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Comments
1. It is not fare to compare 2 year + 2 year lease to a 4 year ownership.
2. You will not be able to trade your 4-year-old BMW in for anything close to KBB price. Selling privately is a big hassle and risk
3. $38K stuck in a car. You do not need to be an investment visionary to get at least %5 per year.
These alone will even your comparison results.
As most pointy headed financial planners will tell their clients:
If you got the cash then buy and keep a car as long as it remains a low maintenance affair.
Ofcourse if you are passionate about cars then irrationality dictates that you buy/lease a car every two to three years.
In my case rationality rules despite my great passion for cars. I remain a loyal owner of a 99BMW323 and my wife still owns our 83 MB300D family heirloom.
Okay, now here is the deal. I need a new car. I need a car that is cool, sporty, has four doors, and offers prestige, or some form of prestige. I am not trying to be arrogant here, the profession is what it is. I have looked at and test drove the following cars: Acura TL, RL. Infiniti M35 and M45, Lexus GS30, GS400, Audi A6, BMW 530i. Well, I have narrowed the choice to two: Believe it or not, I am either going with an Acura TL or a BMW 530i. Acura TL would be: Automatic, Navigation and all the standard goods that come with the Acura TL. BMW 530i would be: Automatic, Sport Package, Premium Package, Navigation, and all the standard goods that come with the BMW. The BMW is well a BMW and it's drive, handling and prestige are incredible. The Acura TL is a sporty sedan, with cool looks, good handling, great handling for a FWD, and offers some prestige, and great value.
As for the other choices. I did not like the RL, it looks too much like an Accord, and for a car over $40,000 that should not be the case. Plus, the inside room is about the size of the TL. The AWD, however, is awesome. But, the RL is out. In regards to the Infinit M35/45, Lexu GS300/400, and Audi A6, all are great cars. My favorite two out of the group are the Infiniti M35/M45 and the Audi A6. However, I am passing on all these cars, because if I spend that much money, I will spend the extra $3,000 to $10,000 for the 530i BMW, which brings me back to my two choices and dilemma; the 530i for $56,000 out the door, or the TL for $35,000 out the door. Both prices include all fees and a California Sales Tax of 7.97%.
So, what do you guys think? $56, 000 out the door for 2006 530i, auto, sport package, premium package, navigation. $35,000 out the door for a 2006 TL with Navigation. It is a $20,500 initial difference; quite a bit of change. In say three years time, what do you think the actual cost difference would be? I have ran some numbers, I am not sure if my logic is correct, maybe someone can check. Remember, I give political advice, others do the finances.
BMW 530i Price $56,000 out the door
Down 38,000
Finance 18,000
Loan/60 months/4.5% 335 payment
Total payments paid at 36 months 12080
After 36 months owed 7688
Sell Price (Kbb used as reference for future value 31800 (Assume 36,000 to 41,000 miles on car, 36 months old)
owed 7688
Maintenance Costs (From Edmunds.com) 0
BMW has Free Maintenance for 50,000/48months)
Equity 24,112 (Sell price $31800-$7688 owed)
Sub Total Owenship Costs
Down Payment 38,000
Total Payments at 36 months 12080
sub total at 36 months 50080 (Down Payment +Total Payments at 36 months)
Equity after selling at 36 months 24112
TOTAL COSTS OF BMW OVER 36 MONTHS $25968 (Sub Total at 36 months -Equity at 36 months)
________________________________________________________________________________- _______________________________________
Acura TL Price $35,000 Out the Door
Down 17,000
Finance 18,000
Loan/60 months/4.5% 335 payment
Total payments paid at 36 months 12080
After 36 months owed 7688
Sell Price( KBB used as reference for future value $23,000 (Assume 36,000 to 41,000 miles, car 36 months old)
owed 7688
Maintenance Costs (From Edmunds.com) 1700
Equity $13612 (Sell Price - Owed-Maintenance Costs for 36 months)
Sub Total Ownership Costs
Down Payment $17000
Total Payments for 36 months 12080
Sub Total at 36 months 29080
Equity after selling at 36 months 13612 (Sell Price 23,000 -$7688 owed - $1700 Maintenance Costs)
TOTAL COSTS OF TL OVER 36 MONTHS $15468 (Sub Total at 36 months - Equity at 36 months.
