Automotive

Car lease strategy (very high interest)

  • Last Updated:
  • Dec 7th, 2019 12:00 am
[OP]
Newbie
Mar 16, 2010
63 posts
12 upvotes

Car lease strategy (very high interest)

Hello,

I'm getting a BMW X7 which has a very high interest rate (5.99% for lease and 4.99% for finance). I considered going balloon finance but dealer says it requires a $10K collateral to prevent from exporting the vehicle.

My ultimate intention is to keep the vehicle but I can't justify the high interest cost by getting into a 4~5 year finance arrangement.

So, I'm considering getting into a 2-year lease with a high downpayment ($30K~ $40K), and just take over the vehicle at the end with enough savings I will have by then.

Ideally I would just buy outright with this kind of interest rate but unfortunately I don't have enough disposable cash at hand.

What do you think of this strategy? Is it too crazy / unorthodox?
Last edited by yuliskorean on Dec 1st, 2019 3:44 pm, edited 1 time in total.
61 replies
Deal Fanatic
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Sep 14, 2006
8759 posts
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Is the X7 or even a BMW a must have for you or can you not go look at other luxury brands with lower interest rates?
TEAM CANADA!!!!!!!!!!!
[OP]
Newbie
Mar 16, 2010
63 posts
12 upvotes
yeah unfortunately(?) I fell in love with this one and I decided to bite the bullet :)
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Sep 14, 2006
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Do you have to get it now or can you wait until a better rate is available? Can you get a LOC and pay it out with it and just repay your LOC as long as you’re disciplined enough to actually pay it back.

I don’t actually condone you doing it but if you must buy the X7 now, this is another way to save in the interest cost assuming the LOC rates are lower.
TEAM CANADA!!!!!!!!!!!
[OP]
Newbie
Mar 16, 2010
63 posts
12 upvotes
I need to get it now as our family needs the vehicle with baby no. 2 coming, etc.

I should look into my banks for LOC options tomorrow, but chances are slim as I recently refinanced my condo to purchase a house. Not much equity built in either yet.
Deal Fanatic
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Sep 14, 2006
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yuliskorean wrote: I need to get it now as our family needs the vehicle with baby no. 2 coming, etc.

I should look into my banks for LOC options tomorrow, but chances are slim as I recently refinanced my condo to purchase a house. Not much equity built in either yet.
Bro, you’re potentially cornering yourself into debt. I’d highly advise you to reconsider other cheaper cars.

Second baby coming
Refi on condo to get a new house
Buying $100k car

All that is $$$

But if you must, LOC with a lower rate is probably your best option.
TEAM CANADA!!!!!!!!!!!
[OP]
Newbie
Mar 16, 2010
63 posts
12 upvotes
Hahah yeah i know it sounds bad. All good though! Got good cash flow (with all the rental income it is more positive than before) and also got good sources of income confirmed. Just dont have enough disposable cash at hand right at the moment.

But brother i hear you. Ill check with my banks for loc options! Thx much!!
Deal Addict
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Sep 9, 2012
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Oakville, ON
yuliskorean wrote: I want to get it now as our family want the vehicle with baby no. 2 coming, etc.

I should look into my banks for LOC options tomorrow, but chances are slim as I recently refinanced my condo to purchase a house. Not much equity built in either yet.
Fixed that for you. Nobody *needs* an X7 just because they have a 2nd kid on the way.
Deal Expert
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Jul 30, 2007
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Toronto
If you are ever so fortunate, perhaps your bank may offer you prime + 1%
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CanadianLurker wrote: Fixed that for you. Nobody *needs* an X7 just because they have a 2nd kid on the way.
He can get a Toyota Sequoia for tens of thousands less and will have room even for baby #3 and #4.
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Sep 6, 2018
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BeaverLiquor wrote: Don't know how someone can "fall in love" with a vehicle, let alone one built for soccer moms.
Blind consumerism at its finest.
Deal Addict
Apr 26, 2013
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aweawea wrote: Blind consumerism at its finest.
This type of behaviour is how good people get brought down to earth sometimes. All it takes is one source of this supposed guaranteed income to dry up, people counting their chickens before they've hatched.
Deal Addict
Mar 3, 2018
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GTA
yuliskorean wrote: I should look into my banks for LOC options tomorrow, but chances are slim as I recently refinanced my condo to purchase a house. Not much equity built in either yet.
Not directly related to your car purchase but are you going to be renting out that condo. If so was the condo refinancing to get a down payment on a personal house. If that is the case the condo interest payments will not be deductible against rental income. Might affect your cash flow projections.
Deal Expert
Aug 22, 2011
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Center of Universe
Doubt you'll get a LOC under 5%.
Put the $40K as a lump sum payment on your new house and see if you can get a HELOC, which is easier at prime +.5%>
Deal Addict
May 30, 2012
3921 posts
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BC
I have loc 150k at prime -0.25 that is not being used...
I also have the cash to do a cash purchase for x7. But I don't see x7/gls worth 100k. Q7 (3.0t) / xc90 (t6) is more reasonably priced.
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Sep 6, 2002
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4.99% isn’t bad. I’d advise against large deposits on a lease.

Another option is to apply for this credit card and see what your approved for 0% for 10 months but if you don’t pay it back in time get ready for high interest
Autocorrect sucks
Banned
Dec 14, 2017
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yuliskorean wrote: I need to get it now as our family needs the vehicle with baby no. 2 coming, etc.

I should look into my banks for LOC options tomorrow, but chances are slim as I recently refinanced my condo to purchase a house. Not much equity built in either yet.
You don't really need an x7 with a second baby coming in, maybe check out the X5.
Deal Expert
Jan 15, 2006
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Richmond Hill
That grill...

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