[The Reverend]

I currently own a 2016 435i GC and the "lease" is up this Sept. I did buy it new and I'm curious as to whether I should re-finance the balance and keep the car considering that I have spent the last four years basically paying off the depreciation.

The vehicle also has an extra two years of warranty on it so I'm wondering if I should just hold on to it during that time since it has 39,000 kms (24,233 miles).

At the end of the lease I'll owe about $26,000 CDN ($19,619 USD) so part of me thinks that I wouldn't find a four year old car with low mileage and warranty for that price. Does it make financial sense to keep it for another two years or sell it now?

A minor concern I have that is somewhat offset by having the extra warranty is when I took the vehicle in for normal service recently they found a leak in the transmission. They did the powder test to try to see where it came from but then the recommendation came back from BMW to replace the entire transmission as well as transfer case. The fuel pump was also replaced under warranty during a previous service.

So what would you do? I do love the car but part of me wants to move into something like a Lexus GX460 or Toyota Tacoma to embrace my inner weekend warrior but also have a vehicle that holds it's value better. But if I do that, I've basically pissed away the money I've spent the last 4 years on my current vehicle.

[Darth One]

Worrying about what you've done for the last 4 years is a common fallacy called the "fallacy of sunk costs". At this point none of that matters.

The decision you have in front of you is whether you can do better for $26k CDN than this 4 year old car that you've maintained to whatever standard and whose full history you know

[overcoil]

good answer above

also the Lexus GX460 and the Tacoma (2016 intro ) are old and uninspiring.

[NemesisX]

Leasing will usually be vastly more expensive than purchasing cars outright.

The most financially savvy way to own a car is to buy a 1-5 year old used vehicle. Whether you finance the car or buy it outright is up to you. As a general rule of thumb, if you are unable to write a check for the car in full and not even blink an eye, then you cannot afford it.

You're also using incorrect terminology.

I currently own a 2016 435i GC and the "lease" is up this Sept. I did buy it new

Why are you putting "lease" in quotes? You didn't buy the car. You leased it. You rented it.

Does it make financial sense to keep it for another two years or sell it now?

You're also not selling the car now. You can't sell something you don't own. You're giving back your rental, and you're asking yourself if you want to buy a used 4 year old vehicle for $19,619.

[The Reverend]

Originally Posted by NemesisX

Leasing will usually be vastly more expensive than purchasing cars outright.

The most financially savvy way to own a car is to buy a 1-5 year old used vehicle. Whether you finance the car or buy it outright is up to you. As a general rule of thumb, if you are unable to write a check for the car in full and not even blink an eye, then you cannot afford it.

You're also using incorrect terminology.



Why are you putting "lease" in quotes? You didn't buy the car. You leased it. You rented it.



You're also not selling the car now. You can't sell something you don't own. You're giving back your rental, and you're asking yourself if you want to buy a used 4 year old vehicle for $19,619.

The value is actually a ballon payment hence the quotation marks around "lease." I traded in my 2012 335i which I owned outright on this one and the dealership suggested going the balloon route vs. finance to lower the payments.

[The Reverend]

Originally Posted by Darth One

Worrying about what you've done for the last 4 years is a common fallacy called the "fallacy of sunk costs". At this point none of that matters.

The decision you have in front of you is whether you can do better for $26k CDN than this 4 year old car that you've maintained to whatever standard and whose full history you know

This is great, thank you.

[The Reverend]

Originally Posted by ScottSinger

good answer above

also the Lexus GX460 and the Tacoma (2016 intro ) are old and uninspiring.

Yeah, I agree with that statement. But the choices for vehicles that hold their value really well is somewhat limited. What would you suggest as an alternative that holds value?

[P1]

Originally Posted by The Reverend

Yeah, I agree with that statement. But the choices for vehicles that hold their value really well is somewhat limited. What would you suggest as an alternative that holds value?

I looked at cars that “held their value” and fell asleep. Rather own something fun and deal with depreciation.

[The Reverend]

Originally Posted by P1et

I looked at cars that “held their value” and fell asleep. Rather own something fun and deal with depreciation.

