Owners choice vs Lease

[dantm3]

I am still waffling back and forth between buying new, or trying to find a used M3. I was talking to my CA last week when I was getting service on my wife's 5 series and he told me that you avoid fees in owners choice (like acquisition) and also avoid being taxed twice if you decide to purchase and in the end the payment is lower. My question is can I have someone take over a owners choice contract with same terms like a lease swap mid contract term, or am I in contract for the full term and have to keep the car or I guess sell for whatever residual value is left?

[BMWjunkie]

As I understand it, owner's choice is a loan with a balloon payment after the initial term. You can either turn the car in at the term end (after 36 months), pay it off or refinance. So it acts like a lease but it isn't one; you are the owner. As a result, just like you can't assume someone's car loan, someone can't assume your Owner's Choice loan. You have to pay it off in order to sell it.

[dantm3]

Originally Posted by BMWjunkie

As I understand it, owner's choice is a loan with a balloon payment after the initial term. You can either turn the car in at the term end (after 36 months), pay it off or refinance. So it acts like a lease but it isn't one; you are the owner. As a result, just like you can't assume someone's car loan, someone can't assume your Owner's Choice loan. You have to pay it off in order to sell it.

Makes total sense... I will probably lease as I like the flexibility of being able to swap out of a car if I am ready for something new..

[dmk08]

Owners choice has the same terms as a lease same rates etc.. As BMWJunkie said above the biggest difference is the car is titled in your name. This is only done in about 5 states IIRC. The main purpose is so clients dont get double taxed if they want to buy the car after the lease.

In Georgia for instance you pay tax on the full value of the car when you buy it lease or purchase. If you leased the car and then bought it out you would have to pay full tax on the fair market value of the car again because the name on the title will change.

So its to help in states with stupid lease laws. In Cali and other places leasing is simple you only pay tax on the leased amount up front.

[TurboM]

The interest rate is ALWAYS higher with owners choice. You need to do your math if you're trying to figure out the better deal while weighing in the odds of you actually buying it after a lease term.

Generally speaking, if you want to keep it over 3 years, financing it will be better (assuming you get a decent rate, i.e. less than 2%). If you don't keep it less than or equal to 3 years, a lease will be better (assuming you dont plan on buying it after the lease ends. This will obviously vary a bit based on your rate and "break-even" point with the car".

Trust me these companies have figured out ways to maximize their profit. The owners choice allows you to pay a little more than a lease would be and gives you the option to buy it out for just a little less than it would be to buy out a lease. You just need to crunch the numbers to figure out how much more you're paying over the lease period to see if its really worth the extra money based on the residual of the car.

Keep in mind, as stated earlier, that tax requirements vary from state to state which could be a big factor in your decision.

[jjrandorin]

Originally Posted by dantm3

I am still waffling back and forth between buying new, or trying to find a used M3. I was talking to my CA last week when I was getting service on my wife's 5 series and he told me that you avoid fees in owners choice (like acquisition) and also avoid being taxed twice if you decide to purchase and in the end the payment is lower. My question is can I have someone take over a owners choice contract with same terms like a lease swap mid contract term, or am I in contract for the full term and have to keep the car or I guess sell for whatever residual value is left?

There would be no lease swap on owners choice because its not a lease. You would need to sell the car to the other person, just the same as if you had paid cash for the car.

So, you would not be advertising a lease swap, you would be selling them a car. You would not need to go through the BMW lease swap approval process, you would need to have someone purchase the car from you outright.

[dantm3]

Makes sense. I may just go the lease way for a little more flexibility and personally would probably want something new after 3 years.

[mercedesc63]

Originally Posted by dantm3

I am still waffling back and forth between buying new, or trying to find a used M3. I was talking to my CA last week when I was getting service on my wife's 5 series and he told me that you avoid fees in owners choice (like acquisition) and also avoid being taxed twice if you decide to purchase and in the end the payment is lower. My question is can I have someone take over a owners choice contract with same terms like a lease swap mid contract term, or am I in contract for the full term and have to keep the car or I guess sell for whatever residual value is left?

