My Calculations on Cost of Ownership Lease vs. Finance

[Swancoat]

Originally Posted by ///Mperative

Do you own a business? If so, then leasing is the only way to go for tax reasons.

The fact that you can do that is representative of how f'd up the tax code is.
In no way is that a legit business expense.
I don't own a business. Where's my write off?

[acuteperformance]

When you purchase a car for business purposes it's now seen as an asset of the company, once you sell you're taxed on the sale price of the car. You can write off interest and expenses.

When you lease, you don't have this problem and can also write off interest and expenses.

* As always, please contact your accountant for accuracy.

Michael

[Powaup]

Originally Posted by symple84

Where did you get the calculations for BMW Select??

There was a post on the forums cant find it anymore but basically the balloon is 40% to calculate interest on the ballon you do:

Balloon Price*0.03*(5/60)

[Dasm3nd]

Originally Posted by ///Mperative

Do you own a business? If so, then leasing is the only way to go for tax reasons.

Agree but my avg yearly miles is 16k. Not sure if leasing is still advantageous. I'm also not opposed to financing/owning car outright.

[Powaup]

Originally Posted by Dasm3nd

Agree but my avg yearly miles is 16k. Not sure if leasing is still advantageous. I'm also not opposed to financing/owning car outright.

If you lease the car with intentions on buying it out at lease end you do not need to worry about mileage or return fee's

[Dasm3nd]

Originally Posted by Powaup

If you lease the car with intentions on buying it out at lease end you do not need to worry about mileage or return fee's

So, if I lease a car for 10k/year (but actually put on 16k per year), I will not have to pay $0.20/mile fee if I am going to buy it? I thought the lease was one transaction and buying after lease another.

I'm just trying to figure out whether leasing with 16k/year allowance with intent to buy is a better deal than financing.

[Powaup]

Originally Posted by Dasm3nd

So, if I lease a car for 10k/year (but actually put on 16k per year), I will not have to pay $0.20/mile fee if I am going to buy it? I thought the lease was one transaction and buying after lease another.

I'm just trying to figure out whether leasing with 16k/year allowance with intent to buy is a better deal than financing.

Nope you will not have to pay the over mileage fee. At lease end you have 3 options:

1-Turn the keys in= you pay for overmileage fees if any+ turn in fees
2- Buy the car out= You don't pay any lease related fee's is just as if you are buying a used car
3-Extend the lease (I think the max you can extend for is 6 months)

I'm inbetween leasing and BMW Select, If I lease I will get 10k miles/month and drive as much as I want since I'm buying the car out at the end

This is from an old post I put up months back:

Originally Posted by Powaup

Lets say you lease an M4/3 for 36 months with 10K miles your monthly payments would be about 900$ a month (using numbers from e93 M3 w/ 69K MSRP) and at lease end you will have the option of either 1) buying the car out or 2) turn the car in.

1) You finance the residual value of the car ~$40K and don't worry about the dealership charging you for the miles you went over from your agreement.

2) If turning the car in you end up with nothing and will get charged for going over mileage whereas buying the car out is kinda of like buying a 3 years old car that is actually yours (if that makes sense)

if you look at current used 3 year old e93/2 M3s with 30-40k miles most of them are priced around $50K which makes buying your car for ~$40K even more of a bargain

Why not just finance the car from the get go? By leasing your barely paying any interest and payments will be much lower freeing up your cash flow to invest or do whatever you want with your money.

Total money spent on a 3 year lease w/10k miles $2.5K down= $34,864
Total money over 3 years of financing with $2.5K down 2.9% APR= $45,556

Hope this helps

[Dasm3nd]

Originally Posted by Powaup

Nope you will not have to pay the over mileage fee. At lease end you have 3 options:

1-Turn the keys in= you pay for overmileage fees if any+ turn in fees
2- Buy the car out= You don't pay any lease related fee's is just as if you are buying a used car
3-Extend the lease (I think the max you can extend for is 6 months)

I'm inbetween leasing and BMW Select, If I lease I will get 10k miles/month and drive as much as I want since I'm buying the car out at the end

This is from an old post I put up months back:

Thanks. Very helpful!

