Mental pricing for 118i

[peanut125i]

https://www.avis.co.za/long-term-ca...A7VSicy1_v8GzE3eeP6_9VuzxLawVPJgaAma5EALw_wcB

It's scary expensive for long term rentals.

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[tman]

The deposit is covered by BMW "Trade Assistance". You would never put a deposit down on the lease deal because you will never get a return on the money, why, because the entire point of a lease deal is to create a revolving market. You buy the car to rent it, to use it for the duration of the 36 month period and to return it, walking away at 36 months debt free having spent a substantial amount of money and having nothing to show for it.

They do this by providing a criteria:

1. You may not do more than 60 000km in the car in the time you have it, if you do its R1.50 odd per km they bill you when you hand the car back.
2. You must return the car to BMW to qualify for 100% settlement of the finance agreement and to honour the guaranteed future value of the car.

Now you can sell the car out of hand or trade it in elsewhere but you will be liable for the ENTIRE financed amount including the residual. So, a lease deal in SA has a very specific customer in mind, a customer that:

1. Generally likes to live beyond their means, and people that are known to make poor financial decisions
2. Keeps the mileage on his car rather low.
3. Likes has to buy new cars every 3 years. because they are stuck in a debt cycle
4. Wants to have a guaranteed settlement on the car.

What car can you buy lease for R180k thats brand new and offers all of that AND you have 100% guarantee by BMW Financial Services that at 36 months you can hand it back and walk away debt free.

If you financed that car traditionally you would benefit only in that you would own the car after the 36 months period, but then your payment would be closer to R10k a month and you would be paying 11.5% interest in FULL to BMW Financial Services, which makes no sense especially given most of us would prefer a new BMW ever three years anyway.

1. "Only" benefit is owning the car? Thats sounds like a pretty substantial benefit to me, no?
2. 11.5% interest? BS. On new cars & demo, such as your example BMW offers amazing prime minus deals pretty much every other month.
3. Not sure who "most of us" is, but most of the the people I know that has any financial education would realise that its not sustainable to drive a new car every 3 years, by having a monthly instalment till the day you die

And lets face it, if your 118i treats you well chances are you will lease another BMW on the spot when you hand the current back in - Its an insanely clever way of keeping the used car market regulated and the new car market revolving. for manufacturers to make more money

On the insurance side, because at any point of the lease deal the finance amount owed will be incredibly high, it is mandatory that you take out GAP cover on your insurance.

I agree with you there - The Lease market is still young and people do not trust it, this is not helped by brands like Smart offering a ForFour with roadside assistance, three year plan on a three year lease but then finding out:

1. Smart has roadside assistance but dont carry parts or a Smart tech in SA.
2. There is a 15% pay in on ALL service and plan claims by the customer.

Volvo has the market pretty much in their pocket, especially given you can now own a beautiful car without the risk of it stinging you with resale in the long run - BMW is only now seeing the first batch of leased cars being returned and I know, after spending some time in a meeting with a sales manager at SMG Group, they are beyond excited to start doing deals on the newer cars with even more benefits than before.

@SMRTARSX1

Agree with everything you say, lease deals are very good and very successful in the USA. About time we got that over here.

The whole reason people do not trust it, is because its sold like a Verimark product - as the answers to all your prayers to drive your dream car. And as you have pointed out there are clauses in the contracts that are not to the advantage to the consumer.

I know there are legitimate reasons to lease a vehicle. Wanting to keep up with the jones is not one.

Leasing works very well in north America, due to low interest rates. If SA can offer these low interest rates there might be additional reasons to consider it.

Until then, its primary advantage is to push new business for manufacturers. Although it looks like an attractive offer for consumers, people who do it for the reasons you have stated tend to be worse off financially than traditional financiers a few years along the line.

 

[SMRTARSX1]

Im not sure why you have replied to me and in such a tone - There are three kinds of buyer in SA. A person who pays cash, a person who finances and a person who leases.

