Lease New vs. Buy CPO Analysis/Discussion: M550 for a Low-Mileage User

Does BMWFS charge an origination fee or any other loan fees on a purchase?

I’m considering a cash purchase of a 2018 CPO, however I qualify for a $500 loyalty credit if I finance with BMWFS.

$500 is worthwhile to me to go through the hassle of getting a modest loan and paying it off a couple of weeks later, but anything less than $500 is not.

The financing disclosures have limited info and are silent on any non-APR costs related to BMWFS financing.

[EDIT: This thread started with a question about BMWFS CPO finance incentives, but the scope expanded and the thread title was updated accordingly.]

Slightly diverts topic, But I have to know the story behind buying a BMW haha. Crazy deal? M5?

Slightly? What site do you think you’re on? :laughing:

I’ll answer your question as soon as I have the answer to mine.

It’s the only way I’ll get this thread to work as intended. :wink:

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Last time I financed a CPO BMW, they did not. I would be shocked if they did.

It is just not the norm like a lease acq fee is.

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Pretty sure none of the captives charge origination fees on loans

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2018 M550 for our second home.

Average historical use of the vehicle it will replace is 375 miles per month (I went back through the service records yesterday).

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I may expand the scope of this thread to “buy CPO vs. lease new?” for this specific vehicle and change the title, but for now please indulge me.

I’ve seen www.usedfirst.com referenced here several times as a resource for projecting depreciation, but my presumption is that an M550 is going to depreciate faster than the single generic “5 Series” selection that’s available on the site… but I have no idea how to estimate how much faster.

I’m using this as a reference vehicle for a CPO purchase.

I’m assuming that in order to get useful data points back I’ll need to project how many total miles will be on the vehicle 3 years after purchase, and then divide that by 5 in order to get the required miles-per-year input that determines the projected values. So that’s the 40,000 that’s on it now, plus 4,500 per year for three years, or 53,500 total (10,700 per year).

Before I hurt my head any more on this, is there a better way to ballpark what this M550 would be worth in three years (I’ll assume private party sale).

The complicating factor is that 2018 is the first model year for the M550.

I’m also not sure I’m inputting my query parameters correctly given what’s displayed in the “Resale Year” column.

(Actually, looking at the value shown after one year based on my inputs makes this data appear to be useless, because this is an $80k+ car).

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We have a couple people here with access to Manheim auction reports. If there isn’t data modeled there for the M550, you might be able to get some data points from what went through the auction lanes and plot a trend line?

I like what you are doing here and I’m following closely, a reason I lease is the unpredictability of what a particular car might be worth at a hypothetical point in the future.

Wondering if @RVguy would have any insight on this?

Also following as I tend to lease for the same reasons most on here do. At the same time I’ve enjoyed a BMW that I’ve owned before and I do not fall in the “ OMG, it’s out of warranty, you’ll need 4 new rotors, two axles, a cam position sensor, and new cup holders tomorrow “. Suffice it to say I’ve also thought about picking up a CPO or used BMW from time to time.

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It’s kind of hard to tell, but if you want a ballpark try KBB for a vehicle 3 years older (2015) with the additional miles.

Is there a specific reason why the M550i? It is a great car, but the N63 V8 is not known for being the most trouble-free of engines :laughing:

The way I analyze this stuff is by looking at relationships within a model year to another trim that exists through time and then apply that relationship to an older year with the target mileage to get a ballpark figure.

The cUrrent MMR on the 18 M550 with 40k mi is 43200. The closes equivalent trim that exists through older model years is the 540xi msport which was the 550xi msport in 2015 model year. The MMR on the 18 with 40k mi is at 37400. So assume a 6800 premium as a 3 year old for the M550 over the 540xi msport. I would assume that this premium will shrink as the vehicle ages so a safe premium as a 6 year old would be around 4500-5500 over the price point of a 2015 550xi msport. The MMR on the 2015 550xi with 53500 mi is at 23900. So assume the M550 if it existed in 15MY would wholesale for around 28400-29400.

The 2018 redesign also adds quite a bit of value. The 2017 540xi msport with 40k mi has an MMR of 31700. So 5700 premium to go from the 2017 540xi msport to the 18 550xi msport with the same miles (40k) selling stars the same point in time.

3 years will also dilute this redesign premium so assume about $3500-4000 for the generation change.

This results in a projected wholesale value of anywhere from 31900-33400 for the 2018 M550 in 3 years with 53500 miles.

Private party will give you about $1k over this so 32900-34400 is a logical value for this vehicle.

Of course the current wholesale market is still pretty jacked with covid-related supply issues so there could be price compression between model year values in today’s market on this model which would under predict future depreciation once the market settles down in the next 18 months. So maybe drop the price range another 1500-2000 for a pretty safe estimate.

Worse case scenario is you are happy with the economics using a more conservative approach and have a bit more equity in 3 years.

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Thank you very much for this thoughtful analysis.

This follows my basic logic exactly – and then adds in a key fact and the detail and nuance that I was craving. I really appreciate your time and expertise.

The fundamental fact that I missed is that the existence of the previous 550 model (even if an imperfect substitute). I was really handwringing over how to account for not having any 2015 M550 comps and then trying to substitute a lower trim level as a proxy.

So… if I saw off $2,000 from both ends and assume a private party sale, I’m at an estimated value range for this 2018 M550 in December of 2023 of $30,900 and $32,400.

