Dilemma - Buyout 2021 BMW X3 m40i vs lease new one

Ask the Hackrs
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Back in Jan 2021 I leased a new BMW X3 m40i with 7 miles on it.

MSRP - $61k
Lease payment - $565 + tax (includes gov / dealer / acq fees etc)
Lease terms - 12k / 36 months
ZERO DAS. Nothing upfront. Just the 7 MSDs which are returnable.

Purchase Option at end of lease term - $33k
Lease End Date - Jan 2024
Current Mileage - 26k miles

My lease is coming to an end in Jan 2024. I have been looking at all the BMW X3 m40i deals on the forum and marketplace but the prices have gone up significantly. All the deals are around ~$750 / month + additional fees ~2k.

Given the low mileage on my car, I am leaning towards buying out the car and keeping it for another couple of years, until I come close to the 4year / 50k warranty. I would probably sell the car at that point and consider my options.

Question 1 - Just wanted to hear from the experts in the forum if they have any alternative hack ideas / suggestions that I am leaving on that table. Even with all the lease fees / rent charge etc I will be paying ~53k for a 61k car (~ 12% discount). Do the numbers make sense or am I missing something ?

Question 2 If I were to buy out the car, should I look into buying any additional service / maintenance / extended warranty ? If yes, any particular hacks you can suggest on that front ? Any know problems with 2021 X3 m40i that I will get dinged for if I choose to keep this car ?

Also, if you know of any great deal on a 2024 X3 m40i, do let me know. I am ready to sign ASAP. :slight_smile:

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2

No need to do anything now. In late 2024 you can purchase the bmw platinum extended warranty if you choose to keep the vehicle beyond 4 years.

Service & maintenance can be done by any competent indy at a much lower cost than these prepaid plans.

3

In same boat. Nothing great poppin. New X3 design in 2024. Leasing will still be a mess I assume. Looks like I will wait. Good luck.

4

You can do a 2-mo lease extension without buying out the car if you think that makes a difference. Beyond 2 months it becomes difficult with BMW.

5

Extend 2 months, buy it, and have the option to purchase additional warranty before the factory runs out later if you decide to keep it.

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@305Hackr and @SteveB25 - Thanks for pointing out the lease extension. I did not consider that and have never done that before.

Couple questions -

  1. Does the monthly payment remain the same or does it reduce ? Since the acq cost and other fees that were rolled in the lease are paid off by now.

  2. If I am to get the lease extended by two months, I will end up paying BMW $575 + tax for next two months. After that if I am to purchase the car, the buyout price will reduce by that amount, is that assumption correct ?

  3. If I do end up buying another car in those two months, the I “loose” two months worth of payments.

So if I understand correctly the only benefit to two month lease extension and then buyout is that I am getting two months worth of payments interest free. (If point 2 is valid)

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You have to ask BMW FS if your payoff goes down with the additional 2 mo payments. I vaguely remember that some companies don’t apply lease extension payments (or only count partially) towards the payoff. I am not sure with BMW. I believe this is the case with Audi.

I’m my opinion, the benefit of doing the lease extension is to buy yourself time to see if anything changes with the lease programs. Every month is different. Historically Jan and Feb have not been good for leasing but who knows. If the lease extension payments don’t reduce the payoff then I wouldn’t do it

8

I extended my bmw a few months ago before purchasing.

  1. My monthly stayed the exact same. I’m in a state that taxes monthly payment, not sure if it differs from states that tax differently. Not sure how acq and other fees played a factor, but payment didn’t go down. I did pay $2500 Das toward taxes and fees though.

  2. Buyout will be reduced with extension by depreciation portion of payment, not the full 565.

  3. Not losing anything, buying time with a familiar payment.

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Update on this

In the last one week or so, I went around BMW dealerships to look for a replacement for the 2021 X3 m40i. I wanted a step up from X3 m40i in terms of space, so went and looked at 2024 X5 xdrive40. It is slightly bigger and offers a more comfortable ride. The 2024 X5 has new interior and somewhat of a linear acceleration as compared to X3. The inventory on these is so short that I could only find one X5 to test drive, which lasted 8 mins. The dealers won’t allow you to take the car on longer drives on a highway or give more time with the car. It might also been that they wanted to keep tire kickers at bay during these busy times.

Impressions - X5 is a slightly bigger car, but not as fun to drive as the X3 m40i. At-least, that is what I gathered from my relatively short test drive.

Lease Price of 2024 X5- In my area, dealers are only willing to do max 4% off, pre-incentives. That puts the price around $1000 with zero DAS. I really could not bring myself to justify that much monthly payment for an X5.

Loaner - I was able to locate a loaner (with 9k miles) and negotiate 15% discount off MSRP + incentives + base MF - 10k/39m lease payment came around $820. Plus the dealer was willing to buyout my current lease and give me a 3k check for equity. 3k equity was the best I could find anyone was willing to offer on my car (tried brokers, equityhacker and BMW dealers).

