The only person I know who currently leases cars (used to buy outright for the past 30 years) has a liquid net worth of $14 million He's in an SL 55 AMG right now.

Boy it would be amazing to be him. He apparently has little desire for supercars, he's never owned one.

Before the SL 55 AMG, he bought a bmw 740 iL outright. Before that, he had a mercedes S 500.

I don't know how he has the restraint to not buy the absolute top of the line versions of these vehicles when he has so much cash.


His wife had a mazda miata --> lexus SC 430 --> and now she drives an escalade (these are/were purchased outright)

I know people with far less who are splurging on the SL 65 AMGs, the lamborghinis, etc. go figure haha.

 

Just because you don't believe in leasing doesn't mean that someone who does is not "financially savvy".

I know several people with 7 and 8 digit net worths that lease their vehicles. Guess they're not "financially savvy" enough because they lease. Purchasing a significantly depreciating asset isn't the smartest investment either. There are very few cars in the world that could be considered a true investment that will actually return money in the long run.

 

it doesn't "basically mean" that at all. it can mean several things. i'd venture that a TON of those leased BMWs are leased by business persons and they don't want their company's cash tied up in down payments plus payments on a loan for the entire cost of the vehicle. instead there's little money down and they're only paying for the time they have it, and perhaps for their image they want to be driving a relatively new vehicle most of the time, so they lease and get a new one every 2-3 years.

while some people may lease because they couldn't afford to buy the car, that's not 'frankly' why leasing exists.

that just doesn't make any sense - i know bmw's record isn't stellar, but if bmw's fell apart after 3 years it would trash their reputation. i know tons of people who have used bmw's and love them and have few problems.

while this approach is likely to be the least out of pocket $, there's no guarantee, and you should see the bill we got for the 90k regular service on an RX300 we had. plus, MANY, MANY people simply don't want to drive 9 or 10 year old cars - i know i don't! there's more to life than just scrimping every dollar. PLUS, if someone buys an LS to own 10 years to "save money" that really makes no sense anyway, why not just buy a stripped Camry instead? that would be even more "financially savvy" wouldn't it? (death by boredom though)

happy for you, but buying a new LS is not a financially savvy decision, rofl.

 

haha, just saw this. i rest my case.

 

ok, back to the thread topic...

if i had to choose between 328i sedan and IS350 i think i'd get the IS350. i think the 3 series interior is ugly, the sedan exterior is better with the refresh but still not as nice as the IS. the 3 sedan has better rear seat room but both cars are small so screw the back seat passengers and get the fast and smooth IS350.

however, getting a 328i coupe with sport package and stick shift would probably sway me over the IS350.

 

There is a big difference between being financially savvy and being cheap.

Owning a LS 460 is not being cheap, but it is financially savvy with respect to the alternative cars at the same level.

I enjoy my life, but I also didn't become well off by being dumb with my money. I could very easily by a new 335i with cash tomorrow if I wanted, but that would not be very smart.

While I would agree that there are reasons to lease, like being self-employed or a business car - for the typical consumer it is a far worse decision than to buy a good car and keep it for 10 yrs and drive the heck out of it.

You can consult any number of financial planners who will tell you the same thing, it is not like I am making these things up.

 

This is not religion or something where there is a belief system or something - this is simple math - leasing is more expensive over the long term than owning a car and driving it 10 yrs or so.

The argument most of you seem to have is that rich people lease so it must be a smart decision financially. Actually, it is the opposite. For them, it is probably just an indulgence, like an expensive hobby, like polo or something. But, I am sure even these people would admit that it is not a financially savvy move, rather an indulgence.

Leasing was pioneered by BMW - as were programs like certified pre-owned. This is done to make their cars more affordable/accessible to people who could not afford them and attempt to maintain the price of used vehicles (most of which are coming off a lease). Funny how these things work together to help increase their profits.

They are smart, I will give them credit - they understand the US consumer very well.

 

Never going to happen, there's an argument in here now that people seem to be taking personally. (being about their financial intellect with respect to owning/leasing)

 

I hope people are not taking things personally - that is not my intent.

I really never felt like I was saying anything new - it has been explained in numerous financial planning books how leasing is not a good deal financially. This is not some groundbreaking stuff here.