Ha! So true.

[F32Fleet]

Look at used prices off dealer lots for comparable vehicles. Let your vehicle go if it's lower than the buyout price at the end of your lease. Then buy the vehicle back once the dealer lists the vehicle for sale.

[zx10guy]

Originally Posted by The Reverend

The value is actually a ballon payment hence the quotation marks around "lease." I traded in my 2012 335i which I owned outright on this one and the dealership suggested going the balloon route vs. finance to lower the payments.

So they got you into a BMW Financial Select loan.

The sales guy at the dealership I bought my 135i tried to do this to me. He knew I wasn't buying into the monthly payment game. So he tried to sell me on the ability to use the money I didn't sink into car payments/down payments into the stock market. I would have gone with the Select loan had he not been a total a$$ to me. It was the greatest feeling in the world when he thought I was going to sign on the bottom line with the finance documents for the Select loan when I put the brakes on things and dropped the credit union check on the table. The look on his face was priceless. Then they proceeded to waste another 30 to 45 minutes trying to figure out another financing vehicle to try to salvage that back end money they thought they had. I played along because I knew they were wasting their time. When all this happened, no one could touch the 1.49% 5 year loan the credit union gave me.

Again, had the sales guy not been a total prick, I would have done the Select loan. They get their back end money. He would have given me the little bit I was asking for in my negotiations. And I would have refinanced with my credit union to get out of the Select loan.

[c1pher]

Originally Posted by zx10guy

So they got you into a BMW Financial Select loan.

The sales guy at the dealership I bought my 135i tried to do this to me. He knew I wasn't buying into the monthly payment game. So he tried to sell me on the ability to use the money I didn't sink into car payments/down payments into the stock market. I would have gone with the Select loan had he not been a total a$$ to me. It was the greatest feeling in the world when he thought I was going to sign on the bottom line with the finance documents for the Select loan when I put the brakes on things and dropped the credit union check on the table. The look on his face was priceless. Then they proceeded to waste another 30 to 45 minutes trying to figure out another financing vehicle to try to salvage that back end money they thought they had. I played along because I knew they were wasting their time. When all this happened, no one could touch the 1.49% 5 year loan the credit union gave me.

Again, had the sales guy not been a total prick, I would have done the Select loan. They get their back end money. He would have given me the little bit I was asking for in my negotiations. And I would have refinanced with my credit union to get out of the Select loan.

I don’t mind working with a dealer if they work with me in return. Otherwise, I do exactly what you do. It makes no difference to me whether they get a kickback or not.

[10"]

1M owner wondering what "depreciation" means?

never heard of it.

:P

[The Reverend]

Originally Posted by zx10guy

So they got you into a BMW Financial Select loan.

The sales guy at the dealership I bought my 135i tried to do this to me. He knew I wasn't buying into the monthly payment game. So he tried to sell me on the ability to use the money I didn't sink into car payments/down payments into the stock market. I would have gone with the Select loan had he not been a total a$$ to me. It was the greatest feeling in the world when he thought I was going to sign on the bottom line with the finance documents for the Select loan when I put the brakes on things and dropped the credit union check on the table. The look on his face was priceless. Then they proceeded to waste another 30 to 45 minutes trying to figure out another financing vehicle to try to salvage that back end money they thought they had. I played along because I knew they were wasting their time. When all this happened, no one could touch the 1.49% 5 year loan the credit union gave me.

Again, had the sales guy not been a total prick, I would have done the Select loan. They get their back end money. He would have given me the little bit I was asking for in my negotiations. And I would have refinanced with my credit union to get out of the Select loan.

My experience was actually the opposite as this dealership has been great to me and my cars.

I knew most of the folks there and would routinely chat with them about cars but they've experienced some staff turnover and all the enthusiasts have moved on unfortunately. I'm a loyal guy so like anyone I like consistency but the last few times I've been there it's decidedly more sales focused vs. customer focused.

Anyway, when they presented the original deal with a 1.11% interest rate I decided to go for it but now I have to consider options.

