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2Addicts | BMW 2-Series forum BMW 2 Series (F22) Forum 2 Series Pricing, Ordering, European Delivery Advice what's smartest to do beginning / end of term loan vs. lease

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      09-01-2014, 05:54 PM   #1
haloeight
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Advice what's smartest to do beginning / end of term loan vs. lease

Does it make sense to use trade in value / downpayment as capital cost reduction on a lease with BMW? I was going this route, then read that if the car is totalled or stolen, this money is effectively gone.

Asking my insurance if this is covered and not sure if BMW's leasing terms covers this, but it's making me pause about using trade in value / downpayments on a lease. I've read some people do this for the monthly cost reductions, others don't and say you might as well just pay out a higher lease cost per month using the same amount of money you would have put down up front. OTOH maybe it's the same as if the money was put towards a downpayment on a loan and the vehicle was stolen / totalled?

Also, regarding end of term - if choosing between an owner's choice loan or lease, is one smarter than the other for setting up next purchase?

Perhaps I should rephrase the question - obviously with a lease you can walk away, buy, get into new, etc. and the only trade in value you can get it is market value > residual (thanks for the confirmation in my other thread). You could buy the vehicle at the residual + fees. With the balloon payment, it'd be a little less than residual value, but there's also interest to pay, and who knows if you just want out at that point or to get into something new.

Would appreciate any perspectives on what is smarter...I have like 10 different variations on leases/standard loans/owner's choice loans I'm waffling a bit on.

Last edited by haloeight; 09-01-2014 at 06:04 PM..
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      09-01-2014, 07:33 PM   #2
mike@tpc
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I would take the higher payment and put as little down as possible. the part about losing it all if totalled is the reason. I've done a few leases and only kept one til the very end, but we were only 3 months short on my wife's first Z4. Went in to look at ordering one for 3 month later delivery and wound up just trading it on the perfectly optioned one they had in stock.
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      09-01-2014, 08:04 PM   #3
haloeight
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Thank you - so help me understand what you did on that trade in scenario (new to this)...you just got out of your lease early and into a new vehicle without issue? When you say traded in, I take it there was no value of your previous vehicle applied to the new vehicle?
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      09-01-2014, 09:20 PM   #4
mike@tpc
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basically, the trade in value equalled the lease payoff plus 500 on the Z4, so we gave it back and got an additional 500 off the USAA price on the new Z4 (which we purchased).

I have in the past also traded in a g35 coupe on a dodge magnum when my airline went bankrupt and cut my pay in half and we had to sell my truck and downsize. On that, I got 1000 more than lease payoff, one year into a 39 month lease.

I also traded in a Mustang GT one year into a 2 year, and wound up about 1000 upside down on that one.
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      09-01-2014, 09:29 PM   #5
haloeight
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Thanks again Mike. You were helpful in the other thread I had too on lease trade ins.
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      09-02-2014, 05:19 PM   #6
haloeight
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Talked to my insurance company and got a bit more information. Evidently having a waiver of depreciation on my insurance will address concerns around capital cost reduction / trade in value / downpayment on a lease. In this scenario if the car is totalled / stolen in the first two years, what the insurance company gives me is the original sale price, not the depreciated cost. So in this case I would get back the original MSRP/selling price before any CCR / trade in value / downpayment on the lease and be covered for this situation. After 2 years I would get the appraised/depreciated value of the vehicle, so there is a risk there.

Just thought I'd share in case anyone else is searching on this topic or this is news to anyone.
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