'15 i3 purchase vs '17 i3 lease -- price and depreciation

So, I am in the greater Boston area. I am contemplating an i3 Rex and can buy a CPO '15 for around $27k with under 5,000 miles; MSRP on the car was about $52k, in service for a year, so the extended warranty would take it out for 4 years from today. Clean Carfax records.

Or, lease a '17 with an MSRP of $55.5 with a 'sale' price of $50k, plus the federal and a state refund of $10k total, residual is calculated at $32.3k (58% of MSRP!); hence, depreciation on the car (what you pay for in a lease) is only abut $8k. Interest rate is a bit high, so interest expense would be about $4k over the term of the lease. Add in other fees of say $1.5k. Hence, the cost of ownership of the leased car would be about $13.5k for 3 years (excluding sales tax, but I also have to pay sales tax if I buy the '15, so consider that a wash)

So, any thoughts on the price of the '15? It certainly seems like a pretty aggressive offer, and the dealer has also offered me a very good price for my trade-in.

However, the other option is the leased vehicle, which sticks BMW FS with the risk of depreciation on a vehicle that may be out of date come 3 years from now. I have been thinking the future depreciation of the '15 may be in the $13k range over the next 3 years -- any thoughts as to what a low mileage '15 i3 will be worth in December, 2019?

Obviously, BMW thinks a 3 year old '17 i3 will be worth circa $30,000+ at that time, but that seems extremely unlikely. So, what would a 4-year old '15 i3 be worth?

I really would like to go all electric in Dec 2019, although buying the i3 gives me the chance to hold off a bit longer, or jump in earlier if there is a compelling reason to do so. But, a lease sticks BMW with the risk. Plus, of course, the newer car has the longer range of the bigger battery.

I welcome you thoughts

I would lease based on your desire for all-electric and electric cars are going to be getting alot better in the next few years. The resale on the 2015 may even suffer due to the larger battery in the 2017 i3. Plus the Tesla model 3 will be available by then and might be a game changer since it will have twice the range of the i3. I got a 2015 i3 in February 2016 via 30 month lease for about $8k all in taxes and everything.

I'm also uncertain about the resale value. In a year or two, 2014- 16 i3s will be inferior in range to just about anything, save for the old LEAFs. With introduction of the 94AH 2017 i3, I would expect the used prices to go down even now, and I don't really see it happening. So, don't rely on my predictions too much

Also consider if the range of the 2015 is adequate for you. It works surprisingly well for me, but Boston is a large city with cold winters.

lsp12 said:

. . . I am contemplating an i3 Rex and can buy a CPO '15 for around $27k with under 5,000 miles; MSRP on the car was about $52k, in service for a year, so the extended warranty would take it out for 4 years from today. Clean Carfax records.

Or, lease a '17 with an MSRP of $55.5 with a 'sale' price of $50k, . . .

Click to expand...

In May 2016 I bought a 2014 BMW i3-REX, end of lease, with 6440 miles for $29.9k. Yet time moves on and there is a newer Prius Plug-In whose sales started in November but it will likely be in short supply for several months:

• Prius Prime vs BMW i3-REX
• 25/550 vs 72/80 EV/gas mile range
• 71/(121 hp engine) vs 168/(32 hp REX)
• 54 MPG vs 40 MPG @65 mph

Look at your requirements and choose what works best. In my case, I was offered a 2016 Prius Level 3 for the price of the used BMW i3-REX. In May an easy decision that would be harder today:

• City driving - BMW i3-REX is much nicer with better handling, dimensions, and urban range
• Highway driving - Prius Prius is much nice with longer range for better block-to-block time

Bob Wilson

I just picked up my 2017 i3 REx from the dealer on CommAve and leased it.The lease made more sense for me because the lease deal was favorable, the technology is changing too fast, and the depreciation on these cars is insane. A 2015 might make sense if you don't mind the lower range.

The residual on the lease is absurdly high based on what a used i3 goes for. I was able to knock about $50 off of the monthly payment by chaining seven security deposits together ($450 each). The upside of chaining the security deposits together is that I will get the security deposit back at the end of the lease. The cap cost reduction only reduces the monthly payment; it does nothing to reduce the overall cost of the lease. Even taking into account the opportunity cost of using the money for the security deposit instead of investing it the security deposit chaining makes a lot of sense.

Also, the USAA discount was $1,000 which lopped off another $28 per month. The F&I person was very helpful in getting the code once she saw I had USAA for insurance.

BOSi3 said:

I just picked up my 2017 i3 REx from the dealer on CommAve and leased it.The lease made more sense for me because the lease deal was favorable, the technology is changing too fast, and the depreciation on these cars is insane. A 2015 might make sense if you don't mind the lower range.

The residual on the lease is absurdly high based on what a used i3 goes for. I was able to knock about $50 off of the monthly payment by chaining seven security deposits together ($450 each). The upside of chaining the security deposits together is that I will get the security deposit back at the end of the lease. The cap cost reduction only reduces the monthly payment; it does nothing to reduce the overall cost of the lease. Even taking into account the opportunity cost of using the money for the security deposit instead of investing it the security deposit chaining makes a lot of sense.

Also, the USAA discount was $1,000 which lopped off another $28 per month. The F&I person was very helpful in getting the code once she saw I had USAA for insurance.

Click to expand...

Thanks for the info. How much off MSRP did they go?

My new offer is about $5500 off, including the USAA discount. However, they are marking up the MF from .00134 to .00169, so that is about $25/month over the life of the lease, or a bit north of $900. I would definitely buy down the rate, as the MSD gives an IRR of around 14% (and after tax, at that), so a good use of money. I might do a trade in as a down payment -- that has a couple of benefits: no sales tax on the value of the trade (that saves 7% of the trade value); plus paying the marked-up interest on a smaller sum of money. So, the IRR on the use of the car as a down payment is around 4% after tax or say 6.5% pre-tax. Obviously, a trade off with the increased risk inherent to having a down payment on the leased car, and the alternative uses of the money.

I don't really need the range of the '17, though it would of course be nice. I only drive say 5,000 miles/year. It really is just a decision about the likely depreciation on the '15 vs. the known expense of the '17. There are, of course, other tradeoffs -- I am in RI, and there is an outrageous annual car tax (6%/year on the value where I live!), so a 2 year old model will have a lower valuation and hence lower tax, probably to the tune of $50 - $75/month. But, the '15 ties up my capital for the 3 year period, and that has an economic cost as well. And, RI has a $2500 rebate on new electric cars, so that helps the '17.

When you net it all out, it really is a question of the future value of the '15. If it falls by more than another $12,500 in the next 3 years, it's probably a wash. So, if I pay say $25,500 for the '15 ($27,000 less a $1500 inflated trade valuation), will a 4 year old '15 i3 with say 20,000 miles and 1 year of warranty left really be worth only $13,000 in December 2019? That's the question....

I got $5000 off list and then they added the $1,000 USAA discount in the F&I office. I was pleasantly surprised to learn of the USAA discount.

You could just take over my Lease and drive the car till Next year November and see if you want to get a new I3 in 2018/19 or a Tesla 3 when the lease runs out. Don't have to worry about car deprecation or down payments or money factors.
$362.29 a month
Residual: $31,040.00 end of contract
Contract End Date
11/3/2018