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      04-17-2011, 02:40 PM   #1
NiceGuyEddie
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2008 M3 lease end options

Hey everyone,

I have a 2008 M3, SSII with FR interior, DCT, and loaded. My lease will expire this August, after a 36mo/12k mi. term. It currently has 29,xxx miles. I am approaching the point where I will need to decide whether to turn this car in (and lease another M3) or purchase it. The residual is $37,294, which seems to be pretty low (I know, I got worked over pretty well on the lease when I entered into it, but at the time, I was unable to really negotiate the terms).

I have really enjoyed this car, and aside from a few rock chips and interior scuffs from normal use, it is in fantastic shape. I just had the evaporator replaced under warranty, which was leaking, but aside from that, I have not encountered any major issues. My thought process so far has been that I may be able to negotiate the residual down further with the aim of purchasing the car below market value. I know I will have to pay sales tax on the car if I do that (Florida is 6%). If I keep this car, I would likely lower it on Eibachs, as I really like that look, and I understand it would still be pretty civil (this car is my DD). Also, I know I will be out of warranty in August 2012 (after about 1 year of ownership). I have some concern over any major mechanical issues that could come up after the warranty period.

Or, I would lease a new M3, and would definitely get ZCP (I really like the wheels). I would also get the benefit of having the updated idrive. If I leased another M3, I would likely get a different color, as I love SSII, but would not want to get bored with it after several years. With this option, I would have warranty/service coverage for the entire term, and would be able to negotiate much more favorable lease terms on the front end.

This all leads to the F3x M3, which I will likely get, knowing that I have historically turned my vehicles over every 3-5 years or so. I believe that car will hit the streets sometime in 2014. Knowing this, I would appreciate your input on what may be the wiser option – keeping my 2008 until the new M3 is released, or leasing a 2011 M3 until that time. Keep in mind, this is not a “what should my personal preference be” thread, but rather, an analysis of the financial factors involved (monthly payment, maintenance, and risk factors concerning major mechanical issues) and risks/benefits of each option. I figured there would be some folks out there who have already gone through this situation themselves that could offer some insight. I also welcome input from the dealer-type guys I know to frequent the board for their direction.

Thanks!
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      04-17-2011, 04:16 PM   #2
NiceGuyEddie
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Here's my current car, by the way:
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      04-17-2011, 06:05 PM   #3
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I'd lease a new one for a few reasons.

1) You really have no indication of what the car will cost to maintain past the warranty period, additionally I doubt that many people would know as they are only starting to go off warranty now. For this point, I would look into how much TYPICAL replacement parts would be (including oil changes as those would not be covered anymore).

2) Unless you would be paying the difference in cash, then you will be taking a lone out for that money as well and be paying interest on it. This would probably be somewhere in the neighbourhood of 1K/month based off of a 36 month term.

3) Add the monthly payment to your cost of maintenance (which will undoubtedly have brakes and tires in there as well, and on a new one you'd get new brakes and new tires), and if that is less than what it would cost to lease a new one, I'd take a new one.

However, if you do buy it, then at the end it is yours and you can do whatever you want with it.

Just my 2 cents. Good luck with your decision
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      04-18-2011, 08:22 AM   #4
NiceGuyEddie
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Thanks, DDS. Those unknown repair/maintenance costs are the biggest variable for me right now. I appreciate your input.
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      04-18-2011, 10:43 AM   #5
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you maybe able to sell your current car to make some bucks...
don't keep the car....will be hard to sell when the F3X come out
why don't you lease a RS5? it is stunning in person....
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      04-18-2011, 11:41 AM   #6
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I am in a similar position and have spent quite a bit of time weighing my options. I got rather detailed in my own analysis but here are the basic steps I took. You can fine tune to suit your needs.

A. Cost of current lease

Add your lease down payment (less deductibles) and the sum of your 36 lease payments. Then add in any maintenance you have paid for (tires, etc.). This will give you the amount you've spent to drive this car for the 36 month lease.

B. Cost to own

For this example we will assume you're going to pay cash for the car and that you will keep it for 3 more years.

Estimate the cost of maintenance over the next three years including oil changes, brakes, tires, etc. Add the total from A, the residual value of the car, and the estimated maintenance.

Now estimate the value of the car in three more years. This part will be the hardest. One approach you could take would be to price out a 6 year old E46 M3 with ~72k miles, then calculate the percentage of the original retail price. Once you have an amount for this, subtract it from the total from the paragraph above. This will give you the amount you will have spent to have the car for 6 years.

C. New Lease Cost

Get a quote from a dealer on a lease for a new M3 with all the options you want. Repeat step A with the new amounts.

D. Compare Results

Add A and C (the sum of two back to back leases leading up to an F3x M3) and compare to B (the cost of one lease and then buying the car). This will tell you which is the more expensive route. It might be a no-brainer. One might be significantly cheaper and there won't be a question in your mind of which way to go.

Or, the totals might be rather close. In that case, you will have to consider the subjective factors. For the same price, would you rather keep driving the car you have now or would you rather be in a new M3 with ZCP, new iDrive, warranty, etc.?

Again, this is a simplified approach but I'm sure you get the point.

I hope this helps and good luck.
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      04-18-2011, 12:23 PM   #7
scottz5
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Great advice here. I was going to buy a new M3 but went with a lease so that we can get the new model when released.