WHEW! I hope I have done this correctly. So, after three years at these rates and assumptions (and they are conservative), the 2006 BMW 530i will have cost $10,500 more than the 2006 Acura TL at 36 months, even though it sold for $20,500 more. Well, if this is the case, I would spring for the BMW 530i for the same reasons I listed above as to why I would spring for the BMW over the other great cars I test drove.
Does any of this make sense? I welcome all opinions. Oh, by the way, I DO NOT WANT TO LEASE. I do not feel comfortable with a Lease, and in reality it is pretty much a wash anyway. Again, all opinions welcome. Thank you!
You could get the TL and then a used Miata and still come out ahead in cash. Then you have two fun cars.
Now, however, therefore, notwithstanding, if you reverse the words and leave the sentences they were in otherwise intact, I would agree completely.
"If you are passionate about cars then rationality dictates that you buy/lease a car every two to three years." Now that, it seems to me is a rational statement.
We all have our own personal ways to rationalize our actions. . .since when is passion necessarily irrational or, as I interpret your sentiments, undesirable?
I find it difficult to reconcile great passion for cars with the behavior you suggest.
I do however support your right to buy and hold (and your right to claim, even, that you are simultaneously passionate and rational.) I have nothing against heirlooms, indeed the car may have great memories or be somehow symbolic of milestones in one's life; but, from MY perspective (as correct as yours is to you), this does not exactly demonstrate passion for automotive technology, etc.
But, I could be wrong, just not uncertain. :shades:
The TL is a bargain for what you get, but it has a large turning circle and some torque steer due to to its front wheel drive. And it's an Acura. Not much prestige there.
With the BMW, the performance of the car more than lives up to the badge.
You will have no regrets spending the extra bucks. You get a great performer and all the prestige you can muster.
I too would become extremely nervous after 4-5 years wondering how much longer those ultra-sophisticated internal gizmos will hold up and even worse, having to come to grips with the major expense of repair and replacement parts.
Can't be cheap.
Leasing is definitely the "what me worry?" approach.
It goes against my grain to throw that kind of money at a depreciating asset.
To me owning means "headaches." I gladly lease a new vehicle every 3 years to avoid maintenance headaches and tying up a big chunk of cash.
Some of us enjoy driving a new vehicle every few years with the latest bells and whistles.
I leased my 545 for a rental charge of only 2.4% with a cash outlay of only around $1k.
If I decided to buy it instead, I would have put down at least $30-40k and borrowed the rest for 5.5%.
Then I would have to worry going into the car's 5th year about maintenance costs for all those sophisticated electronic gadgets that eventually will need to be repaired or replaced.
Can't be cheap.
And BMWFS greatly helps to make it so.
I am renting a car for 2.4%. All maintenance is included for the duration of the lease.
I don't "own" the car long enough for expensive maintenance costs to occur.
Hpowders, you must know by now that I am rarely completely serious. Just as I know that you are not completely head-over-heels in love with Mr. Bangle, despite what people say
For too many years, the 5 series looked like an elongated 3 series.
Now at least there is distinct style differentiation.
It would be nice to see Acura follow suit with the next generation RL to distinguish it more from the Accord.
-Paul
Don't you think there are pretty obvious similarities between the 5 and the new 3?
Nostalgic, they may be, but when I'm behind one, I can barely breathe.
We are in the age of flakorific styling. One gets going in this direction and, for the most part, they all jump on the bandwagon.
You do what's best for your financial or business situation. Either way, I wouldn't make myself crazy over doing either one. It's not that big of a difference in the end.
And if you can write your lease payment off on your taxes for a business expense, the lease will no doubt come out way ahead financially for most people.
:shades:
I thought they were looks of envy but it is possible they may be looks of pity! :sick:
I have to stay away from that rumcake!
I personally think the 5 and the E are kind of odd making it to your final cut. They just seem at opposite ends of the LPS spectrum. The E and the GS seem like closer competitors on the luxury end, while the 5 and the M seem to be at the performance end. The RL and the A6 kind of hang out in the middle. I suppose that styling may trump both concerns for many as well. Maybe that's how the E and 5 ended up together (or prestige).
