Leasing first and then buying the car out

[itrocks4u]

Hello everyone,

Hope all is well.

Given Covid-19, I'm in a situation where I'm only at 5,000 miles on my 19 M4 CS out of 20,000, when I should have been at about 12,500. From the looks of it, I'd be lucky if I can do 10,000. So I started to think if I should instead buy the car out. Reading numerous threads from the forums, there are variations on forum members' thoughts whether buying out the car is a good idea or bad.

Assuming a low money factor (or say 0% interest), my understanding is that whether buying outright or leasing first and then buying at the end of the lease period should have no difference. For e.g. if the car has MSRP of $100,000 that was negotiated down to $80,000. With a residual of $60,000 and $20,000 in payments, it should bring me back to $80,000 out of pocket if I was to lease and buy. So there really is no difference. The key is to compare the residual value to the market value at the end of the lease e.g. is the residual is $60,000 and market is at $50,000, it wouldn't make sense to buy.

Would appreciate any thoughts on this from your experiences.

NOTE: From numerous threats it also says dealers NO LONGER negotiate buy back. BMWFS may give some discount but not to rely on it.

Poll added for fun.

[Ervin87]

It really depends on your situation.

You have a car that will only depreciate in value.

If your residual is lower than market, and you want to flip it, that is an option, but by the time you buy it out, pay tax on that amount, it is pretty much a wash.

If you plan on keeping it for 10 years, might as well buy it out at the end and enjoy it.

[///M4ster Yoda]

The other factor here is the pig nose G8x. I would wager a ton of people are gonna buy off lease instead of drive that monstrosity

[clutchdj]

Originally Posted by itrocks4u

Hello everyone,

Hope all is well.

Given Covid-19, I'm in a situation where I'm only at 5,000 miles on my 19 M4 CS out of 20,000, when I should have been at about 12,500. From the looks of it, I'd be lucky if I can do 10,000. So I started to think if I should instead buy the car out. Reading numerous threads from the forums, there are variations on forum members' thoughts whether buying out the car is a good idea or bad.

Assuming a low money factor (or say 0% interest), my understanding is that whether buying outright or leasing first and then buying at the end of the lease period should have no difference. For e.g. if the car has MSRP of $100,000 that was negotiated down to $80,000. With a residual of $60,000 and $20,000 in payments, it should bring me back to $80,000 out of pocket if I was to lease and buy. So there really is no difference. The key is to compare the residual value to the market value at the end of the lease e.g. is the residual is $60,000 and market is at $50,000, it wouldn't make sense to buy.

Would appreciate any thoughts on this from your experiences.

NOTE: From numerous threats it also says dealers NO LONGER negotiate buy back. BMWFS may give some discount but not to rely on it.

Poll added for fun.

Residual vrs market is key. Wait till end of the term then go from there. Everything is negotiable especially if you have a vehicle a dealer really wants.

[Demxsr]

There are a lot of factors to consider. I did a ton of research on the options to acquire this car. After looking into it, I decided to lease at the end of 2015. At the time BMW had great lease numbers and ease of transfers (not sure what it's like now). At the end of term I was way over mileage, about 8k miles. But I was still able to negotiate a good deal for buyout. In my case, I ended up with some equity in the car, at that point in time, by buying out the car. This only happened because I was educated on the numbers, negotiated a good deal on my initial lease terms, and then once again at buyout. This happened Sept 2018, so as you stated their policy to negotiate end of lease vehicles may have changed.

The situation really has a lot of variable that will be specific to you. Residual Vs end of lease market value is the biggest thing. But there are a ton of other variables and it can sometimes be a gamble, but usually all options usually land near each other in the end.

[AlterZgo]

It depends on the value of your car. If it’s worth more than the payoff (which it almost always is for me as I also have low mileage on my cars) you can either buy it and keep it or if you are bored with the car trade it into Carmax or sell it to a friend. In either case you DO NOT need to pay sales tax. People will tell you you do but they don’t know what they’re talking about.

Carmax or any dealer will buy your car and pay you the equity if your car is worth more than the payoff. No one pays sales tax b/c they are a dealer.

If you have a friend who wants to buy your car by paying off the lease residual, as long as you transfer the car to him in 10 days after you get the title, you don’t pay any sales tax. However your friend will pay the sales tax to the DMV when he transfers the car to his name at the DMV. This applies to California.

[Maitre_Absolut]

Originally Posted by itrocks4u

Assuming a low money factor (or say 0% interest), my understanding is that whether buying outright or leasing first and then buying at the end of the lease period should have no difference

Yes in a true 0% world that would be the case but its not.

Assuming you would have financed 4 years on initial buy, vs lease say 3 and then finance another 3, thats 6 years of financing vs 4 and likely higher average rate over those 6. The latter costs more.

Those who lease 4 + finance residual over 4 couldnt afford the car to begin with (8 yr loan). Thats an insane amount of interest.

[f80er]

I am not even sure there is a clear answer to this question. So many factors involved but in my case I leased 2 F80s solely based on the TCO for the time of the lease. I had no intention of buying out either but with my second one BMWFS gave me $5500 off the $48K residual so it was a no brainer for me to buy it out.

I would just say do whatever you want because it makes 0 difference what a bunch of car nerds on a forum think you should or shouldn't do.

[c0nrad]

at the moment its looking like my buyout is a great deal, but never know what could happen

[vinlo]

Originally Posted by c0nrad

at the moment its looking like my buyout is a great deal, but never know what could happen

Same here. Will have to wait and see...

[R N M]

If you plan to keep it long term and you can get 0% financing then sure buy it.

If you are not sure then just wait until lease is closer to maturity.

[itrocks4u]

Thanks everyone, other than paying the car upfront or financing the car through BMWFS, what external options are available at lower interest rates?

[itrocks4u]

I decided to go ahead with G80. I sold the M4 CS to the dealer and it had some equity within. All of this happened in the last few weeks lol.

[lilywi440]

Originally Posted by R N M

If you plan to keep it long term and you can get 0% financing then sure buy it.

If you are not sure then just wait until lease is closer to maturity.

Better to evaluate the mortgage option and compared the best benefit for you

[lilywi440]

Better to evaluate mortgage option and compare it with lease, and go for the best option that cost you less, for mortgage check this advisor https://www.bvsmortgages.co.uk/

[NickyC]

Keep the CS, it’s an amazing car and has made a true believer out of me.

Old thread I know, but I never miss a CS plug.

[itrocks4u]

Yea agreed.
I had already returned it and also cancelled on my G80 lol

Now my daily is a Toyota Sienna.