02-17-2017, 11:30 AM | #1 |
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Owners choice vs Lease
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?
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02-17-2017, 11:16 PM | #2 |
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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.
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02-18-2017, 07:13 AM | #3 | |
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02-18-2017, 07:28 AM | #4 |
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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. |
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02-18-2017, 09:48 PM | #5 |
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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. |
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02-19-2017, 11:16 AM | #6 | |
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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. |
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02-19-2017, 03:51 PM | #8 | |
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02-19-2017, 03:52 PM | #9 | ||
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02-19-2017, 03:54 PM | #10 |
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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.
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02-19-2017, 08:03 PM | #11 | |
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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. |
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02-19-2017, 09:17 PM | #12 | |
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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. |
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02-19-2017, 09:17 PM | #13 | |
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PenFed's loan that's similar to Owners Choice is pretty competitive in terms of interest.
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02-20-2017, 07:36 AM | #14 |
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PenFed has a loan (Payment Saver) similar to BMW Select not Owners Choice.
Last edited by dmk08; 02-20-2017 at 07:55 AM.. |
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02-20-2017, 08:13 AM | #15 | |
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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 |
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02-20-2017, 08:59 AM | #16 | |
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02-20-2017, 07:23 PM | #17 | ||
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02-20-2017, 07:33 PM | #18 |
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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....
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02-20-2017, 07:38 PM | #19 |
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Tax is in full up front in Texas with a lease.
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02-20-2017, 08:15 PM | #20 |
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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. |
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02-20-2017, 08:18 PM | #21 |
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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
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02-21-2017, 06:21 PM | #22 | |
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I couldn't buy a car from Cali on Owners Choice even tho I live in an Owners Choice eligible state. |
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