[Emilime75]

Don't know what your year/model/mileage/condition...go for in Canadia, but the comps down here are about $5-10k over your $19+k buyout. If you like the car, keep it, and if you just have to scratch the "want something else" itch, sell it and use the extra funds towards it.

[The Reverend]

Originally Posted by Emilime75

Don't know what your year/model/mileage/condition...go for in Canadia, but the comps down here are about $5-10k over your $19+k buyout. If you like the car, keep it, and if you just have to scratch the "want something else" itch, sell it and use the extra funds towards it.

I think it's in great condition, no scratches, marks or dings. Always hand washed and parked inside when not being driven. It's a 2016 435i GC. But if the comps are that much over I will seriously need to consider that.

But to your point, I do like the car, it's fantastic. Super fun to drive and practical when I need it to be. I still think it's the nicest looking sedan out there, hands down.

[GenXer]

Sometimes it's better to stick with the devil you know. I'm sure you took care of it well and it's still desirable and familiar. If you still enjoy it, keep it. It still has plenty of life left. If you know it has serious issues dump it. That's a reasonable price for a 6 cylinder BMW.

Unless you want to use it on a downpayment on a new Tesla

[zx10guy]

Originally Posted by The Reverend

My experience was actually the opposite as this dealership has been great to me and my cars.

I knew most of the folks there and would routinely chat with them about cars but they've experienced some staff turnover and all the enthusiasts have moved on unfortunately. I'm a loyal guy so like anyone I like consistency but the last few times I've been there it's decidedly more sales focused vs. customer focused.

Anyway, when they presented the original deal with a 1.11% interest rate I decided to go for it but now I have to consider options.

If that was the rate you have for your Select loan, it's not as good a deal as you think it is. That 1.11% rate applies to the entire loan. So you have to calculate the interest of carrying that $19k balloon payout to term over the years you've had the loan not paying down any of that principle. I don't remember how they did it on the Select loan terms that were presented to me. It was either the interest on the balloon part was rolled into the ongoing monthly payments or the interest was added to the left over principle forming up your final balloon payment.

I caught onto this early on as I knew there is no free lunch. Once you know the actual details that 1.11% is very misleading and your effective APR is going to be much higher.

[Al Bundy's Dodge]

Originally Posted by The Reverend

Yeah, I agree with that statement. But the choices for vehicles that hold their value really well is somewhat limited. What would you suggest as an alternative that holds value?

Markets can be regional, but here in Colorado 4runners and Jeep Wranglers hold their value very well...in addition to Tacomas.

I think wrangler is the way to go because you get the fun factor and a MT along with minimal depreciation.

[The Reverend]

Originally Posted by zx10guy

If that was the rate you have for your Select loan, it's not as good a deal as you think it is. That 1.11% rate applies to the entire loan. So you have to calculate the interest of carrying that $19k balloon payout to term over the years you've had the loan not paying down any of that principle. I don't remember how they did it on the Select loan terms that were presented to me. It was either the interest on the balloon part was rolled into the ongoing monthly payments or the interest was added to the left over principle forming up your final balloon payment.

I caught onto this early on as I knew there is no free lunch. Once you know the actual details that 1.11% is very misleading and your effective APR is going to be much higher.

Thank you for this. I can confirm that I did not know this to be the case. This info was never offered to me but ignorantly, I never asked either. I chalked up receiving such a great rate to having a super credit rating and being such a great guy.

Now that I think about it, I should have known when the National Sales guy came over to close the deal with me as he happened to be in town.

[TheBingoBalls]

I'm starting to think about the same as my lease ends next year. No issues other than a few cosmetic issues like stone chips but that was something that was inevitable and something I could touch up and clean up on my own. There is nothing about the car nor the buyout price that comes as a surprise. The buyout is going to be low $30k including taxes.

Not too afraid of owning it outside of warranty - currently have a E90 and R56 MINI both outside warranty with no major issues and all work done by myself. To add, the GXX 4er will play a huge factor whether or not I buyout the 440.

[Gen13 F36]

This is always not a good idea, lease a car then buy it out at the end. You always lose more than buying/financing...then later on trading the car in for a newer car.