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      02-03-2021, 10:32 PM   #1
Rob_G77
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BMW Lease - A lesson learned

I leased my Z4 and paid off the entire lease up front so I didn't have to deal with monthly payments. My intention was to eventually purchase, but just not sink so much money into the car right away. This was a big mistake and lesson learned.

First, there is absolutely no benefit for paying it all up front. It actually becomes a financial detriment if you suddenly decide to sell or trade the vehicle. Even though you paid everything up front, you're still charged whatever the lease interest rate is. If you decide to trade the vehicle, you lose ALL of the interest PLUS the taxes on the full lease amount and get none of it back even though the lease ended early. Just think of it as an extra level of depreciation you certainly did not expect.

Never again would I do this.

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      02-04-2021, 09:30 AM   #2
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Sorry to hear that. With how low the interest rates are. I dont see why anyone would even lease if you had the intention to purchase later (unless you have some sort of tax incentive to write off vehicles)
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      02-04-2021, 10:04 AM   #3
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I felt max MSDs was the better lease deal when mine came because the difference in interest savings compared to the one pay was negligible. Expected to do a 2 year lease because I wasn't going to keep the car but 0.9% interest (almost free money) and uncertain mileage needs led to a purchase. No regrets because now I love it enough to maybe keep it.
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      02-04-2021, 11:20 AM   #4
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Originally Posted by BMWGirlFL View Post
I felt max MSDs was the better lease deal when mine came because the difference in interest savings compared to the one pay was negligible. Expected to do a 2 year lease because I wasn't going to keep the car but 0.9% interest (almost free money) and uncertain mileage needs led to a purchase. No regrets because now I love it enough to maybe keep it.
I thought about lease but now that work is remote. I would be surprised to put 5k miles on the car.

Where in Florida are you? If you see a misano blue Z4 M40i near Venice, FL. that is my wife driving!

I have yet to see another Z4 around here or near Lakewood Ranch where I spent the other part of my time visiting my mother.
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      02-04-2021, 11:40 AM   #5
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Originally Posted by tonggi View Post
I thought about lease but now that work is remote. I would be surprised to put 5k miles on the car.

Where in Florida are you? If you see a misano blue Z4 M40i near Venice, FL. that is my wife driving!

I have yet to see another Z4 around here or near Lakewood Ranch where I spent the other part of my time visiting my mother.
I live on the east coast but BFF in Parrish. Getting ready to leave to visit. Z4 ACC has transformed drive from drudgery to joy. I've seen maybe 6 - 10 total since launch. Almost all 30i. Drove beside white M40i last week coming back across Alligator Alley. This driver was excited & disappointed because I don't think other driver considered it an event. Will watch for Mrs. Tonggi.
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      02-04-2021, 01:30 PM   #6
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Other than at the dealer, I have yet to see another Z4. Saw a couple of the previous generation(s).
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      02-04-2021, 01:52 PM   #7
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Quote:
Originally Posted by BMWGirlFL View Post
I live on the east coast but BFF in Parrish. Getting ready to leave to visit. Z4 ACC has transformed drive from drudgery to joy. I've seen maybe 6 - 10 total since launch. Almost all 30i. Drove beside white M40i last week coming back across Alligator Alley. This driver was excited & disappointed because I don't think other driver considered it an event. Will watch for Mrs. Tonggi.
Nice, she has been practicing the car nod that I taught her.

This car is stupid fast its scary. Faster than my car!
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      02-04-2021, 04:27 PM   #8
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Originally Posted by tonggi View Post
Sorry to hear that. With how low the interest rates are. I dont see why anyone would even lease if you had the intention to purchase later (unless you have some sort of tax incentive to write off vehicles)
No incentives and the interest rate makes it into a $5000 loss for me. BMW is like 'we have your money, go f&&k yourself'. I never knew they would pocket the full interest money even if the lease did not go to end for one reason or another. They aren't breaking any laws or contracts doing this. It just seem rather unethical to not refund the interest.

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      02-04-2021, 06:39 PM   #9
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Quote:
Originally Posted by Rob_G77 View Post
Quote:
Originally Posted by tonggi View Post
Sorry to hear that. With how low the interest rates are. I dont see why anyone would even lease if you had the intention to purchase later (unless you have some sort of tax incentive to write off vehicles)
No incentives and the interest rate makes it into a $5000 loss for me. BMW is like 'we have your money, go f&&k yourself'. I never knew they would pocket the full interest money even if the lease did not go to end for one reason or another. They aren't breaking any laws or contracts doing this. It just seem rather unethical to not refund the interest.

Rob
I would never lease a car - to me it wouldn't feel like I owned it.
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      02-04-2021, 09:18 PM   #10
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Originally Posted by jcard71 View Post
I would never lease a car - to me it wouldn't feel like I owned it.
Leases are ok if you know you won't keep the car after 4 years or the interest rate is significantly better than financing. Leases also used to be good for having lower payments in general for a higher priced vehicle. But, residual values just aren't very good any more. The 5 series and higher residuals are significantly worse than something like a 3 series. As much as I like BMW, affordability goes out the window after the 3 series and x3.

