Buying vs. Leasing a BMW 3-Series Convertible: An In-Depth Financial Analysis
This analysis explores the financial implications of buying versus leasing a BMW 3-Series 325Ci Convertible, a reliable entry-level sports car with a strong resale value. With a selling price of $36,750 and various financing options available, we evaluate the costs associated with both purchasing and leasing over three years. The potential monthly payments and overall expenses are examined, alongside the respective advantages and disadvantages of each option. Ultimately, the analysis suggests that purchasing may be the more financially sound choice based on individual needs and usage.
Buying vs. Leasing a BMW 3-Series Convertible: An In-Depth Financial Analysis
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Presentation Transcript
Team 2 Vinh Thu Lieu – Organizer Qi Xu – Summarizer Manuel Gutierrez – Techie
Scenarios Buying Vs. Leasing a Vehicle. • BMW 3-Series 325Ci Convertible • Good Entry Level Sport Car • Reliable • Good Resale Value (approx. <= 70% ) Depending on the Used Cars • Comfortable and Great Looking Car • MSRP: = $40,295 • Selling Price: = $36,750 What should he do?
Course of Action 1 • Buying a Car: • Down Payment: $2500 • Excellent Credit: ARP at 6.65% - 3 Year fixed APR Performance Loan • Monthly Payment: $1139
Course of Action 2 • Leasing a Car: • Annual mileage: 12,000 miles/year - 3 Year Terms • Down Payment: $2500 • Monthly Payment: $494
S = $0 S =$24177 n = 36 A = $494 n = 36 $ 2500 A = $1139 $ 2500 Annual Worth Analysis BMW 3-Series 325Ci Convertible Buy Cash Flow Diagram Lease Cash Flow Diagram
Sensitivity Analysis • Varies Down Payment • Varies the Financial Period (Terms) • Over Mileages Cost • Buying vs. Leasing
Decision • Down payment: $2500 (Selling Price: $36750) • 3 years financing • Keep the Car Total Cost: $40,999.10 (Buy) Total Cost: $42,763.70 (Lease) • Don’t Keep the Car Total Cost: $14924.22 (Buy) Total Cost: $17780.80 (Lease) • Difference: $2856.60 • Buying is the best choice here
Advantages and Disadvantages of Buying • Advantages: can modify your car in whatever manner you choose , there are no mileage restrictions, You can drive as many miles, you have the flexibility of selling the car whenever you want • Disadvantages: As warranty expires and you experience mechanical problems with the vehicle, you're responsible for the repair costs. As vehicle gets older, you can expect to incur repair and maintenance costs , Cars depreciate in value while depleting your liquid cash in the process
Advantages and Disadvantages of Leasing • Advantages: leasing provides an opportunity for people to drive more expensive vehicles for less money each month, leasing allows consumers to drive a new vehicle every few years, Leasing helps consumers avoid the hassles often associated with selling their used car to an independent third party or trading in their vehicle to a local dealer • Disadvantages: most vehicle leasing programs have a yearly mileage limit, leased vehicles usually require higher insurance limits, Lease contracts can be difficult
Resources • http://www.nada.com/ ( Vehicles pricing, Tip and advising about lease vs. buy ) • www.bmwusa.com ( vehicles about the chosen car ) • http://forums.mwerks.com/zerothread?cmd=print&id=794813 ( formula for lease ) • Text Books (Present Worth Analysis)
