Entry Level Luxury Performance Sedans

mikefm58

One more note here on this, where leasing is a definite advantage is if the vehicle is used as part of a business, such as a realtor or other sales person. There are distinct tax advantages of leasing versus an outright purchase for commercial vehicles.

But for individuals, leasing is "virtually 100%" more expensive in the long run over a purchase.

circlew

I agree that lease is cheaper than the depreciation hit in re-sale value. My lease is 12,000 miles/3yrs. and will probably go for $800 for extra miles 4 months before lease end. The extra cost for lease vs. buy is because you need to lease twice vs. buying and keeping 6 years.

If you buy and keep the car over 6 years, you probably are flirting with 100K so depreciation levels out in the later years but basically the maintenance/repair costs increase fast. The resale is low and hit is high vs. original cost.

The savings in buying comes after year 6 but the car is basically getting tired in at least some major drive train parts. But if the car stays sound, you start saving in repair costs.

rockylee

I bet they are getting near retail for the 335i, right ?

Rocky

captain2

If you buy and keep the car over 6 years, you probably are flirting with 100K so depreciation levels out in the later years but basically the maintenance/repair costs increase fast. The resale is low and hit is high vs. original cost
any car these days should have minimal maintanence costs at 6 yrs/72000 miles, if that is the assumption on miles driven and length of loan. Unless, of course, you are driving something like a BMW or MB, which owners should trade off before the warranty/free service periods expire.
A friend had an older 328 (before BMW had to offer their service program). Nothing really wrong with the car, took it in for the 40000 mile 'scheduled' service and got it back $2300.00 later - absurd - since when do 'simple' brake jobs cost $1200.00 and 'simple' tuneups $600.00! Although the German cars do maintain high values used, the gross dollar hit is ludricrous compared with most of the 'Japanese' makes - the reason why the lease rates tend to be much higher. But, in any case - most of the real money saved by purchasing is actually realized after the vehicle is paid off, so that from a financial standpoint it does make sense to accelerate that process as much as possible, even if your monthly bill is doubled.

blueguydotcom

Well, I guess we are on two different planets. If you trade in your car you only pay tax on the difference, therefore the tax you overpaid on the first purchase will go back to you after the trade in.

That's dependent on state. In CA your trade-in does not count for squat on taxes. Trade in a 40k car for a 40k car and you're still down 4k on taxes.

Second, the residual value after 3 year lease is very close to trade in, for BMW that is.

I've owned a couple BMWs now. There's a pervasive myth they don't lose much value.

And please don’t quote me KBB or Edmunds as they are not even close on some models and makes. I spend my share on dealers auctions and I can assure you BMW in a good condition will bring good money.

Not from what I see. BMWs lose insane amounts of value quickly. After year 3, like everything else, the slide slows.

Again, if you lease you always pay more, at lease the money factor if you are good negotiator.

Babble that's just ignorant. I've proven you wrong already... you're talking but not making any sense. You're using terms like "always" and yet you don't seem to understand them. My last lease, I saved thousands leasing. Expressly because the car took a huge hit on depreciation and the tax savings.

blueguydotcom

bet they are getting near retail for the 335i, right ?

Check the bimmer boards. People have been getting over-invoice deals on the 335i already. BMWs are a commodity, just like a Honda Fit. Massive competition - essentially anyone paying MSRP for one is getting taken for a ride.

louiswei

This may not meant much but according to Edmunds...

2007 BMW 335i (zip code: 30360, Metro Atlanta):

MSRP: $41295 (including $695 destination charge)
TMV: $41295

So yes, apparently for right now the new 3-coupe is selling around the sticker.

I know people like blueguydotcom will come back with the ED option which allows one to get one below invoice. However, I think with the ED, one should also take the airplane ticket, hotel cost, and any misc cost into consideration. I am pretty sure that if one can get a good deal on the ticket and hotel the overall cost should still come below the non-ED price but it would not be that significant.

