Originally Posted by username79
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.