BMW Leasing 101 / FAQ (BMW emphasis)

[Powaup]

Here is a link to a lease calculator that I think will be very useful for this thread: http://f80.bimmerpost.com/forums/att...4&d=1391667449

[macagain]

Originally Posted by MFNATIK

My friend did this with his 528i. Bought it for less than the residual. I haven't heard it happening for M cars but I'm sure others may chime in.

Any idea if from dealer or BMWFS directly?

[doug_999]

Great post OneRib! Best full lease explanation out there and now we can just link back to here when people ask questions. One minor clarification

When you turn your car in, the dealer can buy the car on the spot from BMWFS (as you noted, they get a better price than the residual). In that case, they can sign off on the car as is and you are free and clear (sometimes an advantage vs. waiting for the final BMW inspection).

Originally Posted by Mako

I think this might depend on what State you live in though, in Illinois for instance the new tax law taxes a lease on the down payment plus monthly payments. So I read this as "fees" like acquisition fee, doc fees, DMV fees are not a "deposit" so if paid up front there should be no tax on them (7% for me) but if I roll them into the lease, then I would be charged 7% tax on them! seems silly to roll something in and have to pay taxes because of that, other states might be different.

Mako, I believe the law is
"tax will be based on each lease payment (plus related fees and charges)"

So no advantage to not rolling in (although my dealer normally makes me pay the doc fees and DMV fees outside of the lease anyway).

[MRCUR]

Originally Posted by macagain

Any idea if from dealer or BMWFS directly?

If you're doing a lease buyout, you're paying BMWFS directly since they own the car. Dealers do not own leased cars. If you're trading in the car to a dealer, they will take care of the buyout with BMWFS (just as they would if you had a loan on a car and were trading it in).

[Victor G]

Great post. Thank you!!

[F80NJM3]

Very valuable information especially for 1st time buyers. Nice work OneRib

[davezaristo]

Originally Posted by OneRib

Some states like CA just charge tax on your monthly payment or the depreciated amount of the car while in the lease term (it all means the same thing). This rate can be the same as the sales tax or a specialized rate that is different for sales tax.
PA for example has a 6% sales tax but charges 9% tax on every lease payment (higher in Philadelphia or Allegheny County).

Other states charge sales tax on the whole sale price of the vehicle. I think Texas does this. For this reason leasing is not desired. BMW has combated this by creating owners choice which gives a temporarily low initial payment with a lump sum at the end. I circumvents the lease tax and still allows the buyer to walk away before the lump sum is due.

Taxes vary too much from state to state for me to be accurate or knowledgeable about every state.

I am in CA and that makes me wonder why I have to pay an upfront tax when taxes have already wrapped into the monthly payment..and the funny thing is that I got two similar quote and while most of the numbers being equal, the quote with additional discount off MSRP is $100 higher on upfront tax, which i can't seem to understand how it was calculated...

[Mr.SugarSkulls]

Originally Posted by davezaristo

I am in CA and that makes me wonder why I have to pay an upfront tax when taxes have already wrapped into the monthly payment..and the funny thing is that I got two similar quote and while most of the numbers being equal, the quote with additional discount off MSRP is $100 higher on upfront tax, which i can't seem to understand how it was calculated...

You and me both- especially that first point. Is that legal?

Btw OP- thank you so much for this post, that must have taken you a while, so your efforts are appreciated!

[jzmundy]

Incredibly useful post - thanks, OP!

[OneRib]

Originally Posted by davezaristo

I am in CA and that makes me wonder why I have to pay an upfront tax when taxes have already wrapped into the monthly payment..and the funny thing is that I got two similar quote and while most of the numbers being equal, the quote with additional discount off MSRP is $100 higher on upfront tax, which i can't seem to understand how it was calculated...

Originally Posted by MrSugarSkulls

You and me both- especially that first point. Is that legal?

Btw OP- thank you so much for this post, that must have taken you a while, so your efforts are appreciated!

I may be wrong about California. PLEASE double check your state rules via the state government site or something similar. I am not an accountant and I can't be positive about any specific state's tax rules.

[Mr.SugarSkulls]

Originally Posted by OneRib

I may be wrong about California. PLEASE double check your state rules via the state government site or something similar. I am not an accountant and I can't be positive about any specific state's tax rules.

No worries my man, I'm not quoting you when I speak to my CA/ it did make me curious though, so I'll simply ask for my curiosities sake.

