Loan vs Lease vs Own

[GrussGott]

BimmerBahn :

My point was it's not his car, it's BMWFS'. A lease is closer to renting than a purchase with either cash, or a loan, which then you're using the value of the asset as collateral against the loan balance and the asset is owned by the individual, not the bank.

That's not true:

In both cases (loan and lease) - the lender holds the title (or places a lien on the title) until the financing is complete at which point the lender (e.g., BMWFS) removes their name and the borrower takes control of the title. The events for when that can happen are different for loan and lease, but the structure is the exact same: Lender owns the car (and controls the title or lien) until borrower pays off the note. The difference is the obligation: the lease contract give the lessee the right of exit whereas the loan does not, thus the lease allows for risk management while the loan does not.

Of course with owning, after purchase, the owner controls the title.

Net-net, this means there is no difference in ownership or control of the asset with leasing/loaning: in both cases the borrower has the sole right take control of the title (by paying the note) which means neither is closer to renting than the other since, with renting, the renter never has the right to control the title, but with BOTH loans and leases, the borrower does. (and because the lender controls the title, they can legally repo your car if don't make payments)

The best example of this is your rental contract with, say, Hertz or National:

It doesn't give you the right to control the title at the end of the rental period, thus totally different from either a loan or lease.

[Draper]

But we all know only poor people lease. 'Owners' are the only true M-thusiasts.

[Dethsupp0rt]

Originally Posted by Draper

But we all know only poor people lease. 'Owners' are the only true M-thusiasts.

Exactly. Unless you pay for it from spare cash you just happened upon while relaxing on your handmade Italian leather sofa, you're a pauper and do not deserve to brandish the BMW badge.

[BimmerBahn]

GrussGott -- In a lease, at least in the states I'm familiar with, the name on the title is BMWFS and the leasee (primarily for registration purposes). In a loan, the title is held at the bank for collateral / the title also has a lein record on it, so if a duplicate title is requested, the new one has the correct info. The name on the title is the owner, or whomever took the loan out/co-signer, etc. The bank's name is _not_ on the title as owner.

In hindsight, the rental analogy may have been over simplifying. At any rate, my point, which seemed to be lost on the discussion is that the car ain't yours if it's a lease which is why you must bring it back with all the original equipment that it had when you initiated the lease. Another point, if you were the owner of the lease, when you bought the car at the end of the term, you wouldn't be subjected to tax on the new purchase.... why would you have to pay taxes on something you already owned?

Anyhow, people will do whatever the want to their leased vehicle. If they clear the mods with BMWFS, and they approve in writing, that's all that really matters. If they roll the dice and get dinged at lease turn-in, it's on them

Cheers,

[GrussGott]

Originally Posted by BimmerBahn

the car ain't yours if it's a lease

Nor with a loan which is why the bank can repossess it without your permission (and the bank owns your mods in that case too).

And bringing back a leased car is turning down the call option on the contract: returning the car, and one of the reasonable conditions of that option is to return exactly what you started with. You don't have to, you can exercise the call option and buy it, or get another loan.

That's why many lease: options, control, and risk management. It's the smarter financial strategy.

And in both cases the borrower has the sole unambiguous right to own anytime they choose - pay off the note, which is the key distinction and all seems extremely distant from renting a car at Hertz. I'm perplexed why you and others find - or want to find - some meaningful distinction here.

That said, if most of us didn't have inferiority complexes we wouldn't be buying these cars in the first place.

[iamwingman]

Originally Posted by GrussGott

Nor with a loan which is why the bank can repossess it without your permission.

And in both cases the borrower has the sole unambiguous right to own anytime they choose - pay off the note, which is the key distinction and all seems extremely distant from renting a car at Hertz. I'm perplexed why you and others find - or want to find - some meaningful distinction here.

That said, if most of us didn't have inferiority complexes we wouldn't be buying these cars in the first place.

