BMW Leasing 101 / FAQ (BMW emphasis)

[s4play]

Originally Posted by bb1857

Exactly what he said...think of it this way...you want to rent an apartment and its $2000 a month for 3 year lease....you want cheaper rent payment...would you ever give them $5000 upfront to lower that monthly payment?? Not likely and if you do I would like you to be my renter!

Same exact concept with a car because you are truly renting it from them for the term of the lease.

I love the way you worded this to make it easy to understand, thanks!

[OneRib]

Lessthanzero
Your mindset is different when it comes to leasing. When you lease you are paying for the deprciation cost of the car plus interest. When buying, you are trying to get the buy the car for the lowest overall cost. That's why buyers tend to worry about paying more down upfront so they qualify for the best interest rate at the shortest term they can afford. A leasing customer wants to pay the smallest depreciation cost over the lease term. There is no real benefit to paying money down on a lease. You could lose it in a total loss collision and it doesn't really save you any money overall. I tell people if they really would like a lower monthly payment either buy MSDs or take your downpayment money and put it in a separate account. You can then siphon off small amounts every month to lower the payment.

[Lessthanzero]

Thanks all for helpful comments. I've been without internet, traveling but am back, armed with more information:

* 2017 model yea (F83)
* MSRP for build is $86,400
* Sale price is $82,000
* 10k miles/year
* money factor $30/$1000 (Am it getting this right?)
* DC sales tax is 8.17% which shouldn't be applicable to leases, of course. However, there is a monthly 10% use tax on the lease portion as I understand it.
* Dealer charges $499 processing fee
* Tags for 2 years $185

For a 36 month lease I was quoted the following:
=> No money down: $1,400 per month
=> $5,000 down: $1,181 per month

Do these prices look right? What else should I ask for?

[OneRib]

Originally Posted by Lessthanzero

Thanks all for helpful comments. I've been without internet, traveling but am back, armed with more information:

* 2017 model yea (F83)
* MSRP for build is $86,400
* Sale price is $82,000
* 10k miles/year
* money factor $30/$1000 (Am it getting this right?)
* DC sales tax is 8.17% which shouldn't be applicable to leases, of course. However, there is a monthly 10% use tax on the lease portion as I understand it.
* Dealer charges $499 processing fee
* Tags for 2 years $185

For a 36 month lease I was quoted the following:
=> No money down: $1,400 per month
=> $5,000 down: $1,181 per month

Do these prices look right? What else should I ask for?

That isn't how you normally write the MF and it comes out lower than the base MF when I tried to convert it. The residual is 60% and the base MF is 0.00137 or 3.288%
I get $1291.73/month using Leasematic. So they may not be giving you the base MF. Not sure is the sales price is a good deal but you can check the name your deal thread to find out.

[Evangelo2]

Hey Guys,
I built a spreadsheet to calculate lease price and am wondering if anyone can verify that my logic looks correct. Putting a table of factors and payment below. Thanks guys!
-Evangelo2

Lease Factors

MSRP $82,820.00
Money Factor 0.00137
Effective Rate 3.288
MSD Cost $800.00
MSD Count 4
MSD Cost $3,200.00
MSD Discount 0.00007
Effective Money Factor 0.00116
New Effective Rate 0.02784
Cap Cost $80,000.00
Residual Rate 60.0%
Residual Amount $49,692.00
Cap Cost-Residual $30,308.00
Acquisition Fee $925.00
Disposition Fee $350.00
Taxes $2,606.49
Total Amount $34,189.49
Down Payment/Cap Cost Reduction $10,000.00
Down Payment Less MSD Total $6,800.00
Total Financed $27,389.49
Term (Months) 36
Payment ($793.91)

[bb1857]

Originally Posted by Evangelo2

Hey Guys,
I built a spreadsheet to calculate lease price and am wondering if anyone can verify that my logic looks correct. Putting a table of factors and payment below. Thanks guys!
-Evangelo2

Lease Factors

MSRP $82,820.00
Money Factor 0.00137
Effective Rate 3.288
MSD Cost $800.00
MSD Count 4
MSD Cost $3,200.00
MSD Discount 0.00007
Effective Money Factor 0.00116
New Effective Rate 0.02784
Cap Cost $80,000.00
Residual Rate 60.0%
Residual Amount $49,692.00
Cap Cost-Residual $30,308.00
Acquisition Fee $925.00
Disposition Fee $350.00
Taxes $2,606.49
Total Amount $34,189.49
Down Payment/Cap Cost Reduction $10,000.00
Down Payment Less MSD Total $6,800.00
Total Financed $27,389.49
Term (Months) 36
Payment ($793.91)

Numbers look right but logic is way off. You should NEVER EVER EVER put money down on a lease...EVER. You are simply rolling the dice with possibly losing your money over the course of 36 months. Only put the MSDs and first payment down and nothing else. If you are worried about a higher payment then stick the $6800 in a separate account and pull from it monthly for the payment.

Would you ever put your $6800 into an account that would never increase but for the course of three years has an absolute possibility of disappearing completely? That is what you are doing when you put money down on a lease.

[Evangelo2]

Originally Posted by bb1857

Numbers look right but logic is way off. You should NEVER EVER EVER put money down on a lease...EVER. You are simply rolling the dice with possibly losing your money over the course of 36 months. Only put the MSDs and first payment down and nothing else. If you are worried about a higher payment then stick the $6800 in a separate account and pull from it monthly for the payment.