It's not that people are lazy to pick up their cars in Europe. However, I don't like the idea that I have to wait 3 month (or is it 6?) for my car to arrive after I picked it up. Also, a trip to Europe is just not as attractive to me comparing to a trip to China or Taiwan. But that's just me.

blueguydotcom

Even without ED you can get them for a bit over invoice. People are really myopic about saving some dough. Say you're in some po-dunk fly-over-state and the one BMW dealership won't budge on price. Check bimmer boards and find a large city nearby that does have competition. some email blasting will nail down deals quickly. Hop a JetBlue, Ted, SWA flight after you do the deal online/over-the-phone and pick up your car for a quick drive back. If that'll get you a BMW at $500-1000 over invoice v. MRP, that's worth it.

Living in socal we've got BMW dealerships on all over. There's so much competition that a car like the 335i starts getting negotiated prices below MSRP before they're ever delivered.

louiswei

Oh, blueguy, I am pretty sure the 335i are flying out of the dealer lot with price below MSRP. Like I said, usually the Edmunds' TMVs are off for some reason. I wouldn't be surprised to find out that the 335i are selling for about $1000 under MSRP. I know for people like you that's not that great of a deal but compare to many suckers whom are paying MSRP that's not that bad at all - especially for a hot car like 335i.

I agree with you on that if people truly want to land a great deal they should shop around the coutry. When I bought my IS350 back in April I found out that I can get probably another $1000 to $1500 off the deal I got in Atlanta if I buy it from dealers in Cali. However, with the school and many interviews lining up back them, a trip to Cali to pick up the car just seems not logical to me. Also, since I was planning to finance my car for at least 4 years, $1000 difference (about 20 dollars per month) is just not that significant after all. The bottom line is: would I want to get a better deal than the one I got ($1500 off MSRP)? Yes. But after taking everything into consideration, it seems more reasonable for me to buy it from my local dealership.

habitat1

Two comments:

(1) I agree that you need to draw the value line somewhere when it comes to saving money. My business partner, with a net worth in the solid 8 figure range, considered importing a Honda Accord from Canada a few years ago to save an extra $1,000 on the exchange rate. Needless to say, he's a great lawyer and investor in our company, but I handle the financial decisions. That example aside, I have found it unnecessary to go accross country or outside the country to do a little arbitrage bargaining.

(2) Leasing vs. Buying: blueguydotcom may be an exception, but I always seem to have the strongest negotiating position when I can write a check for an in-stock car and dare the dealer to rip it up. Edmunds TMV on my 2002 S2000 was $36,000 (yes, $3,200 over MSRP). The Saturday before Thanksgiving in 2001, I walked out with one for $32k even. The discount on my 2005 911S Cab was even more substantial. At one year and 10,000 miles, I could sell it for, at worst, $8-9,000 less than I paid for it (about 50% of what the annual lease payments would be). I am in a lucky state that recognizes trade in values on taxes. I am of the general opinion that when you introduce another party to a transaction - i.e. a leasing company or financial institution - they need to make money to stay in business. If, in fact, they have a cost of capital that is significantly below mine, they might be able to do that and still offer me some value in return. But, for a lot of people, that internal cost of capital could be a 6%-7% home equity loan, with the interest being tax deductible. That's hard to beat.

blueguydotcom

Habitat, dealers make less money if you pay cash for a car. It's actually a better deal for them to sell the car lower and get you on their financing. The bank pays them back instantly and they get a cut of the finance rate.

Actually had a dealership tell me straight up if I financed through them and then paid off the loan instantly they'd sell me the car at a lower price. Weird but true.

I totally agree that quite often leasing for the short-term buyer quite often really isn't a great deal without a tax deduction. But there are exceptions.

pmvi

Check the bimmer boards.

What bmw board(s) would you recommend?

It will be interesting to see when people start modding the 335. That's one of the beauties of turbo engines! I must admit I would be a bit leery of chipping a BMW--at least if the electrical issues I keep hearing about are true, and especially in a 1st year model which typically get new mappings in subsequent years (which can over-ride the mods)

pg48477

That's dependent on state. In CA your trade-in does not count for squat on taxes. Trade in a 40k car for a 40k car and you're still down 4k on taxes.

