Quote:
Originally Posted by Das BMW
Hi All,
I will be looking to lease/buy my first new BMW ever, an M550i, in the next 6-12 months.
I originally planned on leasing the car with the option to buy, but with the chip shortage sending prices higher with no end in sight for the next 1-3 years, I am trying to figure out if I need to call an audible and Buy (vs. Lease with potential buy-back).
My rationale is 2 parts, 1 that actually doesn't have to do with the shortage, just has always been in the back of my head:
1. Chip shortage creates a low supply of late-year M550i's after a 3yr lease, therefore more valuable.
2. Late-year / G30 M550i's will be sought after compared to the somewhat less attractive, potentially hybrid-only 2024's.
I am looking to ask the more experienced audience here what they've seen with late-generation leases, if there are any patterns I should be aware of.
What would you choose in my situation? Do the residuals potentially track those reasons, or any others? Etc.
Thank you
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There are no downsides to leasing - unless you know you're going to way exceed your mileage allotment and are going to turn the car in OR if you know you're going to buy it in the long run...
Here are some benefits
Pre-determined vehicle purchase value at the end of 3 years - you won't pay a dime more than if you just bought it from the beginning (maybe some in interest charges, but not for the actual vehicle). If the vehicle is worth more than the residual after 3 years then you just pay the residual to keep it. If it is worth less than the residual, turn it in but tell the dealer you want to buy it - leasing companies make deals to sell the cars to the dealership it was turned in at (they have no obligation to keep the car on their lot), AND the dealer isn't going to pay the leasing company more than fair market value for the car.
Insulation from market trends in used vehicle pricing. Real world example... My wife leased an Audi A3 prior to the dieselgate fiasco (her's wasn't a diesel). The residual for it was just under $20k at the end of 3 years. Her car was pretty basic, just had the 2.0T and quattro as options, not much if anything else. When we turned her car in, you could buy a better equipped car, same year/mileage, for about $17k.
All lease agreements include GAP insurance by default. You're not on the hook if the car is worth less than the payoff if the car gets totaled. GAP insurance is optional and costs extra on a regular loan. Also, on a loan you pay the sales tax up front and if the car gets totaled you lost that money. On a lease you pay the sales taxes on the monthly payment (most states, your mileage will vary) and if the car gets totaled you're not on the hook for it.
Also, NEVER put money down on a lease, if the car gets totaled you will lose that money. Stick it in a bank and subsidize your payment with it, use it towards MSDs on the lease, invest it in crypto, but NEVER put money down on a lease (not even the acquisition fee, doc fees, taxes, etc...). A good rule to live by, if you can't afford the lease payment without money down, you can't afford the car.