Buy new it's nicer and it costs nearly the same.

[dantm3]

Originally Posted by mercedesc63

Buy new it's nicer and it costs nearly the same.

You mean from a lease standpoint? New vs used purchase is huge difference

[dmk08]

Originally Posted by dantm3

Makes sense. I may just go the lease way for a little more flexibility and personally would probably want something new after 3 years.

If you're keeping the car 3 years you'll have the same options to turn in / trade in an Owners Choice car for the same residual as a lease car. You just cannot trade it early to another party.

[jjrandorin]

Originally Posted by dmk08

If you're keeping the car 3 years you'll have the same options to turn in / trade in an Owners Choice car for the same residual as a lease car. You just cannot trade it early to another party.

+1

Owners choice is only offered in some lease unfriendly states, and functions a lot like a lease but is not one.

owners choice does not have a lease acquisition fee of 925 because its not a lease.

Owners choice does not have a money factor (its not a lease) it has an interest rate, just like a regular loan.

Owners choice does NOT come with Gap Insurance (a lease comes with gap insurance included, owners choice does NOT just like a regular loan does not).

Owners choice has some tax advantages over leasing when it comes time to turn the car in, but as I am not in an owners choice state, I will leave that to someone in one of those states to explain. Something about tax credits etc.

On an owners choice contract, YOU are the registered owner, so you can sell the car to whoever you want, just as if you were in a traditional loan. You can NOT just "have someone assume it" like a lease swap.

owners choice, in general, has more flexibility than a lease, because you own the car. You can turn it in at the end of the deal and not pay the residual value just like a lease ( and UNLIKE bmw select).

You should consider taking a shorter term lease (maybe 24 months), rather than trying to figure out how to get out of the car early every time. BMW subsidizes the 36 month lease the most (usually) but it does not have to work for you.. they will let you do shorter terms, it just is normally more expensive on a monthly payment basis.

[mischiefbenz]

Originally Posted by TurboM

The interest rate is ALWAYS higher with owners choice. You need to do your math if you're trying to figure out the better deal while weighing in the odds of you actually buying it after a lease term.

Generally speaking, if you want to keep it over 3 years, financing it will be better (assuming you get a decent rate, i.e. less than 2%). If you don't keep it less than or equal to 3 years, a lease will be better (assuming you dont plan on buying it after the lease ends. This will obviously vary a bit based on your rate and "break-even" point with the car".

Trust me these companies have figured out ways to maximize their profit. The owners choice allows you to pay a little more than a lease would be and gives you the option to buy it out for just a little less than it would be to buy out a lease. You just need to crunch the numbers to figure out how much more you're paying over the lease period to see if its really worth the extra money based on the residual of the car.

Keep in mind, as stated earlier, that tax requirements vary from state to state which could be a big factor in your decision.

This is incorrect. I did an owners choice in TX back in Aug. 2013 when i got my F30 335i. The dealer I got my car from would not give me the base MF on a lease. To save the deal at the 11th hour, they offered the owners choice to me. The finance interest rate was the same as the base MF for a lease at that time.

Another reason BMW offers The Owners Choice & BMW Select programs is for ppl that would like to lease the i series models and still have them capitalize on rebates. Many of these rebates only apply for personal purchases; so buyers typically wouldn't qualify on a std. lease. With the Owners Choice & BMW Select plans, they would as the car is title in their name.

[Vectors2final]

PenFed's loan that's similar to Owners Choice is pretty competitive in terms of interest.


New

1.74% APR 24 to 36 months $10,000 to $100,000
2.24% APR 37 to 48 months $10,000 to $100,000
2.49% APR 49 to 60 months $10,000 to $100,000

[dmk08]

Originally Posted by Vectors2final

PenFed's loan that's similar to Owners Choice is pretty competitive in terms of interest.