I was not aware of that, I live in NY and we only pay tax on the difference of the selling price and trade in. You might want to elect a new governor next time around, this is rip-off.

I've owned a couple BMWs now. There's a pervasive myth they don't lose much value. Not from what I see. BMWs lose insane amounts of value quickly. After year 3, like everything else, the slide slows.

I’m telling you how it is in NY, CA may be different. Still don’t get where you getting this from, do you have the data to support your argument , or is it coming from personal experience?

Babble that's just ignorant. I've proven you wrong already... you're talking but not making any sense. You're using terms like "always" and yet you don't seem to understand them. My last lease, I saved thousands leasing. Expressly because the car took a huge hit on depreciation and the tax savings.

I guess you did not read my post or decided to ignore it. Your $2000, so called savings came form $4000 tax, which would not be the case here in NY. How should I know that you getting ripped-off on taxes in CA?
I’m telling you again depreciation is generally in line with residual for BMW. I find it strange that you are so good in negotiating buying price for a new vehicle, but can not negotiate good selling price for vehicle you are selling.

rockylee

While I agree with you on the leasing vs. cash deal one thing you left out was the accumulated interest one would pay through out the loan.

Rocky

blueguydotcom

I was working off a lease v. cash model. You are correct, if you take out a loan the numbers change even more.

rockylee

okay, I do respect your negotiating tactics on cars.

Rocky

habitat1

"dealers make less money if you pay cash for a car. It's actually a better deal for them to sell the car lower and get you on their financing. The bank pays them back instantly and they get a cut of the finance rate....Actually had a dealership tell me straight up if I financed through them and then paid off the loan instantly they'd sell me the car at a lower price."

Replay what you are saying. If the dealer makes MORE money if a buyer finances a car, that must mean the buyer is paying so much in financing costs as to allow the fiancing company to give a kickback to the dealer. And I agree, that may be the case. But when my cost of funds is under 4% after tax, I sure as hell am not going to pay 8%+ on a car loan or a lease money factor that translates to that kind of interest rate.

I haven't tried the idea of financing a car so the dealer gets his cut up front and then paying the loan off immediately thereafter. But I suspect the financing company would get wise to this tactic pretty quickly and put the kabosh on it. Or have a substantial pre-payment penalty / loan fee to the buyer to cover the kickback.

It's pretty simple, really. There is only one source of revenue in this equation - you the buyer. How many businesses do you want to support with your revenues? I don't even deal with sales people any more and, surprise, always get a better deal directly from the sale manager by cutting out that middle person.

Again, I think we agree there are particular circumstances in which you can game the system to your advantage. I wouldn't mind sticking it to a finance company if it didn't cost me anything and the dealer gave me a piece of their kickback. But the payoff needs to be good enough or the free cocktails strong enough for me to spend a couple of hours with finance guy that probably struggled through high school math.

esfoad

Be careful when dealing with the Sales Manager. My brother-in-law was a car salesman and says that the customer could almost always get a better deal from a salesman rather than the Manager because the salesman is usually hungrier for the sale. Remember, always be careful that you are getting treated the way you expect to be.

cdnpinhead

The dealer assumes (correctly) that a huge percentage of the people he finances will run the contract to completion or trade the car (& the note) in, upside down. So does the bank or finance organization that pays him to use them.

Unlike you, I have financed cars at the dealer, only to pay off the note a few months later. He wins, I win & the (stinkin') bank loses. Boo hoo. I always ask if (& read the fine print to verify) there's any pre-payment penalty. Anyone remember the rule of 78?

I paid straight cash for the car I drive now, but got a better deal on my wife's (newer) vehicle by financing it (for a short time) through the dealer's bank.

ontop

Anyone remember the rule of 78

Wow - if you need to finance a car thru a lender that's precomputing (front loading) interest (probably illegal now) then you probably are in deep ship financially.

