insurance (which BTW is included on all BMWFS leases) would cover the shortfall. If you put $5k down, most or all of that money will be gone.

I'm not saying that you should never put money down on a lease, but it's one thing to keep in mind. I'd rather put MSDs down and lower the interest rate. You will get that money back if the car is totaled.

[chrisny]

That's the variable I mentioned. I've (foolishly) never looked enough into the gap insurance to know how much it would or wouldn't cover, or what it costs (i've assumed it is included in my policy given the coverage package I have, but have been lazy and haven't confirmed).. but if that covers the full gap, of course that can save you thousands that you would have otherwise had to put out of pocket. If it does, of course it's better to let the gap insurance eat that cost than to have put it out yourself up front and have no gap to begin with (if you actually total the car of course).

I can't imagine a gap ever being big enough to eat up the 15k in ChiefMike's example though. But I don't think most people go that far.

Don't get me wrong, I'm not arguing one way or the other either, I've never done more than the tax and inception fees, and usually not even the tax. Just saying I can see why some people do it. And I agree on the MSD's, but (as I'm told at least), NY doesn't allow those.. not sure what other stays do or do not.

More importantly, you're saying BMW FS themselves provides the gap insurance in every lease?

[AEC]

Originally Posted by chrisny

More importantly, you're saying BMW FS themselves provides the gap insurance in every lease?

Yes. If you lease through BMWFS, gap insurance is included. Theoretically, it's a part of the Acqusition Fee that you pay at the beginning of the lease.

[chrisny]

Originally Posted by AEC

Yes. If you lease through BMWFS, gap insurance is included. Theoretically, it's a part of the Acqusition Fee that you pay at the beginning of the lease.

Good to know, thanks.

[jspdr]

Originally Posted by likecarz

2014 X5 35i M Sport
$74,300 MSRP
$1k over invoice less $1k loyalty..bought at invoice.
Partrick BMW near Chicago
Ordered 11/14..ETA end Jan.
No bull...

Your guys from Chicago area can you pm me your dealer's info.
Thanks

[Wardman]

Any current lease deals? x5 luxury, leather, mc seats, camera, and tire.

61,900 list price
899 a month
7msd's
2500 down
20,000 miles a year/3 year lease

[Overtaxed]

Originally Posted by AEC

Say, for the sake of argument, you drive a $50,000 car off the lot and total it within the first month. Let's say the value of the car when it it totaled is $45k. If you have put no money down, the gap insurance (which BTW is included on all BMWFS leases) would cover the shortfall. If you put $5k down, most or all of that money will be gone.

I'm not saying that you should never put money down on a lease, but it's one thing to keep in mind. I'd rather put MSDs down and lower the interest rate. You will get that money back if the car is totaled.

I'll say it for you. You should never put money down on a lease. If the money factor is that high (where you want to put money down to avoid the interest rate) buy it outright and finance. Or buy a different car (as I did, the Rover money factor was a total "no go" for me, pushing me to look at and buy an X5).

If you buy a 50K car and total it in the first month, you'll be lucky to get 40K in the settlement. And new cars are the most often stolen/never recovered vehicles, particularly trucks like this that cost 50-100K.

The beauty of a lease is that all that stuff is someone else's problem. Car totaled? Your out, at most, one payment. If you buy or lease with a big downpayment, you could be out 10K or more.

MSDs (multiple security deposits) are a much better deal than putting more money down on an X5 (and likely all BMW) lease. No risk (other than BMWFS going out of business) and good impact on the money factor.

When leasing it's pretty simple. Never put anything down (no capital cost reduction) unless money just doesn't matter.

[Overtaxed]

Originally Posted by AEC

Yes. If you lease through BMWFS, gap insurance is included. Theoretically, it's a part of the Acqusition Fee that you pay at the beginning of the lease.

Gap insurance is in every lease I've ever done (a lot of them) in the US. Another reason not to put money down, you're paying for the gap insurance but if you put 15K down, you're getting no value at all from it. Insurance is there for a reason, let them take the risk, not you.