It's renting with an option to buy. But renting nonetheless. Only someone with a Hangup would suggest otherwise. I don't see anything wrong with renting, personally. Maybe you do?

[RickFLM4]

Originally Posted by BimmerBahn

GrussGott -- In a lease, at least in the states I'm familiar with, the name on the title is BMWFS and the leasee (primarily for registration purposes). In a loan, the title is held at the bank for collateral / the title also has a lein record on it, so if a duplicate title is requested, the new one has the correct info. The name on the title is the owner, or whomever took the loan out/co-signer, etc. The bank's name is _not_ on the title as owner.

In hindsight, the rental analogy may have been over simplifying. At any rate, my point, which seemed to be lost on the discussion is that the car ain't yours if it's a lease which is why you must bring it back with all the original equipment that it had when you initiated the lease. Another point, if you were the owner of the lease, when you bought the car at the end of the term, you wouldn't be subjected to tax on the new purchase.... why would you have to pay taxes on something you already owned?

Anyhow, people will do whatever the want to their leased vehicle. If they clear the mods with BMWFS, and they approve in writing, that's all that really matters. If they roll the dice and get dinged at lease turn-in, it's on them

Cheers,

You are subject to tax upon buyout because (at least in FL) you weren't required to pay it upfront as you would if you financed the car with a loan or paid cash. You pay tax on the part of the car you signed up to lease (i.e. the agreed upon depreciation). If you return the car you owe no further sales tax. If you buy out you just pay the sales tax on the residual / buy out amount.

If you modify a leased car and return it you will pay a price for the dealer to return it to factory spec, as required by the lease. This isn't much different than a dealer paying you less on trade in for a modified car. Penalty either way. Same for driving 20K miles on a lease - pay overage on lease or take lower price on trade in or resale.

Leases and loans are far more similar than dissimilar. The option implicit in a lease provides the lessee more economic flexibility despite the misconception that "owning" the car gives you more flexibility. You can trade in or sell the car before the contractual end of either arrangement. You can always buyout / refinance a lease into a financing, but not vice versa.

[GrussGott]

Originally Posted by iamwingman

It's renting with an option to buy. But renting nonetheless. Only someone with a Hangup would suggest otherwise. I don't see anything wrong with renting, personally. Maybe you do?

Someone with a hangup on definitions, and specifics; see RickFLM4's post.

Personally we only rent or lease cars and houses as we see too much downside risk these days, so nothing wrong with renting. It's just extremely in-accurate to equate an auto lease with renting a car from Hertz.


But since we're chatting about renting ... we did rent-to-own (really lease to own) once on a house in Chicago as we had an expectation that we'd eventually move there but weren't 100% sure and our residence was elsewhere.

Back then it seemed stupid to ever rent a house since even owning one for a month could turn a profit, but we also just thought there were enough variables that we wanted an "out" if we needed it. That was in 2007.

Needless to say, the seller was extremely distraught when we paid the minuscule exit fee and got the fuck out of dodge.

But I bet you're curious, you're thinking, "wait - if you got out of the contract but still needed a place in chicago, where'd you go?" Well that's the genius of this whole story: we negotiated a sept-may nightly price at the Hyatt Regency downtown for $80/nt for 3 years! Any night we wanted, sept-may, for $80.

Now you're thinking, "but what the hell does that have to do with BMWs??" Well, we used some of the massive hyatt points we racked up to stay in suites at Park Hyatts across Europe on ED of an M car.

That we leased. kah-BOOM, brought that story home.

That was kinda fun.

[iamwingman]

Originally Posted by GrussGott

Someone with a hangup on definitions, and specifics; see RickFLM4's post.

Personally we only rent or lease cars and houses as we see too much downside risk these days, so nothing wrong with renting. It's just extremely in-accurate to equate an auto lease with renting a car from Hertz.

