There’s more than one way to get a new BMW. While buying your Bimmer outright may be the most common and obvious option, you could lease one instead. But which way is best?
The decision to lease or buy a car isn’t always as straightforward as it seems. Ultimately, it depends on your specific needs and wants. With that in mind, here’s a closer look at when to buy or lease a BMW.
Benefits of Buying Your BMW
The greatest advantage of buying a BMW outright is that you’ll own it. As soon as you sign the paperwork, it’s yours. You can then drive it as much as you like, customize it or sell it to someone.
There are financial benefits to buying, too. Once you’ve paid it off, you’ll no longer have monthly car payments. Your Bimmer also becomes an asset at that point. While most cars depreciate, several BMW models have increased in value lately, thanks to a growing interest among younger generations. The trend suggests you could turn a profit by selling a car that becomes a classic.
You don’t have to wait for financial benefits from buying your BMW, either. Unlike leasing, buying means you don’t have to worry about mileage limits or damage penalties. You can also refinance your loan for a lower payment.
Benefits of Leasing
Leasing has several advantages, including greater upfront affordability. While luxury car prices have dropped slightly in the past year, BMWs are still expensive. Lease payments are almost always lower than loan payments, so you’ll save money in the near term by leasing.
Depending on the terms of your lease, you may not be responsible for some maintenance expenses or have to worry about depreciation-related losses.
Another advantage of leasing is that you can use it to drive the latest model. At the end of your lease, you can turn your BMW in and lease a newer version. Conversely, you’d need a lot of capital to do that while buying each model outright.
Things to Consider When Deciding
As you can see, both buying and leasing can be beneficial. To decide which is best for you, ask yourself the following four questions.
1. What Can You Afford?
The most obvious thing to consider is how much you can afford. Look at your finances and the leasing and loan pricing of the BMW model you’re considering buying. Generally, you should lease if you want a new car for less money, but that’s not always the case.
Total leasing and buying costs vary depending on taxes, interest rates, depreciation and contract length, among other things. Use a lease vs. buy calculator to see which option is cheapest overall.
2. How Much Do You Drive?
You should also consider how much you’ll drive your Bimmer. That’s because leasing contracts have mileage constraints — typically between 10,000 and 15,000 miles — that incur extra fees if you drive further.
Leasing is fine if you only take the car out for occasional drives or have a short commute. Conversely, you’ll want to buy your BMW if you have a longer route or want to drive it cross-country.
3. How Will You Use Your BMW?
Will your car be your everyday ride? Is it something you’ll only drive for special occasions? Does it have investment potential? Your ultimate goal will make buying or leasing more or less beneficial.
Lease your Bimmer if having the latest and coolest model is most important. Buy it if you’ll put it through more wear and tear, or consider it a long-term investment. Even though cars often lose 60% of their value in the first five years, you can’t profit much from their value unless you own them.
4. How Long Will You Keep Your BMW?
Finally, ask yourself how long you want to keep your Bimmer. The timeline often determines whether leasing or buying is more expensive.
Leasing is more affordable if you only plan to keep your BMW for a few years before upgrading to a newer model. Buying a BMW is better if you want it for as long as possible. The cutoff point for buying become more affordable is typically around six years — the average auto loan term length, so you’ll have no payments after that and will offset much of the depreciation.
Decide When to Lease vs. When to Buy Your BMW
Usually, it’s better to buy a car than lease it, but luxury vehicles like BMWs aren’t as straightforward. Use this guide and ask yourself these questions to determine which method makes the most sense. Then, you can get what you want from your Bimmer for the right price.