I did owner's choice with my new M3, only because I wanted to have the flexibility of a "lease-like" financing. With the production of the V-8 M3 coming to an end, I didn't have enough time to save properly to purchase it out right, in addition the dealer I went to honored a$1500 incentive and appraised my car at a higher value than Carmax did. So for me, it was kinda of a perfect storm of financial situations that made it easier to make this horrible financial decision.
I did owner's choice since it was a financially viable way for me to get into the car right now with the flexibility of owning or turning it in after 3 years.
For your situation, if you can use your address in the burbs, I would definitely recommend you do that regardless of whether you buy/finance or lease.
The problem with the City, is that not only do you have to pay taxes on the whole amount of the car (compared to just the depreciation in a traditional lease), but the city adds a lease tax on top of it. Your 8% sound right because i think it comes close to being like 18% (total) just to lease a car for a City of Chicago resident, which is ridiculous. The owner's choice somewhat circumvents that by making it basically a balloon loan with an option to turn in the car at the end of the term (usually 3 years).
From my research and my own experience these are the conclusions i've arrived to for a Chicago resident:
Option #1 - Buy/Lease
- Simple traditional financing
- You own the car after it's paid off
- Usually higher monthly payments (depends on sale price, trade-in, interest rates & down payment)
Option #2 - Lease
- You get taxed on the whole value/price of the car (not just the depreciation)
- You get taxed AGAIN on the residual value if you decide to purchase the car at the end of lease
- City of Chicago adds a lease tax on top of the sales tax, which by all indications brings up the total sales tax around ~18% (somebody correct me if i'm wrong)
- You don't own the car, but the monthly payments are lower than a traditional purchase financing (depends on MSRP, residual, money factor, negotiated price, trade-in, & deposits)
Option #3 - Owner's Choice
- Circumvents the City of Chicago tax
- If you decide you want to keep the car at the end of the term, you just have to pay off the balloon payment to avoid getting double taxed (see above)
- Monthly payments are lower than a Purchased Finanace, but higher than leasing.
- You CANNOT use MSD (multiple security deposits)
- The title will be in your name, so you can actually sell your car at any point
- The balloon loan works somewhat like a traditional loan, where you make 35 set payments and the 36th payment acts as the last payment to own -or- in otherwords it is the "balloon" payment (which is basically the residual).
- After 3 years you can either a) turn the car in like a lease, b) make the balloon payment and keep the car, c) refinance the balloon to own the car (you WILL get taxed again by doing this), or d) sell your car back to the dealer (at a predetermined price) to purchase a new car
This link might help:
I hope some of this makes sense, and again, this is all just a summary of how "I" understand it...please feel free to correct me if i'm wrong.
hope this helps!