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      02-04-2021, 11:17 PM   #11
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That's not true about the tax. If you go through a dealer, they/you do not have to pay the tax. Well at least in WA state. I guess it could be different elsewhere.
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      02-05-2021, 08:24 AM   #12
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I would never lease a car - to me it wouldn't feel like I owned it.
Yep and any time a vendor is pushing something "to help you out" it's suspect. Every car ad comes with a cheesy "lease me" front page.

Reminds me of the car salesman's ploy "if we can get you in for $300/month are you ready to deal?"
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      02-05-2021, 04:40 PM   #13
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First Lease

I decided to lease a vehicle for the first time in my life with this Z4 acquisition. Normally I pay cash for a car and drive it for 10-20 years. My current 14 year-old RX-350 has 130,000 miles and still looks and drives great. But with the Z4 I wasn't sure if it was a car I would be happy with long-term. I'm not getting any younger and if it gets too uncomfortable getting in and out of the roadster - it's gone at lease end with very little hassle. If I decide I want the M40i instead of the 4-banger - it's gone. If BMW brings back European Delivery - it's gone. If they add some must-have options or elements to the 2024 model - it's gone.

I'm hopeful that I'll love the car and at lease-end decide to keep it. I'll pay the inflated residual and be happy I have a car I know was well cared for and treated great. Happily at this point in my life spending a few thousand dollars extra (lease vs buy) doesn't bother me, so if it makes me happy I'm good. There's also a chance I may get lucky and invest the $50,000 I get to hold onto by leasing in the next Gamestop craziness and buy a Ferrari instead!
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      02-05-2021, 10:45 PM   #14
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I never understood the economics of a lease. When I looked at it I always came out ahead buying and selling rather than lease and either give back or purchase post lease.

I can see it making it easier to get a new car every few years at the same payment. It is easier, but not the most economical option.
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      02-06-2021, 06:01 PM   #15
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Quote:
Originally Posted by Romer View Post
...
I can see it making it easier to get a new car every few years at the same payment. It is easier, but not the most economical option.
Agreed. Leasing is simply for those who want that new car smell every few years.
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      02-06-2021, 09:17 PM   #16
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Quote:
Originally Posted by Geradeaus View Post
Quote:
Originally Posted by Romer View Post
...
I can see it making it easier to get a new car every few years at the same payment. It is easier, but not the most economical option.
Agreed. Leasing is simply for those who want that new car smell every few years.
The friends I have that lease cars are usually the ones that want to drive a car they can't afford...
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      02-07-2021, 07:18 AM   #17
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Quote:
Originally Posted by jcard71 View Post
Quote:
Originally Posted by Geradeaus View Post
Quote:
Originally Posted by Romer View Post
...
I can see it making it easier to get a new car every few years at the same payment. It is easier, but not the most economical option.
Agreed. Leasing is simply for those who want that new car smell every few years.
The friends I have that lease cars are usually the ones that want to drive a car they can't afford...
You need to upgrade your friends!😉
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      02-07-2021, 12:22 PM   #18
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Quote:
Originally Posted by Geradeaus View Post
Quote:
Originally Posted by jcard71 View Post
Quote:
Originally Posted by Geradeaus View Post
Quote:
Originally Posted by Romer View Post
...
I can see it making it easier to get a new car every few years at the same payment. It is easier, but not the most economical option.
Agreed. Leasing is simply for those who want that new car smell every few years.
The friends I have that lease cars are usually the ones that want to drive a car they can't afford...
You need to upgrade your friends!😉
Why? That's on them, not me - I paid cash.
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      02-08-2021, 07:29 AM   #19
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Leasing allows someone to drive a better car than they could otherwise afford.
That's why you go to the mall parking lot and its full of $60k-$70+k X5's & Q7's.

The downside is that you're always making payments and never have a period with no car payments.

If I were the OP I would not haver paid the lease off early and just made the monthly payments until the end of the lease. As they noted, unlike a purchase there's no benefit to paying it off early.
Then decide if you want to keep it. You may even be able to negotiate the buyout price at the end.

I don't lease but if you just want a fun toy like a Z4 for a few years and won't put many miles on it then it makes sense. Owning these cars out of warranty can be very expensive and many people just don't want to deal with it.
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      02-22-2021, 03:45 PM   #20
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Quote:
Originally Posted by ejm3 View Post
... but if you just want a fun toy like a Z4 for a few years and won't put many miles on it then it makes sense. ...
+1 This!

I have a small fleet of cars i OWN (joking ... but are 6 cars too many for 1 person?), but had the itch for a roadster. There's no way I want the G29 after 3 years, so paying $17k in lease payments (all-in cost for 36 months) was much better than paying $60k + 6.625% NJ Sales Tax, and hoping to get back $43k when I was ready to sell it in 3 years.

