Hey guys, I am new here and I am considering at some point later this year to get a new car. I have always liked the Mini and what it brings to the enthusiast as a sporting fun affordable car. I am a big BMW lover so I feel it doesn't count as straying from the brand, if indeed I pull the trigger on a Mini, even though I have been spying the 1-series.

Leasing has never been something high on my list as a financing tool that seems to work for most cars, or for people that don't have their own business, where they can write it off as an expense. Most cars depreciate like crazy in the first 3 years and the lease payment can be much more than just traditional financing, depending on negotiations and manufacturers discounts.

But, when you consider that the Mini is one of the highest resale valued cars in the used car market, leasing doesn't seem like such a bad deal. Now I still need to do a long term analysis, which I can share later, but at the fifty-thousand foot level, leasing doesn't seem to be such a bad deal for the typical consumer for this car, especially with the maintenance included and the solid warranty. My analysis will show Total Cost of Ownership of leasing 3 Minis or similar valued cars over 9 years versus, keeping one for 9 years.

Now getting back to my point, the subject of this thread, I have quietly lurked reading different posts here and I see lots of bantering about on what is the better value, the S or the JCW flavors of Cooper or Clubman. Obviously the equipment level is higher, but so is base price. I ran a quick payment comparison of a very nicely loaded up $31,650 Cooper S vs a $31,650 JCW Cooper through the MiniUSA financing Lease calculator. And with their standard $2500 down and a lease that is 36 months with 10k miles/year, the difference is 40% higher for the JCW over the S or $155/mo. over 3 years ($5,580)! $384/mo. vs $539/mo. !

I think this is being caused by one or two of two things.
1) They are running a promotion on all Cooper S, not just the auto/premium version

and/or

2)the JCW depreciates at a much faster rate and is not valued as high in the used market.

I am new to this brand and have never owned one, but I am confident many of you can confirm or deny my assertions.

Thoughts?

 

Yeah, it's because they are running deals on cooper S's.

Most of the time, car manufacterers don't do much on their "halo cars" due to the niche market they serve. More people buy MCS's than JCWs.

 

I had an 2010 MCS and now a 2011 JCW. Lease on MINI makes no sense. You can buy the car for lower payments. Mini Select is not a bad deal either. With the low finance rates I chose to do a traditional purchase this time. Last time I did Mini Select on the 2010. Rate were higher then at 5.9%. 2011 I got 2.9 missint he 0.9 by a day!! That cost me $1200. residual on the JCW went down to 39% from 40% being lower resale values on JCW. Think about it.
Not many people in the martket for 30K used MINI when yo can buy new for that. Maybe not a JCW but new. I have close to 40K in my new JCW and when I think about that it is a bit crazy. They same amount I have into my 2005 Maserati a bought 2 years ago with 10K on her. Ferrari Motor, all leather. Had to justify the cost. Easy after you have owned and driven them.

 

well i was always on your thought process that leasing was an awe full option but this time i have a business and put my mini in the business name so i shave a substantial amount off my "monthly payments" (by leasing its counted as renting at end of year so actual cost is not immediate) .

The mini calculator is garbage! the only way to get an accurate quote is to go into the dealer. I used mini calculator to figure out a rough estimate of my 2011 clubman (32,450) and lease calculator 571/month. When i spoke with my Motoring Advisor with residual value at 67% w/o payoff of my truck was 344/month not including taxes/fees.

you can see its a huge discrepancy between real life and online calculator. after taxes/fees/payoff of my truck which is wrapped into the monthy payments is 420/month even.

Go in, test drive a car and sit down with your MA about your options. Its the best way to go.

 

I thought the calculator was dead on except you need to add in you tax.
Play with the down and interested and I thought it was dead on. It is just me as I leased lots of cars and trucks because I am in sales and could write them off. You can write off a purchase too. I lease payment should always be less than if you were buying it. You are renting a portion for your use. With MINI a lease was like $100 month more expensive. The numbers simply do not pencile on a lease with MINI. There residual is to low and there money factor on a lease if off the charts.

 

The calculator on miniusa.com is crap.

A lease is very easy to calculated if you know the residual and money factor (interest rate). You can get these from sites like leasecompare.com and calculate your own payment, which will be much more accurate.