Fear / Greed / FOMO -

  1. Fear - The buyout price is 33k on my lease. If I buyout the car in cash, I would be at 36k (DMV + excise Tax + 2k in state taxes). My fear, what happens if I buy a 36k BMW and it craps out on me in next 6 months. What if I sell it after two years and it depreciates by 20k and I loose out on any equity etc.
    Fear of commitment - I love the car, what if I am making the decision based on emotions, rather than based on sound logic. It is just material things, don’t get tied to them otherwise you will loose money and time !

  2. Greed - There was 3k being offered to me for X3. If I didn’t sell the car immediately I would loose out on that 3k.

  3. FOMO - The lease payments of $820 looked good, given the current market circumstances. Dealer was willing to do base MF, incentives etc, which is unheard of in this area. What if I miss out on this deal and I am unable to get a car with similar payments in next couple of months. All the chatter about unreasonably high lease prices kept unnerving me.

So, to put everything in perspective (mathematically) -

Cost of keeping X3 m40i for next 3 years - $36k + 4k extended warranty + 2k maintenance + $600 (excise tax) = $42.6k
If I sell that car after 3 years - In 2027, for a 2021 X3 m40i with 60k miles, I might get 10k for it = 42.6 - 10 = $32.6k out of my pocket in 3 years

Cost of getting a loaner X5 for 36months - $29,520 + $3420 in excise tax + plus 2k maintenance (tires, brakes) - 3k equity = $31,940

Cost of new X5 - $1000 * 36 = $36k - 3k equity + $3420 in excise tax = $36.4k

In all, X5 / X3 would cost me around that same in next 3 years. Folks here can argue that I can offload the X5 in couple of years and gain positive equity, but knowing me, I won’t have the time or bandwidth to do it. If it works, I will keep using it.

For now, it makes sense to me to buyout the X3 m40i and keep driving the car.

Over the course of this one week period, I realized that I really like my X3 m40i and I was trying to just get into a new car just because my lease was coming to an end. If it was not for that, I would be happy to keep this car around for another couple of years. X5 has space, is new, but doesn’t have the popping sounds that put smile on my face while driving it. I do still have the fear, what will be the maintenance cost on the X3. If someone has good deals on extended maintenance / warranty plans, please do share. Also any other tips / counter arguments are highly appreciated.

Sorry about the long read, car buying has been on my mind for last one week and I just wanted to share my thoughts with the community that cares so deeply about leasing and enjoying cars.

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Your X3 won’t depreciate $20k in 2 years.

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$10k sounds low

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@max_g - I just went with the extreme scenario. BMWFS estimated depreciation amount of $520 per month. If it continues to depreciate at that rate then in next 36 months it will depreciate by $18,720. I just went off of that number and since no one pays market price when selling, I reduced it by another 4k. Hence the ~22k depreciation in 3 years.

I don’t know how to calculate depreciation value for a car. Is there a website that publishes these numbers ?

Anyhow, any increase in return value of x3 only makes the case stronger for buying out that car.

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Depreciation is not linear. Any car depreciates most in the first 3-4 years, and after that, depreciation is much slower. I wouldn’t be afraid of issues with an X3 M40i - the B58 inline-6 is a proven motor with no real issues. It’s also an enthusiast-adjacent car, which further helps with value retention. If I had to guess, it would be worth at least $20k in 2027 with 60k miles, probably closer to $25k to be honest.

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As i read your story and comment, i find that i’m in almost the same situation as you are, only difference is i have a M340i with about 24000 miles and lease ends in March.
The lease end buy out is $36,000, and as i’m trying to price out my car in other websites, the offers are around #36k-$37k.
Looks like used car prices are coming down pretty fast since i was offered at $41k back in December.

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My 21 m440 is in the pretty much identical situation. Same end date and numbers as you, same miles, buyout price etc. I’m going back and forth over and over.

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Shopping for m340i the lowest is $41.5k non cpo and $44k cpo in my area.

Maybe can negotiate $500-1k off but if you like the car, at $36k that ain’t bad

17

I have seen at least 8 people in the forum with similar situations as we do. We caught the tail wind of pre-COVID pricing.
3-4 months ago, the choice for me was easy, buy out the car, now I have to really justify that I might not have much positive equity there.

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Yeah I love the car and put on brand new Michelin PS4 tires back in November with the intention of keeping it.
Guess after Vroom went under, used car market price have come down quite a bit.

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Agreed. After tax looking at about $39k. Probably will have to keep the car a year to justify buying it at this point. We have the opportunity to basically buy it below wholesale price but that few thousand in equity is gone.

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You are exactly right!
Don’t get me wrong, I love the car and have no issue driving it for another 3 years if the cost of maintenance for a BMW is not this high. After first 3 years, you’ll start looking into changing breaks and other stuff which cost more than just simple oil changes that comes with the car. And potentially needing to buy warranty after 4th year.
I’m thinking doing the 2 month lease extension and see where the used car market is headed.
In a grand scheme, it seems like used cars prices are finally coming down.

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