And since we're chatting about renting ... we did rent-to-own (really lease to own) once on a house in Chicago as we had an expectation that we'd eventually move there but weren't 100% sure and our residence was elsewhere.

Back then it seemed stupid to ever rent a house since even owning one for a month could turn a profit, but we also just thought there were enough variables that we wanted an "out" if we needed it. That was in 2007.

Needless to say, the seller was extremely distraught when we paid the minuscule exit fee and got the fuck out of dodge.

But I bet you're curious, you're thinking, "wait - if you got out of the contract but still needed a place in chicago, where'd you go?" Well this is genius of this whole story: we negotiated a sept-may nightly price at the Hyatt Regency downtown for $80/nt for 3 years! Any night we wanted, sept-may, for $80.

Now you're thinking, "but what the hell does that have to do with BMWs??"
Well, we used some of the massive hyatt points we racked up to stay in suites at Park Hyatts across Europe on ED of an M car.

That we leased. kah-BOOM, brought that story home.

That was kinda fun.

Well done sir.

[HighlyMedicated]

I see no problem with renting or leasing anything. Its just a mind set, even if you owned the car its not like you can list it as any asset. I feel like I owned the car for 3 years and sold it and got another. To judge and say people are poor or what not is just as bad as racism. You guys are so pompous like you drive a ferrari and even on that forum people have never said anything about social classes ever. If you know any finances its better to lease or buy used any car over 50k because the depreciation is so high and plus with the extra cash instead of a hefty down payment can help towards a profit building venture like a business loan, or stocks, or anything that you can use with your extra cash flow. To say you own it proudly is not something to brag about because in essence since you care so much about status you are only driving a bmw...sad to read but it is america, freedom of speech regardless if you are saying such negative things. But the american dream is to fake it till you make it and the reason why credit was made in the first place, to help people reach higher, and the rich to make interest!

Everything gruss has said its spot on to me, not much a difference to be honest. We all driving the same car and you would never know on the road if leased or not because it really doesn't matter but your ego and pride about such pity things. smh

[brian30tw]

There's another option here: you are all correct, and the differences between the two, for practical purposes, is purely semantics and not worthy of further discussion on a car forum.

[HPIA4v2]

Lease -> wealthy
Buy and keep -> enthusiast and financially savvy
Buy n trade every 4 years -> sucker

[Draper]

Originally Posted by HPIA4v2

Lease -> wealthy
Buy and keep -> enthusiast and financially savvy
Buy n trade every 4 years -> sucker

It could be argued that leasing is the smart play even if you plan to keep the car long-term.

The cost is largely unchanged, and the inherent hedge against damage during the term of the lease plus additional tax benefits (in some cases) should outweigh any feelings a person may receive when paying cash.

[mtr3s]

I financed with the intention on keeping the car after pay off. I am not worried about the repair costs because I believe it will be cheaper than my current monthly payments as long as I keep up with maintenance.

[Mike991M4]

Originally Posted by RickFLM4

You are subject to tax upon buyout because (at least in FL) you weren't required to pay it upfront as you would if you financed the car with a loan or paid cash. You pay tax on the part of the car you signed up to lease (i.e. the agreed upon depreciation). If you return the car you owe no further sales tax. If you buy out you just pay the sales tax on the residual / buy out amount.

Not in Georgia unfortunately. Our new title tax you have to pay twice if you buy out the lease. I bought out the lease on our 6 month old Cayenne for a variety of reasons, and had to pay tax twice.

[RickFLM4]

Originally Posted by Mike991M4

Not in Georgia unfortunately. Our new title tax you have to pay twice if you buy out the lease. I bought out the lease on our 6 month old Cayenne for a variety of reasons, and had to pay tax twice.

That sucks. Presumably you didn't get into the lease expecting to buy it out after 6 mos. so it really sucks that circumstances arose that compelled you to buy it out.

Paying sales tax on the full value of the car upfront and then needing to pay again on residual if buying out would prevent me from leasing. It would change economics and value proposition of "option" far too much to make it a viable financing type for me personally. Glad I live a little further south.

