Am I crazy for wanting to lease a top-of-the-line 3-series out of college? - Page 12

If you look at the 328i Convertible (just the first one I pulled up), the new price is $49-$52K, and two year old CPOs are going for $38 - $40K. So they get ~$700/month for 28 months - about $20,000 in total lease payments. The car cost maybe 46K to build, BMW is borrowing money at 1.7%, so it costs them $1,500 in asset carrying costs over two years. So they end up with something that cost them $47,500 and they get income of $58,000 to $60,000 - total margin of $10.5K-12.5K. If they sell the car new off the lot, they only make $3-6K.

Makes sense - BMW is making money off the spread between the residual and the amount they can sell off-lease cars on CPO. Just another reminder to negotiate hard.

Surely the car doesn't cost 46k to build....

You think more or less?

Fully loaded costs - including marketing, SG&A, etc.? The auto business is not typically a high margin endeavor.

I was thinking less, but who knows?

Too funny. It's OK for him to blow $700 on a pair of shoes because he'll "own them" and "they are within his budget."

I love all the anti-leasing bias on the internet. Part of the reason the non-wealthy stay non-wealthy is they'd rather hold on to generalizations and misconceptions rather than look at facts.

I think the reason for this is that the underlying assumptions that make leasing a BMW make 'financial sense' are antithetical to those who are wealthy. Leasing basically only makes "financial sense" IF you like to drive a new car all the time.

I just pulled the numbers from a post off an e90 forum (and the posters seem to think this is a good deal [http://www.e90post.com/forums/showth...hp?t=396564]):

2011 335i convertible:
Negotiated price of $58,500,
down payment of $4,500,
monthly lease is $700, 36mos.

TCO over three years is just shy of $30,000 ($29,700). Now assume that car prices rise 10% every three years (so your replacement car is 10% more expensive than the one coming off lease). Over 9 years your TCO for leasing three successive cars is going to be a little under $100K ($98,307).

Now, buy the same car as a two year old CPO for $50,000 (not much of a discount off the $58K - you could probably get it for more like $45K). You're going to face maintenance costs that the lessor does not. I estimated $2,000 in the first year, rising by 10% per year over nine years of ownership (so in your last year, you're spending $4,287 on maintenance). At the end of nine years of ownership, you can sell the car for $12,000 (I pulled the price of 2000 vintage BMWs for that). TCO for nine years is $65,000.

There's also a cost-of-money opportunity cost argument. The math works that if you can earn a return of about 9% (pre-tax) on your savings, it's a wash between leasing and buying. 9% seems pretty aggressive these days, though.

From my perspective, driving a new car is a luxury that many wealthy people forgo because it doesn't make a ton of financial sense. But if it's something that you want to do, the economics do work out. You're almost certainly better off leasing than buying a new car every three years and trading your old one in.

where leasing truly makes sense if for the small business owner who can write off much of the cost.

Lets face it...we are talking about buying vs leasing a BMW

Sure there are going to be some snobby people who say a 3 series is not "real luxury" and while I see their point, we are not talking about a vehicle that is purchased because someone has need for transportation.

Someone leasing a BMW isn't applying what the average internet poster would call financial sense...Sure, it is cheaper than buying one if you don't plan to keep it (although you will *always* be saddled with a car payment that will probably increase every 2 years) but that does not mean it is financially sound unless you have enough money that it literally doesn't matter (or your company is paying for it).

My point is that when you are at the point of discussing leasing a luxury car, you are beyond the point where the goal of the exercise is to make financially sound decisions--you want something nice. You want the exterior to be shiny, the leather to be supple, and the engine to be smooth, and you are willing to pay for it. If you need transportation, the "sound" decision is to go buy a toyota, change the oil on schedule, and keep it for 10 years. Leasing a BMW is not about needs...it is purely about wants.

I want to add another point: You still live at home. When you move out, you're going to need to do a lot of one-time investments -- kitchen utensils, pans and pots, plates, furniture, vacuum cleaner etc etc. This will add up to quite a bit, and it sucks having to dip into your savings account to buy the stuff that you need. I would wait a few months before doing anything regarding a new car, just so you can settle in and use the extra room in your budget for all the things you inevitably will need. When things have calmed down, take a look at your needs again and make a decision.

I can't believe this pathetic discussion went on for 12 pages of worthless exchange of should's and shouldnot's...
OP, you are a huge disappointment and will never amount to much for not being able to make a basic decision.

my .02:

If you're using public transportation for all of your day-to-day getting around, rolls sans DD and just splurge (15K) on a decent used sports car.

If you really need a DD, get a beater DD that will have low insurance rates and good milage (and is AT) and also get an ugly, but mechanically sound sports car.

*Sports car being something that is fun to drive on backroads. Typically this means that it is lightweight and handles well. See if you can't find an MGB or TR6 to drive and see if you like it. Also see if you cant find a suspension modified e21 or 2002 (The e21 being the first generation 3 series and the 2002 being the direct precursor to the three series).

am i crazy for keeping on clicking into this lousy freaking thread?