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      10-09-2012, 07:38 PM   #1
BMWrules7
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The truth behind the x1

The truth behind the x1:

It is worth considering buying than leasing this brilliant and amazing vehicle.

Why? These puppies will hold their value and 24 to 36 months from now, the used market will be chomping at the bit to get ahold of these beauties.

You can buy an x1 now optioned for say $700 per month and 30 months from now you could trade it in for the same vehicle with the same options for a new x1 (at the time) with a net payment of $550. I predict 36 to 40 months from now into a 2.4% finance deal, you will be ahead of the curve.

Leasing is still a great option, but financing is not a bad idea since you will be first to supply the used market with x1s.

Time will tell, but the demand for used x1s will be strong---undoubtedly!!!
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      10-09-2012, 08:19 PM   #2
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It's pretty amazing that BMW SUV's may be better than BMW cars. Better reviews and better resale especially the X5 and I expect the new X3 will retain its value as well. I agree the X1 should hold its value well, when they replace it the new one will be front wheel drive based so this is the last of its kind. The last X3 was a piece of crap compared to the X1 and I owned 2 X3's. it rides so much better, much nicer interior, better engine , fuel economy and better transmission. Every vehicle keeps getter bigger in BMW's line up and the X1 is a great size unless you have more than 2 kids. I would take an X1 over a 3 series sedan any day unless you really have to have a manual transmission.
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      10-10-2012, 12:45 AM   #3
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Quote:
Originally Posted by BMWrules7 View Post
The truth behind the x1:

It is worth considering buying than leasing this brilliant and amazing vehicle.

Why? These puppies will hold their value and 24 to 36 months from now, the used market will be chomping at the bit to get ahold of these beauties.

You can buy an x1 now optioned for say $700 per month and 30 months from now you could trade it in for the same vehicle with the same options for a new x1 (at the time) with a net payment of $550. I predict 36 to 40 months from now into a 2.4% finance deal, you will be ahead of the curve.

Leasing is still a great option, but financing is not a bad idea since you will be first to supply the used market with x1s.

Time will tell, but the demand for used x1s will be strong---undoubtedly!!!
In general, I strongly agree with you sentiments. The US used car market won't be saturated with X1's for a number of years and that will help the resale value of the X1. The fuel economy and utility of the vehicle will also help.

I decided to lease for a few different reasons even though I almost paid for the car in cash.
1) I live in California which has an 8.75% sales tax in my area. There is a chance I could move from the area and if I decide to sell my car then, I would take a major hit with the sales tax of ~$2800 basically going down the drain. (Basically this is $2000 more then the immediate hit on the bank fee of $725 on a lease)
2) If I do move to a colder weather area, I may want to swap the sDrive version for the xDrive version. In short, leasing gives me an easier chance to do a do over. And since this is my first BMW, the odds are higher that I may want to do that.
3) I am not a member right now of the BMW CCA. Well if I join the BMW CCA and BMW offers a general rebate or option discount on the X1 lets say in December of 2013 and a loyalty rebate as well and the CCA $500 rebate starts up sometime in the next year, I will be in great position to turn in my current X1 and get a slightly different one and probably have my monthly payments go down...

But I did the math and I very strongly believe buying makes the most sense on this vehicle for most people that will keep the car for 3+ years and are buying a fairly lightly equipped X1.

Buying also makes a heck of a lot of sense if you are paying less then around $33,000 before taxes and live in a state where the taxes are <= 5% to buy either with cash or go to your local bank/credit union for the best interest rate possible.

In any state without a traditional sales tax or a very minimal tax, I would be buying unless I was truly buying the car with lots of expensive options that tend to depreciate quickly.
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      10-10-2012, 12:52 AM   #4
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It's pretty amazing that BMW SUV's may be better than BMW cars. Better reviews and better resale especially the X5 and I expect the new X3 will retain its value as well. I agree the X1 should hold its value well, when they replace it the new one will be front wheel drive based so this is the last of its kind. The last X3 was a piece of crap compared to the X1 and I owned 2 X3's. it rides so much better, much nicer interior, better engine , fuel economy and better transmission. Every vehicle keeps getter bigger in BMW's line up and the X1 is a great size unless you have more than 2 kids. I would take an X1 over a 3 series sedan any day unless you really have to have a manual transmission.
I choose the X1 over a 328i series sedan since its a little narrower which in my situation actually means a lot, has much more utility when it comes to cargo space despite not being as long and arguably drives just as well in everyday driving while still being fun to drive.

