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      05-11-2014, 08:23 AM   #7
adrianv
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Drives: M235
Join Date: Apr 2014
Location: Arizona

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Quote:
Originally Posted by MmmTwo35 View Post
I have no idea what you guys are talking about. Is this an option that is better then BMW select? I figured out that BMW select is even better than leasing because it is likely the value of this car will be greater then the balloon payment or even at a four year buyout and then you simply sell the car at the end of the five-year BMW select or even earlier at the four-year mark and still make a little profit or breakeven, the benefit being that the select payments were quite a bit lower than lease. Can someone comment on this MSD thing not knowing what it is at all, versus BMW select versus lease. I think a lot of folks can benefit from this thread, from this information.
Hmm... That's not entirely accurate. Generally speaking, a 3 year lease will have a lower total cost of ownership than any 3 year financing program, especially with BMW which keeps their lease interest rates fairly close to the financing interest rates.

You are comparing a 5 year balloon loan payment to a 3 year lease payment and calling it "better" by looking at loan payment alone and assuming that translates to total cost of ownership. This is not accurate nor is it a fair comparison. You also give up a lot by going the balloon payment route:

You own the car, so you are paying 100% of your sales tax up front.
You lose all depreciation protection that a lease gives you. You can't walk away from the balloon payment at the end of the day.
You are ignoring that a BMW lease residual is generally artificially inflated. This means that you likely could not sell your car for what a lease residual is after three years. The difference would come out of your pocket.
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