Leasing or buying a BMW, that's the question. There's no cut and dry answer but this article will give you the information you need to make a better decision.

The most important factor when deciding whether to buy or lease a BMW is the time the vehicle will be kept before it's replaced.

We will look into three scenarios of leasing vs buying - at three years, six years, and nine years. The vehicle - BMW X3, one of BMW's best-selling models.

A new BMW X3 goes for about $45,000 (2.0L I-4 cyl, 8 speed automatic) as of writing this, and here are the assumptions we made:

Purchase: $3,000 down, 60-month loan at 2.89% interest. Vehicle's condition at the time of trade-in is very good. It's been driven 10,000 miles per year.

Lease: $3,000 down, 36-month lease with a money factor of 0.00130. There's no wear and tear or mileage charge. It's been driven 10,000 miles per year.

First Scenario: Three Years

Here, we assume that:

·        The BMW X3 has been driven for three years. In the purchase case it was traded in at the end of the three-year period and the due balance was paid off.

·        In the lease case the Beemer was returned at the end of the three-year period.

In both cases there are no repair or maintenance costs because the vehicle is covered by the original BMW warranty.

	Buy (1 car)	Lease (1 car)
Down Payment	$3,000	$3,000
Monthly payment (inc. tax)	$	$
Total of payments made	$	$
Balance due		n/a
Maintenance and repairs	n/a	n/a
Estimated trade-in value		n/a
Equity remaining		n/a
Lease disposition fee	n/a
Total Cost

 

As you can see, in this scenario, leasing a BMW X3 for three years will save you $XXX. The monthly payments are also lower by $XXX which is the main reason people choose to lease a car.

And one more thing - when you are leasing, you don't have to go through the hassle of selling the car at the end of the three-year period, you just return it. It's easy to see that leasing is the clear winner in this given scenario.

Second Scenario: Six Years

In this scenario we would assume the following:

·        The buyer either buys a new BMW X3 and sells it at the end of the six-year period.

·        The buyer leases a new BMW X3 for three years, returns it at the end of the lease period and leases a second new BMW X3 for another three years.

The purchased vehicle will be paid off in five years and there will be no payments in the final year. It will also be covered by the original BMW warranty for the first four years and will have no warranty for the fifth and the sixth one. For that reason, we will assume that there will be no maintenance cost for the first four years and $1500 for the remaining two years.  

As for the two leased vehicles, they will be under warranty for the full six years. Another assumption we are going to make is that the payments on the second leased BMW will be 5% higher than the first one with the same down payment. There will be no disposition fee because the client is leasing another vehicle from BMW. With that said, here's the total cost of owning a BMW X3 for 3 years.

	Buy (1 car)	Lease (1 car)
Down Payment	$3,000	$3,000
Monthly payment (inc. tax)	$753	$
Total of payments made	$	$
Balance due		n/a
Maintenance and repairs	n/a	n/a
Estimated trade-in value		n/a
Equity remaining		n/a
Lease disposition fee	n/a
Total Cost

 

As you could see, both leasing and financing cost about the same. However, leasing offers the benefit of driving a newer car, as BMW produces an updated X3 every three years and the monthly payments are lower.

Third Scenario: Nine Years

In this last scenario we will assume that:

·        The BMW X3 was bought, paid-off and driven for nine years and then sold.

·        Three new BMW X3 were leased - one every three years.

The purchased vehicle will have payments for the first five years and no payments for the remaining four. It will be covered by the original BMW warranty for four years and for that reason we will assume that there will be maintenance cost of $1,500/year for the following three years and $2,000/year for the following two years.

As for the lease, they will all be under warranty. The payments for the second and the third vehicle will be 5% higher than the previous one but the down payment will be the same. There will be no disposition fee when the first two vehicles are turned in and another BMW X3 is leased. And here's what the total cost looks like after nine years:

	Buy (1 car)	Lease (1 car)
Down Payment	$3,000	$3,000
Monthly payment (inc. tax)	$753	$
Total of payments made	$	$
Balance due		n/a
Maintenance and repairs	n/a	n/a
Estimated trade-in value		n/a
Equity remaining		n/a
Lease disposition fee	n/a
Total Cost

 

As you can see, in this scenario, buying the car saves about $XXX compared to leasing three BMW X3. So, if you're ok with driving the same car for a long period of time you'll definitely be better off financing it.

In conclusion, if you intend to keep the car for less than six years, leasing makes a lot of sense - you'll be driving a newer model BMW X3 and won't have to worry about maintenance since it's covered by the original BMW warranty.

>> What's next? Check out our attractive lease offers on new BMW X3 or if you have furtherquestions, call our finance department at (570) 338-6955 <<

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