I have a 2020 X5 which has the lease up at the end of this year.
I am planning on buying out the car regardless because of how the current market is going, and we’ve already gone over mileage, paid to put on new tires on, etc.
I am debating whether there is a downside to buying out the vehicle before the end of the lease. With rates continuing to increase if rates bump up another 1-2% before the end of the year it seems like it’s just going to tack more interest on.
My current buyout is ~$36800 assuming I use the MSD’s to pay towards the buyout.
I am just not sure if there are any differences in fees between buying it now or later.
So really no downside to pulling the trigger early? Only risk I saw would be liability if I total the vehicle but at this point that’s not a big concern.
If I do a Carguru’s search for comparables in my area I’m seeing the going range looks to be anywhere between $46-50k for similar specs. So with a $42k buy out I definitely see the value. Especially because the vehicle had fresh front brakes ($500+ for parts alone if I did it myself) covered under warranty and I just put new tires on it and know the history of the vehicle. Bought this at the end of 2019 when 13% discounts were still a thing and MF rates were low. Would have considered upgrading to an X7 but simply can’t justify a payment that is $400-500 more a month for some extra trunk space.
It’s an opinion question but I’d probably wait for three reasons.
I’d preserve my option to return the lease asong as possible. Maybe you get in a nasty accident, maybe another better deal comes along (unlikely) but I like the flexibility.
Your MF now is much lower now than what you will get when you buy out lease. I’d ride out that 2019 low interest loan as long as I can. Why start paying 4%-6% earlier than you have to.
The feds just raised rates and there is only one more meeting this year. I don’t think rates are going to be 1-2 percentage points higher by year end. Also, if you can do DCU for a shorter period (which you should be looking at for a used BMW) their rates still aren’t terrible.
Thanks, I had held off debating the flexibility, but the lower MF part doesn’t make sense when I only have 3 payments left. I looked at the payoff paperwork, it looks like there is a total of $140 left in interest/rent charge that would be credited back. Even if rates only bump .75% that ends up being an extra ~$900 saved over the life of the loan. I believe the Fed has meetings both in November/December and was reading they expect another 1.25% if things stay on plan so that would be ~$1400 difference between now and then.
Did a handful and got a range between $37k and $42k. Seems that there is a lot of supply in the NYC area and it does seem like the market is starting to soften. I’m not sure how much to consider the online prices, I sold my Mazda to Algo previously and was able to negotiate a higher price once they saw the condition of the car was like new.
Either way - is it fair to compare wholesale prices to what I’d pay if I went out to look for one in December? It feels like any increase in discounts will just be offset by higher rates and there’s no obvious supply increase in sight.
However, used car loan rates don’t follow the fed’s decision exactly though. Places like DCU and Penn Fed weren’t sub 2% on auto loans before the Fed raised funds rate from .25% to 3.25% over past six months.
It’s all at the margin. Do whatever makes you feel best. Neither option is bad.