Clearly the 328i has advantages such as being better when driven in an enthusiastic manner around turns, faster, nicer interior* and in all likelihood better real world fuel economy.

* I do like how the navigation is integrated on the X1 more then the 328i in terms of looks but the 328i nav position is a little better for safety and keeping your eyes on the road.
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      10-10-2012, 11:23 AM   #5
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I agree the X1 should hold its value well, when they replace it the new one will be front wheel drive based so this is the last of its kind.
I didnt realize the next gen X1 will be FWD based. Will this apply to x drive models as well? When will these FWD based models hit the US market?

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      10-10-2012, 12:54 PM   #6
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If you can't write off mileage as an expense, buy and hold (5+) almost always makes more sense- to me anyway. In general the more new car transactions you make the more you'll lose, BMW loves this- who wouldn't? Leasing forces the hand after 3 years, forces timing (maybe that new model isn't out yet), fees, too many miles (+10k per year!)you lose, too few miles you lose unless you buy it out where you'll probably still lose but instead you'll just get another new one and lose even more. Love cars, hate losing ie. leasing. Clearly many disagree but I think many of those who can't write anything off are probably driving more car than they can truly afford. In short the people who can least afford to lose more $ on auto expenses are doing just that by leasing because they can swing the ~450/mo payment with a few k down. That's ~20k to drive a ~40k car no more than 30k miles for 3 years? Sold to you, take 2 while you're at it.
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      10-10-2012, 04:27 PM   #7
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Quote:
Originally Posted by Monterra
If you can't write off mileage as an expense, buy and hold (5+) almost always makes more sense- to me anyway. In general the more new car transactions you make the more you'll lose, BMW loves this- who wouldn't? Leasing forces the hand after 3 years, forces timing (maybe that new model isn't out yet), fees, too many miles (+10k per year!)you lose, too few miles you lose unless you buy it out where you'll probably still lose but instead you'll just get another new one and lose even more. Love cars, hate losing ie. leasing. Clearly many disagree but I think many of those who can't write anything off are probably driving more car than they can truly afford. In short the people who can least afford to lose more $ on auto expenses are doing just that by leasing because they can swing the ~450/mo payment with a few k down. That's ~20k to drive a ~40k car no more than 30k miles for 3 years? Sold to you, take 2 while you're at it.
With all respect to you, here is where you are wrong. I hear it all the time from people that purchased their car instead of leasing that leasing is for those that can't afford to purchase.

Even in your example, you cite that a person that leases will only pay $20k for a $40k car within 36 months.

True, on its face.

But, following your example we have to assume that the leaseholder returns the car after 36 months and then travels with a bicycle for the rest of his life.

No, the leaseholder does not live in a vacuum.

Most leaseholders lease a new car after 36 months. So, to properly evaluate the situation, lets look at the 6 year window. In that time, your typical purchaser has one BMW over five years. If he or she is lucky, they may get 6 years out of it.

However, using your example, the leaseholder will repeatedly spend $20k every three years. So, in six years the amount the leaseholder pays is a little more than the purchaser. But, the leaseholder gets to drive two brand new cars, and the purchaser has his original car.

Now, turning to the third cycle, after 9 years, the leaseholder will have three brand new cars. The purchaser will probably buy a new car in five or six years.

Nonetheless, if you consider that we don't live in a vacuum and that most leaseholders will lease again and again, then the leaseholder spends more than the purchaser.

Plus, the leaseholder gets new technology and a new warranty and free maintenance to boot. The leaseholder does not have to worry if the car gets in an accident since he never has to sell the car.

To me, cars are not investments.

But, both leasing and buying make sense for different reasons.
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      10-10-2012, 08:08 PM   #8
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Quote:
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If you can't write off mileage as an expense, buy and hold (5+) almost always makes more sense- to me anyway. In general the more new car transactions you make the more you'll lose, BMW loves this- who wouldn't? Leasing forces the hand after 3 years, forces timing (maybe that new model isn't out yet), fees, too many miles (+10k per year!)you lose, too few miles you lose unless you buy it out where you'll probably still lose but instead you'll just get another new one and lose even more. Love cars, hate losing ie. leasing. Clearly many disagree but I think many of those who can't write anything off are probably driving more car than they can truly afford. In short the people who can least afford to lose more $ on auto expenses are doing just that by leasing because they can swing the ~450/mo payment with a few k down. That's ~20k to drive a ~40k car no more than 30k miles for 3 years? Sold to you, take 2 while you're at it.
Besides wanting to swap out cars earlier, most people lease a BMW since they do not trust the reliability history of BMW's enough. While I don't believe Edmunds numbers completely, if you look at their "true cost to own" data, sometimes its cheaper on a per year basis to just own a BMW for 3 years via a lease then it is to own it for 5 or 6 years. If you aren't going to search for an affordable independent garage after your warranty is up, a lease begins to make more sense.

