By on March 18, 2016

2012 BMW 328i, Exterior, 328i badge, Image: © 2012 Alex L. Dykes/The Truth About Cars

Sam writes:

Hi Bark,

I have a multi-part question and I’m interested to get your insight.

Part one: To CPO or not. After decades of driving Fords, I’ve decided to treat myself with a sporty German car. A BMW 328i seems like just the ticket. I’m looking at a 2015 model year dealer loaner with 4,000 miles, and it’s available with $8,000 off the $53,000 sticker price. The warranty has been reset, so it’s effectively a full, new-car warranty. With no major changes between 2015 and 2016, this seems like a no-brainer.

Part two: To lease or not. A BMW with a turbo and automatic transmission gives me the willies. I like the idea of turning it back in after three years and washing my hands of any long-term maintenance issues (or having to unload it myself). BMW’s lease interest rate is 4.375 percent, which seems high. The residual factor is 59 percent of MSRP.

Part three: To pay up-front or not. I hate paying monthly for stuff. I’m inclined to just pay the entirety of the lease payments up front. BMW will cut the rate by a little in this case, to 4.125-percent on the residual amount. It still seems high relative to the 0-percent offers on domestic vehicles. Are there any gotchas to paying up front?

I’ve never leased before. I’ve always been a “pay cash” kind of guy. But the lease on the low-mileage CPO with no major changes seems like a slam-dunk over a new car similarly equipped. Am I missing something?

Thanks!

Hoo boy. Get ready for a barn burner.

Leasing is one of those subjects that very, very few people truly understand, and that virtually everybody thinks they understand. So, be prepared for a whole bunch of numbers and facts and data that will make the average person’s head spin right round like a record, baby.

I’m going to answer each question individually, and then try to address your situation as a whole. I’m also going to try very hard not to be effing astonished and disgusted that a BMW 328i can be optioned up to $53,000!!!

Part One: The decision as to whether or not you should buy certified pre-owned (CPO) is entirely separate from whether or not you should buy a dealer loaner. The fact that they’re selling it as a CPO and not just a new car “demo special” indicates that you must live in one of the states where dealers are required to actually buy and title their loaners (that varies by state). Most dealer employees will tell you, even off the record, that the typical loaners are meticulously maintained by the service departments — far better than any consumer would maintain his car. Also, the majority of customers who get service loaners treat them better than they treat their own cars, lest they get hit with some repair bills for a car they don’t own.

However, I’m sure that every single current/former dealer employee here has a “loaner story.” I’ve heard several myself over the years: the car was returned with 2,000 more miles than it left with, we had to clean puke out of it, the used car manager used to take it to pick up prostitutes, etc. Some dealers use their loaner cars in absence of a real demo program for employees, too. $8,000 off sticker isn’t that huge of a demo discount (I saw a Lexus dealer demo with over 20 percent of the MSRP deducted from sticker, for example), but it’s enough that you definitely want to get as much information as possible about the history of the car before thinking about signing on the dotted line. Most dealers deduct about $0.20 to $0.30 per mile off of the invoice price; your discount is obviously significantly higher than that. That could mean that it’s an awesome deal, but it could also mean that a lot boy ran it through the garage door.

You won’t have any problems with the BMW CPO warranty, so don’t stress that part of it. Just be as sure as you possibly can that there aren’t any niggling issues with the car. Sure, they’d likely be covered under the warranty, but your time is worth something, too. See if they’re open to a pre-purchase inspection from an independent shop. If they aren’t: Danger, Will Robinson.

Part Two: That’s a high lease rate/money factor. Super high. Again, most people don’t really understand how the lease rates are calculated, so I’m going to try to explain it in the simplest possible terms. Deep breath … and here we go:

When you lease, you’re paying interest on the average of the net capitalized cost — in other words, the actual cost of the car after dealer contribution — of the car (in your case, around $45,000) and the residual (in your case, about $31,270). To get the amount of interest that you’re paying, you add those two numbers together and multiply them by the money factor.

In case you’re not aware, the “money factor” is the way that interest rates are expressed on leases. It’s often not disclosed on lease paperwork, so most people have no idea what the actual money factor is on their leases. It can be determined by dividing the interest rate by 2,400. You don’t have to divide the sum of the net capitalized cost and the residual by 2 to get the average. That division is already accounted for in your money factor calculation. I did the math on your lease and, before local sales tax is added, I came up with a payment of approximately $520 per month over 36 months, which includes about $140 of interest every month (assuming no down payment at all). I went to BMW’s website and optioned up a 328i to around $53,000 (which required me to check nearly every effing box) and here’s what I got for a lease payment:

bmwlease

WHAT IN THE? That $635/month lease payment assumes a $2,500 down payment and a $925 acquisition fee, too. Who’s paying that for a turbo-four 328i? I just … I can’t.

So, in comparison to what you’d pay to lease a brand new car, your payment seems pretty, pretty good. But man, there are so many other cars you could lease for similar cash … erm, wait, I’m sorry. I started to superimpose my values on you. You like the 328i. Good for you. Moving on.

I’d have to think that if you have decent credit, you’d be able to qualify for a lower interest rate on a buy — but your payment would be higher. A 2.9 percent, 60-month loan for that same $45,000 is going to be about $810/month. Saving $300 a month and being able to walk away from the car at the end if you so choose isn’t a bad deal.

Part three: No, you should not pay for the whole lease up front. There are several reasons why this is a bad idea. First of all, you’re still paying to borrow money that you’re not actually borrowing. You’re paying the interest on the depreciation of the vehicle over the time that you’re leasing it. That’s kinda effed up, man. Secondly, if you total the car when you drive it off the lot, that money might end up being entirely lost. Lastly, even if you put that money in a savings account at 0.5-percent per year and auto-drafted your payment right from that account, you’d come out ahead due to inflation over three years. The actual difference in money you’d save, by my calculations, is right around $300 — or less than ten bucks a month. Not worth it.

Also, there are so many jaw-dropping good lease deals available right now on new cars that, even though you’re getting a substantial deal on the price of this car, you’re really overpaying for the lease in comparison what else is being offered on the market. I recommend that anybody who wants to lease a car right now should just call up dealers in Detroit and see what they’re willing to offer you. The domestic OEMs are putting out leases that are just mind boggling (try a Cruze for $69 a month!) and the import dealers are freaked out. It couldn’t hurt to ring up a few dealers and see what you can shake out of the tree.

Do you need your 328i to have every option under the sun? If not, you can probably work a much better payment on a brand new car with fewer options. BMW is advertising $349/month over 36 months with $3,000 down on a no-option 328i. Even with zero down, that still puts you at around $450/month.

But if you’ve fallen in love with this particular car, then you need to see if your dealer can work a better money factor for you, and be prepared to walk away if they can’t. Bottom line, you’re paying too much money to borrow this car for three years.

[Image: © 2012 Alex L. Dykes/The Truth About Cars]

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202 Comments on “Ask Bark: To Lease or Not Lease a CPO Dealer Demo?...”


  • avatar
    Arthur Dailey

    I am eagerly awaiting comments on this.

    Fear that many will fall into the following categories:
    1) The ‘why BMW’ card? Fanbois versus those who will regale us with stories of why German cars should be avoided like the plague or are purchased only by ‘label whores’.
    2) The why lease and throw your money away crowd. We will get a lot of stories from those who got smoking deals on vehicles that they paid cash for.

    • 0 avatar
      Reino

      1) Why BMW? Because once you drive one, all other sedans are boring. (Although I still question the point of ridiculously expensive optioned-up 328i versus a less expensive 335i or even 528i)
      2) I’ve never leased, because of the long detailed and complex explanation above, I don’t understand the calculations on leasing. I cannot help but feel ripped off somehow. Buying is so much easier with only two simple steps: negotiate final price, then negotiate interest rate. Selling has never been an issue for me.

      • 0 avatar
        rpn453

        A B8 S4 with manual transmission is much faster and less boring than this car even if you aren’t driving it sideways in the snow for four months of the year. Cheaper too.

        But you don’t need to explain the appeal of a RWD MT BMW to me. I get that!

      • 0 avatar
        dal20402

        Leasing only adds one step to that: negotiate residual. All a lease payment is is (purchase price) – (residual) * (money factor), divided into monthly payments. It’s not that complicated.

      • 0 avatar
        JimZ

        ” Why BMW? Because once you drive one, all other sedans are boring. (Although I still question the point of ridiculously expensive optioned-up 328i versus a less expensive 335i or even 528i)”

        because maybe the options/features I want would make a 335i or 528i more expensive than I want to pay?

      • 0 avatar
        BrunoT

        You can google “how to calculate a lease” and get the formula to know exactly what you’re paying. But having owned 3 BMW’s including one 3 series and two 5 series I’ll let you in on a secret. Plenty of other brands are fun to drive now, and BMW steering is not what it used to be, so they’re even closer. One can get a loaded Volvo S60 R design (awd, 0-60 in 5.1 sec, fantastic seats, solid handling) for about what a moderately equipped 328i goes for. The one I got came with a 5 year warranty and full free maintenance and I drove it off the lot for $45,000 including taxes and fees. More comfortable seats for me, and nobody thinks I’m sort sort of badge whore. They have no idea what it is. Which I like.

    • 0 avatar
      VW16v

      Truth be told not all leases are bad. I know a few people that got over $1000 back when they turned in their Subaru’s leases. One got almost $2000 back. The residual values were lower when the lease contract was originally signed. BMW, that is a different story. If the BMW bling is that important. You are throwing money away either way. Lease or purchase. But at least with the lease he can turn in that money pit.

      • 0 avatar
        highdesertcat

        Yeah, leases can work for some people.

        But I would be careful about choosing to lease or buy a dealer-demo. Anything dealer-demo, or anything used by the owners/managers has been totally neglected from day one.

        Most owners or managers are given a brand new vehicle to drive every year as part of their perks or compensation package.

        If it were me leasing or buying, I’d get a vehicle with zero (or thereabouts) miles on the odo.

  • avatar
    VW16v

    Maybe the BMW dealer will offer him free car washes and breakfast for that price. My former local BMW dealer made one damn good omelet. So many people waiting to get their BMW’s fixed the cafe sat around 50 people.

    • 0 avatar
      SaulTigh

      I enjoy my free car washes, but mind doesn’t serve breakfast. :( Just artisanal nuts (so good) and beverages.

      • 0 avatar
        VW16v

        This one BMW dealer in particular makes a great omelet and not so bad cheese Steak. The loaner fleet is mostly 3 series. Kinda of a low end BMW if you are getting your 7 series running again. But, still not to bad. I had one friend wait three days for his X6 run flat to be shipped and he was given a 318. He was pissed.

