Have a wrecked AMG (not my fault). Looking for an expert in DV cases/claims to assist with expert appraisal. Please email direct to "7jp@earthlink.net" to discuss qualifications and fee. Thank you.

 

Lesson #1: Buying something worth more than $30K? then LEASE LEASE LEASE.

 

Local car club had a tech session at local body shop.

Most of the lecture was about diminished value.

Perhaps ask your bodyshop?

 

There are only two reasons to lease, regardless of price.

• it's a business expense
• you can't afford it

 

Another "lease is bad" shrill.
You need to run a spreadsheet before you make comments like above. And even if you own, you can always depreciate the asset if it is a business expense; you do not have to lease.

The top reasons you would like to lease are:

1. No residual value risk : You can always buy the car out if it is worth more at the end.
2. No diminished value risk: Talk to the guy who plunks down $60K, only to get hit in the first month and then see the value of his car drop by at least $10K.
3. No major sales tax hit: In CA if you buy a $50K car you pay $4125 in sales tax. If you do not like the car, too bad you are already down $14K after the 20% drive off the lot depreciation.
4. How good are at you managing your investments: Can you get better than the 5-6% interest rates paid on cars? If YES, then do not tie up your money paying off a depreciating asset but invest the cash to earn higher returns.

Like any other purchase, you can always time your lease. Look for specials money factors or high residual leases, and like any other car negotiate the lowest price. In case of leases all the savings off the MSRP are amortized over the term of the lease. And most manufacturers allow you to extend your lease while you wait for your new car (up to 6 months with BMW), allowing you to time your lease also.

In the BMW world, the residuals are very high making leases very affordable. My $52K 525 leases for $383 pre tax after no money down (I did put multiple security deposits) on a 24 month lease via the European Delivery program. Throw in free maintenance, a $1000 cash rebate from BMW Car Club of America, and waiver of the disposition fee if you buy/lease within 6 months of turning your car over and your total cost of ownership goes down a lot; almost to the level of an Accord EX V6.

With cars it makes sense to either keep them for more than 6 years and drive them till they die or lease them for 3 years. In the years between 4-6 you spend quite a bit on repairs and maintenance, but the difference in depreciation between years 1-3 and 4-6 is not that much (about 10-15% of MSRP) making buying a new car every three years a lot more affordable than you think (for BMWs)

Go check out the Total Cost to Own on edmunds.com. For BMWs, the annual cost of ownership goes up from the 4th year on (based on 15K miles/year) once the warranty ends. If you lease the first year hit is also less. So you might be better off leasing a new car every three years than buying and keeping one for 5-6 years!

It does not hurt to do the math. You will be surprised at what you learn.
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I browzed the MB Finance lease numbers put up by Tarry (leasecompare). The residuals are so low that it does not make any sense to get a new MB. The residuals for 24 months are often comparable to the 36 month residuals for BMWs!! I would only lease a used MB with an extended warranty; it sucks to own a car which not only costs 2x of a Chrysler but also depreciates like one!