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      04-07-2015, 02:59 PM   #133
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Great explanation thx
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      04-07-2015, 03:02 PM   #134
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Nice thanks for putting this together. Also I didn't see it, but isn't there a $350 displacement fee if you don't order or buy another BMW? It's what the dealer finance officer told me.
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      04-07-2015, 03:22 PM   #135
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Quote:
Originally Posted by dd1981 View Post
Nice thanks for putting this together. Also I didn't see it, but isn't there a $350 displacement fee if you don't order or buy another BMW? It's what the dealer finance officer told me.
Yes there is. It's in there under disposition fee.
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      04-07-2015, 03:23 PM   #136
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This info is prime, thank you!
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      04-07-2015, 03:39 PM   #137
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Quote:
Originally Posted by OneRib
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Originally Posted by dd1981 View Post
Nice thanks for putting this together. Also I didn't see it, but isn't there a $350 displacement fee if you don't order or buy another BMW? It's what the dealer finance officer told me.
Yes there is. It's in there under disposition fee.
Yep thanks for clarifying it.
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      04-07-2015, 03:47 PM   #138
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Originally Posted by OneRib View Post
Cap cost reduction- This is any money used to reduce the total cap cost. It can be incentives, trade in, or cash. This is generally something to avoid because you lose that money if you total the car. Its also hard to recoup if you want to transfer the lease to someone else (no one wants to give you cash you spent to get your payment low). If a lower monthly payment is needed, makes you feel better, or gets it past the gatekeeper (aka spouse) then you are better of using MSDs (explained below) or taking the money and putting into a separate account. You then transfer a small amount over every month to make the payment lower.

I think that this should be clarified, lots and lots of debate around cap cost reduction
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      04-07-2015, 03:51 PM   #139
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I seem to recall reading (don't remember where though) about situations where someone was able to buy the car at lease end (or maybe within 6 months) for less than the residual. Something about the dealer being able to buy it from BMWFS for less than residual, and even after adding a little profit (easy sale for them), perhaps certifying it, it'd be less than the residual.

Have you heard of this scenario? Or am I just smoking something?
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      04-07-2015, 04:14 PM   #140
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Originally Posted by macagain View Post
I seem to recall reading (don't remember where though) about situations where someone was able to buy the car at lease end (or maybe within 6 months) for less than the residual. Something about the dealer being able to buy it from BMWFS for less than residual, and even after adding a little profit (easy sale for them), perhaps certifying it, it'd be less than the residual.

Have you heard of this scenario? Or am I just smoking something?
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.
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      04-07-2015, 04:34 PM   #141
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so with my lease they told me that I need to pay first month and tag fee's ect.... to the tune of about 2k? Is this normal? or should I have all that bundled in and pay $0 first day? I am thinking of turning in this lease earlier than 3yr and getting another lease.
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      04-07-2015, 04:39 PM   #142
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Very good info here. Thank you for putting this together!
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      04-07-2015, 04:44 PM   #143
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Originally Posted by tonydt1g3r View Post
so with my lease they told me that I need to pay first month and tag fee's ect.... to the tune of about 2k? Is this normal? or should I have all that bundled in and pay $0 first day? I am thinking of turning in this lease earlier than 3yr and getting another lease.
Yes it's normal to pay first month and fees up front. You can roll the fees in, but you wind up paying interest on those fees. If you think you are getting out of the lease early, it's not a bad idea. Every situation is unique. Most of the recommendations in my original post are based on the most common situations. It's more a guide than absolutes. My biggest priority was to make sure everyone who read it had a good understanding about how leases work. This way they could decide if leases were right for them.
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      04-07-2015, 04:48 PM   #144
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Quote:
Originally Posted by Powaup View Post
I think that this should be clarified, lots and lots of debate around cap cost reduction
I am open to any edits or suggestions. Is there something specific that you think is problematic?

If it's the idea of cap cost reductions not being favorable, then I would say it normally is not the best idea unless you know you are going to keep the car for the duration of the lease. You also take some risk if the car is totaled because it's not your car and the insurance money will not go to you.
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      04-07-2015, 04:53 PM   #145
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Has anyone asked about deciding to buy the car after the lease is up? What are the implications of doing so?
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      04-07-2015, 04:57 PM   #146
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Can anyone explain to me the line item for "upfront taxes" and how is that calculated?
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      04-07-2015, 04:59 PM   #147
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Originally Posted by AyJay87 View Post
Has anyone asked about deciding to buy the car after the lease is up? What are the implications of doing so?
No implications and the disposition fee would be waived. You can simply pay the buyout or you can negotiate with BMWFS or your dealer. Many times you can get the vehicle for less than then buyout. You just need to ask. The only potential drawback is if you finance, it would be a used car interest rate not new.
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      04-07-2015, 05:00 PM   #148
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Has anyone asked about deciding to buy the car after the lease is up? What are the implications of doing so?
I am planning on most likely buying it after the lease. I know one advantage is you can negotiate the price again and possibly save some more money. Leasing also removes the risk/liability/loss of value in case there is an accident during the lease period. I could walk away and get something else.