 

BMW has subsidized leases as part of their US business models for years. Artificially high residuals, low money factors=low payments for the customer, and a bunch of nice low mileage lease returns for BMW to sell again as CPO's.
Haven't seen them do this on the MINI brand ever. And it's slowed down on the BMW side too during the economic crash. Now that used car values are creeping up again, the cheap leases are coming back.

 

A lot of finance folks say an individual leasing a car is bad for your finances. If you've some way to write it off then go ahead.

IMO folks use lease to get into a car they cannot afford and then have nothing at the end. Except for some high mileage charges and condition refurbishments.

But, there are a very small number of folks that change a car every 2 years and can afford to have nothing at the end. But in the long run it becomes very expensive.

Just MO.

....Les

 

I have had great luck leasing trucks. The reason is Pick up hold there value way better than cars. I have leased cars also but ussally only if they had a special lease deals. I am not afraid to lease because there is a pay off jsut like buying a car. If over miles I would jsut trade it in on something else. The whole idea of a lease only works if the payment are lower than purchase it with the same down. You are only renting a portion of the car so I find it very strange that you woudl have to may more. The MINI Smart Buy is good because it works lile a lease with lower payment but you have a balloon or refi at the end of your term. I did that on my 2010 and was on about 2K upside down after only 1 year of payments. I bit the bullet and upgraded to the JCW I wanted. I am hoping this car has some long term durablity because I expect the residual to be bad on an almost 40K Mini. If I order a car I tend to keep it a for at least 4 years.

 

One of the above posters is correct, in a lease you pay for the depreciation that the car takes during the lease term plus financing costs.

Mini's have had the highest resale values in the industry since 2002, when they were released. I always attributed that fact that for the first few years, dealers never had any in stock so, the supply was matched nicely with demand. I am really surprised after almost a decade to see this same trend in values.

The Mini calculator changes depending on STATE and I believe there are some factors for high-dollar items that don't translate well into resale in the future, i.e.: $2,000 Leather Option, 18" Upgrade rims, JCW Options page. At least you can infer based on the monthly with different items being configured that this is happening. This translates to my original subject for this thread and that is JCW cars devalue faster than the more plentiful, less costly non-JCW cars. In fact the non-S cars are probably the best, as there are less of them in the market, and they are more affordable new and used.

But back to the guy above that says you should never lease. I agree with the sentiment, but if you go down that path, you should never buy new either, if you are really looking to save money. But rational purchases would never lead us to a Mini as you are paying way more per pound for A-to-B transportation. Living in Colorado, I have an SUV for playing in the mountains and commuting on crappy days. I have a used BMW for everything else. I see my friends with businesses leasing as a standard rule and it got me thinking, would it make sense to lease a car that has great resale value b/c indeed all you are really paying for is the depreciation during the lease term.

So let's translate this over 9 years. My wife and I typically keep our commuters about 7-9 years depending on our boredom coupled with interest in a new model. (For example, She just HAD to order a Smart car and she loves it. Not b/c of gas mileage but b/c its cute. She only drives about 7k miles a year for work. So asking it to haul her around for 7-9 years shouldn't overwork it or cost a lot in maintenance and repairs)

Let's compare buying a new Mini, financing it over 5 years with normal interest and keeping it 9 years against leasing 3 Minis over the same time period. Let's assume 12k miles year. Let's assume tires last 12k miles. Let's assume the purchase price is $30K.

At 7.5% interest over 60 months, $36K is the cost to buy

Leasing three cars similarly equipped in markets outside of NYC in 36m increments, about $40K will be spent.

The difference is $4K, but over that life time you will buy 3 less sets of tires in the leasing scenario, b/c you will turn each in about the time you probably need tires. That translates into $1500-1800 of savings against the $4k, leaving $2,200-2,500. You don't have any maintenance costs in the leasing scenario, but you would have slightly higher insurance costs. So if we say that the oil changes and simple maintenance offset the insurance, then over 9 years the price to have a new car, fully under warranty, with no maintenance and repair surprises is $20/mo. If you have 1-2 big repairs to 108,000 miles, it would certainly eat that up.

