First time with repossession. Help is greatly appreciated.

[Karlooch]

Originally Posted by RickFLM4

It’s simply one scenario vs. your statement of “no scenario” “ever” where leasing is financially favorable. But you know that already and are just here to troll, right.

Ok... Lets do a comparison:

Lease: You lease your m4 for lets say a 3 year term... your monthly lease payment is 1500 a month CDN (Roughly based on local lease terms and takeover terms). 1500x12 = 18,000 CDN a year. 18000x3 years = $54,000 dollars that you will never get back.

Buying used outright: I'll use my scenario, I bought a 2016 M4 for $57,500 CDN taxes in. In four or five years lets say I put 10,000 KILOMETRES. year on the car it will have under 90,000 kilometres at the end of that term. I think its safe to assume that based on current values and even what e92's are going for that my car will still be worth atleast 40k. 57,500-40,000 = $17,500 ownership cost over four years (Not including maintenance and mods and other stuff of course.)

How is one not better than the other? Sure I could blow the motor up or something devastating could happen to the vehicle but scenarios like that are not all that likely and are still probably cheaper then what a lease would cost. Plus its actually mine and I'm completely uninhibited in how I mod it or what I want to do with it.

[Karlooch]

Originally Posted by brianeck

Lol this was a great reply. If you get a decent lease rate there is a lot of value in it. Cars are terrible assets and their value drops quicker than the gas needle when you drive them off the lot.

Your $80,000 down payment also has a time value of money element, and while your car is losing its value BMW is out making money on your money.

Again, if you had read my follow up I am not arguing in favour of buying new and absorbing a huge chunk of depreciation.

[Humdizzle]

everyones finances are different. leasing, financing, purchasing outright... they all make sense for the right person. i personally dont lease, but there are advantages where it makes sense for business, tax purposes, etc.

better to have money in something that can actually make you money like real estate / investments / etc.... than have it ALL stuck in a depreciating asset.

OPs problem was he couldn't make the lease payment and still decided to hang on to it. he could have 1) terminated it, bought the car with a loan assuming he had credit, and then sold it. 2) liquidated savings and assets to make the payments or 3) the simplest/best thing would have been to just transfer the lease.

all those options would probably be better than repossession and killing your credit

[RickFLM4]

Originally Posted by Karlooch

Ok... Lets do a comparison:

Lease: You lease your m4 for lets say a 3 year term... your monthly lease payment is 1500 a month CDN (Roughly based on local lease terms and takeover terms). 1500x12 = 18,000 CDN a year. 18000x3 years = $54,000 dollars that you will never get back.

Buying used outright: I'll use my scenario, I bought a 2016 M4 for 57,500 taxes in. In four or five years lets say I put 10,000 KILOMETRES. year on the car it will have under 90,000 kilometres at the end of that term. I think its safe to assume that based on current values and even what e92's are going for that my car will still be worth atleast 40k. 57,500-40,000 = $17,500 ownership cost over four years (Not including maintenance and mods and other stuff of course.)

How is one not better than the other? Sure I could blow the motor up or something devastating could happen to the vehicle but scenarios like that are not all that likely and are still probably cheaper then what a lease would cost.

I have fed you enough for today.

[Karlooch]

Originally Posted by RickFLM4

I have fed you enough for today.

Haha chill out.

[M4-CPA]

Just a few thoughts.

I dislike that the cars go to dealer-only auctions, where margin has to be considered as they want to sell and make even more money. I always thought it would make sense to be open to the public, just like home foreclosures. Since the default party still has a financial interest (like in this case), it would be fair to get the most money possible.

Hope you rebuild you credit and get back into a decent interest rate. Good luck

[petar7408]

Originally Posted by Karlooch

Ok... Lets do a comparison:

Lease: You lease your m4 for lets say a 3 year term... your monthly lease payment is 1500 a month CDN (Roughly based on local lease terms and takeover terms). 1500x12 = 18,000 CDN a year. 18000x3 years = $54,000 dollars that you will never get back.

Buying used outright: I'll use my scenario, I bought a 2016 M4 for $57,500 CDN taxes in. In four or five years lets say I put 10,000 KILOMETRES. year on the car it will have under 90,000 kilometres at the end of that term. I think its safe to assume that based on current values and even what e92's are going for that my car will still be worth atleast 40k. 57,500-40,000 = $17,500 ownership cost over four years (Not including maintenance and mods and other stuff of course.)

