Ask MF: Used MINI or Leased MINI?
Today we have another great question from the MotoringFile inbox that we’d like to pose to the community. Tim is wondering which path to go down: buy a used MINI or lease a new one? It’s a question I know I’ve wrestled with myself, and while I have my own suggestions for Tim, we want to know what you think. Click through the break to see Tim’s full question and then leave your comments below.
Hi Guys,
After about ten years of being a fan and stopping into the dealer to do a drive a couple times a year I’m just about ready to get my first MINI. However, I’m limited not by the overall cost, but by my monthly payment. So my question to you is what you think is the better choice between leasing a new MINI or buying a used MINI. To keep my cost around where I need it I’m probably looking at a 2008 to 2010 with about 40,000 miles on it.
Is an older MINI with miles on it worth owning, or should I just go with the lease and get used to the payment?
Thanks for you advice and the great show.
Tim
So what does everybody think? Who’s asked themselves this very question? Which way did you go and why? Sound off in the comments.
<p>I had a MINI. Couldn’t keep from driving it. 20,000 miles in just over 1 year. Serious problems if I had leased.</p>
<p>got an 06 in December with 64k I just hit 79500 the other day. </p>
<p>What most people do not realize is with a lease, you are still paying an interest rate. So ask when you are there, what is the interest rate on the lease? If it is no worse then buying it, go fo it, you can always buy it out in the end. Also, I will always buy a MINI used from now on, you will get a few thousand knocked off the vehicle, and the previous owner probably had the pleasure of working out any bugs the car had with the dealer under warranty which will save you time from having to run to the dealership for warranty work. Just my $.02</p>
<p>just traded my 2007 MCS with 50K miles with a Chili Red 2009 JCW fully loaded with 17000 miles on it, with dealer dealer waranty (50,000 miles) what a deal.</p>
<p>I’ve always thought there was something super cool about buying a bare bones Cooper. Cheaper, less things to go wrong, lighter, simpler, and better resale when the time comes. I might get heated seats, but that would be about it.</p>
<p>I agree. That was me. I bought a pretty much bare bones Justa Cooper in 07. Drives great excellent gas mileage, and has been reliable. I’d definitely go new if at all possible, particularly with the S as earlier incarnations of the Prince engine were suspectible to the death rattle.</p>
<p>This is exactly why I will never do a lease. Trust me the last thing you want to worry about when you have a MINI is if you’re running out of fun filled miles! With a MINI there are always opportunities to go out on outing with your fellow MINIatics: MINI Takes the States, MINIs on the Dragon, Mickey & MINI, etc! Do you really want to limit your exposure to what makes owning the MINI so much more than just owning a car? </p>
<p>I bought an 2008 Cooper in October of last year. Got a good deal on it, was a base model with a few options, got it through the Mini NEXT program. Got the warranty out to 100K, added the Maintenance package out to 100K and tire upgrades for an extra $2000. Got a nice package for an affordable price. I am very happy, not only that but I can drive as much as I want and at the end of the loan I own the vehicle. I would go with a used one, you will be happy to be motoring.</p>
<p>Leasing vs. Owning can be two different experiences – for leasing, make sure you get the options and mileage allowance you need, because you won’t be able to change things on your own. Also, my friend who leased an Impreza STI found a “no racetrack” provision in his lease agreement, so be aware that leasing might limit what you can do with the car. Owning a used MINI lets you tweak your car and drive it as much as you want, but your warranty (if it still has one) will be short.
