Thinking through… Lease vs Buy situation

So I’m helping a friend evaluate a deal. He’s pretty set on leasing, and generally I am too, but in this specific instance I wonder if it’s better to buy?


  • Sale price already agreed
  • On the lease side there is a $500 rebate and the acquisition fee
  • On the buy side there is a $2k rebate and gap coverage fee $450. Penfed
  • thanks to Texas he would be paying full sales tax either way

So he’s kind of $2k ahead thanks to higher rebate and lower gap fee, and theoretically the ability to trade the car in and get a sales tax break on next car.

Lease MF .00093, buy APR 1.99% for 72 mo.

After he ran the numbers, they’re basically $25 apart on monthly and after 3 years based on amortization schedule he would be about $3k lower balance vs what the residual on the lease end would be.

So, in this case, does it really boil down to simply protecting yourself through the lease in the event there is an accident?

Because then you could just walk away from the car at lease end vs potentially being stuck with a not as valuable car that’s harder to trade out of without being upside down? Again assuming a 3 year timeline.

From an interest rate perspective he would technically be saving some $$ there too.

Any idea on what car it is he’s getting ?

Are you asking so you can give him advice? Please don’t.


It’s a 330i.

If it’s close, I’d always buy, and the numbers are getting alot closer these days. But it’s a very personnel decision, no wrong answer

No I won’t. Wouldn’t it make it easier to understand if you know the car he’s dealing with.

Most of us on here can look at the MF and know which brand his friend is considering.

To the OP, one of the BMW brokers on here mentioned yesterday that the base MF increased to .00096 from .00093, not a big deal but something to be aware of.

Please do a search for Lease vs Buy and read the previous threads on this subject to see if their is any other valuable viewpoints.

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Lower gap fee? There’s no gap fee on a bmw lease. Paying $450 is much higher than paying $0.

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I always treat the acquisition fee as essentially the gap fee, maybe I could’ve worded it better.

There are some leases (looking at you Toyota) where gap coverage isn’t included and gets charged separately.

I think the big question here comes down to residual values. BMW has notoriously had very inflated residual values in the past, meaning that if all else is equal, purchasing leaves you holding a much worse bag at the end. They seem to have relaxed on that a bit recently, so the math may not work out the same.

Sounds like it all really comes down to if at the end of three years, do you think that the residual value will be no more than $2k high. In the past, that’s a bet I wouldn’t have taken. If the RV has been adjusted, it may be closer to reality now.

Yea this residual does seem more in line with reality, but as we’ve seen with how the chip shortage has caused issues and thus driven changes like stopping 3rd party buyouts, I think it’s getting real hard to predict anything lol.

Tricky situation.

I like the lease scenario and guaranteed buyback for vehicles that are high value and/or performance cars, as the bank holds the liability for any accidents. Second hand buyers spending that kind of money are likely to be perfectionistic and scrutinize every body panel.

For lower value vehicles, there will be a lot more buyers despite an accident, hence I’d be more likely to take that risk and buy.

Case in point: very glad I leased a first model year X3M Competition which was a ticking time bomb. Any damages caused by the dealership service staff quickly became BMWFS’ problem. With a base X3? Much less money at risk.

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What, TX charges full tax on a lease? Had no idea.

What’s the total out of pocket to finance the car vs leasing and buying it out? If the lease option isn’t significantly worse, then you have the ability walk away after 3 years regardless of what market pricing looks like.

I would expect 330e resale to be poor once the shortage ends. People buy BMWs for performance, in 3 years why would you buy a 330e vs one of the many electric options that will be available (i4 will be more mainstream by then). I also didn’t expect used prices to go through the roof so nobody can predict the future.

The lease provides an exit regardless of the market. If it’s not terribly more expensive, you have more flexibility.

3 series residuals are crap right now so there’s that. BMW is doing some drive events in Texas. Should let your friend earn an OL code for another $1000 off ($500 from dealer, $500 from BMW)

We need more data, selling price of car, residual etc.

Based on what you told have us, $25 difference over 3 years is $900, did you calculate that into your $2000 difference? For $1100 difference, I like the ability to hand the car back and walk away regardless of what the current used market looks like.

It’s a 330i not an e.

I think “For $1100 difference, I like the ability to hand the car back and walk away regardless of what the current used market looks like.” is one of the big keys here. I’ll have to check w/ him on final numbers, but at the end of the day walking away regardless is a nice feature.

Would be nice if Texas changed the lease sales tax :(.

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Texas charges upfront sales tax on the entire price of the vehicle (same as if you purchased it), compared to most states that either tax on only the total lease cost or monthly lease payments. Results in a lot more tax being paid during the life of the lease than most places.

The exception being if you can find a dealer/brand provided tax credits.

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Have your friend wait for sales tax credits if they can. I imagine they will become available in late November or early December.