Time will tell if I'm right but my honest guess is that I will end up driving my BMW sDrive X1 with Nav and satellite radio about 30k over the next 3 years and be able to sell it private party for 4k over the expected residual value of $20203 on my lease contract which is based upon 36k miles. So my anticipated out of pocket cost after fairly high taxes(8.75%) in CA will actually be around $12000-13000 and that includes the airfare and cheap hotels for a relatively short trip to Europe. The good thing about leasing 2013 models early in the season is that they will be worth a bit more 3 years from now then models that are leased later.

I simply buy the car from BMW financial services before the lease is up and sell it via private party within 10 days. There is no taxes that I have to pay in that situation in California based upon everything I have read.

Every sitution is a bit different and has to be evaluated on its own merit but in general X1 sDrives make a bit more sense to buy if you know you won't need AWD and xDrives make a bit more sense to lease. Why? xDrives can be more expensive to repair/maintain then RWD models.

I am a former finance major so I am very good with numbers and in truth you really have to become knowledgeable about your choices and the tax ramifications of the state you live in to decide whether or not a lease makes sense for you.

And if you can't get the _buy rate_ on a lease and no markup on the bank fee, I would tend to purchase the car in many more situations.

In general, BMW gets you with expensive sometimes tempting options more then they get you on the buy vs lease decision. But you only live once so you have to decide if those tempting options are worth it to you...
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      10-10-2012, 08:09 PM   #9
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Um ok don't really get your point. Cars are most certainly not investments but man 20k every three years X10- that's a 200k mortgage over 30- granted doesn't get you that far in my area. Yes, there are plenty of people who can afford that but for many leasees that's a really bad allocation of $. The same buyer on the new every 6 plan gets 5 new cars for the same $200k plus the residual on 5 6 year old bimmers with only 60k on them(same as lease). Kept nice with records I think 15k each is pretty conservative, that's 75k. Sure over quite a period of time but that's a pretty good chunk of change- good for another decade of driving bimmers. Put the wife on the same plan and now its a 400k mortgage vs. saving roughly 150k. I understand these are very rough numbers but I think they're pretty close to reality really a 2007 328xi with step premium, xenons, cold weather gave me a private party value of 17k in good, 15.5k in fair condition with 60k.

Cars? Not investments but they sure as hell are an expense, how you manage it is up to you. Sure driving a new car every 3 is nice but you'll pay for that perk- a lot. Finance 099 from a former finance major himself. Taxes? Well 8% on 20k + 8% on 20k (two leases) vs. 8% on 40k- one purchase over 6- I think that works out pretty close, no? Additionally if you trade in your 6 year old car you'll deduct that 15k off your new car's tax bill- in most states. Galves gave me 14.5k low end of range trade in value. Leases are like strip clubs- easy access, convenient, nice new things to look at frequently, seamingly cheap entertainment but you're fooling yourself if you think they won't slowly bleed you of cash.
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      10-10-2012, 11:05 PM   #10
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Monterra,

I don't agree with all your analysis, but you convinced me with the strip club analogy. Now whenever my wife drives her car, I'll think "she's gone to the strip club." Awesome.
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      10-10-2012, 11:46 PM   #11
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California: No reduction of sales tax for trade-in

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.. Additionally if you trade in your 6 year old car you'll deduct that 15k off your new car's tax bill- in most states...
In California you'll pay the tax on the full purchase price of the vehicle - there is no deduction for the trade in.
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      10-11-2012, 01:05 AM   #12
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1) Yes, you still pay sales tax on lease payments
2) Lease is very tricky, they don't tell you the variables unlike financed purchases, they tell you the interest rate. It's very hard to know whether you are getting a good lease vs finance.
3) If you can afford it, buy it and enjoy it; life is too short and if money can buy you happiness, do it.
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      10-11-2012, 03:07 AM   #13
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1) Yes, you still pay sales tax on lease payments
2) Lease is very tricky, they don't tell you the variables unlike financed purchases, they tell you the interest rate. It's very hard to know whether you are getting a good lease vs finance.
3) If you can afford it, buy it and enjoy it; life is too short and if money can buy you happiness, do it.
1) But those taxes are rather low compared to buying the car in most states since you only pay the taxes on the drop in residual value and not the full purchase price. For example in California, I would have to pay around $2700 in taxes excluding title if I bought the car over the next 3 years but with a lease, I will be paying around $1125 in taxes and the $725 bank fee.
2) On leases, via the internet you can find out all of the information that you need to know to analyze the lease such as US msrp, residual value and money factor but you have to educate yourself and learn about leasing.
3)In my situation, leasing 2 different BMWs for 3 years each will be roughly the same amount of money spent then buying one BMW for 6 years since I am a new BMW customer and in the second lease or first purchase, I will be able to have additional rebates. And perhaps get rid of the expensive Navigation if iDrive comes standard in a BMW that I want next.