New

PenFed has a loan (Payment Saver) similar to BMW Select not Owners Choice.

[dantm3]

Originally Posted by dmk08

PenFed has a loan (Payment Saver) similar to BMW Select not Owners Choice.

I have read up on payment saver... here are options I guess for me
Lease: flexibility of possible swapping out, and able to return or buy out at end of of lease, but then have to pay taxes again
Owners choice: same terms as lease but no acquisition fee so slightly lower payment. No flexibility on swap but then taxes are not due if I buyout or finance balloon
Penfed: balloon payment at end but zero flexibility with any swap or lease return. I can sell or refinance balloon at end

I am still lean towards a lease

[jjrandorin]

Originally Posted by dantm3

I have read up on payment saver... here are options I guess for me
Lease: flexibility of possible swapping out, and able to return or buy out at end of of lease, but then have to pay taxes again
Owners choice: same terms as lease but no acquisition fee so slightly lower payment. No flexibility on swap but then taxes are not due if I buyout or finance balloon
Penfed: balloon payment at end but zero flexibility with any swap or lease return. I can sell or refinance balloon at end

I am still lean towards a lease

I was under the impression that owners choice is usually a bit more expensive, but you would need to run the numbers. No lease acquisition fee, but dont forget you will need to get gap insurance (or you should anyway.. I certainly would not get a car like that with little money down and no gap insurance, unless I was willing to self insure myself for the possibility of a 5-7k loss if something happened).

[Vectors2final]

Originally Posted by dmk08

PenFed has a loan (Payment Saver) similar to BMW Select not Owners Choice.

You're right, my mistake.

Originally Posted by dantm3

I have read up on payment saver... here are options I guess for me
Lease: flexibility of possible swapping out, and able to return or buy out at end of of lease, but then have to pay taxes again
Owners choice: same terms as lease but no acquisition fee so slightly lower payment. No flexibility on swap but then taxes are not due if I buyout or finance balloon
Penfed: balloon payment at end but zero flexibility with any swap or lease return. I can sell or refinance balloon at end

I am still lean towards a lease

With the PenFed, you can trade it in whenever you'd like... Obviously it depends on the value of your car, and things that would preclude you from actually wanting to and there's no turn-in. I feel like it's the better alternative to leasing in Texas. It all depends on the lease rates and residuals that could sway you either way.

[changw1]

Another significant difference to consider is the tax paid between the two structure. For Owner Choice, the owner will need to pay tax on the full price of the vehicle. On the other hand for leasing, sales tax is only levied on the monthly payment. However, there are exception to that rule such as VA, NJ, etc....

[Vectors2final]

Tax is in full up front in Texas with a lease.

[936F06]

Finance or owners choice sound the best in texas if your planning to keep.
I am thinking of the same thing.
First time buying so learning on this as well. It all depends. Thanks guys.
Back to OPs thread.

[dantm3]

Originally Posted by 936F80

Finance or owners choice sound the best in texas if your planning to keep.
I am thinking of the same thing.
First time buying so learning on this as well. It all depends. Thanks guys.
Back to OPs thread.

Im considering leasing and then just paying taxes upfront.. the only problem I have with this is if the car is wrecked, and I didn't finance the gap insurance will only cover what is owed.. so I am out almost 4K in taxes.. just no easy way to do it

[dmk08]

Originally Posted by changw1

Another significant difference to consider is the tax paid between the two structure. For Owner Choice, the owner will need to pay tax on the full price of the vehicle. On the other hand for leasing, sales tax is only levied on the monthly payment. However, there are exception to that rule such as VA, NJ, etc....

That's the whole point of owners choice so you don't get double taxed. It's only available in those select states with bad lease laws.

I couldn't buy a car from Cali on Owners Choice even tho I live in an Owners Choice eligible state.