  • avatar
    energetik9

    (Part I) I’ve CPO’d a couple BMWs. BMW, in my opinion, has a very good CPO program. I’ve had very few issues with the BMWs I’ve owned, but when they did happen, I never had issues with BMW fixing the item under CPO terms. I never ever had to fight the dealer to cover something.

    As far as maintenance issues (part II). It’s up to you. I’ve owned BMW turbos and had no issues. You have to remember that modern turbos are a whole different breed. I’m not saying they aren’t subject to issues, but they are far more reliable, with better cooling and better materials than in the past.

    • 0 avatar
      slance66

      I bought a CPO 328xi several years ago. No problems really. One leaking gasket late in the three year CPO warranty. No other expenses besides oil changes. The car was a solid as a rock. It’s actually very easy to change your own oil, at least on my E90 it was.

  • avatar

    To lease a new CTS (for example) with Nav, Moonroof, luxury package and 2.0t Engine, I have to pay $3500 down and then make payments of $550 a month for 36 months.

    What I don’t have to purchase is an extended warranty (since the car goes back before 36,000 miles.

    I get Cadillac loaners if I need service.

    No trouble.

    I leased a Hyundai Azera 2013 (fully loaded). $3500 down, $425 a month. No warranty extension required. Car goes back in June. I have to hand them another $3500 to lease something newer: either a 2016 Genesis or a 2016 Sonata.

    The new Sonata’s technology has improved so far beyond the 2013 Azera, it has essentially replaced the Azera.

    Ultimate: leasees don’t want to get stuck with a depreciating vehicle, maintenance/repair costs on a depreciating vehicle or OLD TECHNOLOGY.

    There are plenty of improvements from my 2014 Jeep SRT to the 2016 JEEP SRT including USB ports for the rear passengers and a new stick shifter which is easier to use than the ZF 8-speeed monostatic.

    SO WHY WOULD I WANT TO GET STUCK for 6 years when I can swap after 3?

    Simple rule:

    LEASE GERMAN…BUY JAPANESE.

    Or… “Lease luxury cars” – “buy the econoboxes”

    If you’d financed a 2012 Tesla P85…how happy would you have been being stuck in that when the P85D and the P90DL and the P100DL were right around the corner…or the Model X?

    Why be stuck for 6 years when you can roll new after just 3?

    • 0 avatar
      Syke

      Add one to your Ultimate category: Leasees don’t want to be stuck driving brands of cars that they can actually afford. Showing off is important.

      • 0 avatar

        The word “AFFORD” is completely subjective.

        I actually OWN houses outright (no mortgage balance) and I rent out property to people.

        I can “Afford” a lot of things.

        Should I be spending on them?

        NOPE.

        But I’ll roll a $75,000 HELLCAT long before I’d be caught DEAD in a Honda Accord.

        • 0 avatar
          DeadWeight

          WHY LEASE A BMW 4 BANGER THAT’S FAR FROM POWERFUL OR LUXURIOUS – FOR A WHOPPING $635 ***PLUS $2,500 DOWN & A TRU-COAT LIKE $995 ACQUISITION FEE (SO ADD $3,495 DIVIDED BY MONTHS OF LEASE TERM INTO THAT $635/PER MONTH –

          – WHEN YOU CAN GET EITHER A:

          1) A 4 BANGER TOYOTA CAMRY LE FOR $179 MONTH SIGN & DRIVE!!!!!

          OR

          2) A HELLCAT CHARGER WITH AN ADDITIONAL 400 HORSEPOWER FOR THE SAME MONEY!!!!!!!

          OR

          3) A TWO YEAR OLD CADILLAC ATS 2.0T W/20,000 MILES FOR $18,000!!!!

          YOU’RE JUST GOING TO BE STUCK IN TRAFFIC AT 5 TO 10 MPH MOST OF THE TIME ANYWAYS!!!!!!!!!!

          • 0 avatar
            319583076

            Bravo!

          • 0 avatar
            28-Cars-Later

            You’ll be able to admire those dash gauges in your ATS right as the car catches fire in traffic.

          • 0 avatar
            BrunoT

            LOL, I wonder where people are actually driving these things where they care about fractional advantages here or there. I live in the country and can use the curvy roads every day, but most people are suburban drones who use them to crowd into traffic lanes at 5mph 80% of the time and they have to go on “road trips” to actually experience the thing as intended.

          • 0 avatar

            2010 CTS Performance. 72k miles.
            16k OTD save Tax.
            1700 in catch up work (FE3 shocks-new front brakes-ATF/filter)

            Done. Comfy in traffic, fast when the road is open, professional image. I’ve leased and bought new….but at this point, I’ll be trolling cars.com to find a used car on a new car lot, for cream puffs on the theory anything remotely dicey goes to Auction.

            I’ve spent a LOT more car money for less-I run them till they explode in a hail of parts, so at least my depreciation is amortized over time. At 30k/yr, a warranty is at best a temporary sense of security, so the vast majority of my car time is out of warranty anyway.

    • 0 avatar
      sportyaccordy

      BTSR- if you choose to derive your happiness from having the latest and greatest you deserve to be (and are) miserable.

      Skye- so the only merit of a better brand is to show off? There is nothing a 328i does better than a Camry?

      I thought maybe we could go one lease article without triggering the B&B’s self righteous tic. Shame on me for being an optimist.

      • 0 avatar

        #1 My iPhone6S Plus 128GB is the best device I’ve ever owned.

        If the iPhone7 Plus offers 256GB, This phone goes back in the box and I’m getting iPhone7 on DAY ONE.

        #2 People are willing to spend longer on cars than many other things because they spend long periods of time in their cars and their cars serve as their livelihoods.

        To each his own.

        I’d never buy a Prius or Camry or Accord (so help me God ) or Acura…but I won’t begrudge someone who chooses to spend their hard-earned money on one.

        LEASING is done mostly by RICH PEOPLE or BUSINESSES in order to avoid high costs on depreciation and maintenance.

        I have the money.

        It works for me so I’m good with it.

        • 0 avatar
          sportyaccordy

          Leasing = paying for the depreciation of a car.

          For now, leasing works because money is essentially free. It will be interesting to see what happens when rates come back to reality

          • 0 avatar
            28-Cars-Later

            When or if?

          • 0 avatar
            markf

            I am betting on if, not when for interest rates. The real money is on never…..

          • 0 avatar
            28-Cars-Later

            I am also on “if”, I think we’re more likely to see a global financial reset and/or serious conflict (which I said three years ago). I’m fairly certain two of the four presidential candidates will involve the nation in a preemptive nuclear strike if given the chance, and in my view, Trump is not one of them despite his near megalomania and aloof disposition.

        • 0 avatar
          BrunoT

          You save exacty ZERO in depreciation with a lease. The lease payment is a combination of the expected depreciation and the money factor (interest). If you use assumptions and buying at a bad price, getting raped on trade ins, etc, you could make an argument for leases, but really that’s just being a dumb or lazy consumer. And let’s face it, people who lease 3 series rarely have money to burn.

          • 0 avatar
            28-Cars-Later

            “people who lease 3 series rarely have money to burn.”

            Sure about that?

          • 0 avatar

            Actually, BMWFS subsidizes their leases. The residual value is inflated which works in lessees’ benefits. They do save some depreciation cost.

            It’s a gross generalization to say :” people who lease 3 series rarely have money to burn. ” It costs more to lease different vehicle every 3 years than someone who buy and hold until their wheels fall off.

          • 0 avatar
            ixim

            Add up all the costs of running a new car into the ground – including reduced insurance on an aging car and compare the cost per mile to a cheap lease. Should be about the same. The other lease downsides- anxiety over dings and dents, no equity- don’t bother me. YMMV.

          • 0 avatar
            krhodes1

            Depending on where you live, that reduced insurance cost simply doesn’t happen. It costs me $535/yr to insure a brand-new M235i with full coverage. It would still cost me more than $300 a year for JUST liability coverage. Then in my state there is the issue of excise tax as I laid out in a previous posting – roughly $3000 for the first three years, eventually dropping to ~$240/yr forever – that alone pays for a TON of out of warranty repairs over time. Then sales tax over and over and over again on leases – even in states where you only pay the difference or on the lease payments. It would be a rare occasion that leasing really comes out cheaper, even for a theoretically expensive to fix BMW. Depreciation is the biggest cost of a car, and you still “pay” a fat wedge of that when leasing a car. And you keep paying it every three years.

            Leasing doesn’t offend me in any sort of moral sense, I think there are occasions where it makes sense. But anyone who really believes it is the cheapest way to own cars is really bad at math, or lives in a weird edge case. it is convenient, but convenience comes at a cost. Then especially these days there is the issue of “life happens” Circumstances change. Needs change. Getting out of a lease early tends to be expensive. Even with my M235i that isn’t paid for, if life happens I am but an hour or so drive from getting rid of it to Carmax at any point. I put enough down on it to not have to ever worry about being underwater.

      • 0 avatar
        jmo

        Can someone explain to me why the B&B have such a huge objection to someone spending a portion of their discretion income on a nice car?

        • 0 avatar
          dal20402

          Because this is America, where puritanism is seen as a sign of virtue.

          You can’t just work hard; you have to work HARDER THAN EVERYBODY ELSE or you’re a slacker.

          You can’t just eat healthy: you have to be VEGAN, ORGANIC, and FREE RANGE or you’re going to die of a heart attack at 45.

          You can’t just exercise: you have to run marathons and kill yourself with 90-minute P90X workouts or you’re a flabby couch potato.

          And you can’t just save a reasonable amount of money; you have to SAVE EVERY PENNY like Mr. Money Mustache or you’re a spendthrift.

          And people internalize these messages. And they feel like failures because they can’t be PERFECT, so they become failures; they don’t work hard, exercise, eat well, or save any money at all.

          • 0 avatar

            dal20402

            EXCELLENT explanation.

            I appreciate the syntax as well.

          • 0 avatar
            dal20402

            I wouldn’t normally use that many caps. I think you inspired me.

          • 0 avatar
            DeadWeight

            Plantpower, gluten-free, free range Non-GMO carrots, 6 minute ab workout with wheatgrass shooters & inversion spinal decompression with a swallowing-of-the-kale-3 foot long strip-tug-out-the-anus detoxification process.

          • 0 avatar
            28-Cars-Later

            @Dal

            People have to understand, I already am perfect.

          • 0 avatar
            ExPatBrit

            Great reply dal.

            I have had a few nice cars but at this time in my life I don’t care that much.

            You will probably always regret if if you don’t buy or lease that dream car if you can afford it. There are no nice used vehicles for us to buy if some folks don’t step up and buy new ones.

          • 0 avatar
            BrunoT

            Because buying a used BMW when you have $179 in your checking account and no retirement fund is being a puritan. Got it.

