I have a 2023 BMW eDrive40 with 18,000 miles. I put a hold on a 2025, which should arrive in a couple months. After rebates, my price is $62,100 US plus taxes. Financing is 4%. The dealer won’t give me a trade-in price for my '23 till the '25 arrives. If I don’t like the price, I get my deposit back. Let’s say my trade comes in at $37,000. If I finance and add $3,000 (for a total $40,000) I’ll pay $682/month for three years.
Leasing requires $5,000 down, and the dealer will take my trade, which at that point leaves $32,000 left over, which the dealer would just pay me me. So, I have no cash outlays then, but have payments of $776/month for 30,000 miles over three years. My $32,000 will more than cover all the payments.
At the end of the lease, I can buy the car for $31,700. I realize that if I don’t, I have to get another car, at which time I don’t have a trade, so I take the remaining cash and buy or lease something. If I finance. I get a sales tax credit, but not with leasing. I’m inclined to lease the new '25. Is that a reasonable decision?
Thanks; sorry for being imprecise. The lease is for three years. I think $37,000 is a bit low for my trade, but it’ll do for for an estimate of the figures. If I trade my car for the lease, the dealer will credit its value against the required down payment of $5,000 and pay me the balance in cash: 37,000-5,000=32,000. Thereafter, I pay $776/month for three years. The $32,000 will more than cover all the lease payments. At the end of the lease, I can buy the car if I want.
If I want to simply buy/own the car, my loan payments will be about $682 for three years, but I’ll own the car free and clear at that point. I can trade it for it’s value at any time.
I really like the idea of getting a car for three years and not laying out any cash or making any payments. I don’t anticipate getting rid of the car if I lease it for three years. I understand that I may come away with no car after three years, and i can handle that if it happens. Being new to leasing, I just want some expert advice if I’m missing any drawbacks to leasing in my example.
Do you own the 2023 BMW outright, or is there a loan or lease that needs to be paid off? Honestly I cant see any scenario where the 2023 BMW EV will have any positive equity after 2 years unless it is owned outright or there was a huge down payment. BMW is literally trying to give away the 2024s right now.
Also, leasing does not require any money down. Where are you coming up with the $5K? You are probably better off trying to sell the 2023 BMW than trading it unless there is a sales tax credit on the trade in. I don’t think it matters whether you lease or finance if you own the car outright. Maybe NV is different.
Thanks. I own the car free and clear. I’ve never leased before, and the dealer said that a down payment is required. I’m in NV and dealing with BMW of Las Vegas. Here’s an example of a lease offer from their site. Pic below. There is a sales tax credit in NV on a purchase, but not on a lease. However, the dealer gave me a “tax” credit on the new car lease.
Required? Not normally, but they see $$$$ and don’t want to let it go.
You do save interest by putting down, but unless there is a new NV law, you don’t have to put any money on the table.
If you have a low Credit Score, then that can be the bank asking for it.
“If you have a low Credit Score, then that can be the bank asking for it.”
Nope. Score is 835 with no debt. Based on that page from their site, it certainly seems to be a requirement. But I would think that your payments are based, in part, on the down payment.
Edit: for example, if I put down $7,500 instead of $5,000, my payments go from$776 to $699.
That’s why $300 / Month with $3000 down is $383 Effective.
Dealers like to hide Effective pricing with large downs to make monthly pricing lower.
Of course , there is a slight interest calculated on the missing down making the 383 really more like $383+$XX without the down. But down is not required by law anywhere that I remember.
There’s no question that keeping my current car is cheaper, by far. As to the second point, I wasn’t very clear. Certainly I’m making payments. What I meant is that, I’m selling my current car to the dealer and using the proceeds to make all payments under the lease, with a few thousand bucks to spare. That’s the cost of getting a new car for three years. That also assumes I’m okay with the residual value. Buying the car with a loan leaves the car with me, at the expense of monthly payments that I make from my own funds, as I will have traded the car for the loan down payment.
Edit: Carvana just valued it as almost $33,000. That seems ridiculously low…I’d probably keep it if that’s the price in 2-3 months when the new one arrives. Oh, but they also said they’d give me $3,000 more if I trade through them.
$3k more than what? Another bid from carmax/carvana/etc? $3k more than their “value” they would say its worth?
I’d get a second opinion on your car from carmax online now. If its below the number you want now I’d expect it to be way below the number you want in 2-3 months. Used cars are sliding down (and have been overall since last november)
They said you would get a $3000 sales tax savings on the vehicle youre purchasing from them but presented it in a way that made it look like they were giving you more money.
I think you’re letting your trade obfuscate what’s going on.
Here is what you’re actually asking:
Am i better doing a lease that’s $776/mo with $5000 due at signing or financing for 3 years for $682/mo with $40000 due at signing?
If we ignore the interest potential, youll spend about $64500 to purchase or $32000 to lease. You would need to be able to sell it in 3 years for $32500 to break even. Do you think it will be worth that much un 3 years? The bank doesn’t think it will be.
If you trade the car in to the dealer you ARE going to get screwed. They will simply limit the amount of screwing by giving you the sales tax deduction. You are learning that BUYING a BMW EV is not a good deal. Right now you have to finance these and expect to turn it in at the end of the lease.
How much a difference do you think there is going to be between your 2023 and a 2025 (I4 I assume)? You have already taken the big depreciation hit on the 2023. I would just keep it unless you are upgrading to an I4 M50. I understand the desire for a new car as much as anyone, but I just don’t see enough difference between the 2023 you have and the 2025 you want to justify. The only way this makes sense is if you need the cash for something else, like a good investment, and can afford the higher lease payment. Whatever you do, do NOT buy the 2025.