How is one not better than the other? Sure I could blow the motor up or something devastating could happen to the vehicle but scenarios like that are not all that likely and are still probably cheaper then what a lease would cost. Plus its actually mine and I'm completely uninhibited in how I mod it or what I want to do with it.

I agree with this- I have never leased a car nor will I. I dont need "new" all the time and see people kill themselves paying never ending payments on cars their whole lives- its crazy.

I have bought 4-5 M3's in my lifetime, bought and drove for about 2 years then sold it for 1-2K less then I paid.

You also forgot, there is usually $5000 due at lease signing or something like that.

If certain people are VERY rich, then it makes sense because it doesn't matter but anyone with a 9-5 will end up keeping a chunk of their paycheck slotted just on cars payments and never actually owning anything. I couldn't imagine being limited on mileage as well.

[Keca10]

This doesn’t need to turn into a lease vs finance thread.
But it’s obvious people don’t understand how leases work. There are plenty times where leases make as much or more sense than financing.

The lease is just a way to finance only the forecasted depreciation of the new car ownership instead of financing the full value. Granted some of the interest paid within lease payment is on the full value. I never put anything down on a lease, it makes no sense to do (main reason: if the car gets totaled you don’t get it back). You can structure a lease however you want.

I financed the M3 and leased the X3. I have almost $9k in equity in the X3 lease (I can buy it and sell it for more at any time). I like having a lower payment and using the extra cash flow to invest in things that make me money.

Lease is like financing with a few extra options where I can pick the best thing for me 3 years down depending on the car market. I can finance the ‘payoff’ anytime to flip into a loan. Usually the cars are worth less than residual value, which means the total lease payments were less than depreciation - better deal than financing if I was to keep the car 3 years. If I went way over the miles, I can simply pay the residual and buy the car, but usually it doesn’t make sense (which would mean leasing plus miles penalty is cheaper than depreciated value of the car).

Those lease ‘options’ (trade-in or buy depending on value later) and lower pmt in leasing come at a cost of a slightly higher interest rate during the lease term. But it can be worth it for many, especially those that like to change cars every 2-3 years.

Best always is to buy a car and drive it until the wheels fall off but life is too short for that.

[Maitre_Absolut]

Originally Posted by Karlooch

Ok... Lets do a comparison:

Lease: You lease your m4 for lets say a 3 year term... your monthly lease payment is 1500 a month CDN (Roughly based on local lease terms and takeover terms). 1500x12 = 18,000 CDN a year. 18000x3 years = $54,000 dollars that you will never get back.

Buying used outright: I'll use my scenario, I bought a 2016 M4 for $57,500 CDN taxes in. In four or five years lets say I put 10,000 KILOMETRES. year on the car it will have under 90,000 kilometres at the end of that term. I think its safe to assume that based on current values and even what e92's are going for that my car will still be worth atleast 40k. 57,500-40,000 = $17,500 ownership cost over four years (Not including maintenance and mods and other stuff of course.)

How is one not better than the other? Sure I could blow the motor up or something devastating could happen to the vehicle but scenarios like that are not all that likely and are still probably cheaper then what a lease would cost. Plus its actually mine and I'm completely uninhibited in how I mod it or what I want to do with it.

dude you just made the numbers work in your favor. And now you are comparing used vs new lease? Whats the point?

Lease provides a protection against resale plain and simple (it is a put option). Its cost is in the form of higher interest ($) and more importantly attracts a payment shopper who can't afford the equivalent finance payment.

I buy cars that I feel will have a higher value than implied residual. I lease those that I dont. Plain and simple.

[Keca10]

Originally Posted by Maitre_Absolut

dude you just made the numbers work in your favor. And now you are comparing used vs new lease? Whats the point?

Lease provides a protection against resale plain and simple (it is a put option). Its cost is in the form of higher interest ($) and more importantly attracts a payment shopper who can't afford the equivalent finance payment.

I buy cars that I feel will have a higher value than implied residual. I lease those that I dont. Plain and simple.

Exactly. It’s like buying options. You are betting the value will be higher or lower than some pre-determined amount (residual). If you do it right and in right scenario, you come our ahead than financing (or buying cash which makes little sense when interest is 0.9%). You can always buy if the value is higher than the residual payoff (the option). For my X3 at the end of the lease, I will buy it then likely sell right away to capture the equity.

[65fastback]

Originally Posted by Karlooch

Sorry I dont want to sound self righteous but I feel like you shouldn't own these cars unless you can buy them outright and can actually afford them.

Karl... you don't sound very "sorry".

I can Believe you think that I guess but...I can't Believe you typed it out and hit submit reply.