Would you ever put your $6800 into an account that would never increase but for the course of three years has an absolute possibility of disappearing completely? That is what you are doing when you put money down on a lease.

Thanks for confirming the math looks right. I get the down payment thing

-Evangelo2

[bb1857]

Originally Posted by Evangelo2

Thanks for confirming the math looks right. I get the down payment thing

-Evangelo2

Actually your effective MF should be .00109....base of .00137 minus 4 MSDs lowers your MF by .00028. Looks like you only calculated 3 reductions instead of 4.

[Evangelo2]

Originally Posted by bb1857

Actually your effective MF should be .00109....base of .00137 minus 4 MSDs lowers your MF by .00028. Looks like you only calculated 3 reductions instead of 4.

Ahh thanks. I purposely left one out since I thought a single MSD was required.

Is a single MSD required and if so how many additional can I purchase (7 I thought read somewhere).

-Evan

[firedown31]

Originally Posted by Evangelo2

Ahh thanks. I purposely left one out since I thought a single MSD was required.

Is a single MSD required and if so how many additional can I purchase (7 I thought read somewhere).

-Evan

MSDs are completely optional. You can do from 0 to 7 to lower your money factor.

[jeostang]

Originally Posted by Thrak

Hmm, so either my math is off, or the dealer did something not allowed by BMW? As I said, I calculated the MF out as .0028 after max MSD, .00329 before. Which is an increase of significantly more than .0004 above buy rate. Am I incorrect in my calculations?

How did you reverse to find out MF? I keep getting 11% which is 00458. I want to have all my ducks in a row so I can figure out my MF when they put it on paper?

Awesome thread btw. I was going to buy a 340i but now will step up the a m3 lease. Since I own my own business my accountant has been bugging me to lease my cars but I've never trusted anything about them till I read this thread.

[jeostang]

Where are you guys getting invoice pricing from, and is edmunds close? Is the navigation package worth the money on the f80?

[Allensjourney]

Originally Posted by jeostang

Where are you guys getting invoice pricing from, and is edmunds close? Is the navigation package worth the money on the f80?

As a rule of thumb I use 92% of MSRP for base model and 91% of options, although I've seen different number thrown out.

[Allensjourney]

Are additional miles still currently $0.16/mile ?? Negotiable or basically set by BMWFS.

[OneRib]

Originally Posted by Allensjourney

Are additional miles still currently $0.16/mile ?? Negotiable or basically set by BMWFS.

I believe so. You can always call BMWFS to confirm. It is not negotiable.

[MadZarBMR]

Originally Posted by OneRib

I believe so. You can always call BMWFS to confirm. It is not negotiable.

I got .20/mile in Feb on a 10k/36 mo lease.

[OneRib]

Originally Posted by MadZarBMR

I got .20/mile in Feb on a 10k/36 mo lease.

It's definitely 0.20/mile if you pay at lease end. The 0.16/mile figure is for early payments.

[LOW4LYF]

Question..... can I add the MPE to my current lease? I have the car since 2 monts......


Thanks

[doug_999]

Originally Posted by Figurka

Question..... can I add the MPE to my current lease? I have the car since 2 monts......

Thanks

Nope, your lease is done (signed sealed and delivered) when you pick up the car. You are now financing X and paying interest on Y for the next Z months.

And... you will need to return the car after the lease as it came - with the stock muffler.

[LOW4LYF]

Thanks

[starbai]

Would the Destination Fee be part of the MSRP Calculations? Does that also get included in the 'Cap Cost'?

Other than the cost of the negotiated price of the car and its options, what else should technically be included in these calculations for the Cap Cost and MSRP?

Examples I'm questioning:
Lease Insurance? (Not car insurance but the insurance offered by the dealer on excessive wear)
Dealer Fee?
If I don't want to pay for these two upfront, would I just add them to the cap cost (but not the MSRP?)

Also, when calculating the Residual, you do so off of the MSRP, US MSRP if its a Euro Delivery, but does that MSRP include Destination Fee?


I'm assuming Acquistion, Disposition, Title/Tag are part of the drive off fees.

I'm having trouble figuring out if in Orange County FL you pay a sales tax based on just the monthly lease payment or on the total Cap Cost?

[MRCUR]

Originally Posted by starbai

Would the Destination Fee be part of the MSRP Calculations? Does that also get included in the 'Cap Cost'?

Other than the cost of the negotiated price of the car and its options, what else should technically be included in these calculations for the Cap Cost and MSRP?

Examples I'm questioning:
Lease Insurance? (Not car insurance but the insurance offered by the dealer on excessive wear)
Dealer Fee?
If I don't want to pay for these two upfront, would I just add them to the cap cost (but not the MSRP?)

Also, when calculating the Residual, you do so off of the MSRP, US MSRP if its a Euro Delivery, but does that MSRP include Destination Fee?


I'm assuming Acquistion, Disposition, Title/Tag are part of the drive off fees.

I'm having trouble figuring out if in Orange County FL you pay a sales tax based on just the monthly lease payment or on the total Cap Cost?

Destination is included in the MSRP (think of it this way: if it's on the window sticker, it's part of MSRP).

The other fees and anything you want to "finance" in the lease would be part of the cap cost. Think of this as just like a regular loan, but the money factor is the interest rate.

FL taxes you based on the monthly lease payment.