          • 0 avatar

            This is also why Americans destroy every beer style. We feel the need to turn it up to eleven, when many beers are by definition and style 5 or 6…..

        • 0 avatar
          sportyaccordy

          Because they themselves either can’t afford one or don’t have the guts to pull the trigger. It comes down to pure jealousy, plain and simple.

        • 0 avatar
          tankinbeans

          If out were a brown, rwd, V8 station wagon with a manual choke and a ham radio it would be a slam dunk.

          Spending your money how you wish is sacrilege and must have the approval of internet keyboard warriors.

          • 0 avatar
            28-Cars-Later

            Mmmmmmm ham… radio.

          • 0 avatar
            BrunoT

            In case you didn’t notice the guy solicited opinions. They didn’t go to his house, bust down the door, and lecture him.

          • 0 avatar
            28-Cars-Later

            @Bruno

            Now I’ve got the COPS theme playing in my head, thanks for that.

            [breaks into the door with a battering ram]
            OFFICER1: Get your hands up in the air, now!
            MAN: [gets up with hands in air] What did I do?
            OFFICER1: Sir we had a report about a recent CR-V purchase. [points to the Classifieds] Sir, this brown Mazda6 wagon better suits your needs.
            OFFICER2: You were warned about this, Jones.
            OFFICER1: Put your hands behind your back, you’re coming with us.
            OFFICER2: Maybe the judge will grant community service and you can come help us work Saab Appreciation Day.

        • 0 avatar
          Acd

          Yeah you’d think that on a website devoted to cars that the readers would be ok with people spending their money on nice cars. Go figure.

          • 0 avatar
            BrunoT

            Logical fallacy of false dilemma. Either lease a car you can’t afford OR die in a 36 year old Pinto fire.

        • 0 avatar

          I think I’m the minority here. There is nothing wrong with lease if you have the financial means to do so. A lease payment is like monthly utility bill . A car is necessity for most Americans much like paying for cell phone bill.

        • 0 avatar
          wsn

          “Can someone explain to me why the B&B have such a huge objection to someone spending a portion of their discretion income on a nice car?”

          —-

          They can. But in this case, the person asked for opinions and got them.

      • 0 avatar
        Von

        As long as the money is made legally and ethically, they can spend it on a Hello Kitty Hellcat for all I care.

        BTSR can have some strange views, but lease German and buy Japanese is a good general rule of thumb. Japanese being only Toyota and Honda though, other brands are riding on their coattails.

    • 0 avatar
      TMA1

      Wait a minute, you’re leasing another car for Azera girl? I thought she dumped you.

  • avatar
    RHD

    If you’re going to drive a BMW for three years, and a turbo to boot, why would you want an automatic transmission?
    If the answer is to make commuting on congested freeways less work, then there’s no point in shelling out for a BMW anyway.

  • avatar
    rpn453

    I don’t know much about leasing, but this seems like a very intelligent and thorough response. Good work, Bark.

  • avatar
    sportyaccordy

    53K? Sporty BMW? Y u no M2?

  • avatar

    Simple rule:

    LEASE GERMAN…BUY JAPANESE.

    Or… “Lease luxury cars” – “buy the econoboxes”

    The costs for maintenance and repairs are so considerably high that if you want a “luxury” vehicle you should lease it. A long-term, low-cost, low-maintenance vehicle (Camry, Accord, etc) might as well be financed.

    There are people paying $200 a month to lease Toyotas and spending less than $40 a week on fuel – less than $100 a year on oil changes.

    Meanwhile “SOME PEOPLE” are leasing luxury cars for $899 – $1000 a month (S-class cost us $1600 a month with business leasing).

    thing is, when time comes due to replace that W221 with a W222, you get a “whole new car” with all the new trimmings.

    • 0 avatar
      Arthur Dailey

      And there we have it BTSR as the voice of reason:

      “Lease luxury cars” – “buy the econoboxes” The costs for maintenance and repairs are so considerably high that if you want a “luxury” vehicle you should lease it. A long-term, low-cost, low-maintenance vehicle (Camry, Accord, etc) might as well be financed.

    • 0 avatar
      Kyree S. Williams

      People lease for three reasons:

      a) They want a nicer car than they could afford or would want to pay to finance
      b) They trade their cars often, and it’s cheaper than financing and taking a bath on depreciation with most vehicles upon trade-in. With 72-month financing, which is common, you don’t typically reach positive equity in the vehicle until the fourth or fifth year.
      c) They want inexpensive transportation and total peace-of-mind in terms of mechanical welfare. Even for luxury cars, this one is valid because companies like BMW and Jaguar have no-cost maintenance for the entire duration of the lease

      All of those reasons are perfectly valid, in my mind. I do trade cars often. I like the Golf SportWagen, and it isn’t going anywhere, but another reason I can’t lease is that I put *waaay* too many miles on my cars. I’ve had the Golf SportWagen for 11 months now, and it already has 21,000 miles on it. It’ll have 23,000 by this time next month. And, keep in mind, for four months, I had another car with which I was splitting the miles

    • 0 avatar
      an innocent man

      You stole my rule.

    • 0 avatar
      krhodes1

      I’m going to put my accounting degree to work here. Saying that leasing luxury cars makes sense because they are more expensive to fix is stupid. Compared to the cost of the first three years depreciation, repairs and maintenance for MANY years out of warranty is chump change, even on a BMW.

      If you can afford to buy the thing in the first place, you can easily afford to fix it. I paid off my ’11 328i in just about 4 years. That meant for the first four years I had that car, on average it cost me well over $1000/mo. $44K on the road with taxes, not including Maine’s extortionate annual excise tax on new cars. And it is still currently worth ~$30K private sale. I could probably get low twenties for it tomorrow at CarMax if I got laid off or something. Anyway, there is no way in creation, that this car is going to cost me anything like that amount to keep on the road for the foreseeable future, even if I just loved the dealers loaners and cappuccino.

      The best reason to lease a car is that you just want a new car every few years, so you might as well minimize the monthly payment to do so. Chances are you will not come out ahead of just buying the thing and trading it in whenever you choose, and you will certainly lose big time versus keeping it for a few years once it is paid off. Or if you are one of the lucky few who can write off a lease as a business expense. Though even then, I am not convinced that most would be better off depreciating a car as an (IIRC 5yr) asset plus writing off actual expenses, or just taking the mileage deduction. That one depends on how much you drive.

      Frankly, the excise tax ALONE on buying/leasing a $50K car every three years is enough to make the smart person not do it in this state. And you can’t even hide it in the loan, as it gets paid to your town. Mine doesn’t even take credit cards.

  • avatar
    Felis Concolor

    The last time I saw orange peel that bad on a factory paint job was my father’s Datsun 720 pickup in construction orange.

    • 0 avatar
      Car Ramrod

      **trunk enlarged to show texture**

    • 0 avatar
      ItsMeMartin

      And why would it matter so much? Unless you are actively looking for imperfections in the paint from up close, in direct light, the difference between such a paint job and a desired, smooth one is minimal if even that.
      I’m puzzled by how easily some of you (the general you, not Felis in particular) are willing to overlook awful reliability or huge repair costs of certain cars, claiming that it’s par for the course, and consider such a minute detail without any real significance a deal-breaker.

      • 0 avatar
        ajla

        I personally notice my paint quality enough that I would not want to spend $50K on a vehicle with bad orange peel.

        It would negative effect my perception and enjoyment of the car because I find it unattractive. Probably not a big deal if I’m buying a commuter Sentra, but over a certain price point the minor details matter much more to me.

      • 0 avatar
        TMA1

        You don’t have to actively look for an imperfection like this when it’s staring you in the face. I noticed it too. I wouldn’t want to see this on a $53K car. I thought the Germans were supposed to be great at paint. That’s garbage.

      • 0 avatar
        BrunoT

        Some car guys are really hung up on fit and finish issues, even if at a normal look a car is gorgeous. The idea that it’s flawed drives them crazy. Read owner reviews, some of these crazies will sell a car if the speaker buzzes at max volume. They won’t bother to figure out that the car lacks a subwoofer and a $300 upgrade would have been cheaper than dumping a $50,000 car in 9 months.

    • 0 avatar
      DeadWeight

      “The last time I saw orange peel that bad on a factory paint job was my father’s Datsun 720 pickup in construction orange.”

      The Ultimate Driving Machine* assembled with absolute precision with components made of unobtanium by the most highly skilled craftsmen & craftswomen in all of Bavaria!!!

      • 0 avatar
        ItsMeMartin

        Autobahn(TM) tested; Fahrvergnügen(TM) guaranteed.

      • 0 avatar
        Kyree S. Williams

        Our Sonata has noticeable orange-peel, unfortunately. I don’t see it on all of Hyundai / Kia’s products, but the color in question—Harbor Gray Metallic—seems to have been a particular challenge for them.

      • 0 avatar
        krhodes1

        @Deadweight

        Actually, having taken the factory tour in Munich, 3-series are painted in about the highest tech, completely robotized paint line you could even begin to imagine. No humans involved at all. Fascinating stuff. Amazingly few humans involved in putting together the whole car.

        • 0 avatar
          DeadWeight

          BMW does a lot correctly (based on build and, especially, business model & marketing), but they some things very wrong as of late, also.

          And I’m not sure if that photo above is or is not from a new BMW a$$ end, but if so, then BMW needs to definitely work out some bugs in what is no doubt their costly and state-of-the-art paint facility (assuming that’s not a repainted, damaged vehicle).

  • avatar
    dal20402

    The concept of a CPO lease isn’t objectionable in the least. In theory, you should be able to pay for depreciation on a newish used car rather than a new car and save quite a bit of money, while retaining the advantages of a lease (low payment, hassle-free return).

    Unfortunately, automakers have decided to target vulnerable and/or uninformed customers with their CPO lease programs, and the terms always seem to stink. High money factors, terrible fees, unrealistically low residuals… watch the terms very carefully if you want to lease a CPO car.

  • avatar
    Ltd1983

    “I’ve heard several myself over the years: the car was returned with 2,000 more miles than it left with”

    Not quite 2,000, but I got a loaner XC70 over Memorial Day weekend and decided to take an impromptu camping trip, and put about 1,000 miles on it. Free miles, and all the wear and tear of a camping trip on someone else’s dime was too hard to pass up.