Let us know more about your E as you drive it more, but also tell us how you picked it. I'm also curious as to your mention of the RL being reliable. This was obviously a factor since you noted it. But then you went ahead and chose a car that is not known for reliability (although any one car can be great or not in that regard).
When we were testing the many and various cars we were looking at to replace our 2003 Audis, we always walked away from the Mercedes saying "that was a really really nice car -- but pretty low on the driving dynamics scale."
We never walked away from the BMW feeling that way.
Walking away from the BMW we often remarked, "can't someone marry the performance of the BMW with the classic luxury of the Mercedes?"
Then the Mercedes rep told us that "4Matic" meant All wheel drive+automatic transmission. At BMW they told us you can shift for yourself or we can do it for you -- ultimately at the exact moment in time we placed the order for the new BMW, the Audi only offered an auto, ditto the Mercedes, but BMW allowed and encouraged the most dynamic performance of all the Germans.
Now, at age 54 (and my wife is 51), the other comment was "we're not OLD ENOUGH to go for the Mercedes." Of course that is tongue in cheek, but Mercedes seems to emphasize the driving experience less.
We thought the Mercedes was better suited to a Cadillac comparison or perhaps Lexus than it was going up against the 5 series. Unfortunately, at that exact moment in time when I was plunking down my commitment, no 530xi could be had -- so I went with the most dynamic and best value of the lot, the M35X -- and then, as you may know, Audi of America came in at the 11th hour with a deal on a new A6 that was "an offer I couldn't refuse."
Please share your perceptions and how you came to this apparently happy but difficult (for some of us) to follow decision. Thanks. :shades:
You certainly don't need to justify anything to anyone here, it is a matter of curiosity and seeing that this week feels like a lot of dead air, perhaps you have the time to expound.
I too have looked at the E350, but now live in an area with awd isn't as big a priority. Just thought the drive wasn't as exciting as our 325 was. The MB was a decent car, but the interior doesn't seem to have that certain luxury feel that MB's used to have years ago. Maybe it is the plastic... I dunno. Something about it just didn't give me the feeling that it was a solid car. But that is just how I felt about it. YMMV.
-Paul
Buying a car every two to three years is not rational. If you are passionate about cars then it becomes easy to rationalize purchasing or leasing a new car every two to three years. But that does not mean it is rational.
We all have our own personal ways to rationalize our actions. . .since when is passion necessarily irrational or, as I interpret your sentiments, undesirable?
In my opinion there is dualism between passion and rationality! In your opinion passion and rationality are intertwined especially in the case of cars. This is the source of our disagreement and the disagreements of philosophers in past millenniums when they discussed their chariot purchases.
Oops wrong forum. I better go back to my Plato forum.
Mark may be saying that if you are passionate about an automobile, getting it may also be the rational choice if you are otherwise going to have regrets (outweighing other practical/rational concerns).
As to classic Descartes dualism, I will add: I post, therefore I am. Many will attest that thinking (at least on my part) has nothing to do with it.
(the future's so bright...I gotta wear :shades: )
I hope you'll join in - it's all good fun here, honest!
The entire thread of most if not all of the musings here (that I read anyway) are opinions. That is why it is so entertaining and engaging to participate herein.
I was simply reversing two words "as if" that made it somehow MORE than opinion. I have no thoughts that such word play made either statement have the requisite verisimilitude for "truth."
"Gotta have it. . . gotta have it" is many LPS buyer's mantra I suspect. I would assume that is the part of growth that is above the needs for food, clothing and shelter and is perhaps part of the hierarchy of needs called "self-actualization."
A lot of us rationalize our LPS purchases for there are darn few practical reasons for lusting after and acquiring these vehicles.
As I said and/or meant of my opinion: I would use a word such as loyalty to describe the buy and hold behavior while I would use the word passionate more to describe "the seeking of the next" (aka getting a new one every couple or few years.)
I do not think much of what we discuss here is rational, perhaps it barely qualifies as logical.
I just found it personally entertaining to reverse the words from the original post, which, despite all this fuss I essentially understand and agree with.
BTW I love the phrase [somewhat modified for widespread dispersion] "I blog, therefore I am. . ." consider it disseminated on the WWW. :shades:
You'd certainly think that greater complexity should lead inevitably to higher repair costs, but my experience suggests otherwise.