With a purchase price of $45,600 now, that would put the three-year depreciation cost roughly between:

$45,600 - $32,400 = $13,200

and

$45,600 - $30,900 = $14,700

That establishes the baseline for comparing to the costs of a new lease, which I’ll address in a separate post (although anyone with at least one working eyeball can see that it’ll be pretty difficult to justify a new one, even with the risk of repairs).

Thank you again!

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I might have a brother who might have a legitimate Manheim account. :slight_smile: I was mostly struggling with what to use as a proxy for a 5-year-old M550 (which doesn’t exist). @RVguy cut through that with the most reasonable substitute, with logical qualifiers.

Agreed. And I’m willing to pay something for that.

I’ll also pay something for having no repair or maintenance costs for three years (which, of course, does not make these things “free”).

I’m also willing to pay something for a car that doesn’t smell like a previous owner’s clove cigarettes, or the gallon of sweet acidophilus that spilled and soaked into the carpet on the way home from the grocery store which was then covered up with that pink sawdust-like substance the elementary school janitor would sprinkle on my friend Jennifer’s vomit :face_vomiting: every time she lost it on the way to the restroom.

But I’m preaching to the choir, since you’re already on board with the premise.

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Most of my driving (by trip count, not total miles) is local errands, and I really appreciate the virtually-instant power and torque from the V8, which propels this vehicle from a dead stop in a unique way (at its price point) that makes me smile every time.

I don’t want an SUV or a two-seater, and probably not another convertible.

I’ve already rejected all of the following:

  • E53 coupe (fails as both a “luxury car” and as a “sports car”; some of the interior details are really low-rent; among the shortest test drives I’ve ever taken – with the notable exception of the one immediately below)

  • E43 sedan (drove this after the E53 coupe, and it’s noticeably and dramatically less than; the recent E Class sedans are really dull to look at)

  • AMG GT (spectacular machine, but I’m too tall to comfortably enter/exit, plus even the softest ride settings are bone-jarring after about 6 minutes; fails the “no two-seater” test)

  • Tesla _____ (they’re all ugly)

  • 750i (already have one, so a second one seems silly, and I want something at least a bit smaller and more fun to drive)

  • A8/S8 (I just drove a new S8 and it’s awesome – but it’s too large [see previous], and I found the all-touch-screen controls unintuitive and distracting while driving; the A8 solves none of that)

  • A6 (yawn)

  • S5x0 (the coupe is one sexy MILF, but it’s basically a rolling La-Z-Boy; the sedan fails the “smaller than a 750i” test and spectacularly fails the “more fun to drive than a 750i” test; styling on all variants is aged, which will only get worse as the next-gen models hit the streets in meaningful numbers)

  • A7/S7 (haven’t driven either one, but I don’t like the exterior styling at all)

  • INFINITI anything (nothing in the line-up appeals to me)

  • BMW 3 Series | BMW 4 Series | Audi anything5 | Mercedes Cxx and Cxxx* (zero appeal in any variation; I’m too old to be a frat boy)

  • BMW 6 Series (design looks even older than it is)

  • Ghibli (a friend had one and I hated everything about it, but mostly it sounds obnoxious and falls apart when you look at it)

  • Giulia (too small and ugly AF; without the triangular front grille it looks like a 1999 Ford Escort sedan)

  • Panamera (it’s a big car, and it’s on already on the short list to replace the 750i)

  • Boxster/Cayman (if I’m going to get a two-door Porsche it’s going to be a 911, and they all fail the “no-two-seater” test, either literally or on a technicality)

  • Volvo C3PO, XR4Ti, etc. I’ve tried to talk myself into liking the sedans, but they’re awfully plain to look at so I’ve never attempted to see if they drive better than their specs suggest.

  • Genesis G80/G90 (still has that Hyundai stink)

The only other vehicles currently on my “maybe” list are the Audi S6 (2020+, so I’d probably have to lease a new one), and the BMW Z4 m40i is a distant maybe (loved the power and handling, but it violates both the “no-two-seater” and the “probably-not-another-convertible” tests).

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No Volvo S90 T8 :laughing:?

Either way, it seems like you really narrowed the choices down. Maybe find one with more CPO/less mileage? It’s hard to gauge used car prices right now with everything being valued at more than its worth.

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Have you considered the G80/G90?

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That matches up with the first conclusion I’ve drawn from this discussion.

Everything below is based on very round numbers.

If the reference CPO vehicle above will depreciate $14k in 3 years, it would cost at least double that to lease a new one for the same term.

For an additional $5k (around $50k) I could get a CPO with 20,000 miles (perhaps fewer), which should reduce the risk of post-warranty repairs and the car should be in better shape aesthetically (and have fewer odors :pig_nose:).

That would still leave me with $10k left over before accounting for any of the less significant differences like sales tax and registration fees (which are largely based on vehicle value in CA).

Since I put on so few miles, I would recoup at least some of the higher upfront cost for a lower-mileage CPO, because after three years the CPO would have 35,000 miles on it instead of 55,000.

Side note: I already have an independent shop that I trust, because they took great care of my E500 for several years.

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No appeal. I also left Testa _____ off my list. I’ll update it now.

BMW 6-Series

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It’s actually a very strong proxy. BMW now throws a virtually meaningless “M” in front of the trunklid badge on the largest engined models of their non-M cars

It’s an 550i M-sport by another name.

What the marketing bozos again failed to realize is that “special” BMWs achieve or fail to achieve coveted status irrespective of what’s on the trunklid. The E46 330i ZHP has no signifiers on its trunklid yet remains the most coveted non-M3 E46.