  • avatar
    gasser

    Leasing is more confusing that the shell game practiced curbside in NYC. One needs to see the actual numbers to decide if the dealer has lowered the CAP cost or upped the BB to juggle the monthly. Does the fact that its a dealer demo bother me?…..no with two “buts”. If the dealer damaged and repaired it on his own, it won’t appear in Carfax or Autocheck, so let a mechanic look at it. Seccond, check the title to see if it really was a “demo” or if the salesman is “confused” and its a lemon trade in. The mileage doesn’t bother me, because even with the rule of thumb that a demo or rental mile is like 2 or 3 miles for a sane driver, its low enough to go for. (Rental/demo mileas are like dog years.)
    If the OP wants it, its his choice. For me, that kind of $$ would steer me to a Maseratii Ghibli lease.

    • 0 avatar
      Kyree S. Williams

      I would say that BMW wouldn’t sell lemon/buyback vehicles as CPO units…except that there were reports of them doing just that not too long ago. Ridiculous.

    • 0 avatar
      TMA1

      Maserati is an interesting idea, but those dealerships must be few and far between. I’ve never even seen one. I’m thinking Jaguar at these prices.

    • 0 avatar
      dal20402

      Leasing is not confusing at all if you can get the dealer to show you the numbers. You’re paying for depreciation, with a bit of interest added. They often won’t show the work, and that’s what makes it confusing to a lot of customers. You’d never expect to sign a loan agreement without knowing your interest rate, but the dealer won’t disclose the money factor and residual unless you ask (and ask, and ask).

      • 0 avatar
        highdesertcat

        Often, an independent Credit Union, Bank or other lender will have a complete outline of the Leasing process available because I would not trust a dealer representative to explain the process nor their numbers.

        The dealer’s sole purpose for existence revolves on parting a customer with as much money as they can.

        Information is power. Be forewarned.

        • 0 avatar
          dal20402

          Inform yourself about the process first and you don’t need the dealer to “explain” the process or numbers — you just need the dealer to show you the numbers.

          All you need to understand a lease offer is this
          – Net capitalized cost (i.e. purchase price)
          – Money factor
          – Residual value

          The one thing you have to know that you don’t have to know when you are buying (but that you should know to make intelligent buying decisions!) is what the right residual value is.

          A high residual is good, because it will lower your payments. Subsidized leases usually work by artificially raising residuals. Don’t worry about the high price to buy at the end of the lease — if you like the car, you can just turn it back in and go buy a similar (or the same) one used for market price.

          • 0 avatar
            highdesertcat

            Thx dal20402, I copied your comment and sent it to a couple of people I know who are considering going the Lease route on their next vehicle.

        • 0 avatar
          carr1on

          Be careful with local bank or credit union leases. Their turn-in policies can be quite strict compared to OEM leases. Dealers tend to overlook scrapes and scuff and carpet stains. I’ve heard of credit unions sending an itemized all for those items upon turn-in.

    • 0 avatar
      BrunoT

      Some good caveats there. Dealers are capable of all sorts of games. The money to be saved selling you a damaged car is just too good.

  • avatar
    healthy skeptic

    Bark M. wrote: “I’m also going to try very hard not to be effing astonished and disgusted that a BMW 328i can be optioned up to $53,000!!!”

    Then I’ll be astonished and disgusted for you. That price is crazy. For a fully loaded 335i, maybe. For a 328i…WTF? That heated steering wheel must really have pushed it over the edge.

    And I’m saying that as a BMW semi-afficicanado.

    • 0 avatar
      Kyree S. Williams

      Haha. Actually, the 335i got a new engine and became the 340i for MY2016.

      You can still get a 328i past $50K with no issues in terms of sticker price. I saw the sticker in the glovebox for a lesser 320i that I received as a loaner, which had navigation, the nicer instrument cluster, and nothing else…and *it* was 43K.

    • 0 avatar
      krhodes1

      Back in 2011, I could have optioned my e91 328i to just about $60K by ticking ALL the silly boxes. I did not, was ~$44K US MSRP with just cold weather, premium, C/A, H/K and roof rails. And a stick back when you paid $1200 more for the automatic. The newer cars have more content standard for a higher starting price, but they also have option packages that I couldn’t even get on my car. Plus a more powerful AND more efficient engine (even if it doesn’t sound as good). None of that comes cheap. I can’t get excited about $53K for a BMW when a mid-range 4×4 pickup MSRP’s in that range.

      I would expect to be able to negotiate a bigger discount on this car, and BMW’s current interest rates on both loans and leases are a little stupid. My dealer was able to handily beat BMW Financial on my M235i last summer with Bank of America by a full 1.25%. I actually just refi’d the car with my credit union and saved another .75%, but they were only slightly cheaper than BMWFS last summer. Weird, but I will take it!

  • avatar
    sportyaccordy

    This is something I have wondered about. CPO lease. Why don’t they do used car leases? If they could certify and warranty the cars (like CPO does) it would be a gold mine for banks. Would also help with new car residuals, which would drive down those payments and increase sales. Am I missing something?

    • 0 avatar
      ixim

      No matter what they call it, it’s still a used car. The paper on used cars always has a higher interest rate/money factor.

      • 0 avatar
        krhodes1

        Not necessarily. CPO BMWs usually get the same rates as new ones from BMW. And my credit union will finance any current or previous model year car with <10K on it for the new car rates. 1.24% currently, as I just refi'd my 2016 M235i today. That is with a .25% discount for direct debit of the payment, and a .25% discount for direct deposit. Obviously, tippy-top tier credit rating needed. Got a credit for one month's interest too – technically first payment isn't due until 4/28, though I paid one today and will pay another one on 4/15. I like being paid ahead.

  • avatar
    Kyree S. Williams

    First off, there actually were some changes for 2016. The 3-Series received a facelift, or life-cycle impulse (LCI), as BMW likes to call it. The I6 in the 335i was replaced with a new one, and became the 340i; however for the 328i, it’s just styling changes and the addition of LED headlamps.

    Second, Bark is right. Do *not* make a single-payment lease. When you lease, even if you pay the full cost of the lease at once, you still owe money. Technically, your final payment is the car…when you turn it in at the conclusion of the lease. So, if the car were totaled, all of the payments you made would, first and foremost, be absorbed by the cost of paying the car. The lease’s GAP insurance would cover the rest. If you only paid monthly, the GAP insurance would still cover the deficit, and you could walk away not having sunk thousands of dollars into a car you don’t have. The only reason you’d ever want to make a single-payment lease is if you had poor credit and that was the only way you could get it (and why not just buy a cheap cash car at that point?). But that doesn’t sound to be the case for you.

  • avatar
    28-Cars-Later

    *If* they are calculating their 59% residual off of the original MSRP (so 31,270), DO NOT BUY but lease it. What you have to understand is this is an MY15 and we’re halfway through MY16, this matters on the block. So three model years back, MY13s are trading 19,0-22,7 with avg mileage and clean condition, nationally. You’re already one model year in on this deal… picking up what I am putting down? Don’t flush the difference between $45K and its near future value (say 21) down the tubes on a buy.

    MY13 BMW 328i Coupe RWD

    03/02/16 CALIFORN Regular $22,000 24,810 Above WHITE 6G A Yes
    02/19/16 PA Regular $18,900 26,987 Avg BLUE 6G P Yes
    02/19/16 NEVADA Regular $19,000 28,999 Avg WHITE 6G A Yes
    02/17/16 SF BAY Lease $20,900 35,685 Above WHITE 6G A Yes
    03/02/16 CALIFORN Regular $19,500 40,149 Avg GRAY 6G A Yes
    02/17/16 DALLAS Regular $18,000 64,902 Avg BLACK 6G A Yes

    MY13 BMW 328i Sedan RWD

    03/03/16 PALM BCH Regular $21,800 8,433 Above BLACK 4GT A Yes
    03/03/16 PA Regular $21,900 9,807 Above BLACK 4GT P Yes
    03/17/16 PA Lease $19,750 13,996 Avg IMPERIAL 4GT P Yes
    03/02/16 SF BAY Lease $21,000 15,828 Above MOJAVE M 4GT A Yes
    03/17/16 SO CAL Regular $22,250 17,425 Above BLACK 4GT A Yes
    03/10/16 RIVRSIDE Lease $21,750 17,549 Above MINERAL 4GT A Yes
    03/11/16 FT LAUD Regular $20,400 17,958 Avg WHITE 4GT A Yes
    03/09/16 ORLANDO Lease $20,200 18,292 Avg IMPERIAL 4GT A Yes
    03/14/16 ATLANTA Lease $20,900 19,123 Above MINERAL 4GT A Yes
    03/10/16 RIVRSIDE Lease $20,500 19,409 Avg IMPERIAL 4GT A Yes
    03/10/16 RIVRSIDE Lease $21,000 19,488 Above BLACK SA 4GT A Yes
    03/11/16 FT LAUD Regular $20,300 20,141 Avg BLUE 4GT A Yes
    03/09/16 NASHVILL Regular $22,750 20,160 Above WHITE 4GT A Yes
    03/09/16 ORLANDO Lease $19,600 20,705 Avg JET BLAC 4GT A Yes
    03/04/16 ORLANDO Regular $21,350 20,800 Above WHITE 4GT A Yes
    03/09/16 MILWAUKE Lease $20,500 21,893 Avg GLACIER 4GT A Yes
    03/09/16 CALIFORN Regular $19,000 22,943 Avg BLACK 4GT A Yes

    • 0 avatar
      Kyree S. Williams

      I love that you provide these auction values for us. Just out of curiosity, does it matter that, while the 3-Series sedan was redesigned in MY2012, the 3-Series coupe wasn’t redesigned (and turned into the 4-Series) until MY2016? Technically, it would have been an old bodystyle compared to the sedan. Does that drive down prices? Because typically a coupe carries a premium over its sedan counterpart…and that didn’t happen for 2013, based on your data.

      • 0 avatar
        28-Cars-Later

        I’m glad somebody loves something I do. Looking at the raw figures that didn’t seem to matter, but historically yes the last MY of the old bodystyle does depreciate slightly because of a new one when it first comes out. You will also see bidders on the block have more active interest in a new bodystyle if it rolls through say after an old one. What may have happened is coupe demand may have been higher to offset the typical loss we’re describing. Coupes typically go for more than sedans which we see when we look at MY10 (ignore the rough coupe for 7,9 something was obviously wrong with it):

        MY10 BMW 328i Coupe RWD

        02/23/16 ORLANDO Lease $13,100 36,932 Above GRAY 6G A Yes
        03/16/16 NJ Regular $10,900 54,694 Avg WHITE 6G A Yes
        03/14/16 NJ Regular $13,200 56,804 Above SILVER 6G A Yes
        03/17/16 FRDKBURG Regular $13,800 59,439 Above BLACK Yes
        02/18/16 DFW Regular $7,900 66,146 Below BLACK 6G 6 No
        03/17/16 PALM BCH Regular $12,700 66,486 Avg WHITE 6G A Yes
        03/03/16 ATLANTA Lease $13,100 73,511 Above WHITE 6G A Yes

        MY10 BMW 328i Sedan RWD

        02/25/16 ATLANTA Lease $9,700 45,728 Avg SILVER 6G A Yes
        03/01/16 DENVER Lease $13,100 47,154 Above BLUE 6G A Yes
        02/18/16 PHOENIX Regular $10,500 49,536 Avg SILVER 6G A Yes
        03/10/16 RIVRSIDE Regular $9,250 51,027 Avg LT BLUE 6G A No
        03/09/16 CALIFORN Regular $10,800 52,951 Avg WHITE 6G A Yes

        Orphan brands also typically drop 10% or more as well once everything is done, I saw it happen with Oldsmobile and later with Pontiac (the equivalent W-body Lacrosse was trading mid 12s in 2010 when I bought the GP, I overpaid on the GP at 11,2 but they were trading mid to low 10s on avg).