As a general rule - paying into anything where you are not gaining any equity is not a good idea financially.

I suppose I just don't like the way BMW operates and runs their business. They encourage people to get into leases, which is not in the consumers best interest financially. Kind of like mortgage brokers who got people into ARM mortgages they couldn't really afford - just a shady business model.

 

amdave, yes in basically 100% of situations where you compare leasing 3 cars for 3.3 years each or 5 cars for 2 years each to just owning 1 car for 10 years straight, you will always come out ahead financially having the same car for 10 years straight.

Where leasing starts to make financial sense is when you already know you're not going to keep a car for more than 2-3, maybe 4 years, anyway. In those cases leasing will often times SAVE you money vs buying a new car every 2, 3 or 4 years and selling your old one.

But even that depends on the brand you're considering, their residual, money factor, and real world depreciation rate. I, for example, came out WAY ahead on my 335i by leasing it. I'm talking if I had bought this car and decided to sell it out, my total cost of ownership after 2 years would be a full 7-8 grand more expensive than it has been due to me leasing.

So no, leasing isn't an indulgence for wealthy people, owning a new car every 2-4 years is an indulgence... structuring that ownership in the form of a lease is often the most intelligent way to go about it.

 

Anyways...

Unfortunately my friend still has not decided, but here are my thoughts on some of the OT stuff in this thread:

1.) After doing my own research on various Lexus/BMW/MB boards before my car purchase, IMHO it's easy to see that the BMW/MB guys are far more "brand loyal" and biased than the Lexus guys. For example, search "ISF" on the BMW boards, then search "M3" on the Lexus boards.

2.) My friend is leasing, and that's what works best for him at the moment. Lease vs. purchase depends on the situation. One is not better than the other.

Now back on topic... in no way am I putting down the IS350 by comparing it to the 328i as opposed to the 335i. We all know that the IS350s direct competitor is the 335i. However, in this situation, the 328i with options has shot up its pricing to equal the IS350; Thus, my friend is now making a choice between those two. I'm just looking out for him to make sure he is aware of everything that contributes to the pricing premium for the BMW.

He is now also looking at the IS250 as well, since he might be able to save more money and get even more options he wants in the car. While he is drawn to the brand of BMW, in doing so, he is also making more compromises than he'd like for features and options.

I think the main points I got (In favor of the BMW) are free maintenance, driving experience, and obviously subjective opinions on styling. He is going to test drive the cars soon, so I'll keep you guys posted. Please continue to chime in with your thoughts! Thanks.

 

Thanks for the update. Somewhere buried in here you will find some content from people with actual experiences with the 2 cars in question.

 

Fair enough - some are willing to take the financial hit to have a new ride every couple yrs.

However, I have issue using the words "ownership" and "leasing" in the same sentence.

When you lease, you own nothing. You have no equity in the car. In fact, you can't drive it as many miles as you want, you have to worry about the condition of the car both inside and out etc. You have restrictions. It really is not your car.

You no more "own" a leased car as you would own an apartment you rent.

Back to the topic at hand - has your friend considered customer service after the sale? My sister has a BMW 3 series (not leased, btw) and she gets horrible customer service. Lexus is far superior in this regard, and I think most will agree.

 

Exactly, you miss the point that some high-income professionals do exactly that, pay the price with cars every 3 years. Especially for the self-employed ones that can write-off a very significant amount of the lease (so the government subsidizes their car essentially, just like home owners get tax advantages, again the government subsidizes them too).

Driving premium cars is expensive regardless if they are leased or owned, especially if the average person only keeps them 3-5 years.

But that's not the topic that OP presented, is it.

 

I was going to suggest the IS250 as a nice cost savings option since you mentioned he's not an enthusiast, but it wasn't an option you originally gave for what he was looking at ... but since he now is ...

I would say get the 250 with every option he might want, it will be nicer than the BMW as a car to drive around (though not as a 'drivers car').

For 'fun' I would work out how much (ballpark) service w. Lexus will cost him over the lenght of time in the lease and see if that makes a difference to him; don't forget to discount future expenditures and add inflation in those clacs