[Gastoys]

Other cool part about leases is that if the car is ever severely damaged resulting in a salvage title after repaired by authorized shop BMW is the salvage title holder, not you.

[Thrak]

Originally Posted by Powaup

Yes, it would be harder to get rid of a lease if you have lots of money in cap cost reduction because the new leasee would be required to make a lump payment for the total value of cap cost reduction left on the lease.

Not sure if I understand this part. If I put down, for example, $10,000 in cap cost reduction, that would lower my payment by a significant amount. In my particular case, it would drop my payment from $913 to $648.

Why would there be a cap cost reduction left if I already paid $10k up front? Or are you saying that in order to not waste a significant amount of money, I'd be advised to ask anyone taking over the lease to pay me a pro-rated portion of the $10k in order to keep their monthly payment at the $648?

[phoenixbmwlife]

Best thread in a long while. Well written and I agree with everything written. Good Job!

[TrqAdct]

Great info OP! Agree with you an all accounts. Thanks for posting.

I've been wondering about one thing regarding purchasing extra miles. Does the residual get adjusted automatically in case you buy extra miles?
In other words, if your original residual is say $30k...few months before your lease end you buy $2000 with of miles (because you are over)..is your new residual $28k now?

[gvega702]

Great post and will be useful for a guy like me one day if I choose to lease

[OneRib]

Originally Posted by Thrak

Not sure if I understand this part. If I put down, for example, $10,000 in cap cost reduction, that would lower my payment by a significant amount. In my particular case, it would drop my payment from $913 to $648.

Why would there be a cap cost reduction left if I already paid $10k up front? Or are you saying that in order to not waste a significant amount of money, I'd be advised to ask anyone taking over the lease to pay me a pro-rated portion of the $10k in order to keep their monthly payment at the $648?

Yes exactly. A lease amounts to paying for the depreciation of the vehicle while in your hands (+interest and fees). How you decide to pay it is up to you. You could essentially put the whole lease cost down in one up front payment and drive around for free. If you did that and halfway through he lease wanted out, you would want a prorated amount back. You wouldn't want the person taking the lease over to drive around for free. The one taking over the lease would not want to pay you anything. The lease holder has less leverage because they are on the hook for the lease term unless someone agrees to take it over.

So in your example the $10k is your money you used to help finance borrowing the vehicle for a set period. You would want the prorated amount back if you don't use the vehicle for the whole time. Now you have to find someone willing to give it to you. If you put no money down, its just a matter of taking over the monthly payment.

[OneRib]

Originally Posted by TrqAdct

Great info OP! Agree with you an all accounts. Thanks for posting.

I've been wondering about one thing regarding purchasing extra miles. Does the residual get adjusted automatically in case you buy extra miles?
In other words, if your original residual is say $30k...few months before your lease end you buy $2000 with of miles (because you are over)..is your new residual $28k now?

No change to the residual. By buying extra miles you are evening out the residual value on your end before turning the car in. It only makes sense to buy miles if you plan on walking away from the car at lease end. If you are going to buy it or the dealer agrees to buy it from BMWFS, then you wouldn't want to buy the extra miles.

[flyga3]

Awesome thanks for sharing!

[BGM]

that "money factor" nonsense is ridiculous..

why not just use interest rates?

[r3zon8]

Slap this puppy on your laptop next time you lease. Instructions are in the second sheet. Enjoy!

https://www.dropbox.com/s/jlksj80qwx0v7pi/regm.xls?dl=0

There's a nice list of crowd-sourced lease rates/residual for most makes/models on ridewithg.com

Invoice prices are all on edmunds.com

With those 3 things you'll be unstoppable. Well not really, but at least a VERY knowledgable consumer and sales managers will appreciate that. If they don't shop elsewhere or try an auto broker like best buy auto leasing in NY.

[OneRib]

Originally Posted by r3zon8

Slap this puppy on your laptop next time you lease. Instructions are in the second sheet. Enjoy!

https://www.dropbox.com/s/jlksj80qwx0v7pi/regm.xls?dl=0

There's a nice list of lease rates/residual for most makes/models on ridewithg.com

That website used to be fantastic, but it became too popular and his source was "strongly encouraged" to stop providing numbers. Now its just a collection of self reported deals. Not all models and lease scenarios are listed every month.