Lease to Purchase?

[818M3]

Hi guys, hope everyone is doing well! I have been away from the forums for quite sometime now. My previous cars (F82/F80) I sold a while back. I have the urge to jump back into a F82 and do a special order color. Here are my questions..Would I be able to do a 36 month lease on a special order car? Secondly, would I be able to do a lease to purchase at the end? I am assuming the lease is just like any other lease from a car that's on the lot. Nothing changes if it's special ordered. Correct me if I am wrong. If so, I am thinking about putting a large down payment because later I will be buying. What do you think? Thank you.

[Andrae26]

Originally Posted by 818M3

Hi guys, hope everyone is doing well! I have been away from the forums for quite sometime now. My previous cars (F82/F80) I sold a while back. I have the urge to jump back into a F82 and do a special order color. Here are my questions..Would I be able to do a 36 month lease on a special order car? Secondly, would I be able to do a lease to purchase at the end? I am assuming the lease is just like any other lease from a car that's on the lot. Nothing changes if it's special ordered. Correct me if I am wrong. If so, I am thinking about putting a large down payment because later I will be buying. What do you think? Thank you.

Not interested in the M4CS? Really good deals on them. You're correct, nothing changes if it's a special ordered color.

[818M3]

Not interested in the CS. Looking at ordering a Miami Blue M4.

[alex2364]

Why would you start with a lease if you know you want to purchase? You're paying higher interest rate and lease acquisition fee.

[Tuscan]

You can lease a special order car but like others said it's pointless to lease it if you are going to purchase it later. And don't put any money down if you are going to lease it.

[818M3]

Thank you for the responses. My thought process behind it is this, and its just a thought.. If I lease now, my monthly payments are going to be considerably less compared to a finance deal. So, for the next 36 months, I have lower payments. Again, just a thought! All of this might not make the best financial sense since I haven't kept up with the residuals/MF's, etc. Another thing I like is the fact I have the option to return the car at the termination of the lease in case I need to. In regards to acquisition fees, perhaps I can negotiate it with my dealer as a five time returning customer?

[gs1403]

Originally Posted by 818M3

Thank you for the responses. My thought process behind it is this, and its just a thought.. If I lease now, my monthly payments are going to be considerably less compared to a finance deal. So, for the next 36 months, I have lower payments. Again, just a thought! All of this might not make the best financial sense since I haven't kept up with the residuals/MF's, etc. Another thing I like is the fact I have the option to return the car at the termination of the lease in case I need to. In regards to acquisition fees, perhaps I can negotiate it with my dealer as a five time returning customer?

Your thinking isn't illogical. The lease programs are pretty solid right now in terms of MF, residuals and incentives. The money factor is the lowest it's ever been in a while (.00128), the residuals are very high (60% for 10K) and there's $3250 in incentives to be had. The inflated residuals however mean that when your lease is over, you will likely end up paying more than the market value of the car if you choose to keep it, especially with the G series to be the latest and greatest three years from now. You need to consider the fact that BMW currently does not allow the lessee to buy out the car at the end of the lease for less than the predetermined figure on the contract determined by the residual give or take a $500 credit I've heard of some people getting.

If you'd like to take advantage of the current lease programs and take three years to consider whether or not you want to buy your car out, then leasing may be a good option for you. You may end up spending a little more with the lease -> buyout route as opposed to having financed your car from the beginning (disregarding the opportunity cost of the extra money you will have spent for the downpayment and higher monthly payment if financed) due to transactional fees and inflated residual (the exact delta we can't predict as we won't know how much your car will actually be worth in three years). If however your car tanks in value for whatever reason (depreciation, accident), you may simply choose not to buy it out. In summary: I see little reason not to take advantage of the strong current lease programs versus putting a larger chunk of cash towards a depreciating liability unless you are absolutely sure that this is a car you will want to keep for a long time - the latter of which doesn't really sound to be the case here.

[818M3]

Another question. Once I have an allocation, I place the order. When do I put the down payment and sign the contract? Before or after I receive the car?

[M3PGH]

Originally Posted by 818M3

Another question. Once I have an allocation, I place the order. When do I put the down payment and sign the contract? Before or after I receive the car?

when you get delivery

[lukej]

Everything sounds good, but I would not put money down on a lease, I get it,,, you want to keep the payment down, but after 3yrs you don’t buy it ,,that down payment is gone gone gone...

