Lease new or buy used?

[rabenoja]

I am leaning towards leasing since the advertised local deal in my area is $279 for a i3 Rex (24 months, 10k miles). Pretty cheap but I've also looked at some used ones and it seems like I can get a comparable model for about $30 - $35k. Clean cars (some certified) with less than 5,000 miles and some actually just have over 1,000 miles on the them. It can be as much as 10K off from new for a lightly used car so I'm a little torn.

I know if I were to keep the car for awhile, I should just buy used since the depreciation has been paid by someone else. But will battery advancements make that bad move? There are talks of a sub 40K tesla with a 200 mile range, the upcoming Chevy bolt, and the list will probably grow but does that matter if this car can handle my driving needs as it is today? I do like that if I purchase the car used I wouldn't have to worry about going over with the miles. I can drive 15K+ miles a year. The monthly payment will be a little more and the finance rate is a little higher on a used vehicle but I will own it. If I lease, I can see where the technology is in 2 years and upgrade to the latest and greatest. The monthly payment is also a lot lower compared to a purchase. Still torn...

Everyone's situation is different but would you lease or buy used?

 

[Zony]

Here's my wordy take ... the technology and range will arguably improve exponentially over the next 3-5 years (and perhaps beyond). I will always lease electric until such time as there is a viable and economically prudent methodology for replacing batteries. You'll probably be out of any tax and rebate benefit (here in CA that is 10k if you have at least 7500 tax liability) - so it would need to be low 28-31k to be of interest to me (especially with the discounts currently in place).

I'm sure someone has done a cost analysis of a 4-8 year ownership of ICE v BEV lease in terms of scheduled maintenance and average fuel (gas and electric) consumption. We got into our LEAF in November 12 when gas was hitting 4.60/gal and our ICE was going to be due for timing belt, brakes, and clutch (at 120k for a ten year old VW we got our value out to be sure) - ouch!

I'm well ahead financially and "tree-huggerly" (yeah I try to be one of those) due to our driving habits, charging options, and ability to modify our lifestyle to a certain extent. In other words... it works for us for the time being. As the LEAF gets ready to come off lease, we will be going all BEV save for the old Land Rover, so BMW, KIA, FIAT, and MBZ are at the top of our list for the next 30 months providing the economics make sense as well.

If you have more details on the vehicle, many here are very good at deciphering the good deals from the average ones.
Have fun with the decision - I know I am
Z

 

[rabenoja]

Thanks for your feedback! After a few more days of thought, I'm 95% sure that leasing will be a better option for me. Like you, I also believe that there will be huge advancements in EV's over the next few years and I don't want to be committed to a particular car.

The only thing that would sway me is if I can find a steal on a used one. It would have to be under $30k.

 

[Schnort]

The only thing that would sway me is if I can find a steal on a used one. It would have to be under $30k.

It would have to be well below $30k to make it a steal, considering MSRP minus the federal tax rebate and the standard BMW incentive is ~$34K. In Georgia, the state incentive is $5K, in Texas it's $2.5K. That's pretty close to $30K for a brand new one.

BTW, don't forget owners choice as an option. It's functionally close to a lease (return it at 2 or 3 years, with much lower payments), but you get the full federal and state incentives.

 

[roofless]

BTW, don't forget owners choice as an option. It's functionally close to a lease (return it at 2 or 3 years, with much lower payments), but you get the full federal and state incentives.

True, but you also pay sales tax on the entire purchase price, which offsets much of the tax credit.

 

[Dee123]

It's interesting that almost everyone advocates some sort of leasing for an EV. A common argument is flexibility to take advantage of new technology.

Leasing locks one in, not buying. A buyer can sell tomorrow as long as one is willing to take the financial hit. If you believe BMW has been competent in their risk analysis of residuals, one is almost certainly better off paying cash than huge interests under a lease plan. When a car is returned at the end of the lease, it will be sold on (expectedly at a profit)!

The only valid argument i see for leasing is peace of mind knowing the residual ball is not in your court. Auto industry appears to have successfully convinced us that the additional cost (interest) of leasing a depreciating asset far outlays the benefit of peace of mind. In the UK, that additional cost over three years is around £5k for a well specced car

 

[sithsmith23]

It's interesting that almost everyone advocates some sort of leasing for an EV. A common argument is flexibility to take advantage of new technology.

Leasing locks one in, not buying. A buyer can sell tomorrow as long as one is willing to take the financial hit. If you believe BMW has been competent in their risk analysis of residuals, one is almost certainly better off paying cash than huge interests under a lease plan. When a car is returned at the end of the lease, it will be sold on (expectedly at a profit)!

The only valid argument i see for leasing is peace of mind knowing the residual ball is not in your court. Auto industry appears to have successfully convinced us that the additional cost (interest) of leasing a depreciating asset far outlays the benefit of peace of mind. In the UK, that additional cost over three years is around £5k for a well specced car

+100!

 

[MikeS]

I decided that the cost of leasing was going to be very similar to the likely depreciation (I have leased for 4 years) in which case the lease seems the better option as I have fixed my cost.

 

[Jeffj]

I'm not a fan of leasing simply because of the mileage restrictions put on the car. You have to watch what you drive, and its pretty expensive to exceed the miles. If you end up getting a lease with more miles, then any miles not used are effectively wasted. I've done some analysis over the years on cost/mile, and leases just don't cut it for me.

However, in the US at least, leases are highly, highly competitive given the rates being offered and the high residuals. There was just a story that made the rounds of a bunch of people leasing the Fiat 500 Electric for an effective cost of $83/month (3 years/30K miles). No matter how few miles you might drive, that's a fantastic deal. You could never touch that on a purchase.

 

[roofless]

I agree with Jeffj. I've also found that the residuals for all of my BMW leases have been inflated, and the cars were always worth considerably less than the residual at the end of the lease, which is why the lease deals are typically so good. I also disagree with MikeS's comment about "huge interests" on a lease, at least here in the US -- the interest rate tends to be very low, and you're only paying interest on the depreciation, so it really doesn't amount to that much. I don't assume that the same is true in the UK.

For the i3 specifically, I personally think buying is very risky given the low demand I'm seeing in my area. We started looking at the i3 a couple of months ago, and neither my wife nor I have seen a single i3 on the road here in South Florida. It seems likely that when my wife's i3 lease ends in 2017, there will be more competitive offerings available, including new i3's, so demand for a 2014 i3 might be even lower than it is now. At least for us, leasing was the right choice.

 

[jelloslug]

I made out like a bandit on the lease for the Leaf I had. The residuals were inflated and there would have been no way on earth I could have sold it for what the residual was. I do think the residual on the i3 is a bit inflated also but not to the extent of the Leaf. In another 18 months I will find out....