I don't think the analysis I just presented holds up with cars like a Ford Fusion or a Chevy Cobalt where the depreciation is insane the first 3 years, but for cars like the Mini, that has an outstanding track record and doesn't ship millions to dealers annually to blow out and find buyers for, it seems like its a good plan. A new color or flavor every 3 years seems fun. $20/mo. fun factor seems easy to swallow.

 

This just all shows how a lease is very much like a purchase financialy.

But people that like to modify their vehicles, a lease is not an option if you plan to return it.

Now if you want a different vehicle every few years, by all means go for the lease.

 

In your 1 purchase vs 3 lease comparison, I noticed a couple things worth mentioning (I think ) :


-You only get 2 extra sets of tires from leasing since there are only 2 more leased cars than purchased cars.

-Even at 9 years old and 100k, the MINI you own will be worth something. What is an '02 MCS with 100k on it worth these days for instance? If it's worth even $5k, then that amount essentially comes out of the $36k you spent on the car.

 

Good point... a 2002 with 108k now is worth about $6-7k in my neck of the woods...

My point on tires is that the leased cars will have tires that will need to be replaced twice each during their lifetime at 12k miles so that's 6 times...and i think the purchased car would need to buy eight... so I was off by one set... but I am not sure I buy the fact that you can't squeeze 20k out of tires on these cars... are the members of NAM.com only racers? or are the stock tires that soft?

I have a feeling a more comprehensive model would be needed to properly compare with real maintenance costs and projected repair out of warranty costs... even the extended warranty costs to mitigate that... either way I think we have shown with big numbers that there will be a monthly convenience charge of $40-60 to continually lease, which in the reality of today's costs and our lack of time, this is somewhat immaterial...

Of course if we all did that and more Minis were annually purchased, the used market would have more supply and the residuals would theoretically fall and the cost of this type of financing would increase.

 

Well, runflats are garbage and with my experience your replacing them at 20k (sometimes less)

Im a guy that likes to mod my car, so because i have a leased clubman i am going to be sticking with bolton/off mods untill my lease is up at which point i will decide if i keep it or get another (which im a guy that can get bored with cars pretty quick, but this one is different so who knows

at the end of my lease i can by my car for 19,800 so if it works out to be worth more then your insane to not buy it and sell it. if its worth less is when you need to sit down and decide if you want to keep it and for how long but at that point you can get it re evaluated and purchase it for less then what is on the contract.

Being a business i write off close to half the payments. If i finance it then you can only write off the depriciation in the first two years after that you cant write off much more. but im sure you dont care about businesses and how we get an awesome tax break on leased vehicles

With the killer lease deals mini is still offering i would test drive one, who knows three years from now you might hate the Mini! (of course i dont know how you could)

 

well you can still mod a lease verses a buy but either way you'll most likely void the warranty (unless it's bolt on stuff which can be easily removed)

 

Most of you don't know how a lease is calculated.

You lease the depreciated value of the car, which on a cooper s is 38%. This means on a $26,000 car you are paying the .0018 (or .0021 without loyalty discount) on only $9690. Even with 9% sales tax that should make a 3 year lease payment about $260/month. If they're charging you $380/month they're making an extra $4,500 on you in profit. You have to get them to give you the terms first, and then have them show you how they calculated your payment.






5

 

Negative ghost rider. You missed my original point. I was originally commenting that the MiniUSA lease calc values different options and packages with the valuation that some hold their value better than others.

We veered off topic to discuss Lease vs Buy on strong resale vehicles.

I think the point was made and understood that the MiniUSA lease calc does not take into account negotiations off MSRP with your local dealer or any regional discounts.

After visiting the dealer and realizing the dozens sitting on the lot, my thoughts that resale is protected by most Minis being ordered by a customer aren't as clear as I expected them to be. I was surprised to see so much inventory. I don't know how long dealers have been keeping such large stock, but it could affect long term resale if its a new trend. I see the Mini taking hits on long term reliability reports, so you would think a constrained supply would be propping up the used car resale prices.

 

 

no, you're wrong actually.

You pay the depreciation on 38%, but the interest is calculated on (cap cost + residual) times the rate of 0.00180. So you are actually paying that lease rate on 162% of the price of the car. That is because the rate of 0.0018 is the interest rate divided by 24. Basically, you pay interest on the average daily balance of the lease during the lease term--- or the average of the cap cost and the residual.