I would hold your down payment till you refinance it as a loan, then I think you would be money ahead to put it in the car then. But with the lease in 3yrs you change your mind you walk.

My 2cents

[BigMo]

Originally Posted by gs1403

Your thinking isn't illogical. The lease programs are pretty solid right now in terms of MF, residuals and incentives. The money factor is the lowest it's ever been in a while (.00128), the residuals are very high (60% for 10K) and there's $3250 in incentives to be had. The inflated residuals however mean that when your lease is over, you will likely end up paying more than the market value of the car if you choose to keep it, especially with the G series to be the latest and greatest three years from now. You need to consider the fact that BMW currently does not allow the lessee to buy out the car at the end of the lease for less than the predetermined figure on the contract determined by the residual give or take a $500 credit I've heard of some people getting.

If you'd like to take advantage of the current lease programs and take three years to consider whether or not you want to buy your car out, then leasing may be a good option for you. You may end up spending a little more with the lease -> buyout route as opposed to having financed your car from the beginning (disregarding the opportunity cost of the extra money you will have spent for the downpayment and higher monthly payment if financed) due to transactional fees and inflated residual (the exact delta we can't predict as we won't know how much your car will actually be worth in three years). If however your car tanks in value for whatever reason (depreciation, accident), you may simply choose not to buy it out. In summary: I see little reason not to take advantage of the strong current lease programs versus putting a larger chunk of cash towards a depreciating liability unless you are absolutely sure that this is a car you will want to keep for a long time - the latter of which doesn't really sound to be the case here.

You sign your contract at delivery. It sounds like you are leaning towards purchase but want that flexibility to just turn the car in after 3 years if you want. In the long run it will cost you more but if you are willing to do that to increase your options so be it. People do it all the time.

Now in regards to the down payment. The only real time you will "lose" the entire down payment is if you total the car on your drive home from the dealership. The buyout for BMW will be far more than what insurance will pay you for the car and your down payment money will cover the difference. If you didn't leave a down payment then GAP insurance pays it, which is included in a lease. Over 3 year depreciation on a lease the greatest depreciation is in the first year so essentially a lot of your down payment is always at risk (in the event of a total loss). If you don't total the car in 36 months then you got to enjoy the lower payment. Unlike financing leaving a down payment does not lower your finance charges. Sure that low payment is nice but it has its risks.

The best way to attack this is to pay for everything that doesn't residualize upfront (taxes and all fees). Then leave the max security deposits (7 MSDs). Each MSD is the amount of a zero down payment. BMW will give you a lower finance rate since your leaving the security deposit down and you get it all back at the end of the lease. You can then use that money as a down payment if you chose to finance or put it towards the next lease or just take a check.

With MSD's and paying fees upfront at around an $80000 price point that could knock about $150 or more off your monthly payment with $6-7000 waiting for you at the end.

[G35POPPEDMYCHERRY]

i ended up paying more for the lease with intent to buyout; it was about 1k more due to the 2500 dollar lease credit offered. i wanted to CPO it; little did I know BMW would totally piss the lease program and their CPO program down the drain and the f8x is reliable. intrest rates were good when I purchased and consequently so were MF. not too good right now

[secretanchitman]

Lease and give it back or finance to keep!

Leasing to buy is almost never better for the buyer (you) in the end.

[Darth One]

If a low monthly payment is your goal, have you thought about just financing with a longer payment term? You pay much more interest charges vs a shorter loan, but you'll be paying a shitload in the lease-to-purchase scenario anyway.

[AlterZgo]

I think people have misconceptions of lease and purchase options. I used to pay cash for my cars. Then I realize what a stupid decision that was because I would pay sales tax on entire price of the car and only keep the cars for 2 yrs. so I started leasing and that works best for me mainly because I only pay sales tax each month I have the car. I have leased for 3 yrs and sold the car 2 yrs onto the lease and gotten equity back. That’s right. EQUITY! Believe it or not you can have equity in a lease if your car is in good condition and has low miles.

Most recently, I took my M3 lease to the end and bought the car out. I didn’t pay any fees to dealer etc. as I got the payoff from BMWFS and sent them a check.