The 2 least reliable cars I ever owned were a '78 VW Rabbit & an '80 Audi 5000. By today's standards, these were ridiculously simple machines. No power windows, seats or mirrors, no automatic transmissions, no high-end stereo systems. Needless to say, no ABS or VSC; those had not yet been invented. Hell, the Vee-Dub didn't even have A/C. (It was my last car without it.) But those cars came close to making me a pauper. I laugh about it now, but it wasn't funny at the time.
By contrast, my wife's '99 Lexus should be a nightmare. Power everything plus stuff like ABS, stability control & a CD changer that no one had even thought of back in 1980. It should be a maintenance nightmare, but my total repair costs since the warranty expired nearly 3 years ago wouldn't cover my cable bill for 4 months. (Nope, I don't have an "extended warranty". Don't believe in them.)
Does higher complexity = higher out-of-warranty repair costs? Not necessarily.
Well with the new LPS', we simply don't know the answer yet.
All this stuff is too new to predict what's ahead down the road.
iDrive, Bluetooth, complex computer chips.
I simply would rather not take a chance on owning one of these vehicles 5 years down the road out of warranty protection.
These vehicles are just too complex.
You will begin to feel like the invisible man.
Your examples illustrate that today's automobiles (in general) are all much more reliable now than they were then, both on a daily and long-term basis.
That said, some are better than others. Those who buy choose their vehicle because they hope it will still be delivering a satisfactory experience 5 or 10 years later. Those who lease want all the latest stuff & could care less whether it'll last beyond the lease term.
Different strokes. . .
Which approach will carry the day, in 3 or 5 years? I'm thinking Asian. Meanwhile, I'm seriously considering a BMW and (gasp) a Mercedes. But there's still that G35 coupe.
Passion? . . or reliability?
I think the future of European automobile sales in North America awaits the result of this and many similar decisions.
European handling in a vehicle that doesn't break.
There's a concept.
They made one, its called the M45 Sport.
Nope ! That would not be the case for 10 years of ownership. The M45 is more loaded with complex electronic gadgets than any car in its class. Ofcourse this makes the M45 a "golly gee whiz techno-wonder". But think of the long-term and the M45 looks less impressive.
The risk of replacing failed electronic systems in a M45 may end up being too costly to justify long term ownership.
I think the expensive complexity of all luxury cars(German and Japanese) will cause bigger future head-aches in terms of maintenance costs than what was experienced in the past.
Just think of the future expenses involved if things go wrong with accident avoidance systems, electronically controlled suspensions, sophisticated cruise control, drive-by-wire throttles and God-forbid if your car is equipped with a complex hybrid system.
Complexity is what is going to make long term ownership of luxury vehicles a migraine experience.
All long term car owners who hate spending big bucks on maintenance may have no alternative but to buy non-complex base Honda Accords or Toyota Camrys. Complex luxury will not be an option.
Does anybody remember when some cars came with the option of talking reminders/warnings? Those didn't go over too well either. The few people that did opt for it ended up just being annoyed by it.
My point is that these new-fangled devices may end up breaking right and left (highly unlikely these days) and the industry will return the the simple stuff. Only then it will be called "retro styled instrumentation" or "classic." (and will probably be on the high dollar cars)
I hear ya on the future hybrid headaches. I think the government should give tax breaks on maintenance and repair of hybrid vehicles. That would definitely sweeten the pot to get people to buy more of them and also lessen the blow when something breaks. Just a thought. Maybe I need to write my congressman so it can be ignored. :P
I would never dream of owning a MB or BMW for that long.
I would never dream of re-opening a German versus Japanese reliability debate in this forum. Did so a few hundred times before in various forums and now my New Year's Resolution is not to do it again in 2006.
My whole point was that maintenance costs for all luxruy autos(Japanese, German and American) will become a bigger issue in the future than they are today. So big that long-term owners may end up re-considering how long they really want to own a car.
Infiniti will have all the parts you will ever need 4-5 years down the road.
See you at the shop!
But other dealers in New York didn't charge tax on bank fee. Anyone know why?
Thanks,
http://www.jacquielawson.com/viewcard.asp?code=AJ35534993
At the end of it, with the tailfeathers hanging over the bubbly, all I could think of was a birdbath bidet!