All three forms of finance have benefits and cons - Frankly, I don't want to own a car, Im 27 years old and have had 6 cars in the last 2 years.

I especially dont want to own one when they release a new one, with new tech and engines every five minutes. I would sooner spend the savings of a lease deal only paying R180k for the rental of the car vs financing it outright on a nice holiday.

Nobody is forcing you to buy the car outright, or locking you into a deal you cannot get out of. If after 3 years you want to buy a car cash or finance it normally its your prerogative, its not a debt cycle, its a finance deal, and you have 100% right to take them up on the offer again if it works for you.

If liking new things and finding the cheapest way to pay for them is your definition of keeping up with the Jone's then your mindset is very narrow.

BMW is obviously in business to make money - And if they make a new car accessible to me every 3 years and I can pay only the monthly instalment, with a calculated risk up front, who am I to say no? You will also note, BMW has moved a lot of optional items to standard items - On the 1 series, Navigation is standard, auto lights, auto wipers and bluetooth and USB are all standard now, its not like you are getting an entry level car either.

Irrespective of anything, for my purpose and for the (and I did write this) the specific target market of leasing, its a winning formula.

 

[KPM3_30]

@Tman, As much as I understand your point of view, it is exactly that, YOUR point of view... Everyone is different and has different reasons for doing what they do, so long as it works for their particular circumstance, all is fine. No need to make stereotypical generalizations or cast aspersions on a select group of people due to choices that they have made, that do not align with your way of thinking. This isn't the first time you have done that and you 'forcing' your view on others, by means of taking shots at their personal choices is rather tiresome.. Live and let live.

There has to be a cost associated with transport, whether you pay to lease or to own, each scenario should work for that individual. Not everyone wants to be 'stuck' with an out of plan car/old model/etc and still suffer depreciation at the end of that full cycle versus driving a new car/full maintenance and service plan/opportunity to experience different vehicles/manage contractual obligations upfront.

P.S. Technically the bank still owns anyone's car until it is fully paid off, so that point is moot to me.. If you are using finance as a means to buy a vehicle, whether you lease or pay to own, choice is yours.. Buying to own makes more sense with cash however. As they say, "you pay your money and make your choice".. :thumbs:

 

[SMRTARSX1]

If you want to own a car, buy it cash.

 

[MR_Y]

I would say later Millenials (born in the 90s) would steer towards lease deals.
From what I read, later Millenials prefer to "invest" in experiences (e.g. holidays), instead of owning items.

I am from 1982, I suspect tman is from earlier on? - where our generation prefers owning things.

 

[KPM3_30]

I would say later Millenials (born in the 90s) would steer towards lease deals.
From what I read, later Millenials prefer to "invest" in experiences (e.g. holidays), instead of owning items.

I am from 1982, I suspect tman is from earlier on? - where our generation prefers owning things.

Personally, it only makes sense to own a car if you plan on keeping it longer than 5 years or if you're buying cash. No point in paying more to own something, that you have no plan on keeping..?

Depreciation in those 5 years with a consumption of the car's maintenance plan/age/etc means that you are taking a knock on something you could've leased anyway, because you never intended on owning the car outright. My logic anyway.

I am classified as a millenial and I prefer to invest in appreciating assets, where possible..

 

[individj]

a few friends of mine prefer to lease cars...they have enough money to buy these cars cash but they tell me its convenient & they factor it into their budget..like paying for internet :biglol: i guess if you think about it they are going to be changing cars every few years anyways..none of them are really enthusiasts or own any classics either.

 

[SMRTARSX1]

a few friends of mine prefer to lease cars...they have enough money to buy these cars cash but they tell me its convenient & they factor it into their budget..like paying for internet :biglol: i guess if you think about it they are going to be changing cars every few years anyways..none of them are really enthusiasts or own any classics either.

Rather the banks money than your own in opinion.

 

[tman]

Im not sure why you have replied to me and in such a tone

I can see you put a great deal of effort in post nr #10 in this thread, and contributions such as them add value to this forum.