        • 0 avatar
          319583076

          I really appreciate the data and insight you provide also, FWIW. Thanks.

          • 0 avatar
            28-Cars-Later

            You’re quite welcome. One of these days though, 28 Consulting is gonna open up for a fee :)

        • 0 avatar
          Kyree S. Williams

          Huh. Thanks for the info. I have noticed the trend with orphan brands; unfortunately the one orphan car I was looking to buy (the Saab 9-4X) wasn’t cheaper than the Cadillac SRX with which it shares its mechanicals and platform…due to the 9-4X’ extreme rarity.

          • 0 avatar
            28-Cars-Later

            Ha I’m kidding about a consulting business on car buying. I think you did well to avoid the 9-4X, the only way it could have worked new was with some kind of warranty and even then you still might have been SOL as parts of it are made of unobtanium.

            “It has been reported that 457 units were assembled during the 9-4X’s brief 2011 production run.[7] However, VIN numbers for 2011 go over 600, and there were approximately 60 2012 models produced.”

            https://en.wikipedia.org/wiki/Saab_9-4X

            So there are at most somewhere between 660 and about 700 in existence and here are all the ones transacted recently:

            MY11 Saab 9-4X 3.0L FWD

            03/03/15 RIVRSIDE Regular $15,700 18,476 Avg BLACK 6G A No
            10/01/14 NJ Regular $15,400 20,473 Avg BLACK No
            05/09/14 PA Regular $16,200 32,985 Avg BLACK 6G P No
            11/30/15 CINCINNA Regular $10,100 84,929 Avg TAN 6G A No

            MY11 Saab 9-4X 3.0L Premium FWD

            01/06/15 NYMETSKY Regular $13,750 56,678 Avg White NON N No
            06/16/15 ORLANDO Regular $15,000 29,349 Avg WHITE 6G A No

            MY11 Saab 9-4X 3.0L Premium AWD

            02/24/15 PHILLY Regular $17,200 31,656 Avg WHITE 6G A No

            MY11 Saab 9-4X 3.0L AWD

            01/02/15 PA Regular $17,500 23,620 Avg BLACK 6G No

            MY11 Saab 9-4X 2.8L AERO AWD

            11/13/14 EL PASO Lease $25,000 19,937 Avg NONE 6CY A No
            01/05/15 NORTHSTR Regular $17,125 31,848 Avg NONE NON N No
            01/07/15 MINNEAP Regular $19,300 31,512 Avg BLACK 6GT A No

            If you really try, you can probably track at least one of them down based on the auction location (except avoid the one at Northstar (Shakopee, MN) as it didn’t have an engine for some reason).

        • 0 avatar
          Arthur Dailey

          @28carslater: then please let me play this game. Recently got some trade in valuations on our inherited 10 year old Buick LaCrosse/Allure with the much loved 3800 engine, with under 120,000kms on the clock. In the past year have put in over $1,500 in new OEM parts. New catalytic converter, 4 new tires, new oxygen sensors, new ECM, plus filters, etc. Recently passed emissions and safety testing.

          No accidents, previously owned by an over 80. Unfortunately the plastic ‘wood trim’ on the interior is scratched and the exterior looks like it came out on the losing end of a number of knife fights.

          Average offer as a trade-in? $1,000 Cdn.

          • 0 avatar
            28-Cars-Later

            Sure. Please bear in mind these are all as-is cars and in US dollars. I tossed in two examples of our lord and savior.

            2006 VOLVO XC90 2.5L 5G SUV P PS PB AC SR AWD 124,223 DKGREY

            2007 BUICK LACR CX 6G 4DSN A PS PB AC HT 141,717 SILVER

            2004 BUICK REG LS 6G 4DSN A PS PB AC 57,239 RED

            2002 ACURA MDX 6G SUV AWD 138,299 TAN

            $1000 CDN is like what $700 USD?

            I think i will give you $700 USD for it provided its not rotted underneath.

            Personally I would keep it forever and deal with the cost cutting as I do with my GP, but that’s me.

            Oh and here’s a bonus oddball one

            2003 BUICK CENT CUST 6G 4DSN A PS PB AC 131,025 SILVER

          • 0 avatar
            Arthur Dailey

            Underside is not that bad. Replaced a fuel line. It had the ‘waxy’ rustproofing applied, which is not what I recommend. Yeah what I was offered works out to about $730 U.S.

            Was looking to move it and purchase a nicer example of the same type, as I have started to appreciate the torque of the 3800, the nice wide seat and the relaxed quiet cruising experience that made a Buick a Buick.

            However with what I was being offered, it looks like it will stay around as a short distance grocery getter and for use by the kids.

            Just hope that we will not have to spend much more on parts.

          • 0 avatar
            28-Cars-Later

            @Arthur

            You forgot the guess the values!

            Yeah that’s what I would do with it, you won’t get much for it but 3800 has supernatural properties. I have an MY08 GP and I have had a litany of non power-train related problems with it inc the steering rack breaking (there was a TSB for it) and the master cylinder leaking/being replaced (there is no seal kit, evidently). I also put control arms and a new shocks on around 70K miles and had to spot weld the exhaust. Before starting to Krown it two years ago, it had been at the body shop twice for rust repair.

        • 0 avatar
          Arthur Dailey

          @28cars re: estimated pricing:
          2006 VOLVO XC90 2.5L AWD 124,223
          About $8k? Shocked at the depreciation on these.

          2002 ACURA MDX 6G SUV AWD 138,299
          Just under $5k?

          2003 BUICK CENT 131,025
          Probably about $1k?

          2007 BUICK LACR 141,717 SILVER
          I have seen them priced from $3k to $4.5k if that is miles not Kms

          2004 BUICK REG 57,239
          With that mileage, that’s the one that I think would be the best deal.

          • 0 avatar
            28-Cars-Later

            Yeah the Volvo XC90 is quite a doozy. Supposedly the later ones sucked much less than the first few years which were quite problematic. A bit off on these, you are but if you’ve never seen wholesale you’re thinking a retail mindset. Generally every retail price your see sub $10K USD is double what the vehicle is actually worth. The margins actually tend to run higher as the cars age because “they” have you believing in a high retail floor (i.e. that 10 year old car is worth $10K+, when this is rarely true outside of high demand models or exotics)

            2006 VOLVO XC90 2.5L 5G SUV P PS PB AC SR AWD 124,223 DKGREY $3,900

            2002 ACURA MDX 6G SUV AWD 138,299 TAN $3,300

            2007 BUICK LACR CX 6G 4DSN A PS PB AC HT 141,717 SILVER $3,000

            Finally

            2003 BUICK CENT CUST 6G 4DSN A PS PB AC 131,025 SILVER $150

            I speculate the last one was accident damaged because that’s scrap value here. The report does not show any announcements though, its just what I copy in.

            Oh and for S&G here’s a Ferrari listed in the general sale (not as-is like the rest of these)

            1999 FERRARI F355 8CY COUP A HT 36,207 YELLOW $50,000

  • avatar
    bikephil

    Leasing any car is stupid. Leasing a newish BMW whose resale value drops like a rock after 2 or 3 years is utterly moronic. But BMW drivers tend to have more $$ than brains, so go ahead…

    • 0 avatar

      Welcome back, bikephil! I take it that you’re quoting Dave Ramsey here?

    • 0 avatar
      28-Cars-Later

      if he is only paying the difference between $31,270 and $45,000 (or $13,730) for something which is going to lose $24,000 or thereabouts in the time period, if he really wants the car leasing is actually brilliant (or payment $381/mo/36mo before interest). Now whether its wise to piss away 13K on something you don’t own… well that’s another story.

      • 0 avatar
        dal20402

        What people miss with both cars and houses is that you’re pissing away money whether or not you own them (for mortgage interest on houses and depreciation on cars). In both cases renting isn’t nearly the categorically bad decision people make it out to be, and the answer of whether renting or owning is better isn’t clear unless you actually do the math.

        • 0 avatar
          tjh8402

          @ Dal20402 – a lot depends on the house. in my case, my mortgage payment is about what I’d pay for a decent one bedroom apartment in this area. Plus my payment will never go up dramatically (our state allows homestead exemptions for taxes which limits how much yours can go up every year), whereas rent definitely can and will. So I can either spend $750-800/month for the next 30 years and at the end of it feel pretty well assured that I have an asset worth what I paid for it, if not more, or I can spend ever increasing amounts of money on rent and have nothing to show for it.

          • 0 avatar
            dal20402

            tjh8402, in your case the math was decisively in favor of owning, and it tends to be that way for people who expect to stay in the same place for a long time.

            I’m on the other side of the coin. Thinking I was going to be in Washington DC for a long time, I bought a house there. Life did not cooperate and I had to sell the house just one year later. Even though I made a substantial profit on the sale if you just look at sale prices, I took an absolute bath on expenses, most prominently broker commission and real estate transaction tax (which is super-high in DC). Had I known I was only there for the short term I would have saved a ton of money by renting. (At least the carryover capital loss from that transaction will continue to lower my tax bill for the next two years…)

          • 0 avatar
            tjh8402

            @Dal20402 – yes unless you have a super hot housing market, I’m sure you did get hosed. Second set of closing costs, cap gains…etc? I think I remember reading somewhere that you should ideally hold on to a house for 5 years before reselling. That’s when all the homebuying and selling fees are paid for.

        • 0 avatar
          28-Cars-Later

          @Dal

          I agree.

        • 0 avatar
          krhodes1

          Real estate is far too local to make any sweeping generalizations. Where I am, there are plenty of houses for sale, but darned few apartments to rent (and it is nearly impossible to build more). So you can’t even begin to rent a decent apartment for what a nice size house costs. But people can’t necessarily buy due to that pesky down payment required, so there is bid demand for apartments. Supply and demand.