[Mike991M4]

Originally Posted by RickFLM4

That sucks. Presumably you didn't get into the lease expecting to buy it out after 6 mos. so it really sucks that circumstances arose that compelled you to buy it out.

Paying sales tax on the full value of the car upfront and then needing to pay again on residual if buying out would prevent me from leasing. It would change economics and value proposition of "option" far too much to make it a viable financing type for me personally. Glad I live a little further south.

well, at least the second tax payment was based on assessed value, which was 30k less than the cost of the car, so it wasn't a total double tax.


Its a diesel that we special ordered to our exact specs, and Porsche extended the warranty to 6/100 as a goodwill gesture when dieselgate broke. And, I bought 2 new porsches on the same day, and didn't do my homework on the lease numbers. Got the 911 at 1.9%, but they screwed me on the money factor for the lease. After that, Porsche financial couldn't seem to process my lease payments and I had up to 3 lease payments at one point lost in space, so I just said screw it and bought it out, because its my wife's favorite car ever.

Now because we did it, I'm getting 11,500 from the class action suit, instead of the 2000 had I leased, so I think it will work ok.

[HighlyMedicated]

Originally Posted by mtr3s

I financed with the intention on keeping the car after pay off. I am not worried about the repair costs because I believe it will be cheaper than my current monthly payments as long as I keep up with maintenance.

Keeping the car is the only reason to finance but as mentioned above leasing to own will be cheaper monthly but will take longer depending on how many months you decide to finance. But cheaper than maintenance you pay monthly? Not likely at the higher mileage you would need parts replaced cause old wear and tear plus the labor to do so in these cramped engine bays. Small repairs will most likey cost over $1000 and you will be driving an older car that may stop on the road, probably not, but as a daily driver a person can have a new model with no problems instead of worrying. High performance cars tend to break down more as well. I do love this model of M over the older ones and may buy out in the future, but if I were to keep to own something it would be a classic, that night just make you money if you ever sell the car. Before I do take to bmw I would take to carmax first and make extra money to help finance the next lease! I was busy at the time I got my new M and leased during Marches special, but from the reasearch I did the M's all pay more at carmax enough to pay your obligation to bmw. I should have waited till july tho, M's are getting touchscreen finally and seems to be better deals now than before the marketing hype of special lol. But no tanzanite blue I figured so I had to pick her up immediately and its a color to sacrifice for!

[mperfct]

What about squeakers like me who buy 3-4 year old CPO cars with cash? Dodge the depreciation and still get a little warranty protection. I tend to keep cars even out of warranty for awhile. $3000 repairs suck, but that's only a $250/mth car payment.

[HPIA4v2]

Originally Posted by mperfct

What about squeakers like me who buy 3-4 year old CPO cars with cash? Dodge the depreciation and still get a little warranty protection. I tend to keep cars even out of warranty for awhile. $3000 repairs suck, but that's only a $250/mth car payment.

No arguing on the strategy, but for M cars it's more difficult in real life than theory. Non-M BMWs, no problem too many of them to choose from.

This is the issue buying lease-return M-cars, If the car is reliable, clean and low mileage well the lessee will likely buy it financed though BMWFS.
If the ooriginal lessee passed on it, it'll be snatched by dealer cause they know it's easy sell after CPOed.
Whatever left, went to auction and get snatched by used car dealers.
This is the issue shopping for last M-car category, I know I can tell if car has been painted even with clean CarFax. I would like to nego the price down but a bunch of suckers (sorry for the term, these are people who only look at CarFax), will outbid me everytime.

At the end you better off just buy M-car new and keep it for long time.

[M4 GTS]

Originally Posted by Draper

But we all know only poor people lease. 'Owners' are the only true M-thusiasts.

This is one of the dumbest statements I ever heard.

[Super Spartan]

Nuff said.......