One of the most common questions when looking at a new car is whether to buy or lease. This question becomes all the more important when looking at luxury car brands like BMW. Looking at various factors, such as the cost of loans vs. leasing, value depreciation over time, and BMW extended warranty options including Mechanical Breakdown Insurance and Vehicle Service Contracts (MBIs & VSCs), can help you decide whether buying or leasing a BMW would be right for you.
What’s the Difference?
When you buy a car, you will generally take out a loan in order to cover the cost of a vehicle. You will then be able to pay off the loan over a period of time, with 72- and 84-month loans being the most popular. When you lease a car, on the other hand, your monthly payment is the equivalent of rent. You will keep paying for the car until the lease ends. Both these options, buying, and leasing, have their advantages and disadvantages. People that use a car frequently for work might opt to lease a car with the vehicle allowance that their company gives them.
The first question that most people looking for a BMW will have involves the cost of the loan payment or the lease. In the case of a BMW, choosing whether buying or leasing makes sense financially depends on how long you plan on keeping the car. Generally speaking, the longer you plan on driving the same car, the more likely it is that buying rather than leasing will make financial sense since leases tend to be slightly less expensive per month than car loan payments. Lease payments, however, continue for as long as you keep the lease on your vehicle, while loans can be paid off in time. And, of course, the loan payment or the lease isn’t the only cost you will have to keep in mind. Be sure to take into account the cost of gas, maintenance, and insurance including any potential MBIs & VSCs before deciding whether buying or leasing would be right for you.
There are those people that want to drive their BMW until it is considered a classic car. Luckily, due to these driving machines being top quality, this is an option for those that buy the car. Depreciation of the vehicle is not as big of a consequence if you plan to keep the car for years to come. Buying a new BMW only to sell it a year or two later is a terrible investment due to the car losing value once it leaves the lot of the dealership.
A luxury vehicle like a BMW is a huge financial commitment, so it makes sense to take into account how the value of your vehicle may depreciate over time. If there is a large amount of value depreciation, that could indicate that leasing the vehicle would make more financial sense than saddling yourself with a car that would be worth tens of thousands of dollars less only a few years down the line.
A large amount of value depreciation can also be a red flag for other issues with the car or car brand, including frequent and expensive repairs that add up quickly and create a financial burden that would make buying a less attractive idea. Unfortunately, the BMW Series 6 depreciated $50,000 from 2015 to 2020, approximately 70% of its total value, so anyone hoping to offset their costs by selling their car should pause when considering whether to buy or lease a BMW.
BMW Extended Warranty Options, MBIs & VSCs
One of the many factors that might make buying a BMW more attractive than leasing it would be the potential for getting BMW extended warranty options, MBIs & VSCs. Extended warranty options (more on that here from GoGetOlive.com) can help to cover the potentially expensive repairs on a BMW in the long-term and can help to make the idea of buying a BMW less intimidating for the average buyer. Mechanical Breakdown Insurance and Vehicle Service Contracts (MBIs & VSCs) can sometimes be included on a leased BMW, but they tend to be more limited when the vehicle is leased rather than bought. If you are planning on using the same car for a long period of time, buying and getting an extended warranty option for your BMW might make more sense than leasing.
Should You Buy or Lease Your BMW?
Buying vs. leasing is one of the most important decisions you will make once you decide that you want a BMW. Generally speaking, there are a few rules of thumb that you should follow when making this decision. If you want to have the same vehicle for more than five years, buying would generally make more financial sense. The loan would be paid off in that period of time, and extended warranty options would cover more and help to keep the cost of maintenance lower than if you decided to lease the vehicle. On the other hand, if you would rather have your BMW for a shorter period of time, leasing the vehicle would be less expensive and the more limited insurance and coverage would likely be enough to cover the maintenance and repairs for that period. It is, therefore, essential to decide on how long you want to be driving the same BMW and whether the drawbacks of each option are worth the advantages.
BMWs are considered an ultimate driving machine and are seen as luxurious throughout the entire globe. Buying or leasing one of these vehicles is an accomplishment in itself due to the premium price tag. The best thing that you can do is to create a checklist of pros and cons. Leasing is far less of a commitment financially and allows you to get a new car every few years. Purchasing a car is a far better investment if you are going to drive the car for an extended period of time. Needs differ between individual drivers so take your unique situation into account. You can’t go wrong with a BMW whether you are buying or leasing.