[F82_SID]

Is 3.19% really the best finance offer BMW has right now?! WTF

[firstkill]

OP

it makes no sense if you have positive equity in the lease, that you would not "sell it" and pay off the loan.

Its the exact same as financing and selling at the 3 year mark.

you lease residual is 37,591.50. lets say you sell it for 42,000 (not sure what you sold it for on your finance scenerio)

is a 4408.5 profit.
total cost of ownership on the lease is reduced to 29852.26

VERY close to financing.


FK

[Money2536]

Originally Posted by firstkill

OP

it makes no sense if you have positive equity in the lease, that you would not "sell it" and pay off the loan.

Its the exact same as financing and selling at the 3 year mark.

you lease residual is 37,591.50. lets say you sell it for 42,000 (not sure what you sold it for on your finance scenerio)

is a 4408.5 profit.
total cost of ownership on the lease is reduced to 29852.26

VERY close to financing.


FK

I agree. That is assuming you had a willing buyer.

[Alpine300zhp]

Originally Posted by Money2536

I agree. That is assuming you had a willing buyer.

I notice you are replacing an S4 with the F80. For my next car I was contemplating an S4 because my E92 drinks gas (I drive 25-30k miles a year). Which car do you see being the better car overall. I do love my E92, but the frequent fill ups are a pain in the butt when you drive like I do. Looking for something fun, usable and somewhat reasonable on gas. It is proving to be harder than I thought. Id love to know why you are making the switch as I though the S4 to be a darn nice car. I see you love white like I do. My next ride will be white as well (my current M3 is Jerez black because I took a car that moved out of 112 status and could not modify to my traditional choice of alpine white or mineral white).

[Money2536]

Originally Posted by Alpine300zhp

I notice you are replacing an S4 with the F80. For my next car I was contemplating an S4 because my E92 drinks gas (I drive 25-30k miles a year). Which car do you see being the better car overall. I do love my E92, but the frequent fill ups are a pain in the butt when you drive like I do. Looking for something fun, usable and somewhat reasonable on gas. It is proving to be harder than I thought. Id love to know why you are making the switch as I though the S4 to be a darn nice car. I see you love white like I do. My next ride will be white as well (my current M3 is Jerez black because I took a car that moved out of 112 status and could not modify to my traditional choice of alpine white or mineral white).

Well, I'm not a huge fan of my S4. I leased it and am going to sell it about for months early. I had an E92 M3 that I replaced with my 911, so I had both cars at the same time for about two years. The plan was to get rid of the coupe and end up in the F80, "practical" sedan when the S4 lease was up.

The S4 with AWD and a basic Stage 1 Tune, exhaust, and intake was faster than my catless E92 up to about 100mph. The torque and power delivery is much more usable in most day-to-day driving than the E92. Without a tune though, the S4 is not very good. I wouldn't want it without one. It is more practical, you can rotate the tires, and my long-term fuel economy is 21.5mpg. The interior is world's better, and the paint is much, much better. It is also more comfortable to get in and take a long drive.

All that being said, the E92 M3 is a borderline Epic car. The 911 is an Epic car. Having the M3 made me not want to drive the S4, but now having a 911 makes me not even want to sit in it. I think it is the lack of feel and experience that the car has. Being fast isn't everything. I guess I'm just really sensitive to understeer. The S4 understeers into a parking spot. I also made the mistake of getting the horrible DSG transmission. I would probably like the car more in a manual. Combine this with the fact that Audi hasn't been very pleasant from a warranty and service perspective. If you had a tuned ECU with BMW, they would probably give you a hard time if you blew up your motor and that was the cause. Audi has gone out of their way to search out and void my warranty. They also jerked me around with Audi Care. There have been a few other warranty issues with my wife's former A4. They just aren't an enthusiast friendly brand any longer.

[Alpine300zhp]

Thanks for your input. I have memories of problems with warranty claims on VAG products in the past. BMW is better in many respects including warranty service. I would love your input once you take delivery and drive the M3. Combined 21.5 mpg on the S4 is not great unless it is all city driving.

[Powaup]

Originally Posted by Alpine300zhp

Thanks for your input. I have memories of problems with warranty claims on VAG products in the past. BMW is better in many respects including warranty service. I would love your input once you take delivery and drive the M3. Combined 21.5 mpg on the S4 is not great unless it is all city driving.