I bought a used, low-mileage 2004 MINI in 2009. It hasn’t had any problems (knock on wood) and has been a blast to drive these past few years, but after 3 years, the jarring ride and idiosyncrasies are starting to get to me. My brother bought a higher-mileage 2006 and had nothing but trouble… but he loved the MINI so he switched to leasing a new one and is very happy – he doesn’t put many miles on his cars, so the warranty coverage and low payment fit his needs. </p>
<p>For the same monthly payment, you might have more for your buck out of leasing: the dealer keeps the residual value of the car, you pay the interest and the hedge out their risk by under evaluating the resale value. On top of it you get to give it back after X year which is no small thing if you got, god forbid, a lemon. As some have highlighted, the flip side is you get some limitations.</p>
<p>I personally have always bought used, as i liked the fact that i’m buying a good that’s usually depreciated by more than its real lifetime use.</p>
<p>Also don’t forget that financing agreements also sometimes have clauses like ‘no racing’ or ‘no modifications’ until the loan is paid off.</p>
<p>What about MINI Select? I am in a similar situation. Been a MINI for a while and we need a second car. MINI Select seems to be the best of both worlds in terms of monthly cost and depreciation.</p>
<p>I agree with Tendonin. I am leasing a 2011 Mini Countryman S through the MINI Select program. The pluses is that you have a lower monthly payment, like a traditional lease, but you don’t have any milage restrictions. The difference in the end is that you can’t just turn it in and be done. You have have to pay the balloon payment or trade it in for a new MINI. I would recommend leasing…unless you find an awesome deal and interest rate on a used one.</p>
<p>This is short of the lease vs. buy argument. One thought to consider is how long do you plan to own your vehicle? If you flip vehicles every 3 years, than leasing is good, as you can get a new one, and only pay for what you used. However, you WILL always have a monthly payment. If you plan to own your vehicles for a longer time, than buying is good, as your payments will end, and overall, you will have spent less.</p>
<p>I have friends who lease, because they own businesses and get tax breaks for the car.</p>
<p>Whatever you do, love your MINI, and drive it!</p>
<p>I just bought a used MINI last Friday. 2009 MINI Cooper S with 20k miles on it and an extended warranty and maintenance out to 2015/100k. I spend so much less and it had far more features than buying or leasing a new one. Plus I don’t have to worry about instant depreciation when i drive off the lot.</p>
<p>Two details on leasing which I think are important. First, there is the lease fee at the time you sign and second, you can buy out of the lease at any point- this means you can sell the leased car anytime and simply pay off the buyout. If you sell it for more than the buyout, then you profit. This is highly residual and market value dependent.</p>
<p>My ’12 Mini is on order and I will be leasing it. My apprehension is that I will have to watch my driving. I’m in the process of asking to increase my 45,000mi limit to around 49,000mi, because that’s the current program that I’m under with my ’09 Altima Coupe. I got the Altima in Nov. ’08 (as a lease) and it’s limit was 49,000mi for the duration. I’m current at 47, +++ mi and it’s due to turn in on March 1st! The other thing that I factored in is that I’ve rented cars when I needed to travel and I also have another vehicle that I alternate between.</p>
<p>I was really interested in the Mini Select Program, but my fear was that balloon payment at the end that I would have to pay if the depreciation did not balance out between the two.</p>
<p>Since the Altima was my 1st car that I paid for, I wanted to be get use to the process of making payments (so I leased it). My 3rd car (after this Mini) will probably be a purchase – that is, if I don’t choose to buy out this Mini in the end.</p>
<p>Overall, check your options and habits – what suits you best in the end, based off of yoru driving habits?</p>
<p>I used MINI Select and a significant down payment when I bought my R53 in order to keep the payments low. Three years later I didn’t have any trouble financing the balloon payment through my credit union. MINI Financial would have refinanced it too, but the interest was less favorable. Because MINIs have such good resale value, the amount I owe on the car has never dipped below the book value of the car itself. That was on a 2006. Today, the residuals are even more favorable than they were in 2006, so the balloon payment is a significantly smaller percentage of the car’s value than it was when I bought my car. The only downside is that though the monthly payment is small, I’m still making it six years later. But for me, I was always much less concerned about how much debt I was carrying, or for how long, than I was about getting exactly the car I wanted.</p>
<p>Meanwhile we have leased my wife’s last two cars (not MINIs) and being able to just turn in a car at the end of the term and walk away right as it runs out of warrantee is also a great way to go. It’s the ultimate car-as-appliance lifestyle. As others have said, I think the key factor is how long you intend to keep the car. All cars are bad investments, especially new ones. You only really get value out of ownership if you hang on to the car for ten years or more. Otherwise you’re paying the interest and depreciation for no good reason. With a lease, you kind of pay <em>just</em> the interest and depreciation. Over the years, you’ll spend a little more money overall on always leasing cars, but you’ll have a more positive and consistent cash flow. </p>
