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Originally Posted by colox5
Going to ask a general question here about leasing as I’ve never leased, always purchased. I have a 2021 330e now which I quite like. Wife has a 2021 X45e but perfect world, one of our two cars would be fully electric. I might have wound up with an i4 had I not needed the car when I did.
Anyway, I’m intrigued by the $7.5K federal EV tax credit being able to be applied to leasing. So, if I were to sell my 330e, put a big chunk down for the lease (let’s say $20K) and then have a relatively low lease monthly payment, what are the pros and cons to that approach? One Pro I see is I get more value for my current 330e selling now vs a couple of years from now.
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I think with a lease, you only want to pay for the depreciation or what you use. I am not an expert but I have leased some cars before. Two of which were BMW's.
If I were looking at a 50-60K car and my intention was to drive it for 3 years, then if I say that car has a life span of nine years, I would be looking to pay (at max) only a third of the 60K. In your case, the money I would get from selling my previous car would be working for me elsewhere. Or you could use that to reduce the money factor of the lease if need be. The money factor is essentially the interest rate of the lease. By putting down security deposits, you would get a much lower interest rate, which would be returned to you at the end of the lease.
Try to put as little down as possible when leasing (cover TTL and first months payment). Consider incentives available for the car for your region, negotiate the sales price and make sure you qualify for the lowest money factor available (your credit score determines this). Do not let the dealer mark up the money factor on you. In the month you intend to lease, go to Edmunds to get details on incentives and money factor (mf) for the Make and Model.
Now, here's a scenario: What if you were to get $450/month with $2000 down on the I4 for 36 months and 10K miles per year. That would mean paying a total of $17,750 for 3 years on the car. That is, 35 months X 450 = $15750. The down payment of $2000 would cover the 1st month and TTL. $15750+2000 = $17,750.
If you have this amount ($17,750), you could pay for a one time lease pay. But this is not advised. Essentially, you are putting a lot of risk on yourself. If it is totaled, you are without a car, because you already paid off the lease. Insurance would cover only the remaining of the cars value and pay BMW. You would be left with nothing (unless the accident happened on the very last day of the lease). But, if you paid monthly, then you would only have paid for what you used.
For those who like to purchase after a lease, the best deals are with low money factors. A few years ago, some found that with great incentives and low money factors, leasing before purchasing was better than outright financing. Those environments existed as far back as 2019/2020 and part of 2021. I have not seen it since then.
The above is based on a USA market perspective.