    • 0 avatar
      dal20402

      On the contrary, leasing a BMW is often the best decision, because BMW tends to be very aggressive with their residuals (i.e., subsidizing the leases). That’s particularly true if the BMW you want happens to be a high-volume model, where BMW often concentrates its best deals.

      Unless you’re arguing (which is common enough on TTAC, I guess) that anyone who drives anything other than a 10-year-old, moth-eaten Camry is stupid, you’re not making a lot of sense.

    • 0 avatar
      fvfvsix

      @bikephil – Your point doesn’t make sense. BMW is leasing at a 59%!! residual after 3 years. If the OP only kept the car for 3 years, then it would absolutely make more sense to lease rather than buy.

      Prove me wrong with math.

      • 0 avatar
        krhodes1

        It only works at all if you are only going to keep the car for exactly three years. And even then, everyone seems to forget about the acquisition and disposition fees that go along with the lease. That is ~$1500 for a BMW lease. Which IMHO largely negates the advantage of the allegedly inflated residual. Which IMHO are not nearly as inflated as people think they are, BMW is not in the business of losing money on leases.

        • 0 avatar
          ixim

          Not cheaper to lease but comparable plus you are always driving a late model car. BTW, does BMW waive the disposition fee if you re- up with them? GM does.

  • avatar
    PentastarPride

    I’d avoid leasing altogether. Even though your car will depreciate, it will be worth something when you decide to trade/sell. You have equity.

    That said, buying something and then being rid of it three years later is not a wise move either. It’s best to be in it for the long run, e.g. 5-10 years.

    In this case, the CPO is effectively a brand new car with only 4k miles plus 8k off sticker. That’s a good deal in theory.

    But, what if the dealer is inflating the $8k figure to get the car out of its inventory? Unless you’ve been tracking that particular model and what its average new/CPO prices go for in your area, you’d never really know for sure.

    • 0 avatar
      highdesertcat

      Some people like the idea of driving a new vehicle every three years or so and not having to worry about paying for maintenance, repairs and general upkeep.

      I’m seeing more and more people age 65 and over turning to leasing, instead of renting or buying to take those long road trips. It isn’t their only vehicle but it is their newest vehicle.

      When my vehicles reach the mileage point where long-distance reliability becomes questionable, I’ll probably lease while at the same time keeping our old vehicles for local grocery-getting.

    • 0 avatar
      sportyaccordy

      Some people don’t want to be in the same car for 5-10 years. That sounds miserable unless it’s a classic, pretty much. It’s also a little silly with the way technology is progressing. Other folks don’t want to deal with a car out of warranty. There are plenty of legitimate reasons to change cars frequently. I personally like to buy used frequently (3-4 years).

  • avatar
    Pch101

    It’s funny how the prospect of saving money by getting a late-model used car often results in paying too much for it.

    I would suggest that you avoid leasing unless you get a factory-subsidized lease special. That’s not entirely unusual for these kinds of cars.

    • 0 avatar
      28-Cars-Later

      Joe Sixpack typically does not understand true depreciation or refurbishing costs.

    • 0 avatar
      fvfvsix

      IMHO, buying a 1-2 year old used car is just as risky as buying a 7 or 8 year old used car. I know there are many reasons people get rid of a newish vehicle, but there is a higher chance that you’re picking up someone else’s problem at only 1 year old.

      • 0 avatar
        28-Cars-Later

        All used cars are a risk, the trick for a private party used to be to stick to reliable models or drivetrains which were unloved for whatever reason (we also used to have a glut of used cars from overproduction in the 90s through about 2007).

        • 0 avatar
          fvfvsix

          @28 – I agree. We bought an off-lease ’10 TSX a few years ago for a decent price. Spent about $1K to refurb (detailing, better tires, etc.) Next 2 years have cost me all of $140 in maintenence.

          One of the most brilliant unloved cars IMO.

          • 0 avatar
            28-Cars-Later

            I completely agree, a dealer here had I think MY13s listed retail at 21 in the Fall – a strong value for the money.

        • 0 avatar
          PentastarPride

          That’s kind of what I did…I bought my 2013 Chrysler 200 private party from an elderly couple looking to get a bigger vehicle for their grandkids. It was barely two years old when I bought it. I intend to keep this for at least ten years. It was (and is) a heckuva deal. Nice, economical, reliable.

          I intentionally opted for the 2.4 World engine over the 3.6 Pentastar as the engine has been around for several years with practically no mention of reliability issues. The transmission is decent with no widespread issues. However, it’s “unloved” as it isn’t “fast enough”; the 200 as a whole is “unloved” due to the bias of auto journalists and its pathetic “rental car” stigma.

          • 0 avatar
            Featherston

            @ Pentastar – That sounds like a smart buy.

            It was interesting to see how when the ’11 200 came out, the general press reaction was along the lines of “Yeah, it was done under time and budget constraints, but darned if this isn’t a decent reworking of the JS platform.” Then, when the current 200 came out, the press retroactively lambasted the ’11-’14 200 as “OMG worst sedan ever.”

            I think Jack Baruth had a column about this phenomenon (in general, not specific to the 200) a couple of years ago.

  • avatar
    fvfvsix

    I would suggest doing it this way:

    1) Buy new instead of “slightly used”

    2) Buy a 340i with fewer options instead of a 328i. Out here in AZ, it’s pretty easy to swing a deal for 8-10% off MSRP for something already on the lot

    3) Keep the car 5 years. Your out of warranty costs will likely be around $2K for this car in year 5 (battery, suspension component refurb, brakes)

    4) Sell it for 50% of what you paid for it.

    The cars with the bigger motors are going to be easier to sell to a fellow enthusiast after a half decade of use, and trust me… you’ll enjoy it more.

    • 0 avatar
      BrunoT

      Pretty sound advice. If more people were willing to drive a vehicle a little longer they could drive better cars for the same overall cost. Their problem is they’re “payment buyers” and the higher initial purchase price is all they care about. Resale is “years away’ in their minds and they lack the knowledge or discipline to factor that in. Many people sadly spend their entire lives thinking month to month. They never get ahead.

    • 0 avatar
      krhodes1

      I disagree. The 328i is more than fast enough. I have a slower than current ’11 328i AND an M235i, and while the M235i is certainly a quick car, even the old 328i is not by any means slow. And you will lose less on it than you will on a 340i – just look at what used ones cost going back a few years vs. what they went for new. You will have the least depreciation on the very cheapest lowest optioned car. You never, ever get a 100% return on options with very rare exceptions. The car to get is a 328i or 320i with fewer options, with that same 8-10% off.

      If you would genuinely enjoy the big motor and/or all the toys more, that is an entirely different thing. But it will cost you.

  • avatar
    28-Cars-Later

    Let’s play a game! What did these models do in the As-Is sale at Manheim Pittsburgh on 3/16?

    HINT: As-Is are typically avg to rough condition models which don’t run during the regular sale and you typically can’t arbitrate them unless frame damage is found in a post-sale inspection – hence “as-is”. Dents? Tears? Christmas tree dash? Bullet holes? Broken glass? Blown transmission? All on you pal.

    2009 LINCOLN MKS 6G 4DSN A PS PB AC MR AWD 147,527 BLUE

    1999 MERCEDES ML430 8G 4CUV A PS PB AC SR AWD 162,599 BLUE

    1993 MERCURY TOPAZ GS 4G 4DSN A PS PB AC HT 26,856 TEAL

    2007 MITSUBISHI ECLIP GT 6G 2DCP A PS PB AC SR 118,406 GRAY

    2006 TOYOTA PRIUS HY 4H 5DHB A PS PB AC HT 4X2 138,997 WHITE

    • 0 avatar
      dal20402

      09 MKS: $6500
      99 ML430: $1250
      93 Topaz: $900
      07 Eclipse: $3250
      06 Prius: $3500

      • 0 avatar
        28-Cars-Later

        Well I see we have no other contestants in our game today, so let’s go to the tape:

        2009 LINCOLN MKS 6G 4DSN A PS PB AC MR AWD 147,527 BLUE $7,100

        1999 MERCEDES ML430 8G 4CUV A PS PB AC SR AWD 162,599 BLUE $1,600

        1993 MERCURY TOPAZ GS 4G 4DSN A PS PB AC HT 26,856 TEAL $225

        2007 MITSUBISHI ECLIP GT 6G 2DCP A PS PB AC SR 118,406 GRAY $4,100

        2006 TOYOTA PRIUS HY 4H 5DHB A PS PB AC HT 4X2 138,997 WHITE $3,300

        You’re actually very close on most everything except the Topaz, in fact you were only $200 off on the Prius. I think we should play some Price is Right music and give you the Prius!

        BONUS ROUND

        2008 CHEVROLET IMP SS 8G 4DSN A PS PB AC SR 4X2 57,943 BLACK

        2008 SATURN VUE XR 6G SUV A PS PB AC HT AWD 79,560 GREY

        2005 TOYOTA 4RUN SR5 6G SUV 4X4 150,438 GOLD

        • 0 avatar
          dal20402

          I assumed the Topaz was a somewhat-preserved grandma car, when it was probably a grandma car that ended up sitting outside for 15 years. That’s less than scrap.

          Surprised anyone would pay $4100 for that Eclipse.

          08 Impala SS $6200
          08 Vue $6900
          05 4Runner $7600

          • 0 avatar
            28-Cars-Later

            Possibly a grandma’s car, or very possibly TMU.

            EDIT: Actually above scrap, around here it is the lowest I have ever seen it. A yard up north I visited was paying $130 a car I was told. So this POS probably runs or someone bought it for parts on their own and then will scrap it (but who is keeping one of these going on purpose?)

            I was too which is why it made it into the quiz. I assume looks sporty on my dozen car lot and it gets used to bring the young/ignorant proles into the lot (we used DSM crap/Eclipses/CRXs/Integras/Camaro RS’es for the same purpose).

            Just wow on that LS4’d W-body, but you overpaid on the other two. You’re actually pretty good at this Dal.

            Personally I would have stopped bidding on the Sat Vue at 4ish because F that model, too old and discontinued (I also think it uses a weird V6 in MY08). [checking wiki] Yeah in MY08 the Vue ran the 3.6 and 3.5 the latter of which is a 60V6 descendant. Betcha the XR runs the 3.6 DOHC and either early DI or muliport FI. Yeah F that noise.

            I would have liked to see the 4runner, it was prob a little messed up but serviceable hence the higher price for an 05 with all kinda miles.

            2008 CHEVROLET IMP SS 8G 4DSN A PS PB AC SR 4X2 57,943 BLACK $6,300

            2008 SATURN VUE XR 6G SUV A PS PB AC HT AWD 79,560 GREY $5,500

            2005 TOYOTA 4RUN SR5 6G SUV 4X4 150,438 GOLD $5,000

          • 0 avatar
            dal20402

            That’s actually a very low price for an ’05 4Runner with less than 200k. Those things hold their value like crazy. I bet it had some kind of major issue, or maybe advanced body cancer.