<p>As for mileage restrictions, it’s not as though they come check on you once a year and fine you if you’re at 12,001 miles. If you do a 3 year 36,000 mile lease, you’ll pay a per mile fee for everything over 36,000 miles when you return the car. It’s not much higher than the per-mile fee you’re already paying to lease the car in the first place. The difference is simply pre-paying mileage or paying after the fact at a slightly higher rate.</p>
<p>If you’re leaning toward buying, have a good look at MINI’s certified pre-owned program. These are essentially cars that others have just returned after leasing them. The warrantee is extended and it’s a car that’s been thoroughly gone over by the dealer because they’re going to have to stand behind that. </p>
<p>I used MINI Select and a significant down payment when I bought my R53 in order to keep the payments low. Three years later I didn’t have any trouble financing the balloon payment through my credit union. MINI Financial would have refinanced it too, but the interest was less favorable. Because MINIs have such good resale value, the amount I owe on the car has never dipped below the book value of the car itself. That was on a 2006. Today, the residuals are even more favorable than they were in 2006, so the balloon payment is a significantly smaller percentage of the car’s value than it was when I bought my car. The only downside is that though the monthly payment is small, I’m still making it six years later. But for me, I was always much less concerned about how much debt I was carrying, or for how long, than I was about getting exactly the car I wanted.</p>
<p>Meanwhile we have leased my wife’s last two cars (not MINIs) and being able to just turn in a car at the end of the term and walk away right as it runs out of warrantee is also a great way to go. It’s the ultimate car-as-appliance lifestyle. As others have said, I think the key factor is how long you intend to keep the car. All cars are bad investments, especially new ones. You only really get value out of ownership if you hang on to the car for ten years or more. Otherwise you’re paying the interest and depreciation for no good reason. With a lease, you kind of pay <em>just</em> the interest and depreciation. Over the years, you’ll spend a little more money overall on always leasing cars, but you’ll have a more positive and consistent cash flow. </p>
<p>As for mileage restrictions, it’s not as though they come check on you once a year and fine you if you’re at 12,001 miles. If you do a 3 year 36,000 mile lease, you’ll pay a per mile fee for everything over 36,000 miles when you return the car. It’s not much higher than the per-mile fee you’re already paying to lease the car in the first place. The difference is simply pre-paying mileage or paying after the fact at a slightly higher rate.</p>
<p>If you’re leaning toward buying, have a good look at MINI’s certified pre-owned program. These are essentially cars that others have just returned after leasing them. The warrantee is extended and it’s a car that’s been thoroughly gone over by the dealer because they’re going to have to stand behind that. </p>
<p>I used MINI Select and a significant down payment when I bought my R53 in order to keep the payments low. Three years later I didn’t have any trouble financing the balloon payment through my credit union. MINI Financial would have refinanced it too, but the interest was less favorable. Because MINIs have such good resale value, the amount I owe on the car has never dipped below the book value of the car itself. That was on a 2006. Today, the residuals are even more favorable than they were in 2006, so the balloon payment is a significantly smaller percentage of the car’s value than it was when I bought my car. The only downside is that though the monthly payment is small, I’m still making it six years later. But for me, I was always much less concerned about how much debt I was carrying, or for how long, than I was about getting exactly the car I wanted.</p>
<p>Meanwhile we have leased my wife’s last two cars (not MINIs) and being able to just turn in a car at the end of the term and walk away right as it runs out of warrantee is also a great way to go. It’s the ultimate car-as-appliance lifestyle. As others have said, I think the key factor is how long you intend to keep the car. All cars are bad investments, especially new ones. You only really get value out of ownership if you hang on to the car for ten years or more. Otherwise you’re paying the interest and depreciation for no good reason. With a lease, you kind of pay <em>just</em> the interest and depreciation. Over the years, you’ll spend a little more money overall on always leasing cars, but you’ll have a more positive and consistent cash flow. </p>
<p>As for mileage restrictions, it’s not as though they come check on you once a year and fine you if you’re at 12,001 miles. If you do a 3 year 36,000 mile lease, you’ll pay a per mile fee for everything over 36,000 miles when you return the car. It’s not much higher than the per-mile fee you’re already paying to lease the car in the first place. The difference is simply pre-paying mileage or paying after the fact at a slightly higher rate.</p>
<p>If you’re leaning toward buying, have a good look at MINI’s certified pre-owned program. These are essentially cars that others have just returned after leasing them. The warrantee is extended and it’s a car that’s been thoroughly gone over by the dealer because they’re going to have to stand behind that. </p>