FYI f8x is estimated to get ~30 mpg hwy

http://f80.bimmerpost.com/forums/sho...=927635&page=7

[Alpine300zhp]

Originally Posted by Powaup

FYI f8x is supposed to get ~30 mpg hwy

Understand that I am really suspicious of that number. If it gets anywhere near that then the F80 will be my next car case closed.

[Money2536]

Originally Posted by Alpine300zhp

Thanks for your input. I have memories of problems with warranty claims on VAG products in the past. BMW is better in many respects including warranty service. I would love your input once you take delivery and drive the M3. Combined 21.5 mpg on the S4 is not great unless it is all city driving.

I live in a rather rural area, so I haven't done much bumper to bumper driving. The car is closer to 400AWHP, so 21 isn't that bad. But it is not much better than the E92 on fill-ups. I get about 275 miles per tank.

[Alpine300zhp]

Originally Posted by Money2536

I live in a rather rural area, so I haven't done much bumper to bumper driving. The car is closer to 400AWHP, so 21 isn't that bad. But it is not much better than the E92 on fill-ups. I get about 275 miles per tank.

Thanks a ton for the feedback. This is exactly the information I was looking for. Reality is that I would not buy the S4/5 knowing this. If it gets 275 a tank then that is what I get in my E92. I know your area well and I was just up there last week. Your type of driving is what I would call 70 percent highway. I'm getting 18-19 in the m3 doing 90 percent highway. Very little difference in the two. I figure your tune is costing you 2-3 mpg so best I will see is 24 mpg. The F80 is reportedly going to be mid 20's. If it is near 30 mpg then the matter is closed and my next ride will be the F80 with 6MT and 19's.

[Money2536]

Originally Posted by Alpine300zhp

Thanks a ton for the feedback. This is exactly the information I was looking for. Reality is that I would not buy the S4/5 knowing this. If it gets 275 a tank then that is what I get in my E92. I know your area well and I was just up there last week. Your type of driving is what I would call 70 percent highway. I'm getting 18-19 in the m3 doing 90 percent highway. Very little difference in the two. I figure your tune is costing you 2-3 mpg so best I will see is 24 mpg. The F80 is reportedly going to be mid 20's. If it is near 30 mpg then the matter is closed and my next ride will be the F80 with 6MT and 19's.

Sure thing. I think the F80 is going to be a perfect daily driver other than maintenance cost post warranty. I'm going to lease this one, figure out the best modifications, and then buy one after 3 years.

[Alpine300zhp]

Originally Posted by Money2536

Sure thing. I think the F80 is going to be a perfect daily driver other than maintenance cost post warranty. I'm going to lease this one, figure out the best modifications, and then buy one after 3 years.

Sounds like a plan. My lease comes due April 2016 so I plan to order, if possible, a 2017 LCI M3 with competition package at that time. Even if I have to extend the E92 lease to make it work out on timing. I expect my driving level to decrease by then so I am leaning toward buying. If I am still driving like this then I will probably go with a boring 335 or something more efficient. This all depends on what kind of real world fuel economy numbers the F80 puts down. The 335 is rated at 32 highway and I know it gets about 28-30 highway max. So if they are talking high 20's for the M3 then I will expect it to be somewhere around 24-25 mpg.

[kramsterman]

I own my own company, drive less then 8k miles a year and plan to have the car for at least 3 years. Whats the best option for me?

[Suave]

Originally Posted by firstkill

OP

it makes no sense if you have positive equity in the lease, that you would not "sell it" and pay off the loan.

Its the exact same as financing and selling at the 3 year mark.

you lease residual is 37,591.50. lets say you sell it for 42,000 (not sure what you sold it for on your finance scenerio)

is a 4408.5 profit.
total cost of ownership on the lease is reduced to 29852.26

VERY close to financing.


FK

Great point and I agree. However for those doing an ED lease since the calculation for Residual uses US MSRP an additional 7% of the equity is realized and spread out over the lease payments. Outcome would push the residual value from 37.5K to about 42K. Depending on market demand and value at lease end it could either be a wash and just turn car in or one might be able to squeeze out a few thousand in profit for the next purchase. leasing done right can be very beneficial.