[Das BMW]

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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

[claykin]

I think you're in for a surprise if you try to predict what will happen next, or in 2-3 years. We're in unprecedented times.

Car manufacturers learned some very hard lessons as a result of the pandemic. And this chip "shortage" is not exactly accurately reported. Yes, there is a "shortage" for some semiconductors. The majority of the issues are related to legacy designs that are low margin products to the chip fab owners. The auto industry has been in a rut using outdated designs and semiconductors that were state of the art a decade ago. The only higher production company I'm aware of that doesn't follow this mantra is Tesla. The problem began with auto manufacturers, and their oems, holding off and even canceling orders during 2020. The chip fabs took those slots and booked higher margin semiconductors and those orders came in strong. To compound the issue, these fabs are commonly behind schedule due to supply chain problems and raw material shortages. So, now the auto industry and their oem partners (Bosch, Siemens, Continental, etc) scramble to secure fab slots, while at the same time shifting designs to more modern hardware. So, while no one can accurately predict when this "shortage" will end, it will, and future car electronics will benefit, which means consumers benefit.

[G30 B58]

Build the car that you want. Lease or buy that car. Enjoy that car.

Hope that helps.

[LookBothWays]

I've never leased, so can't help you there, and prefer to buy outright but with prices going higher than I ever wanted to pay I too am looking at leasing vs. buying.

For me I think buying still makes more sense as it will be ultra low mileage and I plan to keep it at least 5 years. These are factors we can predict to a high degree unlike future market conditions. Though I doubt very much that today's cars will depreciate any less and perhaps more than yesterday's cars considering more and more people are driving cuvs while becoming more green minded and you are buying/leasing at the top of the market with minimum discounts. Hmm, maybe I should lease.

[TTG]

i always lease my dailies as there is no point in buying something that will be a commuter.

You are always protected from stuff like accidents, lemons and major shift in market conditions. If things stay the way they are right now, I might actually end up buying my M340 and making profit out of selling it.

M550 or anything with a BMW V8, I would lease.

[IndyZack]

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

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.

[DNYC1919]

Originally Posted by IndyZack

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.

I used a lease broker on my 2021 540 and was happy with my deal. I did find out you can't do msds with ny car dealers so That sucks.

[LuvMyE92]

What Zack said.

The great thing about a lease is that if you decide to keep the car, you can simply buy it at lease-end. The only downside there is that you paid a little more in fees versus a straight purchase, but on a $90K car that really doesn't amount to much, percentage-wise.

[SkylarDuty]

I think leasing is better

[Rutxrut]

Buying vs. leasing can be a tough call. From my experience, buying could be a smart move. Late-year M550i's indeed tend to hold their value well, especially with the limited supply. I've seen them become more sought after, which is great for potential resale value. My friend, who works with a Mortgage Broker in Sutton Coldfield, also suggests that. But it's up to you to decide!