<p>I’d vote for buying an older one, personally. Leases scare me. There are so many terms to having one…</p>
<p>Also, forgot about this… funny since I have it myself! I’ve got the MINI Select option for my car, it’ll be up in June. That’ll be an interesting experience. Anyways, my MINI was $23,650 when I bought it in 2009. Put a down payment of $7,000 on it (no trade in) and my payments are $220 a month. 1.9% interest rate. Great rate if you ask me. I’ve actually been paying ‘in’ with my extra money and already have the first half of my loan paid off. I love the program, but I’ll have to get back to you when the first half of the loan is up to let you know if I STILL love it… ;)</p>
<p>I leased my last MINI. I had no pride of ownership and basically kept it clean because I don’t like dirty cars. I didn’t customize at all other than a grill badge. I was often worried about going over the mileage allowance. I knew it was costing a small fortune and I would have to give it back after 3.25 years. I got cheap winter wheels that were kinda ugly. I was worried for months about rock/hood and bumper damage charges for the eventual return (fortunately no charge!!). I had a damaged run-flat tire and had to pay $$ to replace it. On the other hand, MINIs are not the most reliable cars out there and I knew if there were issues, it was going back so who cares.</p>
<p>I financed my 2012 JCW and put a hefty down-payment to reduce my interest costs. I got some great looking winter wheels. I’ve done some minor modifications and may do more later. Even though part of the car is still financed, I know it is “mine”. I will have non-run-flat summer tires and I can sell the old tires with no repercussion. I don’t have to worry about the mileage… but I do have concerns about long term reliability… But I do have a warranty for a while.</p>
<p>FWIW, in July 2010 I bought a 2004 MINI S MC40 + JCW w/ 35k miles for $16k. At the time MINI was offering a $199/mo lease option, but only for a base model.</p>
<p>A year and a half later (3k miles), I couldn’t be happier with Herbert (my MINI). I’ve even convinced friends’ parents to join the dark side, just from sitting in the passenger seat!</p>
<p>Getting a MINI, Leased or Used, is a good choice. But if your ass cheeks grace the seat of an S/JCW/GP, the lease won’t be the same. Plus, you will be extremely limited to what modifications you can do – which in my case, was the deciding factor.</p>
<p>Happy Motoring, friends!</p>
<p>MINI Select all the way, just make sure the interest is low, no down payment and the Balloon payment at the end is lower then what the car will be worth in 5 years. just check what 5 year old minis are selling for a rough estimate. It will keep the monthly payment affordable. Only negative is that you’ll be locked in for the duration of the loan.</p>
<p>In Pennsylvania we don’t have the ability to take advantage of the Owners Choice. I’ve had a few customers who have moved here from out of state, so I’ve had limited experience with it. The one problem I’ve seen is that sometimes the buyout price car be higher than what the car is worth. I think you’re responsible for the balance as per your contract, if you’re planning to buy it out anyway it’s not a problem, just keep in mind you may be paying a tall price for it.</p>
<p>I would get a R53 hardtop (Preferably from MY2005-2006) with proven maintenance and repair history. To me the absolute best MINI ever made.</p>
<p>VanMINI likes this (2006 R53 JCW)</p>
<p>+1</p>
<p>Leasing is generally a bad idea for the everyday individual. It only makes sense if you are a business and you can write off the lease monthly payments in your income tax.</p>
<p>Cheapest way to own a car is buying used (or new if finances allow) and keeping it until the wheels fall off. It is actually cheaper to keep repairing and maintaining a car post-warranty than buying a new car every 3-4 years with the excuse of a new car “warranty”.</p>
<p>If the cost of yearly repairs + maintenance exceed that of a monthly payment (Say roughly $500 per month X 12 or $6000/year) then it is time to dump the car and get a new one.</p>
<p>But financially (and mathematically) it has been proven time and time again that leasing is the most expensive way to finance a car and it only makes financial sense to buy second hand and own until the car bites the dust.</p>
<p>Seems to me that people have not yet learn the hard lessons of this horrid economy and job market.</p>
<p>There are too many questions to ask and answer to get to the right outcome here. Some people are great lease candidates, others are not. It’s been my experience that the vast majority of anti lease people out there know very little about it. Having all the information is key in making your decision. There are lots of upsides to leasing, and lots of upsides to owning. (there are also downsides to both)
Here’s is one example; if you have an accident in your car and it’s a lease, no problem, your insurance company pays to fix the car. You hand the car back in after it’s been fixed and all is well. The deminished resale value isn’t your problem. If you bought the car, you’ll find that the car is generally worth 20% less when it’s time to sell it/trade it. If you’re saying that you plan to keep it forever – buy it. You will have the option to buy the leased car before the dealer can even buy it. If you feel that it’s been a good car and the price is good, buy it. If you know the car has a few issues and you’re not crazy about it, you have the option of walking away.