Judging from the lingo you use, Im gonna take a wild guess and say you worked in sales for BMW? As I mention in my previous post am not against lease options, I am against how its being sold as the alfa and omega of financing options in SA, and the implications it has for the unsuspecting buyer a few years down the line.

I hate it when I walk into a dealership and the sales consultant bombards me with statements & questions such as:
"why pay 11.5% on a traditional deal, when you can get it for 11% linked"
"The only benefit of traditional finance is you own the car"
"Most of us wants to drive a new car every 3 years". (these examples being from your post).

As I have pointed out, I dont really think they can be attributed to benefits in the long run. Clearly you are a big advocate and thats also fine, as @KPM_330 has stated its just my opinion.

 

[SMRTARSX1]

I worked for MINI/BMW in 2011 - We didn’t have lease deals then, I just don’t see the point of paying more for the same thing? I change cars every few months, a deal is a deal.

 

[MR_Y]

I am classified as a millenial and I prefer to invest in appreciating assets, where possible..

Yes - investing in appreciating assets is a no brainer.

But, leasing a car or buying it on any finance deal, incurs a monthly interest expense (or rental expense for a lease). Even if you buy it for cash, you implicitly incur an opportunity cost (since the funds could have been used to buy an appreciating asset is instead buying a depreciating asset). An expense (interest or rental) or an opportunity cost of funds is a waste of money - which ever way you slice it.

The best case scenario is to buy a cheap (and low maintenance) car and get it paid off quickly (incurs minimal interest expense) and is kept for may years/miles. With the saving (after paying off the car) that would have gone to instalment/lease/rental payments rather invested in a long term, high yielding investment. Call this the Toyota Tazz option.

But, we are vain beings and we want to drive something a bit nicer than a Tazz. So, we buy a BMW (for argument sake, any model). Call this the BMW option.

If you want to settle the BMW and own it outright (and take on the burden of maintenance costs out of plan), then you pay off the debt and own the car. I fall into this category. I prefer this option because I strongly believe that maintaining an out-of-plan car will NEVER cost more than buying (or leasing - sum of those lease payments) a brand new car (of the same status/brand).

If you want to lease the car and have no intention of owning a car AND you are happy to keep on paying a monthly amount forever (or until you retire and buy a Tazz as a retirement car for cash), then the lease option may work for you.

 

[Wes]

Some great points made here in this thread.

And you only need to look as far as the classifieds for ads of cars that "owners" sit with hoping someone will settle the outstanding balance to whichever finance house because they did their numbers wrong or simply want to move on to the next thing.

If it appreciates, buy it.
If it depreciates, then why chain yourself to it?

 

[SanM]

Does the guarantee future value still apply if the vehicle was involved in an accident? If not, then the only risk (other than affordability) is exceeding the mileage limit.

 

[SMRTARSX1]

Does the guarantee future value still apply if the vehicle was involved in an accident? If not, then the only risk (other than affordability) is exceeding the mileage limit.

The GVF still applies as under the terms and conditions of the Agreement the vehicle is to be insured at all times and as per Motorplan, only repaired by an authorised BMW Repair Shop.

Should you return the vehicle in a condition that is not within reason or where its been repaired and not by BMW themselves they hold the right to penalise you.

 

[that_guy_Ettiene]

Went to Zambesi BMW today to check this deal out...see attached pic.
Best deal I got was double the advertisement R4999..

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[MR_Y]

Went to Zambesi BMW today to check this deal out...see attached pic.
Best deal I got was double the advertisement R4999..

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Hahahahahahahahahahahaha :roflol:

For 3 cylinders

 

[cOlDFuSiOn]

The 56 month option makes 0 sense.. That equates to R500k in payments and then you hand the car back at R240k.. Might as well buy it..

 

[that_guy_Ettiene]

They are f#ck8ng crazy

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[shark111]

Seems like the 5k special is still on, just saw this advert http://www.bmwselect.co.za/offer.ht...ect-Q3&utm_term=BMW-118i&utm_content=Unpub-TL

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