There's a snowball's chance in hell of having a 3 year residual of 72% ... so for me, the decision to lease my toy was an very easy one. Lease all day long. I negotiated a deep discount on a vehicle on the lot (my first ever BMW I have not done P1 order), combined BMW NA incentives with my lease negotiation, and leased for a low-mile lease (10k annually). I have 2k on the odometer since Aug 2020, so I'm surely not worried about mileage. Hell, I can likely trade-out the lease on the Z4 at a profit on lease trader when I finally give into temptation and get the M8C Convertible

Am I ashamed/embarrassed to "rent" my BMW ... nope! Am I tying to get into a car that I can't afford? Nope, could have bought it cash.
Why everyone is so worried about "what their friends may think" instead of doing what is more fiscally responsible for their usage needs and net best deal on the same vehicle for the term of "ownership"? I keep cars 2-4 years, so depending on your vehicle behavior, leasing could be the better option.

I have leased several times in the past, when the dealers are hungry for moving volume, deep sales price discounts can be had, combined with manufacturer-set artificially high residuals and artificially low money factor, when the 3 align, leasing is a no-brainer. Take my '16 F85 for example.... $115k MSRP ... $0 down, $800/month lease for 36 months. Paid $28,800 to lease the vehicle. Looked at used car prices in 2019 when I returned the lease, X5Ms optioned the same way were selling for $60k at best. If I paid $100k for it new out the door and bought instead of leased, I would have been out an additional $11.5k compared to leasing when i got rid of it 3 years later!

Be smart and keep an open mind and evaluate all of your options. "Renting" your next car may be a wiser option. If you keep cars for long periods (5+ years), then leasing becomes much less attractive. I wish I had the will power to resist the "next best thing"! More power to you ... I would be a richer man if I had self control
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      02-22-2021, 04:21 PM   #21
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Quote:
Originally Posted by CaboM4 View Post
Quote:
Originally Posted by ejm3 View Post
... but if you just want a fun toy like a Z4 for a few years and won't put many miles on it then it makes sense. ...
+1 This!

I have a small fleet of cars i OWN (joking ... but are 6 cars too many for 1 person?), but had the itch for a roadster. There's no way I want the G29 after 3 years, so paying $17k in lease payments (all-in cost for 36 months) was much better than paying $60k + 6.625% NJ Sales Tax, and hoping to get back $43k when I was ready to sell it in 3 years.

There's a snowball's chance in hell of having a 3 year residual of 72% ... so for me, the decision to lease my toy was an very easy one. Lease all day long. I negotiated a deep discount on a vehicle on the lot (my first ever BMW I have not done P1 order), combined BMW NA incentives with my lease negotiation, and leased for a low-mile lease (10k annually). I have 2k on the odometer since Aug 2020, so I'm surely not worried about mileage. Hell, I can likely trade-out the lease on the Z4 at a profit on lease trader when I finally give into temptation and get the M8C Convertible

Am I ashamed/embarrassed to "rent" my BMW ... nope! Am I tying to get into a car that I can't afford? Nope, could have bought it cash.
Why everyone is so worried about "what their friends may think" instead of doing what is more fiscally responsible for their usage needs and net best deal on the same vehicle for the term of "ownership"? I keep cars 2-4 years, so depending on your vehicle behavior, leasing could be the better option.

I have leased several times in the past, when the dealers are hungry for moving volume, deep sales price discounts can be had, combined with manufacturer-set artificially high residuals and artificially low money factor, when the 3 align, leasing is a no-brainer. Take my '16 F85 for example.... $115k MSRP ... $0 down, $800/month lease for 36 months. Paid $28,800 to lease the vehicle. Looked at used car prices in 2019 when I returned the lease, X5Ms optioned the same way were selling for $60k at best. If I paid $100k for it new out the door and bought instead of leased, I would have been out an additional $11.5k compared to leasing when i got rid of it 3 years later!

Be smart and keep an open mind and evaluate all of your options. "Renting" your next car may be a wiser option. If you keep cars for long periods (5+ years), then leasing becomes much less attractive. I wish I had the will power to resist the "next best thing"! More power to you ... I would be a richer man if I had self control
This is good advice and perspective.

Interestingly, in practice I do the exact opposite (always buy) but that's because I keep my cars for 8+ yrs minimal. My e92 was 12yrs old when I let it go and my f80 is already 5 yrs in. But, that doesn't take away from the very good points made here.
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      02-23-2021, 07:04 AM   #22
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I know for me personally Covid has changed my calculus.
I had a long commute and was doing about 25k miles per year.
So even splitting the miles with 2 cars (one reliable, one fun) leasing didn't really make sense for me.
But there's a decent chance I won't ever be going back into the office so if that's true it changes everything.
So I guess my point being that depending upon your lifestyle and how it could change going forward it might make leasing more or less attractive than in the past.
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