Find a good salesperson who knows what they are talking about and run the numbers.</p>
<p>Leasing has more pitfalls that advantages and yes I am well familiarized with the process having leased an Acura many years ago. You pay higher insurance premiums because your coverage limits for both comprehensive and collision are higher (The car is in the bank’s name not you). Tires and other consumables (Unless the car has included maintenance) come out of your pocket and the car is not yours. Dings, dents and other “wear and tear” damage must be addressed by the lessee prior to turn in the car or risk getting dinged by the lease company/bank with high fines or inflated repair bills. Mileage charges can rack up quickly. Life and job changes during the life of the lease can wreck havoc with your wallet and credit standing. it is not easy to get out of a lease contract without incurring hefty penalties. And if the car is wrecked you are still responsible to seek for repairs and if the insurance policy holding company does not “total” the car you will still be driving around in a salvaged car until the end of the lease contract. There is no free lunch when it comes to leasing, folks. </p>
<p>Leasing looks like a good deal at the beginning but all the nasty surprises and hidden costs come back to haunt you at the end. If dealers and manufacturers love leasing we consumer must beware of it and educate ourselves (This education should never take place at the dealership’s showroom floor) as much as possible. Leasing is not for everyone yet dealers suck people into it. The lure? Affordable car payments, low out of pocket cash outlay (well that is debatable with capitalization costs) and generally get them to sign on a more expensive vehicle than otherwise would be beyond the scope of affordability under traditional finance.</p>
<p>Be sure to understand all the options and what you are getting into before signing the dotted line. Lease is not for the vast majority of people and don’t let this education take place in the showroom or in the dealer’s finance office.</p>
<p>If you finance the car, it will still essentially belong to the bank until you’ve paid that loan off. So if you finance, is the insurance cost higher? No. If you finance a car and decide to sell, do you not think cracked windshield and door dents are coming off of the sale price? So you are paying in that instance, you just wont be getting a bill in the post. Sure, in the case of an accident you’re driving in a car that has been repaired. Same deal if you financed, however, as Mark points out, you can return the leased vehicle and the lessor takes the loss due to reduced value. Where I live the accident is declared on the registration, and depending on the amount of damage sustained can seriously impact the resale value, if anyone will buy your car at all. Given the choice I’d always buy the car that has never been in an accident.
The principal reasons dealerships like leasing is, when the lease is up, they get the first chance to talk to you about your next car and potentially a nice car for the used car lot. That’s it. There is no more profit in leasing a vehicle to you than there is selling you the car. I do agree with you, go in educaated and make the call for yourself.