I personally think the significant financial payoff for owning is in years 7-9+ if you are frugal and know what repairs/maintenance are necessary and which ones are not. And you are willing to "roll the dice" and get rid of collision/comprehensive insurance on your car when it drops below around $15,000 in value.

If you are that type of person and willing to keep the car let's say 9 years, I suspect at least 85% of the time you will come out ahead financially by perhaps around $5000-$7,000 vs someone that leased around 3 lightly optioned X1's or comparable cars during that same 9 year time period.

Going by rough estimates and todays dollars, if I lease 3 different lightly optioned BMW X1's or similar entry level BMW's via European delivery over the next 9 years and drive the cars and average of 10k per year, I would expect to pay around $36,000. And probably not even have to ever worry about any maintenance, repair or even tire replacement.

Driving 15k per year, would probably push that cost up to around 42k in todays dollars. And in driving 15k per year, one would probably have to worry about tire replacement 3 times pushing up the cost to around 44.5k

On the purchase scenario, you are obviously having to pay for repairs/maintenance after year 4.
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      10-11-2012, 07:11 AM   #14
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True I'm not factoring in cost of maint/repairs over the last 2 years, 20k. If you're good/lucky you won't need brakes in that time. Barring something else major failing I don't think there's a whole lot to worry about- depending on the model/complexity. $500-$700 on a couple more visits seems reasonable. Any tire I've owned is pretty well shot after 30k- I don't know what their allowance on this is but I'm pretty sure they don't take baldinis. Yes, the longer you keep the more you'll save generally but years 7-9 could be scary/expensive when heavier major components start to fail.

Question wc: What are your payments on your X1s? 36k over 9 on three consecutive leases is $333/mo all in- you either got the best lease deal ever or you're in some serious denial. You're already talking about loyalty and a CCA rebate that doesn't exist yet I'm guessing when you turn the car in early- probably even worse financially. Your numbers are extremely optimistic. My point on taxes is that the portion paid on two leases plus two bank fees is equal to or greater than that of one purchase of a like-kind over 6 and not even close in states where the trade-in value is deducted off your new car's taxable amount. Oh, lest I forget the $350 disposition fee when you turn in. So, 2k in fees on two leases plus tax on about half of the car, 2/5s of the car, its still more regardless.

When it comes to $, leasing=losing with one exception- if you can deduct it as an expense.
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      10-11-2012, 12:49 PM   #15
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That's still an expensive way of doing it (every 3) and you're still limited- what if you need to get out sooner, what if your situation changes and 10k/year ends up being 15k/year, but you don't want the car anymore? Then you're almost certainly paying more, which is why I say when you can afford the car you want, buy it, don't skimp, buy the damn bells and whistles if you think the those added features will keep you in the car longer and you'll save a good chunk over time and be able afford nicer vacations, retire a little sooner, etc- it really does add up. If you're halfway to a seven figure income or so then yeah whatever live large.
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      10-11-2012, 02:20 PM   #16
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I always pay cash for my cars. Let me do the exercise and see:

1) I ordered a X1 with only paddle shifters and dealer promised to give me $1000 discount, so the cost before tax would be $30665 + tax & license (8.75% + 2%?) = $32,965 OTD. I hate California's high tax!

I plan to pay cash and sell my beloved 11 Sorento V6 which I paid $23,500($3300 below MSRP) + tax = $25263 and should be able to sell privately for $20K (only 20K miles). $5263 is the cost in 21 months = $250/month less 30% tax deductions = $175/mo for driving the Sorento V6.

2) That means I will fork out $13K for the 2013 X1 and get drive for 3.5 years of free maintenance & full warranty. After 3.5 yearsw, my 2013 X1 might be worth $20K (@ 39K miles still under warranty). My expenses over the 42 months: ($32,965 - $20,000) divide by 42 months = $309/mo -30% tax break = $216/month.