            I forgot about the timing chain issues on those early 3.6 engines (which are in the Vue XR). Should have thought of that.

          • 0 avatar
            28-Cars-Later

            You’re probably right, no doubt had some announcements or it wouldn’t have made it into as-is in the first place. Sometimes the gamble pays off. Here are the only Subbies since I know you have one:

            2005 SUBARU FORESTER X 4G 4CUV A HT AWD 116,781 BLUE $2,200
            2005 SUBARU LEGACY 2.5GT 4GT 4DSN 5 PS PB AC SR AWD 134,928 BLUE $3,900

            My rule with GM car is pretty much if its not LS/SBC, 3800, or at least 60V6 (which isn’t as great but doable), keep moving. Their other oddball stuff isn’t generally worth the headache (I personally will deal with Z-body Saturns but as a dealer I’m not sure its worth it at this point).

          • 0 avatar
            dal20402

            If that stick Legacy GT is at all presentable someone’s going to make some nice money on it.

            Part of the reason my wife and I are thinking about replacing the Forester in the short term is because we’ve suffered almost zero depreciation on it and want to take advantage while we’re at this point in the curve. I bought it new for a bit over $26k more than three years ago and trade-in value is currently somewhere around $22k! Subarus are almost free driving in the Northwest.

            One option is the QX50 I’ve been talking about, but for complicated (but very valid) reasons my wife is now into hybrids and electrics. We’re also looking at used RX450h and, relevantly to this thread, subsidized leases on BMW i3s.

          • 0 avatar
            28-Cars-Later

            Let me look it up, what year is it?

            Lex hybrids are made with gold, diamonds, rhodium, and Martian skin I doubt you’ll find a good price on one used. I might look at the I3 lease, a girl I work with traded her Smart car [!] for one after she married.

            EDIT: Maybe Martians went on sale, wholesale on the 450H FWD is about 5-6K premium over the gas model.

          • 0 avatar
            dal20402

            ’13 Forester XT Touring, no nav, factory roof rack, 27k miles, very good condition (tires at 50%, two door dings and a couple teeny-tiny marks on the front bumper).

            Low-mile 2013 RX450h are in the $35k+ range around here. Given expected depreciation that’s acceptable. I gag when I look at the i3, but it makes sense for us on a rational basis and my wife kind of likes it, so I’ll swallow my pride and take a test drive.

          • 0 avatar
            28-Cars-Later

            MY13 Subbie Forester XT Touring H4

            11/11/15 SF BAY Regular $23,200 19,502 Above SILVER 4GT A Yes
            01/06/16 DENVER Regular $18,600 28,009 Below WHITE 4GT A Yes
            02/23/16 ORLANDO Regular $21,400 34,560 Avg SILVER 4GT A Yes
            02/03/16 CALIFORN Regular $21,750 35,191 Avg BLUE 4GT A Yes
            10/28/15 MILWAUKE Regular $21,750 39,783 Avg GREY 4GT A Yes
            11/05/15 SF BAY Factory $16,500 44,268 Below SILVER 4GT A No

            Not many examples but projected range is 23,8/21,4/18,9 (avg miles 31K) for clean/avg/rough per MMR’s little calculator thing.

            I say be a jerk and demand 23 on trade somewhere. The other thing to think about is what’s going to happen to wife’s car down the line. You can prob sell a Lex RX private party yourself, but if you lease i3 you’re either having to replace it in 3 years or buy it (don’t buy it) and then determine who will buy it off of you down the line.

            here is the only base i3 in MMR:

            MY15 BMW i3 hatch “giga” (whatever that means)

            03/16/16 NEVADA Lease $29,250 5,056 Avg SILVER EL A No

            MSRP was 42,4.

          • 0 avatar
            dal20402

            Interesting. Seeing those auction values I bet I can get 23. Thanks as always for contributing data.

            Those i3 leases are written such that it would make less than zero sense to buy at the end. We’d just take the cash from the Subie sale and sit on it, then get something else after 3 years when the i3 goes back to Bavaria Mama.

          • 0 avatar
            28-Cars-Later

            No prob, sounds like a wise move. Given some of your wife’s health problems I would probably do whatever solution brings maximum happiness. If she feels like a million bucks in the i3, then uglyfy up that driveway. I say this as a cheap, er fiscally prudent person, but in the grand scheme money really doesn’t matter – its just green toilet paper.

          • 0 avatar
            dal20402

            I agree, 28. What she wants pretty much goes as long as it’s not financially suicidal (like a lease on a Q5 Hybrid, probably her preferred choice).

            I think she’d end up feeling the most like a million bucks in the RX, because it’s THE car of choice for women much wealthier than her around here, but she’s attracted to the super-low lease payments on the i3. They really are giving away a lot of depreciation.

          • 0 avatar
            28-Cars-Later

            Share some of this data with her in order to make an informed decision.

          • 0 avatar
            VoGo

            The i3 is a cheap lease because the lessor pockets $7,500 from the Federal gov,t. Some states kick in another $2,500.

            So if it costs $42K new, and the residual value in 3 years in $25K, then the lessee is only paying for $7K or $9,500 in depreciation, plus interest.

            That’s how it costs $250/month.

    • 0 avatar
      RHD

      That ’93 Topaz is probably in the AS-IS lane due to a defective odometer…

  • avatar
    tjh8402

    I’m a former e46 BMW owner myself and of the cars I’ve driven, the one that reminds me the most of my car (including new BMWs) is the Ford Fusion. The F30 just doesn’t have that BMW magic anymore. If you want a premium brand that drives like a BMW, go lease an IS or ATS (those are two I haven’t driven). Otherwise, save your $ and get a really nice Fusion Titanium AWD…or just wait till the Fusion Sport arrives, don’t save your $, and enjoy the extra 85 hp.

  • avatar
    Kendahl

    After driving a couple of BMWs, I concluded that their claim to being the “ultimate driving machine” was, at best, previous history. That was almost ten years ago and they have gotten worse, not better, since then. (The one car that did deserve the title was the Porsche Cayman. Unfortunately, I couldn’t tolerate the engine drone right behind my head for more than half an hour.) Before making a buying or leasing decision, I suggest you test drive half a dozen of the competitors in the same price range.

  • avatar
    PandaBear

    Looks like BMW is getting smarter because everyone is leasing to avoid the “image” of poor reliability out of warranty these days, so yes you pay more leasing the short term vs financing, but we all know that depreciation is not linear.

  • avatar
    Kevin Jaeger

    Generally a good article on leasing with one quibble. All of the math and explanation looks correct, but then you drop the clanger about “paying interest on depreciation”, which is financial gobbledegook.

    Depreciation is an expense you pay for. You pay interest on the capital, not on the depreciation.

    • 0 avatar

      Sorry, but I’m correct. That’s why there is still an interest rate on a lease that you pay in entirety up front.

      • 0 avatar
        srh

        The interest paid is on the residual, not on the depreciation. It makes sense that you pay interest on that.

      • 0 avatar
        BrunoT

        You’re wrong. You want my leasing executive wife to log on and explain it to you?

        • 0 avatar

          You don’t want to introduce your wife to me.

        • 0 avatar
          Kevin Jaeger

          If you set the down payment to the full amount of depreciation it’s obvious what you’re paying interest on.

          Example: $50K car, residual value $30K, down payment $20K, 36 months @ 4%.

          The lease payment is a simple 4% interest on the residual value – $100/month or $1200/year.

          If you have $0 down the loan starts at $50K and ends at $30K, so you pay more interest. But that’s interest on a larger loan, not interest on the depreciation, which is a nonsensical concept in finance.

          • 0 avatar

            That’s not how leases are calculated. At all. Read the post again.

          • 0 avatar
            Kevin Jaeger

            Actually it is how leases are calculated when you unwind the “Money Factor” arithmetic into what is really happening.

            You pay the depreciation, and are charged interest on the loan against the asset being leased.

            Type my example into any lease calculator you like and see if you get a different answer.

          • 0 avatar
            Pch101

            Kevin is correct, as his example is intended to illustrate a situation in which the lessee has used a down payment to pay for the depreciation in advance.

            Strictly speaking, leases don’t involve paying interest on depreciation. But in practice, I would say that’s a fair way to describe the bigger picture concept of the nature of transaction to someone who doesn’t understand it: You are renting something, and paying for its loss of value + interest, although the amount of the interest paid is not determined specifically by the amount of depreciation.

  • avatar
    markf

    I can understand the appeal of leasing, just like some folks prefer to rent housing instead of buying (I know it not an Apples to Apples comparison) I think a lot of the lease crowd looks at a car payment as something that they will always have so might as well get something new/something nicer then I could afford to buy in some cases.

    • 0 avatar
      tjh8402

      there is also the matter of the devil you know vs the one you don’t. a leased car will always be under warranty. usually a loaner car is a part of the package. you never have to worry about being without transportation or a major unforseen expense. yes maintenance on an out of warranty car doesn’t have to be as much as a payment, especially if you are able to wrench on it yourself or take it to a mechanic. however, for those that don’t have the time, skill, or facilities to do that, having the luxury of knowing your transportation expenses will not only never include a catastrophically large expense, but you can plan on that expense being $399/month for the next 3 years (and probably no more than $100 more for the next 3 years after that), and on top of that you won’t have to worry about being without a car for any period of time is good peace of mind for those that have plenty of things they already worry about.

  • avatar
    BrunoT

    2013’s are essentiall the same and can be had for under $30K with a little remaining warranty, enough to ensure you don’t have a major problem on your hands. They will depreciate far far slower than a CPO at $45,000. You also PAY for that CPO coverage in terms of a higher purchase price, of course.

    Depreciation savings per year $2,000
    Interest savings per year @5% $ 750
    Insurance savings on the cheaper car $ 75/yr
    advalorem taxes could range from $0 to $150 less depending on your state.

    But at least $2825/year less to own, or $8475 over 3 years. Unless you have a major catastrophic engine or transmission issue out of warranty you’re unlikely to “win” with the CPO newer vehicle. The 3 series is pretty reliable, odds are you may have a couple grand more to spend on repairs over the 3 years, or nothing.

    This is why nearly every ad you see from BMW is about CPO vehicles. They make far more on these than they do on new or non-CPO cars. There’s a price to be paid for peace of mind. But a 3 year old 3 series with maybe 45,000 miles is certainly not old and still has 9 months to a year of new car warranty. So you’re paying over $4,000 a year for that peace of mind for the extra 2 years of protection.