Back to the original question, up here in Canada MINI offers a finance option called ‘Owner’s Choice’ and it is the route I’ve gone to buy both of the MINI’s I have owned. In essence, there is a balloon amount payable at the end of the finance term, so kind of like a big down payment at the end instead of the beginning. It shrinks the monthly payment to approximately that of a lease but with a lot more flexibility. This sounds like it may be the same as MINI Select? If it is, that’s the route I’d go, new car, MINI Select.</p>
<p>Craig, your insruacne cost IS higher becasue the finance company ( BMW finance or other) demands superior coverage on their vehcile. If you owned it, you might be willing to take on more risk and have lower coverages for the sake of having more $ to put into the tank or mods :)</p>
<p>Mark @walk0080:disqus
MINI makes some excellent points. Leases are good for some, but not all. I wouldnt lease a vehcile unless I needed it for work and had a car allowance. LEasebusters.com is a Canadian site which is a great showcase for lease owners desparately looking to get outta leases. I have a guy who works for me leasing a brand new Honda civic.. WHY?? it was the only way he could get the car that (he thought) made him look cool and successful.</p>
<p>In Canada, you can write off the entire lease payment on your tax return against self employed income, where you can only write off the interest payment on a vehcile fiance payment. both require you to keep track of mileage.</p>
<p>Lease or Buy, new or old – all designed to help product advisors and MINI owners come together….</p>
<p>let’s MINI</p>
<p>Personally, I hate all leases. I always buy my vehicles cash, no lease, no loan. I keep them in top condition and trade them in when I feel I want a new one. I always get top trade in dollar and then pay cash difference for the next car.
I used to trade Ford F-250 Diesel pickups this way and the costs would average about $2500 a year or two hundred a month for a new $55,000 pickup. I generally held the vehicles for about 3 years. NO way I could come out that good with a truck lease program.</p>
<p>It’s definitely smart to pay cash and not lease but then you go and do a trade-in? Sorry, you will do better financially if you sell privately and negotiate the best price. I’ve never heard anyone claim that trading in a car is the best thing to do financially. More convenient, yes. </p>
<p>I don’t think i’ve heard anyone speak to the reliability of these cars as they age….</p>
<p>Perfect timing on this question! I’ve always paid cash for my vehicles, but I’m planning on ordering the Paceman, or whatever the R6 moniker will be later this year. I’ll be using it for my business, so I can write it off. I’m not concerned about going over the allotted miles because I have three other MINIs to motor in. I think my accountant may advise leasing instead of buying. Does it make sense to pay for the entire lease up front, or does that defeat the purpose? I don’t plan on modding it at all, or taking it to the track. </p>
<p>Sorry for the typo…that would be the R61, not R6</p>
<p>The answer to Tim’s question is “it depends”… He doesn’t give enough information to really give a good answer! Educate oneself on the options (costs and constraints), then break out the Excel sheet and figure out what works best for one’s anticipated use case.</p>
<p>But yes, an older MINI with miles is worth owning. And no matter the finance route, if one doesn’t buy the car outright at purchase, the payments need to be compatible with one’s monthly budget.</p>
<p>Also, don’t forget the difference in insurance costs too!</p>
<p>Matt</p>
<p>Thanks all for your comments and suggestions. Like to keep my cars as long as they will last. “till the wheels fall off” I think one commenter wrote. I guess the part of the question was how long will that be on a mini? I’m currently driving a ’98 Toyota Rav4 and the thing just keeps on going. I bought it used with 45k on it and now it has 160k… and it’s still going. If the mini will do the same then the used mini is the clear choice for me.</p>
<p>I head DB mention that he has 250k on his Cooper. Can others speak to the longevity of their MINIs? I’m looking at a Clubman S probably. I’ve heard the S is definitely the way to go with the clubman because of the increased body weight… feel free to chime in on this as well.</p>
<p>Thanks again for all the help,</p>
<p>Tim</p>
<p>I am pushing 90K miles in my 2005 R53 Cooper S (Bought brand new 7 years ago). I have read separate instances of MINIs reaching 300K-400K miles.</p>
<p>Look, let’s be honest here…. A car will last you however you treat it and take care of it from new. Modern cars can easily last 250K miles with regular maintenance. Hear me out…. Maintenance is the key to longevity. People now days drop $30K-$40K on a new car and they barely change the oil. They put gas, because they have no other option but maintenance is not an ingrained habit in people today. They have this false notion that 15K mile oil change intervals and “Lifetime” fluids like in the transmission effectively solve the problems and hassles of basic maintenance or good accepted practices. Then cars crap out and they come out to say that the car is a piece of junk.</p>
<p>There are lemons and those happen everyday on every brand, this includes the vaunted Japanese.</p>
<p>How you accelerate, brake, turn and take care of the car will determine how it will last in its elder years.</p>