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VicTexas2010
10-27-2010, 02:22 PM
Hello folks,

This is my first post.

I am thinking of leasing either 2011 535i or 550i ( I am down to one car which is Lexus and basically replacing Toyota Avalon with BMW) and I just read somebody did mention on edmunds.com forum that there is a table on this site for these values and I MUST make sure (or negotiate as close as possible to these values) that the BMW dealer uses BMW Financial Services' CURRENT MONTH’s buy rate lease money factor and residual value.

The question is how to get these values say for this month as well as for November. I am planning to wrap the deal either this month end or next.

I will also appreciate if you give me some pointers for negotiating a good lease deal.

Please help.
:beerchug:

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Message #606Re: 325i or 330i money factor and residual [robray222000]by v_lad May 16, 2006 (2:14 pm)
according to tables at bimerfest for a 36\15k lease of 330i residual is at 62% of !MSRP! and money factor is at 0.00225. 325i - 61% and 0.00285. You usually haggle on both moneyfactor and purchase price when leasing.
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Thanks

jimefam
10-27-2010, 02:24 PM
Go to the ask a dealer forum. All the answers you seek are there.

1HOT BMR
10-27-2010, 02:52 PM
Hello folks,

This is my first post.

I am thinking of leasing either 2011 535i or 550i ( I am down to one car which is Lexus and basically replacing Toyota Avalon with BMW) and I just read somebody did mention on edmunds.com forum that there is a table on this site for these values and I MUST make sure (or negotiate as close as possible to these values) that the BMW dealer uses BMW Financial Services' CURRENT MONTH’s buy rate lease money factor and residual value.

The question is how to get these values say for this month as well as for November. I am planning to wrap the deal either this month end or next.

I will also appreciate if you give me some pointers for negotiating a good lease deal.

Please help.
:beerchug:

************************************************** ************************
Message #606Re: 325i or 330i money factor and residual [robray222000]by v_lad May 16, 2006 (2:14 pm)
according to tables at bimerfest for a 36\15k lease of 330i residual is at 62% of !MSRP! and money factor is at 0.00225. 325i - 61% and 0.00285. You usually haggle on both moneyfactor and purchase price when leasing.
************************************************** ************************

Thanks

The purchase price is key. Negotiate a good purchase price like $500 over invoice and your lease payments will be lower. Money factor and residual are pretty standard at a certain point in time, especially if you are going with the BMW lease. In the end the question is: How much are you willing to pay for the rental of your car? It is all money down the drain anyway whether you purchase or lease. Check the money factor (interest) and residual value anyway - just to make sure that they are comparable to the going rate elsewhere. Watch out for the fees, real and/or imaginary.

laser
10-27-2010, 04:41 PM
"It is all money down the drain anyway whether you purchase or lease."

I wonder if anybody has done a lease vs buy analysis they would share. I have not financed or leased a car for the past 30 years now. It is a good feeling to not have to make payments but I'm not sure I have achieved the least cost solution to th expense of auto ownership and have always been intrigued by the leasing alternative.

Anybody have an analysis they would share?

raleedy
10-27-2010, 05:10 PM
"It is all money down the drain anyway whether you purchase or lease."


Anybody have an analysis they would share?

Google?

DXK
10-27-2010, 05:11 PM
Yes, I have got it down to a science, now my lease numbers match the dealer's to a penny.
If you take my example, 550 European Delivery with sport, dhp, sport auto and few other options, with current LEASE MF for 36 mo, 12k miles would = BUY with 60 months loan and 4.3% interest. Around that interest rate is a break even when taking into account the current residual your total BUY monthly payments will = total LEASE monthly payments + residual.

DXK
10-27-2010, 05:19 PM
But do not use the above example as a recommendation, it's a rough guide. You need to take into account the inflation, opportunity costs, market value of car in 36-60 months and the interest rates in 36-60 months

laser
10-27-2010, 05:56 PM
I think I may be posting this in the wrong place but to the OP the "ask a dealer" forum direction was good advice.

To DXK who was kind enough to respond, I just noticed an article in our local business journal:

http://www.bizjournals.com/atlanta/news/2010/10/27/report-atlantans-28th-smartest-in-us.html?ed=2010-10-27&s=article_du&ana=e_du_pap

Ranks Atlanta as the 28th smartest metro are in the county, Oregon 11th, but Boston is number 1!

So DXK we have similar cars, last one and this one. (congrats on your upcoming trip to the Welt, awesome!)

I think I paid cash of about $54,000 in May 2007 for my 535i, traded it July, 2010 for $28,000 on an F10 ED, my limited excel skills say I paid $684 per month for 38 months and drove it all I wanted (43,000 miles).

This is the kind of simple lease vs buy comparison I was looking for ..... wondering how that compares to the monthly lease payment, deposit required that others have paid?

DXK
10-27-2010, 06:12 PM
Thanks, Laser. For my lease of 08 535 with sport, premium, nav and so on, my lease payment is $745 including 6.25 % tax for 45k miles, I think my car was priced a bit higher than $54K , so it comes out about the same in monthly payments

dkerr
10-27-2010, 07:38 PM
"It is all money down the drain anyway whether you purchase or lease."

I wonder if anybody has done a lease vs buy analysis they would share. I have not financed or leased a car for the past 30 years now. It is a good feeling to not have to make payments but I'm not sure I have achieved the least cost solution to th expense of auto ownership and have always been intrigued by the leasing alternative.

Anybody have an analysis they would share?

I just leased a 2011 535i xDrive after analyzing
1) Cash purchase
2) Loan for 36 months at 0.9% for 20K, cash for the rest
3) Lease for 36 months 12K miles/yr with maximum multiple security deposits
4) As #3 but with no additional security deposits.
Oh, and I did all the above modeling trading in my old car, or selling it privately.

When it comes to leasing everything is known up front, except whether you might exceed the contract miles. If you do then it is 20 cents/mile overage (though BMWFS will apparently sell you them at 16 cents if you call a few months ahead).

When it comes to purchasing everything is known up front, except what the trade or private sale value will be in 3 years time, aka the residual value.

In my experience when it comes to residual value, BMWFS are optimistic. My past two BMWs were not leases and when it came to selling, the trade in value offered by dealership was way lower than BMWFS residual percentages might lead you to believe. I sold privately in both cases, but still less than BMWFS forecast. This is particularly true if you load up the car with expensive options. For example, on my 2011 I have ventilated seats, dynamic handling, premium 2, etc etc. I don't believe these options have nearly as high resale value.

So, when comparing lease or buy you have to make a realistic "guess" on what your resale value might be when you sell. In my case the MSRP was $69,700. The lease residual (61% for 12k miles) is $42,517. But, if I purchased and had to sell myself in three years, would I really get $42,517 in trade (or that +10% in private sale). I don't think so. So when I did my lease viz buy analysis I assumed that the dealer would offer me $38K in trade (equivalent to $41,800 private sale to account for sales tax benefit in a trade).

Total cost of ownership for a lease is simply 36 * monthly payment + any up front payment you made. In my case I worked it out at $34,948. But if I put down maximum security deposit then my TCO was $32,937. A savings of $2,011 over the term. To realize those savings I have to deposit with BMWFS an additional $6,250 that I will get back in three years. