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View Full Version : Leasing vs buying to avoid tire kickers.


lvan
03-02-2009, 11:44 AM
Here is a question since we have some car dealers and experienced people on the forum.

My X-GF is looking for a new car, either E92 328 or 335i coupe. She is wondering if she should just lease the car to avoid selling it down the road and being low balled. The lady has a bad experience when she was selling her Acura RSX. The car was still under warranty, but many tire kickers and lowballers came. I noticed that on here that some members tryed selling their cars after paying it off and so on , but than they decided to keep it after realizing they won't get much for it. The last thing she wants is 3 years down the road someone coming down to her house and hagling her down to get 30k car for 18k or 20k. I am asking from your experience in the past, how hard it is to sell reasonably priced 3-4 year older Bmw that was dealer serviced, 1 owner, and with a few months of warranty on it? In the past I onwed E30s so I never had a chance of selling a newer Bmw. Any advise would be appreciated.

BSL
03-02-2009, 02:36 PM
She would lose more money, overall, on a lease.
Bad idea, IMHO.

3-4 years down the road is a long way away. Selling shouldn't be a problem, providing she does a little research first. Set a price and stick to it, how hard is that?

The easy way out, that most people take, is to sell back or trade-in at a dealership. This is also a lose-lose situation for the seller, but it is more convenient.

I advise you to tell her to buy her new Bimmer and enjoy it!
If she gets stressed out trying to sell in the future, I'd be glad to act as her agent, for a cut. *angel*

dtthiaga
03-02-2009, 03:11 PM
For a brand new car,

If you keep it 3-4 years = Lease

If you keep it 5-6 years = Buy

If Tax Write-off = Lease.

Lease Returns though are not easy with BMW.
They expect a near perfect car back.

Boss17
03-02-2009, 03:21 PM
Why would someone sell a car after 3 years? Especially when they bought the car brand new. Do people really get bored of cars this quickly?

No matter which way you look at it, your gf is gonna lose money on the car the moment she drives it off the lot. I personally would buy the car because I'm not restricted by kilometers, i don't have to worry about monthly payments, and most of all, it's an asset.

The only way I would lease a car is if it's a tax right off for a business, that's it.

By no means should anyone ever expected to get what they paid for a car. It's just not realistic to assume that. If she adds a few mods here and there, it might attract more buyers because it's more aesthetically pleasing. Bottom line, she should buy the car and enjoy it, when the time comes to sell then you weigh out you options (sell private, trade in, etc).

T.Dot_E30
03-02-2009, 03:28 PM
Usually the people who complain about selling a car are the ones who don't take care/maintain the car well or don't prep the car for sellling. (Detail, cleaning etc.)

I've gone to view a few private sales, where the car clearly has problems and things that need fixing, yet they expect a price as if the car was mint. An educated seller can do well, with some basic selling prep (detailing, cert, e-test, UVIP) and making sure the car doesn't have a shopping list of problems.


Leasing doesn't automatically take you off the hook as dtthiga mentioned. Those door dents, stone chips, bad tires, swirl marks aren't going to cut it with the dealer and they lowball you even more! by making you pay big $$$ to fix it.

lvan
03-02-2009, 03:43 PM
^ Very true. I was just thinking it would be wise to get some opinions. Moreover for the fact that Bmw dealer will not let her off the hook easly. I am sure we have people on board that were in the same situation and they can add their opinion. The way I see it, buying it outwright is the route to go. Let the fact alone that most of my friends are so anal to drive anywhere just because lease/mileage issues.

bmdbley'sBro
03-02-2009, 04:56 PM
-

hey just buy it, then get Hosed 'Trading it in' on the next one.

dealers will lowball hard, but as they say: ever tried to sell a car?

and in that way you'll know what a dealers offering,
so if a person then offers u $2K more u'll know its to be taken.

dtthiaga
03-02-2009, 05:14 PM
Why would someone sell a car after 3 years? Especially when they bought the car brand new. Do people really get bored of cars this quickly?


You would be surprised how many people keep their cars for 4 years only.
They simply don't have the time to worry about breakdowns, or maintenance outside of oil changes.

I know a lot of guys who buy their girls new cars, for peace of mind, safety, and reliability.

A week or two ago, I saw a lady driving a black 1999-2001 E46 outside my office. It broke down in a turning lane (transmission I suspect).
She was there for 1 hour in the cold and at night, waiting for CAA flatbed; not to mention at risk of being rear-ended.

A car greater than 5 Years old has a higher probability of failure.

I know people will say, my E36 or E30 has been dead reliable.
You have to admit, the likelihood of a e90 leaving you by the road side is far less than a E46, E36 and E30.

Hence, people buy new cars.

lvan
03-02-2009, 06:37 PM
I was told the same by older crew at work. No matter what type of car it is, start putting money into it after 5 years. Btw 99-01 E46 are garbage. Look how low they go for.

rendered
03-02-2009, 06:45 PM
It all depends on her financial situation as well. Can she afford to spend $30+ cash right now on an E90/E92?

Most people in their 40's and 50's don't have $30,000+ cash right now sitting in a bank account to spend on a car.

Is she able to write off her leasing expenses?

If you're buying straight out, always best to buy at least 1 year old, or older. The first owner has already paid the depreciation.

If she wants a brand new vehicle, but can't afford the lump sum cost, leasing is a great way to get a more expensive vehicle for a reasonable monthly payment. I would lease only from the manufacter's though (BMW Financial Services Canada) They have rates as low as 0.9%.

You can also finance for 0.9% now which is great.

I personally would look for something in her price range to buy outright (cash) and go with the newest car she can comfortably afford. Especially during this economic situation Canada is undergoing.

Or you're lucky to have a dealer friend like me who can sell her an E90/E92 at cost now, and 3 or 4 years down the road be able to sell for a profit, or at the very worst, break even. Trust me, its very possible!

BTW, congrats on the new car!! She sounds beautiful! Welcome to the ZHP club! I want details please :)


P.S. Anythings possible. My 2 year old Acura left me stranded on the side of the road.
My 5 year old E46 has never left me stranded, nor let me down, yet... knock on wood

lvan
03-02-2009, 08:59 PM
Mark, I really wanted to hear from you since you deal with all sorts of buyers. I will let her know that leasing is going to be hassle when they start being anal on lease return. Getting something to purchase it is better IMO.

328i Cab
03-03-2009, 11:35 AM
You can always lease the car and buy it out if the return procedure is too much of a pain. The residual prices are predicted by BMW at the time of the lease starting, at the end of the lease, the actual value of the car could be worth more or less than the buyout. It is happening more and more that lease buyouts are worth more than the market price for the cars. If you buy your own lease out, they can't ding you for any of the mileage/damage on the car.

This would keep payments down and give the option of turning in the keys or keeping a bit longer if it's been a good car. Who knows what the economy is going to be like in a few years - these cars COULD be in higher demand on the used car market then.

Either way, enjoy the new car!

theblue
03-03-2009, 03:26 PM
it's this simple in my mind... if:
are you going to mod = no
do you know how many miles you drive per year = yes
do you like working on your own car = no
do you know you'll want another new car in 3-4 years = yes

then leasing is the best choice assuming a good residual rate and negotiated price.

dtthiaga
03-03-2009, 05:56 PM
You really have to be smart about calculating overall cost to determine which is cheaper for you, lease or buying. Each situation is slightly different.

For example: A friend was buying a Loaded Oldsmobile (2003).
Wanted the car for about 4 years (Warranty Period).

A) Car cost = 24000 + tax = $27,600

B) Lease Cost was $331/month taxes in. $15,888 total for 4 years.
(Was around 0.9% Lease Rate, buy out was around $12,000 ).

I knew the car would be worthless at the end (Far less than buyout).
So, I told him to lease it, and here's why.

C) After the 4 Years, the buyout was $12,000. I could find the same car in the trader for $7500.00

D) Had he wanted to sell it in 4 Years (@ 7500.00), his net loss would have been -$20,100

E) Because he leased it, his net loss for 4 years of car ownership was -$15,888

F) The car was happily returned, and ended up at a Hyundai Dealership listed for $6,900.00
You know they bought that car for $4.5K.

Buy Loss = -$20,100
Lease Loss = -$15,888

In this case, Lease >>> Buy.

lvan
03-03-2009, 06:04 PM
^ Very well said. Fantastic example lol.

BSL
03-03-2009, 07:01 PM
Buy Loss = -$20,100
Lease Loss = -$15,888
[/indent]
In this case, Lease >>> Buy.

That was a GM product, bought in a time when leases were close to 0%, correct?
GM cars are absolute crap at 4 years old, BMW's arent.
BMW doesnt lease for cheap either

europrince
03-03-2009, 07:37 PM
you can't base a purchase decision on the experience of selling it privately down the road. noone plans an exit strategy when buying a car. this isn't a stock investment. she doesn't like selling privately? she can trade it in and save in tax owed, as you pay on the net price after the trade in.

damameke
03-03-2009, 07:56 PM
The last thing she wants is 3 years down the road someone coming down to her house and hagling her down to get 30k car for 18k or 20k. I am asking from your experience in the past, how hard it is to sell reasonably priced 3-4 year older Bmw that was dealer serviced, 1 owner, and with a few months of warranty on it? In the past I onwed E30s so I never had a chance of selling a newer Bmw. Any advise would be appreciated.

If you plan on selling the car after 3 years and with the information on the car as you had described above and if you gathered the average selling price between private and dealer's asking price,(autotrader, autonet..etc etc) ;I am sure you can advertised within that price range and if a buyer came and bargain to 18k or 20k,, you simply tel them, you do not deserve to buy a BMW for you do not know the value of the car. Suggest that they buy a Taka, only $2000.


How hard it is to sell?...depends on the upkeep of your car and if it is price right, it will sell.

Truth of the matter is.. car depreciates and especially so,, if you bought new.

Leasing wil be a better choice if she wants to drive new an different car every 3 year.

That would be my preference if I want to drive new and different brand of car, walk away lease.

lvan
03-03-2009, 08:31 PM
Yup , we hit the verdict.

2-3 years > lease it
5-6 years or longer> buy it

I appreciate info. Will pass on to her.

dtthiaga
03-03-2009, 08:54 PM
That was a GM product, bought in a time when leases were close to 0%, correct?
GM cars are absolute crap at 4 years old, BMW's arent.
BMW doesnt lease for cheap either

Actually, same thing could have happened with BMW. With the Introduction of the e90, the values of E46 really tanked more so than expected (Their 54% residual was off).

Instead of being ahead by leasing (lease residual buy back being far less than actual value), you pretty much broken even going either direction.

In Summary:

A) Look at Cost of Leaseing
B) Look at what the car would be worth at the end of the term, Calculate Net Loss.
C) Compare Lease Buy Back vs projected actual value.

Keep it long = Buy
Flip Quickly = Lease (Unless A, B, C doesn't work in your favour).

europrince
03-03-2009, 09:29 PM
^ good point. i would imagine that would be the same with every model roll over.

lvan
03-03-2009, 10:15 PM
Yeah the recession and arrival of E90 smacked E46 resale value. 99-01 are barely worth anything.

Merski
03-03-2009, 10:35 PM
If shes going to write off the car to a buisness she owns then she should lease, i made the mistake of leasing my e90 330i. After 3 years i just dumped out 36k out the window. I bought my 08 335i sedan it made much more sense in my case. either you want to throw away your money or keep your money you invested.

slemmer
03-04-2009, 09:31 AM
if u lease without the intent of keeping the car it's treated more of a rent to drive vs trying to sell off the car later. U pay more up front for none of the hassle later.

theblue
03-04-2009, 04:28 PM
you can't base a purchase decision on the experience of selling it privately down the road. noone plans an exit strategy when buying a car. this isn't a stock investment. she doesn't like selling privately? she can trade it in and save in tax owed, as you pay on the net price after the trade in.

what?

dealers figure out the residual factor on cars before they sell them, this is important in your purchase decision

yes you should plan an exit strategy

yes this really is just another investment, but a controlled depreciating one

also, when you lease a car, you only pay taxes on the monthly payment, not the purchase price so you're saving taxes there (this assumes canada is the same as the US on this one)

Dennism3
03-05-2009, 02:04 AM
Ivan,

I rarely post here but this is my experience with purchasing a 97 m3 in 99. I paided out right $47,000.00. When I decided to sell it a few years later I incountered this problem. It is very hard to sell a car privately over 20k. I had people interested but could not come up with financing, or could not afford insurance or general maintenance for that matter. I ended up putting the car on consignment at MVL after 6 months of advertisting. Also look at it this way. 40k invested at 6 percent over 3 years (money working for you). Or have 40k depreicating over 3years. I will from now on only lease cars, more so in this economy.

Dennis

lvan
03-05-2009, 12:21 PM
Thank You Dennis. I appreciate a lot your input.

TNation
03-05-2009, 01:21 PM
Actually, same thing could have happened with BMW. With the Introduction of the e90, the values of E46 really tanked more so than expected (Their 54% residual was off).

Instead of being ahead by leasing (lease residual buy back being far less than actual value), you pretty much broken even going either direction.

In Summary:

A) Look at Cost of Leaseing
B) Look at what the car would be worth at the end of the term, Calculate Net Loss.
C) Compare Lease Buy Back vs projected actual value.

Keep it long = Buy
Flip Quickly = Lease (Unless A, B, C doesn't work in your favour).


listen to this guy. he's bang on.
dtthiaga knows what he's talking about. Buying a new BMW in this economy is a terrible decision if you plan on keeping it for only four years. Leasing rates are also at an all time low as well, its a no-brainer for me.
What Dennis had to say was so good too.

lvan
03-05-2009, 01:54 PM
^100% true. Here is another example for the E36. There is a member selling his black 97-328is in max sales section. As stated , he paid 10k for a car a year ago. He is asking 3.5K for it now.
On top of that 10k, he had to do clutch job. We are talking about 11k at least. That is enough money to take over someone's lease and drive much newer car(bmw). Let alone that you get some money from the person that you get the lease take over. Yes the dealer may be anal when returing the lease, but selling the car and dealing with repairs is not a fun factor as well.

TNation
03-05-2009, 02:58 PM
^100% true. Here is another example for the E36. There is a member selling his black 97-328is in max sales section. As stated , he paid 10k for a car a year ago. He is asking 3.5K for it now.
On top of that 10k, he had to do clutch job. We are talking about 11k at least. That is enough money to take over someone's lease and drive much newer car(bmw). Let alone that you get some money from the person that you get the lease take over. Yes the dealer may be anal when returing the lease, but selling the car and dealing with repairs is not a fun factor as well.

even more, on top of this, leasing a new car, you have manufacture's warranty! so essentially you don't even have maintainence bills!

damameke
03-05-2009, 06:31 PM
Ivan,

I rarely post here but this is my experience with purchasing a 97 m3 in 99. I paided out right $47,000.00. When I decided to sell it a few years later I incountered this problem. It is very hard to sell a car privately over 20k. I had people interested but could not come up with financing, or could not afford insurance or general maintenance for that matter. I ended up putting the car on consignment at MVL after 6 months of advertisting. Also look at it this way. 40k invested at 6 percent over 3 years (money working for you). Or have 40k depreicating over 3years. I will from now on only lease cars, more so in this economy.

Dennis

I agree with a few points that you made..however have to disagree about hard selling a car over 20k, newer and especially european cars, 20k plus is the norm. 2006 BMW 3 series are listing above that

M3 is a niche car, like other high end performance cars, Corvette etc etc, so there is limited buyers. and the time to sell these kind of cars privately is much longer.

Depreciation cost is given when one buys a new car.

Lease or buy a 1 or 2 year old, if you are concern of depreciation cost.

damameke
03-11-2009, 01:15 PM
http://ca.autos.yahoo.com/p/1256/leasing-vs-purchasing