And BTW, banks RARELY lose. They work with the golden rule. He that has the gold rules. As it should be....

blueguydotcom

Almost every car dealership adds points to a loan that's not through a manufacturer. AFAIK it's standard practice.

pearl

re the "I don't know any BMW owners who think their cars are reliable" - Baloney - you ought to get out more. Yours truly has a 97 E39 that has over 152k on the clock. It has had routine maintenance, plus some power steering hoses replaced, a fan belt tensioner, and a manual transmission seal replaced. Yes, I expect some things may "go up" on this 10+ year old baby now (clutch is a little dicey but not yet ready to chuck); however, mine is NOT the only such story. Plenty of BMW owners will tell you that theirs is the MOST reliable car they have ever owned. And in any case, tell us about your Lexus with no problems that drives like a pig, and BMW owners will tell you about driving.

blueguydotcom

I know 10 people with BMWs - presently. sure that's not a scientific study but it's a pretty good representation of folks with 3 series to 7 series cars. Given my experience with 2 BMWs and that of every person I know personally, I feel extremely safe saying BMW are not well made. That won't stop me from getting BMWs...it will simply ensure I only lease them.

And in any case, tell us about your Lexus with no problems that drives like a pig, and BMW owners will tell you about driving.

I have a 2006 e90 330i right now. The brakes grind. The AC stops working. The comfort access works intermittenly.

My 03 330i had a laundry list of problems and some BMW could never fix. Don't patronize me like I'm some kid off the street who has never been around a BMW.

I know exactly one guy who swears by one of his BMWs - an e30 352. His e39 540 on the otherhand has cost him thousands upon thousands for tranny, electrical and brake work.

rockylee

habitat, agree with your post pal. I've had salesmen, refuse to help me out with "after sale work" because I wanted to go directly to the salesmanger. What I mean by "after sale work", is going over the cars features. Thankfully, I'm a self study and know how most of the stuff works anyways from reading "literature" about them in magazines and other sources.

In my experience going to the salesmanger has saved me hours of time that I could be out spending with my new ride, instead of watching the salesmen ice me with the back n' forth tatic.

Rocky

rockylee

The Volkswagon Passat. All the reviews I've read remarked at how Rock-Solid they are. I like the interior and exterior. It's ashame the "W" engine went away. Didn't they have some very severe customer service issues ? Would of liked to seen a Turbocharged "W" engine version.

The new car though has decent performance. Wish ya could get a stick and a bit more power in a high performance version. Perhaps in the near future ? Didn't this car lack pwr seats or something which was a major gripe ?
(off my memory)

Rocky

louiswei

an entry lux performance sedan.

I know a loaded Passat can well be as nicely equipped as any cars that we discuss here but it just doesn't belong in this group because:

1. VW is not a lux brand
2. A little lacking on the performance side

If we are to add Passat into the discussion we might as well add the followings too:

Honda Accord V6 Manual
Subura Legacy

kdshapiro

And then you might as well add in the TSX, althought that is a little lacking on the "P" side as well.

rockylee

I disagree with you on this one pal. "What else is new" :P J/K

You honestly don't look at VW as a entry lux-brand like lets say a Acura ? :surprise:

I will be honest and say I'm a lil' bit surprised some would say that. :surprise: I guess when you see the wood interiors and the 3.6 putting out 280 hp. with zero to sixty in 5.9 secs. I guess I'd ask the question of what is a entry performance lux-sedan ? :confuse: I guess I look at VW, as a more upscale car than a Accord or Subaru. The Spec B one could argue belongs couldn't they ??? So this isn't a luxury performance car either ? :surprise:

http://www.autotrader.com/fyc/vdp.jsp?car_id=208060148&dealer_id=593623&car_year- =2005&search_type=both&num_records=25&make=VOLKS&transmission=&model=PHAETON&dis- tance=0&make2=&address=79029&advanced=&certified=&max_mileage=&max_price=&bkms=1- 160567820950&sort_type=priceDESC&min_price=&body_code=0&end_year=2007&color=&sta- rt_year=1981&drive=&engine=&fuel=&doors=&style_flag=1&cardist=864

Rocky

mz6greyghost

And then you might as well add in the TSX, althought that is a little lacking on the "P" side as well.

A "little"? That's an understatement...

rockylee

Lets not push it ! :P

LOL

Rocky