The downside is really only the fact they are offering 0.9-1.9% financing right now. But I think the flexibility and reduced risk is worth more than the low APRs. Plus the ability to get into a 80k car with $0 down is pretty damn awesome. Frees up cash to do other things.
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      04-07-2015, 05:04 PM   #149
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This is a great thread!!!!!!! Thank you for this, it has enlightened me on what a lease truly is.
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      04-07-2015, 05:05 PM   #150
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Originally Posted by davezaristo View Post
Can anyone explain to me the line item for "upfront taxes" and how is that calculated?
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.
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      04-07-2015, 05:42 PM   #151
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Quote:
Originally Posted by OneRib View Post
No implications and the disposition fee would be waived. You can simply pay the buyout or you can negotiate with BMWFS or your dealer. Many times you can get the vehicle for less than then buyout. You just need to ask. The only potential drawback is if you finance, it would be a used car interest rate not new.
Thanks for the feedback. Can I also buyout with the dealer of my choice? Or does it need to be the original dealership I leased from?
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      04-07-2015, 05:43 PM   #152
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Quote:
Originally Posted by AyJay87
Quote:
Originally Posted by OneRib View Post
No implications and the disposition fee would be waived. You can simply pay the buyout or you can negotiate with BMWFS or your dealer. Many times you can get the vehicle for less than then buyout. You just need to ask. The only potential drawback is if you finance, it would be a used car interest rate not new.
Thanks for the feedback. Can I also buyout with the dealer of my choice? Or does it need to be the original dealership I leased from?
Any dealer you'd like to use.
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      04-07-2015, 05:44 PM   #153
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What does the 3k in drive offs consist of?
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      04-07-2015, 05:50 PM   #154
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Originally Posted by OneRib View Post
I am open to any edits or suggestions. Is there something specific that you think is problematic?

If it's the idea of cap cost reductions not being favorable, then I would say it normally is not the best idea unless you know you are going to keep the car for the duration of the lease. You also take some risk if the car is totaled because it's not your car and the insurance money will not go to you.
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.

if the car is totaled it is not automatic that you lose all of your cap cost reduction invested in the lease. I think this is a good explanation:

Quote:
Originally Posted by WilliCO View Post
Not quite that simple. The risk is that you are at the mercy of the insurance payoff. If it's a decent one, you could end up getting some or all of your cap cost reduction back. If it's not, you could lose some or all of it.

Here is a great explanation.

Summary - at any point in the term of a lease, there's a balance you owe to BMWFS. That balance is lower if you provided a cap cost reduction.

If your car is totaled or stolen, the insurance payoff applies to whatever the outstanding balance of the lease is:
  • If insurance payoff > lease balance, you get the difference back (Thing is, depending on the insurance payoff, what you get back may be less than your cap cost reduction or the prorated amount of it that remains).
  • If insurance payoff < lease balance, the gap insurance in your lease protects you and you're off the hook.

Really, all these risks are still there if you finance a car with a large down payment. Except, with financing, you probably didn't buy gap insurance, whereas it's included with a BMW lease.

So...it's no more inherently bad to use a large down payment on a lease than it is on a purchase. The more germane question is what else you might be able to do with the down payment money. MSDs, for example, have less of an effect on your lease payment but you get the money back at the end of the lease.
Quote:
Originally Posted by WilliCO View Post
MSDs are a no-brainer if you have the cash, because it remains your money - unless you trash the car and end up in a fight with BMW on the way out of the lease, in which case they have a lot of your dough.

Setting that aside, there's no real reason not to do them unless optics of the monthly payment are very important to you - in which case a dollar of cap cost reduction has more effect on the payment than an MSD dollar. As it should, since you are actually spending that money.

When I leased an F10 last summer, I was coming off of an E60 that had been paid off for 5 years. There was no way I could go from no payment to ~$750 in one step without my wife wringing my neck. I threw my trade equity at the lease, all $10,800 of it. By result, I've got a $421 lease payment on a 5 series, which is pretty awesome - though I realize the other shoe will drop at the end of this lease.

Everyone has their own priorities.
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