[Tacoma]

Originally Posted by Karlooch

Sorry I dont want to sound self righteous but I feel like you shouldn't own these cars unless you can buy them outright and can actually afford them.

Sorry, don't mean to sound self-righteous but clearly have no clue about the financial hardships some people have suffered during the pandemic. How do you know he could't afford it? The finance company would've done credit check meaning he passed it and could afford it at the time of lease signing. But a lot of people got laid off and owners of small businesses went bankrupt during Covid, and suddenly you can't afford it anymore. Don't judge.

Originally Posted by Karlooch

There is no scenario where leasing is financially favourable to the person leasing… ever.

Have you thought opportunity cost? In leasing, you're only financing part of the full price, the (estimated) depreciated part. So, say, on a $100K car with a 70% residual, you're only financing $30K on the lease. If you're buying you have to pay the full $100K.

So if you choose to lease instead and use that $100K to invest, there is a scenario where you could potentially gain depending upon the rate of return on that investment.

Originally Posted by Karlooch

Who's talking about buying new? Buy a few years out.. absorb the majority of the depreciation and take way less of a hit that way.

What if he doesn't like to buy used cars because of the risks or whatever reason? Instead of buying a used M3 as you suggest, he could've bought new 340i for similar price. Different compromise but same $$ result.

So this isn't really about buying new vs. old, but rather about $$. But how do you know he couldn't afford? Maybe he was making $150K/yr (thus can afford) but then lost his job during Covid? It (losing job or losing your business) has happened to a lot of people during Covid.

Originally Posted by Karlooch

I dont need to know someones financial situation to know that if they have to make payments on a vehicle most likely they cant afford it.

This is dead wrong. There are many millionaires who are leasing instead of buying. There are many reasons, like tax or they would rather use the money to invest or for something else, etc.

On the whole, stop judging and making these grandiose statements pretending to be the only truths when they are not and far from it.

[Ex_Stig]

Originally Posted by Karlooch

Sorry I dont want to sound self righteous but I feel like you shouldn't own these cars unless you can buy them outright and can actually afford them.

You must be a lot of fun at parties. Lol

[Slowphiveo]

Who buys a car outright? If you have 80k or 90k in cash to drop on a car and actually do that....you are wasting money, unless of course it's a depreciating asset where you are renting the car out or something like that.

[///MCollection]

I live in the uk so maybe things are different, I'm good with money and understand most financial things well but never got my head around car finance as I always pay outright for my cars (at the moment an f82, f85 and f87).

Could someone explain how the finance options work as my dealer has but when I've asked a question I feel I've caught him out therefore don't believe he is sharing all the facts just what suits.

For example if I decide to buy a new m? On finance for 100k (easy number) what do I pay upfront and what do I pay interest on and what happens at the end? (Not looking for a quote just a guide)

This post is ideal as there are people from both camps, finance and buy outright, not interested in who thinks there right just the understanding of the principles of car finance.

Thanks in advance guys

[MJ6]

Originally Posted by Karlooch

Sorry I dont want to sound self righteous but I feel like you shouldn't own these cars unless you can buy them outright and can actually afford them.

Sounds like someone needs to educate themselves on the concept of the time value of money. Buying a car outright may sound like a good idea, but that big lump sum you dropped could have been invested elsewhere and actually made you money instead.

Case in point, when my wife and I were looking at purchasing a car for her, we could have paid the dealer with cash outright. But the rate we received was well below the rate of inflation, so to do so would have been ludicrous as you're basically throwing money away at that point.

Feel free to act like a baller and toss money around if you want, but please don't offer unfounded financial advice.

[Keca10]

Originally Posted by ///MCollection

I live in the uk so maybe things are different, I'm good with money and understand most financial things well but never got my head around car finance as I always pay outright for my cars (at the moment an f82, f85 and f87).

Could someone explain how the finance options work as my dealer has but when I've asked a question I feel I've caught him out therefore don't believe he is sharing all the facts just what suits.

For example if I decide to buy a new m? On finance for 100k (easy number) what do I pay upfront and what do I pay interest on and what happens at the end? (Not looking for a quote just a guide)

This post is ideal as there are people from both camps, finance and buy outright, not interested in who thinks there right just the understanding of the principles of car finance.

Thanks in advance guys

You can pay upfront whatever you want. The rest is financed.

If you have excel or numbers the “pmt” function will calculate the payment.
You have to figure out the loan amount (part you are financing), N (number of months) and annual rate (don’t forget to divide by 12).

