KrispyK

What do you guys think of leasing the new E55? Has anyone here leased one of the W210 E55's? What sort of residuals, etc., do they give out on that car? Thanks for any advice folks.

Eurosport

unless you're a business owner I wouldn't recommend you lease any vehicle

amg55

While leasing offers no consistent advantage over buying, as each car and each buyer's circumstances are unique, there are many aspects of leasing which can sum together to provide an overall advantage over buying.

Among them:

Sales tax paid on a lease is much lower-
Cars with high residuals or generous subsidies to boost residuals (making overall payments smaller) can be cheaper to lease-
Leasing is often cheaper for those who drive less than 12000 miles per year AND who change cars every 2-3 years-
The lack of required hassle selling or haggling trade value for an owned vehicle is a plus for leasing-

It is not defensible to flatly state that buying or leasing is "better". But it is relatively easy to determine which is better for any one individual given his or her particular circumstances.

Dr Chill

I agree with Eurosport in that there is a much greater benefit for businesses leasing vehicles than for owning because of the limited depreciation allowance (except for large SUV's/Trucks) that the IRS gives. A lease on a business results in an 30+% effective reduction in the actual cost of the lease payment to the lessee.

Leases for individuals are cost effective if there are factory incentives being offered, like those on the C class. The other benefits of leasing such as never having to sell the car and a new car every three years are balanced by the disadvantages of getting hammered if you try to get out of a lease early and by the fact that you never have the same attachment to a leased car as to one that is owned.

My opinion-if you plan on keeping the car less than 2 1/2 years of more than 4 years, then buy it. If 3 years is realistic or a business owner, then lease it. Regardless, it's not about how you pay for it, it's about how you drive it

hinhin7

Hi guys, I don't know that much about lease. I thought that lease can never be better than buying the car right away (cash).

Dr. Chill: Can you elaborate more on the advantages for the business owner in leasing a vehicle?
and also what is factory incentives?

Sorry guys for the questions, I know almost nothing about leasing. :-)

Thanks

HarvE55

[QUOTE]Originally posted by amg55
[B]While leasing offers no consistent advantage over buying, as each car and each buyer's circumstances are unique, there are many aspects of leasing which can sum together to provide an overall advantage over buying.

Among them:

Sales tax paid on a lease is much lower-

AMG55,

In your part of the country, sales tax may be lower, in Texas, however you pay the sales tax on the entire cost, not just the depreciable amount. Further, in Houston/Harris County, if the vehicle is for business purposes ALL taxing districts hit you for property tax assessments. Lastly, IF you decide to buy at the end of your lease, you get the pleasure of paying sales tax again on the purchase. The amount that can be taken for business seems to be better on a lease, however, you need to look at EVERYTHING, including residual, money factor, etc. I have personal knowledge of this since I just went through it with my 540i which I leased and just purchased after the lease expired. I did work a deal with one of the BMW dealers to return it at lease end and buy it back as Certified. I got the dealer to do it at the certification cost only without any other charges. This was much cheaper than buying a $2800 MSRP extended warranty.

Another option is ballon payment finacing, which works like a lease with a purchase option. The ballon is typically based on the residual that would be used for a lease and you have option at the end of lease as to whether you want to keep it or give it back.

Given that I am waiting for my 2004 E55, I am happy I got an extended warranty.

JAYCL600

Unfortunately you cant just "give back" a baloon car

HarvE55

If you take a ballon or as BMW called it "Owners Choice", the loan was treated like a lease and had a set payoff price (i.e. Residual)and a nominal disposition fee. I don't know if it still available, but back when I leased my BMW in 1999 that was an option. If thats still the case then, YES, you can return the car. Someone told me that it now require purchase of another BMW. Again, this may not be available in all states and MB may not have a similar program.

Dr Chill

Hinhin7,

Factory incentives are given to high volume cars or vehicles that are in abundant supply and are not selling well. Frequently there are rebates available if the car is purchased. If leased, the factory gives special lease rates that are better than usual and reflect a better money factor.

Regarding a business lease, if you own a business and collect a salary from the business equal to gross income minus expenses, you then pay income tax somewhere around 30% of that income. If the vehicle is leased outside of the business then the lease payments are subtracted from your after tax dollars. If the business leases the car, then it is considered a business expense and is deducted from pre-tax income. This would mean that you effectively pay 30% less for the lease. At the end of the year, the business lease tax deduction is adjusted so that if your lease is for an amount higher that a certain specified amount by the IRS, you will have to give a little back, but not much. If the car is owned by the business, and if the vehicle is not a large truck or SUV, then only a small amount can be deducted. This is the same for a personal car that is used to take a deprecation for business use. The best deal by far is to be a business owner and purchase a large SUV (including BMW,MB,Range Rover). There's a loophole in the tax laws that allow $24,000 to be taken as a tax deduction for the 1st year and 20% of the remaining value per year for the following 5 years. Pres. Bush has even advocated increasing the dedution to the full amount of the vehicle in the first year. This equates to getting a 30% rebate on the vehicle in 6 years (or 1 year if GWB gets his way). This tax deduction was originally intended for farmers to help them buy new equipment, but is being abused by professionals all over. I actually considered a new Range Rover rather than a W211 E55, but then realized that I would only be happy with a SUV for about a year before I got tired of it.

amg55

While accountants vary in the degree of breadth and freedom they use to interpret the tax code (witness the spate of recent corporate accounting scandals), our corporate accountant has told us in the past that the primary limitation in leasing cars through our business is that:
the percentage of the cost of the vehicle which you may write off is that percentage of the miles you drive the car for business purposes.

The catch is that the miles one drives to commute to and from the work place does NOT apply any longer. "Work mileage", according to this particular accountant, is any mileage you drive between between the commute to and from the office, which is work related.

So If you are a delivery person, once you get to the office, all delivery miles before the comute home are deductable.
If you're a surgeon, and you work in the same building all day, you can't deduct any of the vehicle's expense through the business.

I'm quite sure others interpret the laws differently, but the last 2 times this issue has been raised in our professional corporation, the answer above was the reason given as to why leasing cars through our business would provide no advantage.

Has anyone else been given a different professional opinion?

Dr Chill

AMG55 this is true however most people use their vehicle once they arrive at work to do something work related if not everyday then at least occasionally. Using your surgeon example, if the surgeon goes from the office to the hospital or a second hospital, then the car qualifies for business use deduction.

amg55

Correct, but it's the PERCENTAGE of "work miles" that determines the deduction.
If you commute 15 miles each way to and from work, and 5 miles during the work day, you may deduct 14% of the car's cost (5/35).
That's the interpretation we've been given.

hinhin7

woowwwwwwwwwwww...thanks guys...
thats a lot of information...(although i am still confused on how that taz things work)....
and I am still at college...and still very far from having my own business here..... heheheh :-)

How do you guys know about this? Is there any information like this on the net?
(it interests me to have a conversation on this topic, hope can talk to you guys more....)

Thanks.....

Solihin