Need advise on ending lease/purchase

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glaucman

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#1
2002 540iA Sport/43500 miles/3yr-45000mile lease ends 24 December 2004.

I would like to purchase this car and need advice on the best method.

(a)pay the residual, $32,000+tax, and only maintain the remaining BMW warranty of 4yr/48000mi.

(b)pay the residual and purchase a warranty for a 3rd party vendor like WarrantyDirect.

(c)turn in the car to the dealer, have it become a Certified Preowned BMW and then by it back. I am told I would pay for whatever the necesary repairs would be and I would have the BMW backed CPO warranty which is 3yr/100,000mi.

Thanks in advance.
 
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Bryan330i

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Hello [wave]


The first thing I would say is don't be in a hurry to pay the residual price unless it is outstanding compared to market value. A dealer will never pay what you as a consumer would pay for the car and the leasing company know this.

If you are with BMW FS I would ask for the extended warranty thrown in at the residual price and I bet you get it. You may also want to see what they can do on a good financing rate.

Just ask for more because you can always pay the full price if they say no.
 
Average Jae

Average Jae

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think edmunds covered this. sorry no time to go look it up myself, but they mentioned that you can deal w/ the leasing company, since they are the ones that "bought" the car for you to lease. and because of the hassle and cost of picking up the car, and uncertainty of the car selling for the going price at an auction, they'd rather settle with you, for less money than the residual. that's just one of the points.

also before buying the warranty, remember there are two options, ext warranty and ext maintenance. it seems you do fair bit of driving, so ext maint may serve you better. since it covers the bmw recommended maint, including brake replacement, which you'd need in a couple years. (usually..) as for warranty, that's a personal decision, since it does cost a bit more iirc. hope things work out, better get the deal figured out soon eh?
 
selavia

selavia

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trade in value for your car is 32,400 in zip 21212. If you like the car and would consider buying another 2002 540iA, then this would be a steal...plus you would know how the car was treated. But I'd try and talk them into a better warranty; if you tell them that if they give you a better warranty you'll definitely pay the 32k, I think most likely they'll go for it.

I have a buddy who deals with MBs that come off of leases and he told me that for the company, the best thing is for the leasee to purchase the vehicle. He said added costs to get the car ready for sale + opportunity costs + risk of damaging vehicle make them eager when a customer is thinking of buying the car.

Hope this helps.

Sean
 
Montana

Montana

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Speaking of taxes, I hate them. If I'm not mistaken, TN is one of the states that does not have a State income tax. The IRS just passed rules for those states allowing sales taxes paid to be claimed as deductions against your Fed return. This is to "level the playing field" with residents of income tax states who get to claim those taxes as deductions. Assuming you are paying sales tax on that buyout you may be able to deduct too! I'd call the IRS for guidance. I'm sure they stayed up many nights trying to exclude as much as they can.
 
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glaucman

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#7
Thanks all for their excellent replies...

Bryan330i said:
Hello [wave]


A dealer will never pay what you as a consumer would pay for the car and the leasing company know this.

If you are with BMW FS I would ask for the extended warranty thrown in at the residual price and I bet you get it.

Just ask for more because you can always pay the full price if they say no.
Click to expand...
I apologize for my ignorance regarding auto leasing as this was my first leased vehicle. But if I understand you correctly when I turn the 540iA in to the dealer they will then buy it from BMW FS for an_amount_less_than my residual, make the required repairs for which I will be responsible, and then sell the auto back to me has a CPO BMW. I will not be financing the buy back but will be paying cash.

Therefore the dealer will profit the difference between my residual minus their purchase price from BMW FS. Also the dealer never stated they would charge me for the CPO warranty per se but rather I would pay the stated residual amount plus any required repairs plus tax. But I was not aware the dealer would pay less than the residual for the car.

As an immediate potiential buyer of the car how much barganing power do I have here?
 
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glaucman

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done deal

Well here was my deal on the aforementioned 2002 540iA. I assumed ownership yesterday.

The dealer inspected the vehicle and found no issues or concerns. He then stated I could purchase the car for the residual + $350 diposition fee + $1300.00 CPO fee. I countered with the residual fee - $1300 CPO and reminded him that the disposition fee at the end of the lease was for the cost of reselling the vehicle which was not an issue since I was a ready buyer. He took it and I got the car for $1300 less than the residual fee. This amount is well below the current Kelly BB value and I have the CPO warranty. I feel this was a win-win deal and am comfortable with it.

Thanks for the advise from all.
 
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Bryan330i

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glaucman said:
Well here was my deal on the aforementioned 2002 540iA. I assumed ownership yesterday.

The dealer inspected the vehicle and found no issues or concerns. He then stated I could purchase the car for the residual + $350 diposition fee + $1300.00 CPO fee. I countered with the residual fee - $1300 CPO and reminded him that the disposition fee at the end of the lease was for the cost of reselling the vehicle which was not an issue since I was a ready buyer. He took it and I got the car for $1300 less than the residual fee. This amount is well below the current Kelly BB value and I have the CPO warranty. I feel this was a win-win deal and am comfortable with it.

Thanks for the advise from all.
Click to expand...

That sounds like a good deal! I think they always try for more because I would guess that a number of people just pay the money. Glad they gave you some $$$$ off.
 
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