[strada]

Originally Posted by deeldoo

Shit happens, why are people judging OP?

Everyones a "Hero" until they aren't. Most of life is luck and OP got unlucky.

In regards to solving that situation, you are screwed OP, i would look to make more money now.

Although luck and timing are a huge uncontrolled part of life, has no one heard the phrase "Make your own luck" ? Luck is a way to describe good things happening with uncommon frequency. You can certainly help stack the deck in your favor, pandemics aside. It's not as if the repo-fairy is wandering around selecting cars at random and you just get unlucky. You can set yourself up in many ways to avoid ever being in this situation.

Originally Posted by Karlooch

Sorry I dont want to sound self righteous but I feel like you shouldn't own these cars unless you can buy them outright and can actually afford them.

I guess this is unpopular opinion, but financial responsibility and solvency is not luck or 'not being fun' at parties. People are real butthurt about the truth. Everyone is jumping down Karlooch's throat about lease vs finance when he didn't say that at all. He said, albeit harshly, that you shouldn't finance a car if you don't have the cash to buy it outright. Many financial planners would 100% agree with that sentiment. Whether you actually pay the cash vs finance for investment reasons is different story as many people have laid out.

Cars in general are horrible purchases from financial standpoint. Especially these M cars, which are not basic transport. These are luxury, completely unnecessary, over the top in most ways purchases. If you don't have the rest of your financial life sorted, then it's not unreasonable to say you shouldn't finance a car like this. Most smart financial people have at bare minimum 3 months spare cash reserves for every monthly cost in their life and really most would advocate 6 months of reserves. 3 months because most disability policies kick in after 90 days and 6 months because who the hell knows what can happen anyway. It lets you have some buffer to unload things you don't need when incredibly unforeseen stuff happens (pandemic or otherwise).

If you don't have that at bare minimum, and are financing (lease, payment, whatever) a completely unnecessary luxury toy. Well, that's not bad luck, that's asking for it. If this makes me 'not fun at parties', I don't know what to say.

In today's age anyone with any crap credit can still get loaned money that they have no real business getting (see mortgage crisis, see repos, see etc etc etc). People have greedy eyes and refuse to live within their current means, that's not luck or a cash vs lease debate.

[Karlooch]

Originally Posted by MJ6

Sounds like someone needs to educate themselves on the concept of the time value of money. Buying a car outright may sound like a good idea, but that big lump sum you dropped could have been invested elsewhere and actually made you money instead.

Case in point, when my wife and I were looking at purchasing a car for her, we could have paid the dealer with cash outright. But the rate we received was well below the rate of inflation, so to do so would have been ludicrous as you're basically throwing money away at that point.

Feel free to act like a baller and toss money around if you want, but please don't offer unfounded financial advice.

You’re not going to get a favourable finance rate on a used car purchase… in Canada they are roughly 5-7% which to me isn”t acceptable on a 50k car purchase.. maybe on a 10k car.

And we’re arguing semantics by suggesting that I could have outpaced the interest on the car by investing the bulk cost. Market could have gone against me for the duration of that and tbh up until a year ago I was getting a solid interest rate on my emergency fund in a HISA that I was pretty happy with while at the same time investing in the market

[Karlooch]

Originally Posted by strada

In today's age anyone with any crap credit can still get loaned money that they have no real business getting (see mortgage crisis, see repos, see etc etc etc). People have greedy eyes and refuse to live within their current means, that's not luck or a cash vs lease debate.

Thank you.. Not saying there aren’t big money rollers out there who lease but in my experience most of the people I see at car meets or street races are financing/leasing and are paycheque to paycheque.. we living in a world where wall anyone cares about now is whether they can make their payments. I want to truly own the things that I have and if they are the banks or the leasing companies they’re not truly yours IMO.

[Ex_Stig]

Originally Posted by Karlooch

Thank you.. Not saying there aren’t big money rollers out there who lease but in my experience most of the people I see at car meets or street races are financing/leasing and are paycheque to paycheque.. we living in a world where wall anyone cares about now is whether they can make their payments. I want to truly own the things that I have and if they are the banks or the leasing companies they’re not truly yours IMO.

So, you own your house outright? No mortgage? And you pay cash for everything? No credit cards?

[Karlooch]

Originally Posted by GNALUZU

So, you own your house outright? No mortgage? And you pay cash for everything? No credit cards?

This is a really dumb way of arguing against my point and I think you must know that. I don’t think it takes a genius to distinguish the difference between good and bad debt and which one of those things a house falls under and which one an m4 falls under.