Quote:
Originally Posted by Merlosso View Post
I am in a similar position and have spent quite a bit of time weighing my options. I got rather detailed in my own analysis but here are the basic steps I took. You can fine tune to suit your needs.

A. Cost of current lease

Add your lease down payment (less deductibles) and the sum of your 36 lease payments. Then add in any maintenance you have paid for (tires, etc.). This will give you the amount you've spent to drive this car for the 36 month lease.

B. Cost to own

For this example we will assume you're going to pay cash for the car and that you will keep it for 3 more years.

Estimate the cost of maintenance over the next three years including oil changes, brakes, tires, etc. Add the total from A, the residual value of the car, and the estimated maintenance.

Now estimate the value of the car in three more years. This part will be the hardest. One approach you could take would be to price out a 6 year old E46 M3 with ~72k miles, then calculate the percentage of the original retail price. Once you have an amount for this, subtract it from the total from the paragraph above. This will give you the amount you will have spent to have the car for 6 years.

C. New Lease Cost

Get a quote from a dealer on a lease for a new M3 with all the options you want. Repeat step A with the new amounts.

D. Compare Results

Add A and C (the sum of two back to back leases leading up to an F3x M3) and compare to B (the cost of one lease and then buying the car). This will tell you which is the more expensive route. It might be a no-brainer. One might be significantly cheaper and there won't be a question in your mind of which way to go.

Or, the totals might be rather close. In that case, you will have to consider the subjective factors. For the same price, would you rather keep driving the car you have now or would you rather be in a new M3 with ZCP, new iDrive, warranty, etc.?

Again, this is a simplified approach but I'm sure you get the point.

I hope this helps and good luck.
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      05-05-2011, 07:19 PM   #8
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Quote:
Originally Posted by Merlosso View Post
I am in a similar position and have spent quite a bit of time weighing my options. I got rather detailed in my own analysis but here are the basic steps I took. You can fine tune to suit your needs.

A. Cost of current lease

Add your lease down payment (less deductibles) and the sum of your 36 lease payments. Then add in any maintenance you have paid for (tires, etc.). This will give you the amount you've spent to drive this car for the 36 month lease.

B. Cost to own

For this example we will assume you're going to pay cash for the car and that you will keep it for 3 more years.

Estimate the cost of maintenance over the next three years including oil changes, brakes, tires, etc. Add the total from A, the residual value of the car, and the estimated maintenance.

Now estimate the value of the car in three more years. This part will be the hardest. One approach you could take would be to price out a 6 year old E46 M3 with ~72k miles, then calculate the percentage of the original retail price. Once you have an amount for this, subtract it from the total from the paragraph above. This will give you the amount you will have spent to have the car for 6 years.

C. New Lease Cost

Get a quote from a dealer on a lease for a new M3 with all the options you want. Repeat step A with the new amounts.

D. Compare Results

Add A and C (the sum of two back to back leases leading up to an F3x M3) and compare to B (the cost of one lease and then buying the car). This will tell you which is the more expensive route. It might be a no-brainer. One might be significantly cheaper and there won't be a question in your mind of which way to go.

Or, the totals might be rather close. In that case, you will have to consider the subjective factors. For the same price, would you rather keep driving the car you have now or would you rather be in a new M3 with ZCP, new iDrive, warranty, etc.?

Again, this is a simplified approach but I'm sure you get the point.

I hope this helps and good luck.
Great advice. I'm in the same boat with about 22000 miles and a residual of 37500. I expect the F30 M3 to be out around early 2014. Anyway, it's a dilemma as a new lease payment would only be about 50-100 more vs financing the current car with an extended warranty. I would feel more comfortable adding mods on financed car that I would eventually own. If it had more miles on it this would be a no brainer.
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      05-05-2011, 07:56 PM   #9
Hedges
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Quote:
Originally Posted by Merlosso View Post
I am in a similar position and have spent quite a bit of time weighing my options. I got rather detailed in my own analysis but here are the basic steps I took. You can fine tune to suit your needs.

A. Cost of current lease

Add your lease down payment (less deductibles) and the sum of your 36 lease payments. Then add in any maintenance you have paid for (tires, etc.). This will give you the amount you've spent to drive this car for the 36 month lease.

B. Cost to own

For this example we will assume you're going to pay cash for the car and that you will keep it for 3 more years.

Estimate the cost of maintenance over the next three years including oil changes, brakes, tires, etc. Add the total from A, the residual value of the car, and the estimated maintenance.

Now estimate the value of the car in three more years. This part will be the hardest. One approach you could take would be to price out a 6 year old E46 M3 with ~72k miles, then calculate the percentage of the original retail price. Once you have an amount for this, subtract it from the total from the paragraph above. This will give you the amount you will have spent to have the car for 6 years.

C. New Lease Cost

Get a quote from a dealer on a lease for a new M3 with all the options you want. Repeat step A with the new amounts.

D. Compare Results

Add A and C (the sum of two back to back leases leading up to an F3x M3) and compare to B (the cost of one lease and then buying the car). This will tell you which is the more expensive route. It might be a no-brainer. One might be significantly cheaper and there won't be a question in your mind of which way to go.

Or, the totals might be rather close. In that case, you will have to consider the subjective factors. For the same price, would you rather keep driving the car you have now or would you rather be in a new M3 with ZCP, new iDrive, warranty, etc.?

Again, this is a simplified approach but I'm sure you get the point.

I hope this helps and good luck.
Excellent advice!
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