[novalauren]

seriously considering purchasing my 06 325xi upon the lease expiration...what kind of "deals" can I get? want to keep my payments on the low side so I will look for a 5 year option......how much to purchase an extended warranty? looking for experiences anyone may have had...thanks so much!

[DrGP]

Your CA will have the answers.

[theYardie]

I'm interested in knowing this as well. I've been lead to believe BMWNA doesn't negotiate at the end of a lease. My source says they pretty much stick to the residual value. I don't know how true this is.

[raquelmister]

I might be keeping mine too, but only if I can work the price down a bit.

[dmboone25]

Financing the car after leasing it is never a good idea. You want a lower payment? Ok, so you will get a 5 year loan then--which will make the bank more money over that term. You want the payment to be the same? Shorter loan, higher payment--but you end up paying more than if you just bought it outright at the beginning. Either way--you will finance the same car for as many as 8 years (assuming a 3 year lease and 5 year loan at the end) and end up being out of pocket much more than sticker....

Your leasing contract will have an amount that the car is guaranteed to be worth at the end of your lease--if I understand correctly, you will not have much leverage to negotiate a lower price--you agreed at the beginning that the car would be worth that much at the end of the lease period.

You would be better off either leasing a new car with a new warranty.

[theYardie]

Originally Posted by dmboone25

Financing the car after leasing it is never a good idea.

I completely agree with this.

If I am to lease the car and then purchase it after I will buy it outright at the end of the lease. Basically, if I buy after the lease, it's for cash. By doing that I am holding onto what I would make as a downpayment and put it in an interest bearing account. I would cash that money out 3 years later and pay the car off in full. I've calculated that this works out to be more cost effective than financing the car to begin with.

[BK]

Originally Posted by theYardie

I've calculated that this works out to be more cost effective than financing the car to begin with.

To be clear, this may be true in your case, but that is atypical. It depends on the finance rate you could have gotten, the rate of interest on the money sitting in an account in the meantime, and the interest rate you pay to the leasing company on its money tied up in your lease (the "money factor").

I'm sure you already know that; I posted for those who don't know how it works or how to do the comparison themselves. As you probably also know, we see a million "lease versus buy" posts.

[DrGP]

I just bought my S4 at lease end from AFS. Biggest PIA that I have ever experienced. Poeple at AFS and VW Credit are virtually incompetent. Started the process in early May and I still do not have a title for it. Residual was $26k. Paid $28K after taxes and transfers. I am reselling it for $31K. Made $3K on the transaction and didn't pay the last months lease payment and lease return fee $400(over $1k). BUT If I had financed the car, my payments would have been in the $700/mo range. I'm better off leasing my 335i with warranty and free maintenance. Plus I have over $4K in my pocket.

[flush01]

if the car will not have any issues, im thinking of buying it at the end of the lease as well... i also want to know if you can negociate at the end of the lease

[theYardie]

DrGP, that's pretty good manuevering with the VW. Was VW willing to negotiate at the end of your lease?

Originally Posted by BK

To be clear, this may be true in your case, but that is atypical. It depends on the finance rate you could have gotten, the rate of interest on the money sitting in an account in the meantime, and the interest rate you pay to the leasing company on its money tied up in your lease (the "money factor").

Yup, you're right again. That's exactly how I did the analysis. I'm being offered the lowest BMW MF and will put down the maximum number of security deposits. Even before the security deposits, I'm ahead when I factor that my MF (lease rate) is much better than the interest rate I can get through financing with a lender I care to do business with, even with my excellent credit. Without going into a lot of details, I'm over $3k+ ahead leasing and then paying cash vs paying $20k to $25k down and financing the rest. So why not make money off what I would've put down and spend it later to buy the car? At that time the money I would put down is actually worth less than it is today. The only thing I haven't figured out precisely is how much tax I would pay on interest earned. I can never seem to figure that out because it's calculated as part of my income.

The sum of it is that leasing then financing doesn't work out, but leasing then buying cash may work in some cases.

[vm]

The financing company knows their business rather well. If the residual value of your car is about the market price of the car at lease end then no, they wont negotiate. If, on the other hand, due to market conditions your residual is much higher than market price they will probably negotiate because they will lost more money and time when they sell your car in auction.

[sctazmon]

Although lease then buy is usually not the most cost effective viewed from the date of purchase, that is not the desired analysis if you are at the end of your lease.

Viewed from the end of the lease, the question becomes what is the market value of the car versus the payoff. If the market value exceeds the payoff, then you have equity. (Don't forget to consider transaction costs.) If you want to purchase your car after the lease, consider yourself making a desicion about buying a used car. What is the value? Can I get another one or a better one at a better price? Also, you are the original owner and you know what the car has and has not been through, and that also is a significant factor.

The main point here is that if you are already at the end of your lease, forget what you have paid - (that's history), but rather make the decision with the marginal cost of buying a used car based on market values and payoff cost.

[noro]

Originally Posted by sctazmon

Although lease then buy is usually not the most cost effective viewed from the date of purchase, that is not the desired analysis if you are at the end of your lease.

Viewed from the end of the lease, the question becomes what is the market value of the car versus the payoff. If the market value exceeds the payoff, then you have equity. (Don't forget to consider transaction costs.) If you want to purchase your car after the lease, consider yourself making a desicion about buying a used car. What is the value? Can I get another one or a better one at a better price? Also, you are the original owner and you know what the car has and has not been through, and that also is a significant factor.

The main point here is that if you are already at the end of your lease, forget what you have paid - (that's history), but rather make the decision with the marginal cost of buying a used car based on market values and payoff cost.

That's exactly right. In general financing a car after a lease is not a good idea, but each deal should be evaluated separately. There are many factors come into play such as is the payoff amount less than a market value of the car, does your car have rare options that you cannot find elsewhere, you know your car's history but not the history of a random used car off the lot.

[theYardie]

Originally Posted by sctazmon

The main point here is that if you are already at the end of your lease, forget what you have paid - (that's history), but rather make the decision with the marginal cost of buying a used car based on market values and payoff cost.

Excellent post.

[Lassaxi]

My goodness! This is the most financially cogent discussion of lease buyouts I've ever seen on this forum. Whatever you guys do, don't start reading the threads in the new car buying section...

[flush01]

i got a question, i asked this before but noone answered me.. lets say buyout is $30,000 and the market value is $35,000... so lets say I find someone who wants to buy it right after my lease ends, so he writes a check for $35,000 to bmw and I get the difference without me paying any tax OR I HAVE to buy it from the dealer, pay 15% tax and only THEN I can sell it ?

[ase2dais]

Originally Posted by flush01

i got a question, i asked this before but noone answered me.. lets say buyout is $30,000 and the market value is $35,000... so lets say I find someone who wants to buy it right after my lease ends, so he writes a check for $35,000 to bmw and I get the difference without me paying any tax OR I HAVE to buy it from the dealer, pay 15% tax and only THEN I can sell it ?

Can you legally sell your lease car if the title is not entirely in your name? (taxes)
It would be really nice for the dealer to broker the deal on your behalf, but why would they?

[sctazmon]

Originally Posted by flush01

i got a question, i asked this before but noone answered me.. lets say buyout is $30,000 and the market value is $35,000... so lets say I find someone who wants to buy it right after my lease ends, so he writes a check for $35,000 to bmw and I get the difference without me paying any tax OR I HAVE to buy it from the dealer, pay 15% tax and only THEN I can sell it ?

The ordinary process is as follows. You purchase the car from BMWFS for payoff price or better if you can negotiate a better deal. Then you own it. You pay sales tax on the purchase. Then you sell it. The buyer pays sales tax on the subsequent sale.