3) In 2016 assume I then get a newly designed X1 for probably $35K + tax & lic = $37,625.

The difference between the new/old X1's would be $17,625. I drive another 3.5 years and sell it for $23K. The cost for driving the 2016 X1 would be ($37,625 - $23K) divide by 42 months = $348/mo - 30% tax break = $244/mo

*I keep the cars <3.5 years so all maintenance & warranty are covered.
*I am a real estate investor and agent so I get to deduct a good portion of the auto expenses against my income.
*I keep all of my cars in the garage and in pristine shape.
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      10-11-2012, 02:26 PM   #17
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Quote:
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I always pay cash for my cars. Let me do the exercise and see:

1) I ordered a X1 with only paddle shifters and dealer promised to give me $1000 discount, so the cost before tax would be $30665 + tax & license (8.75% + 2%?) = $32,965 OTD. I hate California's high tax!

I plan to pay cash and sell my beloved 11 Sorento V6 which I paid $23,500($3300 below MSRP) + tax = $25263 and should be able to sell privately for $20K (only 20K miles). $5263 is the cost in 21 months = $250/month less 30% tax deductions = $175/mo for driving the Sorento V6.

2) That means I will fork out $13K for the 2013 X1 and get drive for 3.5 years of free maintenance & full warranty. After 3.5 yearsw, my 2013 X1 might be worth $20K (@ 39K miles still under warranty). My expenses over the 42 months: ($32,965 - $20,000) divide by 42 months = $309/mo -30% tax break = $216/month.

3) In 2016 assume I then get a newly designed X1 for probably $35K + tax & lic = $37,625.

The difference between the new/old X1's would be $17,625. I drive another 3.5 years and sell it for $23K. The cost for driving the 2016 X1 would be ($37,625 - $23K) divide by 42 months = $348/mo - 30% tax break = $244/mo

*I keep the cars &lt;3.5 years so all maintenance & warranty are covered.
*I am a real estate investor and agent so I get to deduct a good portion of the auto expenses against my income.
*I keep all of my cars in the garage and in pristine shape.
Right, now lets show the math after you had a major accident that cost 2/3 the value of the car to repair. Plus, take into consideration that the car doesn't feel right when driving and you have complained to the body shop ten times and now you have given up. What's your math look like now?

The point is you don't know and can't tell us how much value you will lose.

With leasing, everything is known for the most part. You will not have any unexpected repair costs. If you total the car in the USA, and the car is worth more than what the insurance company will pay then you will be covered with gap insurance that is included with a lease.

If you buy a new car every 3 years and trade in the old, then leasing might be safer (less risk) than financing.

But, the guy who has leased a new car every 3 years for the past 20 years probably spends more money on his car than the person that purchases cars over the same timeframe.

So, for this reason, any argument that leasing is for chaps that can't afford the car is utterly defeated by the fact that in the long run leasing is more expensive than purchasing.

To the contrary, purchasing is for the poor chap that can't afford to lease a new car every two or three years.
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      10-11-2012, 03:58 PM   #18
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Luckily I only have had 1 accident in my 33 years of driving record and hopefully, I will never get into another one. If I do, I got full coverage insurance. If body shop don't fix right then I sell it for 90% of FMV no big deal and get another new car. And that 10% loss in value is also tax deductible, so it really doesn't make much of a difference financially that's what we're talking about here.

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      10-11-2012, 07:34 PM   #19
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Well that's very true leasing IS for the wealthy but way too many poor chaps are tempted by the dangling cheese of a low down payment and reasonable monthly payment to drive a nicer car than their balance sheet allows via purchase. For many leasing is a trap for those unable to save and/or exercise patience.
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      10-11-2012, 10:05 PM   #20
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Quote:
Originally Posted by Monterra
Well that's very true leasing IS for the wealthy but way too many poor chaps are tempted by the dangling cheese of a low down payment and reasonable monthly payment to drive a nicer car than their balance sheet allows via purchase. For many leasing is a trap for those unable to save and/or exercise patience.
Hmmm, doesn't BMW Financial Services review the so called balance sheet of any prospective leaseholder to make sure they can afford the car?
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      10-11-2012, 10:41 PM   #21
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I'm sure you heard of subprime lending...
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      10-11-2012, 11:09 PM   #22
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I'm sure you heard of subprime lending...
Of course I have heard of subprime lending---but not subprime leasing.
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