Drives: '09 E90 M3 - IB
Join Date: Feb 2012
Location: 93 million miles from the Sun
Yes, leasing is a bit more dollars over the life of the lease versus buying when you look just at simple dollars, but it's more complicated than just straight dollars. I ran the numbers out before I jumped in back in '09. I ran two scenarios:
-Buy the car, 3 year loan, sell the car at the end of the three years for "market" value, so I could refresh and stay in a current car. (Remember though, many people will finance the car over 5 years to lower the payment, but that makes the car cost more in the long run. So that's the first way the dollar gap closes between lease and buy.)
-Lease the car for 3 years. Turn car in at end of lease, move on.
In those two scenarios above, leasing was more expensive by about $3000-4000. However, it's NOT that simple. On the owning side, if the car is a problem car, or it gets damaged while you own it, or the market climate is bad for selling a car like an M3, you will not be able to get the ideal "market" value you calculated and planned on, and the difference of dollars between leasing and buying evaporates quickly. Look at the used M3 market, are people getting top dollar for E9x M3's? No. And it will get way worse when the next M3 generation arrives. With leasing, you walk back to the dealer, hand them the keys and walk away if you want to.
Some reasons I leased at first:
-These are complex cars. Things can go wrong. Generally, you'll know in the first two years if it's a problem car. If it is a problem car, and you own it, selling it will be hard and you won't get the "market" value, which increases the net cost to own it.
-You can always buy the car before the lease is over and save all those expensive money factor payments. That's what I did. My M3 was trouble free and I loved it, so I decided to buy the car 7 months before the lease was done. The effective rate on the car was over 8% during the lease. The loan to buy was around 3%. I added all kinds of wheel and tire insurances, extended warranty and other stuff and my payment still went down when I bought it. (In my wife's leased X5 case, the X5 didn't have a few features we wanted, so we ordered a new one with the options we wanted, leased that and turned in the keys to the old lease. No fuss no muss.)
-This was my first M, and I didn't know if I'd want to keep it, or keep refreshing to a new M each time they came out. The flexibility made it stress free.
-If you own a business, a business lease is great for many reasons---write offs, etc.
Ultimately, I think leasing expensive cars is good way to give you some peace of mind that you're not stuck with an expensive machine if you don't like it, or it has problems, or it gets damaged. The extra few dollars are far offset by the convenience, assurance and peace of mind. How many people here have sold a used car? That's just not fun---endless emails, phone calls, PM's, and test drives with odd strangers, low-balls, lack of interest. And remember, specifically with an M car, people assume that the car has been abused, so they don't want to pay "market" value.
In the end, owning a car can be great, but with such complex cars, it is nice to have an option to hedge your bets. Leasing is the way to start in my book. If you have the car for a year and it's great, then jump in and buy it. The few extra dollars---if it even ends up really being more---are worth it to me. My only advice at lease time is to make sure you get as great a selling price as you can, because if you buy the car later, it's price is the residual percentage based off the selling price.
Now, if you said, "I'm paying cash and going to keep the car for 10 years....", I guess you can just go ahead and buy it, but how many people go into an M car saying that?
Now that I bought mine and have been modding it, I really enjoy the car and plan on keeping it for quite awhile. The way my car is setup now (VF620, JRZ RS Pro, AP Racing), I'm not worried about what BMW is going to produce next because I like how my car looks (I don't really care for the new 3 series look), and I know it will easily outperform whatever the next M is---unless BMW decides to drop 600+hp in the next M.....hahaha yeah right.