 

Thank you...but is that legal? Or do they just get away with it? I have been on the Fed Reserve website trying to figure this out all night. As you can see I'm a very busy person.

 

The basic principle of leasing is that you pay only for what you use of the vehicle.
[FONT='Times New Roman','serif'] The federal Consumer Leasing Act requires total amount due, statement of costs (such as the number and amount of regular payments), insurance requirements. [/FONT][FONT='Times New Roman','serif']Unfortunately, the law does not require the dealer to disclose all costs & many agreements are ambiguous with key provisions buried.[/FONT][FONT='Times New Roman','serif']Read "Keys to Vehicle Leasing" by the Federal Reserve Board available at [/FONT][FONT='Times New Roman','serif']www.federalreserve.gov[/FONT][FONT='Times New Roman','serif']. Ask a lot of questions and [/FONT][FONT='Times New Roman','serif']get the answers in writing.[/FONT][FONT='Times New Roman','serif'] [/FONT]A high turn-in value means you're paying less depreciation.[FONT='Times New Roman','serif'][/FONT]
You can also explore financing a lease through someone other than the dealer. A number of independent companies offer leases. For example, the National Vehicle Leasing Association (at www.nvla.org) provides a state-by-state list of independent leasing companies.
Shopping in the fall is the worst time to lease.Because dealers lost money on cars in their lots, they increase lease payments to make up for lost revenue. see Nolo's Encyclopedia of Everyday Law, by Shae Irving and the editors of Nolo.
[FONT=Nyala]Los Angeles/Southern California Chapter[/FONT] Dale Davis, CVLE Endeavor Financial Services 3187 Airway Ave. Costa Mesa, CA 92626 877-727-4327 Fax: 877-337-3227
[FONT=Nyala]Northern California Chapter[/FONT] Jeff Barron, CVLE Ellis Brooks Leasing, Inc. 1533 Bush Street San Francisco, CA 94109-5419 415-474-1100 Fax: 415-474-8037
[FONT='Times New Roman','serif']California State Department of Financial Institutions 45 Fremont St., Suite 1700 San Francisco, CA 94105-2219 415-263-8500 916-322-0622Toll free: 1-800-622-0620 (CA) E-mail: [/FONT][FONT='Times New Roman','serif']consumer@dfi.ca.gov[/FONT][FONT='Times New Roman','serif'] [/FONT][FONT='Times New Roman','serif']www.dfi.ca.gov[/FONT][FONT='Times New Roman','serif'][/FONT]

 

what's the rationale for paying interest on depreciation + the cap cost? is that actually legal?

 

i mean why would you be paying interest on both?

 

You don't! There is a lot of mis-information on this thread. You are paying interest on the entire residual balance for the entire time period you lease for. You are paying interest as well on the declining balance between purchase price and residual. You never pay the residual amount and therefore always pay interest because you will owe it until you turn the vehicle in or purchase the vehicle.

The best time to lease a vehicle will be at model year introduction. If you lease a new model year vehicle at that time, not a last year model, the residual will be at the highest point. As the model year progresses, the residual is lowered to account for the depreciation cycle. If you lease at the end of the year, your vehicle will be another model year older when the lease matures. The only thing that changes that formula would be if the manufacturer subsidizes the lease to move over stocked inventory.

The cost of a lease is variable based on two factors...purchase price and interest paid. The residual is going to be a fixed amount unless the manufacturer artificially inflates it and guarantees that value to the lease company. In that case, the subsidy would normally be the same for all dealers On a lease, the purchase price is negotiable and should be fixed before the lease calculation is made. The larger the discount, the lower the payment because depreciation is lowered. Most dealers have an option to charge a higher rate as a money factor and keep the difference. This markup is usually not disclosed to the purchaser and can usually only be discovered with comparison shopping between dealerships.

Properly utilized and researched, leasing is normally the least expensive way to take possession of a vehicle. While you are not building equity, you also do not have any equity when you finance the purchase either until four plus years of payments are made on the typical sixty month or seventy-two month term conventional financing. The largest problems with leasing are the mis-information passed from one consumer to another and the lack of understanding of how it actually works.