Regardless of whether I intend to keep a car or not I will always lease because it provides the greatest flexibility:

1. No hassle in having to sell your car. Just turn it in.
2. No sales tax on the part of the car you are not going to keep (this will obviously vary state by state)
3. If there are issues with the car, I know I can eventually turn it in at lease end (or sooner)
4. BMWs typically have great residuals so it’s much cheaper to lease from a monthly payment standpoint. Going by my prior track record, before my F80, I never kept ay of my last 4 cars more than 2 - 3 yrs. so it would of course make lots of sense to have lower pay,ent for 2-3 yrs than to pay cash for the car or have higher monthly payments
5. If your car gets in an accident, I know I’m not married to the car. I will just turn it in at lease end.
6. BMW lease MSDs is a great investment. I think I calculated the rate of return as 10%/yr when I did it for my M3.
7. I don’t drive much more than 7k mi/yr so I am typically positive in equity on my leases by about 20-24 months into the lease which gives me even more options to step away sooner from the lease if I want (I’ve sold 2 of my leased cars to Carmax and had them give me a check both times because I had equity in the car after the payoff).

[818M3]

Thank you everyone for the input!

[SYT_Shadow]

Originally Posted by gs1403

You need to consider the fact that BMW currently does not allow the lessee to buy out the car at the end of the lease for less than the predetermined figure on the contract determined by the residual give or take a $500 credit I've heard of some people getting.
.

This really sucks. Any discount you get when you lease doesn't affect the purchase price.

Example:
100k F80 M3 CS
BMW discounts to 80k

You lease it at 60% residual. Some would like that means 80*60% is what's due when the lease is up, but nooooo, it's 100*60%

If you were to purchase, you would have financed a total of 80k. So, moral of the story, if you get a good discount you're better off financing the car

[gs1403]

Originally Posted by SYT_Shadow

This really sucks. Any discount you get when you lease doesn't affect the purchase price.

Example:
100k F80 M3 CS
BMW discounts to 80k

You lease it at 60% residual. Some would like that means 80*60% is what's due when the lease is up, but nooooo, it's 100*60%

If you were to purchase, you would have financed a total of 80k. So, moral of the story, if you get a good discount you're better off financing the car

Not really true.

Let's say you lease a $100k CS at 60% residual. RV is $60,000. But car is discounted 20%. That means you're only paying $20,000 over the lease ($80,000-$60,000RV) plus interest and fees, which I'll disregard for simplicity's sake. If you choose to buy this car out after the lease, then you'll pay the RV, $60k. You've paid $80k ($20k lease plus $60k RV) in total for this car.

Let's say you're buying this same car from the start at the same 20% discount. Then you're simply buying it for the same $80k.

[SYT_Shadow]

Originally Posted by gs1403

Not really true.

Let's say you lease a $100k CS at 60% residual. RV is $60,000. But car is discounted 20%. That means you're only paying $20,000 over the lease ($80,000-$60,000RV) plus interest and fees, which I'll disregard for simplicity's sake. If you choose to buy this car out after the lease, then you'll pay the RV, $60k. You've paid $80k ($20k lease plus $60k RV) in total for this car.

Let's say you're buying this same car from the start at the same 20% discount. Then you're simply buying it for the same $80k.

Interesting... are you sure? If so that's good news for me

I wish they adjusted the residual to something like market value. It wouldn't make sense to return a leased car and then buy it once bmwfs has taken possession for 10k less than doing it outright

[gatorfast]

Originally Posted by SYT_Shadow

Interesting... are you sure? If so that's good news for me

I wish they adjusted the residual to something like market value. It wouldn't make sense to return a leased car and then buy it once bmwfs has taken possession for 10k less than doing it outright

Yes he is correct. Residual is always based off MSRP and not the negotiated sale price. Hence why in his example it is still extremely beneficial to negotiate a lower sales price as that lowers the delta between the sales price and the residual which in turn lowers the lease payment.

Think of a lease as essentially a call option contract. If you get to the end of the lease and want to purchase the car but the residual is higher than the market value then you can just walk away and you came out ahead vs purchasing and selling over the same period. However if you get to the end of the lease and the market value of the car is higher than the residual you can exercise your option to purchase the vehicle at the lower price.

[DocL]

Better yet is to assume a lease with 18mo's or less with low miles and then buy it at the end. That's my plan.

[smiff]

Leasing probably looks better on your credit reports as far as debt goes. $36k vs $80k.