Quote:
Originally Posted by tenxaday
i was wondering what would be better. I know you can't mod a leased vehicle, but most stuff that comes out would that void the warranty?
Some of my dads friends, said they always lease a car. Reason why new cars always have great promos. Then after the lease is up they give you the option to buy which would be a good price. They always sell it after that and make some money on it.
Just wondering? I just heard so many things, this will be my first new car if i decide to get one of these.
|
Couple of comments of this:
Firstly, I highly doubt that the example of you dad's friend is actually true. No matter how you slice it, the buy out at the end of the lease is not going to be a fantastic deal. It really depends on a number of factors that we wont know until the dealers get the cars but you are going to spending a lot to work a deal that way. The buy out is a tricky buying process but generally, if your intent is to buy the car and then make a profit, you should finance the car as opposed to leasing then buying. Consider:
Here are three potential options if you were to buy a bone stock 335i Coupe (MSRP: $41,575)(keep in mind that things vary slightly depending on down payment, lease/finance term, etc.)
Option 1: Lease (using leasecompare.com)
Assuming a 2,500 dollar down payment, 36 month term with 15,000 miles per year, and exceptional credit:
Monthly Payment: 713
Total Amount Financed: $25,668
Residual: $19,409
Net Cost (this is assuming you wrote a check for 19,409 and did not finance the buy-out): $45,077
Option 2: Finance the Buy-Out (everything the same up to the residual)
Monthly Payment (if you were to finance the 19,409 over 24 months at 7.9 percent): 877
Total Amount Financed: $21,408
Net Cost: $47,076
Option 3: Finance
Assuming a 2,500 dollar down payment, 60 month term, with an interest rate of 7.9%:
Monthly payment: 952
Total amount financed: $45,696
Now, as you can see, the lease buy-out can work in this scenario only if you can write a check for the buy-out at the end of the lease. Otherwise, you are paying around $1,500 dollars more. And keep in mind that this number gets a lot worse when you try to minimize the payment and extend the finance term. While you can get a good deal if you write a check for 19,409 at the end of the lease, chances are if you have that money at the end of the lease, you have that money at the start which changes things greatly for finance (which, again becomes the better choice).
Still, it would be nearly impossible to make a profit on this deal though. While you might be able to sell the car for more than the quoted residual of $19,409, you still would have to cover the ~$4,000 that you paid in interest throughout the length of the deal. It is unlikely you will sell the car for more than 25% over the residual.
note: these numbers are mostly hypothetical and I would expect the numbers to be, if anything, worse at the dealer than here.
Advice: Assume you are never going to make a profit on a car. Especially a new car.
Advice Part 2: Assume that the lease deals during the first year of a model are going to be poor. In a low production car like the 1 Series Coupe, the need for a dealer to move cars off their lot is lower (as the likelihood of a surplus is lower, comparatively).
Advice Part 3: Buy only what you can afford. People like leases because they help get drivers into cars that they normally couldnt afford. That doesnt mean that they are great deals. As I have said in other threads, people have an admiration for monthly payments and assume that a lower monthly payment is a better deal than a higher monthly payment. For thousands of reasons this isnt true. Keep in mind, then, that a lease still can be a bad deal and make you pay both more than you think and more than you can "afford".