How to trade in and lease at the same time?

[echostate]

Being somewhat terrified by the insane extended warranty price, I'm thinking about trade in and get a new lease ... lol

I'm currently owning a X5, and not sure what's the best way to transit from owning a BMW to leasing a new BMW. I believe generally it's good to have zero down in a lease (e.g., if the car gets totaled, the insurance company is not going to reimburse us for the lease down payment). But what if we also have a trade in? Do we have to use the trade-in money for lease down payment? Is that the only option? Can we just get cash from dealer? Or basically we should sell the car to other buyer (carmax, or craigslist) and then get a zero-down lease for a new BMW?

Thanks!

[jg425]

You can trade the vehicle, most manufacturers will only allow up to 25% of the MSRP to be used as equity into the lease. So the dealer will have to give you a check for the difference. The downside is that the equity will be gone if you decide to turn the lease in at the end but your payment will be lower. You can sell the vehicle to carmax, but if you live in a state like Georgia you will lose the tax difference from trading. Most states do not give you a tax difference from trading on a lease. So it really depends on how comfortable you are with the payment with 0 money down.

[fbuzila]

I think you can get a better deal if you try to sell it yourself, like on Autotrader;
I looked into myself about 6 months ago, the dealership was offering me about $34k and I listed on autotrader at $44k; I received offers around 39k mark...just an idea

[echostate]

Originally Posted by jg425

You can trade the vehicle, most manufacturers will only allow up to 25% of the MSRP to be used as equity into the lease. So the dealer will have to give you a check for the difference. The downside is that the equity will be gone if you decide to turn the lease in at the end but your payment will be lower. You can sell the vehicle to carmax, but if you live in a state like Georgia you will lose the tax difference from trading. Most states do not give you a tax difference from trading on a lease. So it really depends on how comfortable you are with the payment with 0 money down.

Thanks for reply.

Suppose trade-in value is 30k, and half (15k) is used as lease down payment, and half (15k) is returned to me as a check. Then am I not losing the tax difference all the same? Or the 15k that goes to lease down payment can help me reduce the leasing tax?

The only sure way I know to enjoy the tax benefit of trade-in is to use the 30k trade-in value to directly purchase a new BMW, in which case the sale price is reduced by 30k so is the sale tax dropped accordingly.

[echostate]

Originally Posted by fbuzila

I think you can get a better deal if you try to sell it yourself, like on Autotrader;
I looked into myself about 6 months ago, the dealership was offering me about $34k and I listed on autotrader at $44k; I received offers around 39k mark...just an idea

yeah ... too much hassle, especially my x5 has a minor accident on file (rear bumper replaced) and I really don't want to deal with all the low balls on autotrade/craigslist ...

[jg425]

Originally Posted by echostate

Thanks for reply.

Suppose trade-in value is 30k, and half (15k) is used as lease down payment, and half (15k) is returned to me as a check. Then am I not losing the tax difference all the same? Or the 15k that goes to lease down payment can help me reduce the leasing tax?

The only sure way I know to enjoy the tax benefit of trade-in is to use the 30k trade-in value to directly purchase a new BMW, in which case the sale price is reduced by 30k so is the sale tax dropped accordingly.

It depends on what state you are registering the vehicle in. Most states do not allow a trade difference because most states tax leases on a monthly rate. Which state are you registering the vehicle?

I would take the car to carmax and get a purchase offer and use that to guarantee what trade in value you will get from the dealership.

[cmyx6go]

When you go to the dealer, make sure you don't muddy the waters. Negotiate a price for your new lease separately from the negotiation for the trade. This way they can't play games with you and roll unnecessary dollars into the lease price.

[Kzang]

Trading in your car into a leased car is like putting a down payment into it. All you are doing is reducing the cap cost. It would be smarter to sell the X5 privately or to places like CarMax for maximum returns and just lease the new X5 separately.

In regards to being afraid of warranty and costs... does your current X5 already show signs of issues? I think getting into a new car lease or finance costs more than keeping up with your current X5. Unless you are just looking for a new ride.

[tntp]

OP's "....terrified by the insane extended warranty...". Well, this does not make economic sense unless the OP is looking for the new ride anyway. It's more like spending a buck to save a few dimes to me. Keeping the car for 3 more years gives the OP more money than doing the new lease, trade-in and other headaches.

[fbuzila]

Originally Posted by tntp

OP's "....terrified by the insane extended warranty...". Well, this does not make economic sense unless the OP is looking for the new ride anyway. It's more like spending a buck to save a few dimes to me. Keeping the car for 3 more years gives the OP more money than doing the new lease, trade-in and other headaches.

I agree on this, that's why I decided to keep my F15 and also not buy the extended warranty
(but I also enjoy diy stuff)
F15 is very reliable based on my research

[geedup35]

Originally Posted by tntp

OP's "....terrified by the insane extended warranty...". Well, this does not make economic sense unless the OP is looking for the new ride anyway. It's more like spending a buck to save a few dimes to me. Keeping the car for 3 more years gives the OP more money than doing the new lease, trade-in and other headaches.

I was actually thinking the same thing. Even if you have to drop 5K on and extended warrantee (high balled a number). Wouldn't that be cheaper than the loss you are going to take on trade in?

Now if you also wanted a new ride, I would wait a little until they start making deals on the new ones.

[Kzang]

Originally Posted by tntp

OP's "....terrified by the insane extended warranty...". Well, this does not make economic sense unless the OP is looking for the new ride anyway. It's more like spending a buck to save a few dimes to me. Keeping the car for 3 more years gives the OP more money than doing the new lease, trade-in and other headaches.

That's exactly what I was saying.

[echostate]

Originally Posted by tntp

OP's "....terrified by the insane extended warranty...". Well, this does not make economic sense unless the OP is looking for the new ride anyway. It's more like spending a buck to save a few dimes to me. Keeping the car for 3 more years gives the OP more money than doing the new lease, trade-in and other headaches.

Yeah. I was looking into the new X5 anyway. The price of the extended warranty is just another factor.

But at the end I did get an extended warranty and will keep the F15 for another two years or so.

[OlenVinera]

It all depends on what works best for you financially and convenience-wise.

[Hotflare]

Originally Posted by echostate

Yeah. I was looking into the new X5 anyway. The price of the extended warranty is just another factor.

But at the end I did get an extended warranty and will keep the F15 for another two years or so.

That's what I plan to do too before getting into a new m50i. Or m40i x3. There's no deals to be had , even with the iX coming into play as hurting for sales as they are

[jiggz]

Originally Posted by OlenVinera

It all depends on what works best for you financially and convenience-wise.

Solid advice 4.5 years later!

[EdnyPope]

You can use the trade-in value towards the lease down payment, but it's not the only option. Some dealers may offer you cash for your trade-in instead. Another possibility is selling your car to another buyer, like CarMax or through Craigslist, and then opt for a zero-down lease. By the way, have you ever explored narrative trading? It's an interesting approach that incorporates storytelling into trading decisions. Good luck with your transition, and enjoy your new BMW!

[Maverik259]

Originally Posted by EdnyPope

You can use the trade-in value towards the lease down payment, but it's not the only option. Some dealers may offer you cash for your trade-in instead. Another possibility is selling your car to another buyer, like CarMax or through Craigslist, and then opt for a zero-down lease.

Ya. Down payment on a lease. Genius! Way to resurrect a 5 yr old post.