    By the way, if you cannot write a check for a major auto repair, that is your checkbook telling you that you cannot afford the car, period. Luxury cars come after the rainy day account gets funded. This is how people who can write checks for entire cars get that way. They make smart decisions over time and in a decade or two they have the money for a new car “free”.

    Or, one can be a child and require instant gratification (a 2 year older used car…the horror!”) and be out there with the others living in mom’s basement at age 35 due to a job loss or health issue.

    • 0 avatar
      krhodes1

      If you simply must waste money on piece of mind, you can get a better aftermarket warranty than BMWs CPO coverage for much less than the added cost of CPO. And BMW CPO is by NO means equivalent to the original factory warranty, it has a deductible and all sorts of exclusions. I don’t believe the free maintenance transfers anymore either, though it may on CPO only, which is worth something, though not a lot. In my state the difference in excise tax on a new car vs. a 3yo one at $50K MSRP is *$700*. $1238 for a 2016, $538 for a 2013, and it keeps dropping for another three years. And it doesn’t matter what you paid for it, it’s based on MSRP. And of course, you save on sales tax too.

      But all that said, I find nearly new used cars to almost always be a bad deal. The discount just isn’t big enough to buy someone else’s pre-farted in car. Buy new, or buy well-used. I am happy to pay $50K for a new BMW, or $10K for a used one, but I won’t pay $40K for a used one.

      I completely agree with you that buying expensive cars should be relatively far down one’s list of priorities, which is why I didn’t buy my first new BMW until I was 42. And even then I about hyper-ventilated signing the papers. And I plan to keep it forever.

      • 0 avatar
        28-Cars-Later

        Who sells aftermarket BMW warranties and how good are they?

        • 0 avatar
          krhodes1

          Rt66 is supposed to be excellent. Sold mainly through credit unions – mine offered, I declined when I refi’d. In many cases, BMWs own extended warranties can be a better deal than CPO – and they have options that cover MORE than CPO does. Buy a car privately, get the factory extended warranty, and save a bunch of money.

          Personally, my opinion is that if you can’t afford a car without a warranty, you can’t afford that car. Extended warranties are like Vegas, the house ALWAYS wins (with rare exceptions). Even CarMax wised up and is pricing their luxury car warranties more appropriately. I would rather take my chances than effectively pre-pay for repairs that may not happen.

          • 0 avatar
            tjh8402

            @krhodes- I have to disagree. Over 3-5 years you might come out behind on extended warranties (although that’s never been the case – my family has always gotten our money’s worth), but the question isn’t a matter of if you can afford $2-3k in repairs over a 3 year period, but can you afford it all at once, a situation that is not out of the question on a German car as you know. This is especially the case if you have a car payment. I put a warranty on my Abarth and over the 6 year loan, it’s only costing me an extra $50-60/ month. I can afford that but I can’t afford the payment plus a possible $500-1000 repair. If I didn’t buy the extended warranty, I would’ve had 5 years of payments with no warranty.

          • 0 avatar
            krhodes1

            I refuse to owe money on a car that is out of warranty. Payments or repairs, never both on the same car. As I have said, if you can’t afford the repairs, you can’t afford the car. If you can’t pay off the car before the warranty is up, you can’t afford the car. Would I be thrilled by a $2K+ repair on one of my BMWs? No, but it wouldn’t be any sort of financial setback for me either. Because I don’t buy cars I can’t afford.

            Nobody in my extended circle of friends and family has ever come out ahead on an extended warranty.

          • 0 avatar
            tjh8402

            @krhodes – then I was going to be SOL. I could only afford around $200/month on a payment and drove 24k miles last year. that meant a long financing term and that the car was going to be out of warranty very quickly. an extended warranty was going to be my only option. There was no car under warranty that I could afford to pay off before the warranty expires. so by that reasoning I couldn’t afford a car?

          • 0 avatar
            krhodes1

            I used to be in the same boat. I bought used cars and paid cash for them. And was careful to buy reliable and easy to fix cars, mostly VWs and RWD Volvos. In an N+1 configuration to be safe.

            But ultimately you gotta do what you gotta do. 24K a year on a low budget sucks, as I well know. Even harder if you want to drive something interesting.

            And note – my thoughts on this are more along the line of affording $40-50K cars. If you are not playing in that space, you do what you have to do.

  • avatar
    SP

    I recently had a 2016 BMW 328i Xdrive as a rental while my family car was in the body shop.

    (This was not by design. The Enterprise only had the BMW, a Mustang convertible, a Wrangler, and 3 Suburbans available. This is a messed up product mix if I have seen one, and the manager commented on it as well. But I digress.)

    The 2016 328i is a really nice car. I was a little skeptical of it, to be honest, having readabout the numb steering in recent BMWs, the turbo 4-cylinders, and all that.

    Well, I can say that speed is not a problem in this car. It’s not the fastest thing on 4 wheels, but if you plant your foot in this thing, you will be at extralegal speeds very quickly. Lag is minimal. This turbo 4-cyl works really well. The car is also very quiet, almost silent at idle, and sounds decent under acceleration. I am not sure if this model has the fake engine sounds through the speakers when you accelerate, but either way, it never sounds offensive. A Sport mode quickens the throttle response quite a bit. Or there is Eco mode if you want to try hyper-miling. I think our average over 1 week of mostly short trips was about 25 mpg. So, not bad in context, but not a fuel sipper.

    The car has very confident handling, and a really smooth and well-controlled ride. This car can eat up highway miles or back roads, as you prefer. I enjoyed driving it. The steering is, honestly, fairly numb. When I got back into my Mazda, I noticed how much more direct the steering in the Mazda felt as compared to the BMW. Now, that is a bit telling. I heard that the 2016 received improvements in this regard. I can only assume that the 2015 must have been numb-er, as I never drove it. FYI, the car had the base 17″ wheels with Michelins.

    So on the one hand, the car felt responsive and sporty. On the other hand, it felt a little remote. I’m not sure I’m explaining it well… but, hey go test drive it yourself.

    The interior was clad in the “leatherette” that Germany seems to love. It felt ok. I would have preferred cloth or leather, but, ah, I wouldn’t turn the car down for the pleather.

    The interior was well designed. The gauge cluster is a little plain and almost aftermarket looking, but the gauges are clean and give you the info directly, without silliness or distracting effects. This is a driver’s car. The dash and doors had nice ebony stained wood inserts (probably fake, but nice looking regardless). The multimedia screen is ok, and I liked the wheel/clicker in the console. It’s not a touch screen, at least on the trim line I had. So don’t poke at it. The screen can be turned off entirely for night driving. Again, driver’s car. I was a little confused by the radio tuning options. But I usually found something to listen to, anyway. The sound system was pretty good, if a little bass-heavy.

    The version I drove was optioned up to about $42,000, from what I could tell.

    To me, it’s a decent purchase, if you have the money. With my money, I would probably go for a higher value proposition in something like a Mazda 6 for $24,000. But if I had larger means, I would definitely consider the BMW.

    In regard to the question of CPO – I am not sure how much the CPO program actually gives you versus the price premium … but then again, there are not many used 2015-2016 BMWs floating around, outside of dealer CPO programs. So that may be your only way to get a low-mileage used example.

  • avatar

    I’m surprised nobody has mentioned the real problem with leases – the limitation on mileage they have. Typically those $450 a month lease deals are based on 12,000 miles a year, and I suspect few TTAC readers drive that little … so by definition they are absolutely dreadful deals.

    • 0 avatar
      highdesertcat

      “limitation on mileage they have” You can get leases with no mileage limitations.

      When my daughter-in-law worked for the Pharma industry she leased cars without mileage limitations. Leases were tax write-offs and lease expenses would be reimbursed by the employer.

      Fleet leases (for businesses) also have no mileage limitations.

      For individuals who cannot write off the lease expense, a mileage limitation may help keep lease costs down.

    • 0 avatar
      ixim

      One strategy to deal with too few miles is to turn the car in early with a “pull ahead “. That way you can opt for a lower mileage lease with a lower monthly payment. Such leases are often subsidized, too.

  • avatar
    BerlinDave

    And, if my experience with BMW, albeit in Germany is any consideration – I would not trust them any further than I could throw them…

  • avatar

    Sam,

    Your monthly payment shall be a bit higher than $520 ( excluding tax) per calculated by Bark due to milage adjustment. The 59% residual is great for MY 2015 F30 . You need to fight for lower money factor ( MF ). Your stealer is marking up MF. If they won’t budge, you will want to consider doing maximum 7 multiple security deposits ( MSD )which will knock your MF from .00183 to .00134 . The MSD is fully refundable even if the car is totaled.

    The new monthly payment with 7x MSD will be $483.xx + mileage adjustment . Thats is a great deal because your are paying less than 1% of MSRP / month over 3 years.

    Again, I’m a minority here who don’t frown upon leasing . There are a lot of misinformation posted here because RV is non-negotiable. You can further improve the deal by negotiating on sales price which will lower adjusted cap cost.

    • 0 avatar
      b-a

      Agree with the comments on MSD, MF markup, and negotiating lower price.

      There’s a lot of good info on leasing on the Bimmer forums. My family has leased a few of these cars over the years and its worked out reasonably well, though posts on bad experiences suggest that those who don’t negotiate get screwed (surprise!).

      Also, personal preference of course, but I think a loaded 3er isn’t as fun to drive. All that extra weight adds up!

  • avatar
    jimbob457

    Get an indy BMW mechanic. Take the lease car to him/her. Do what they say.

  • avatar
    crazymonkey

    I’m a retired trial lawyer. I handled lemon law cases; I also owned several BMWs. My legal experience showed that BMWs, particularly the large, top of the line 7 series, had a very high rate of lemon law claims relative to other makes. These were serious defects like the engine of a 750il frequently losing power on the highway so the owner and her small kids were almost crushed by a semi. I should note that I had many claims against other German car manufacturers and that while I handled claims against American, Japanese and Korean mfgrs., they were far, far less frequent.

    Though BMWs have a (fading) reputation as “superior” driving cars, buyer beware, because they can be hyper-technical mechanical messes.

  • avatar

    The beauty of this lease is lessee doesn’t have to worry about lemon/mechanical breakdown.

    According to provided 59% residual, Sam is looking at 12,000 miles/ year over 36 months . His BMW will be adequately covered . Also, he will have access to loaner shall the car is in shop for repair.

  • avatar
    rjg

    Personally, I love BMW leases. 4 banger or not, they drive still drive better than most other cars out there. But I don’t have the appetite to pay more than around 400 with 0 down for one. Luckily, that’s almost always possible even on a well optioned BMW. Right now I’m driving a $57k 528i for a little over 400. You should be able to snag that 328 loaner for under 400. Go for it, but don’t pay anywhere close to 600.

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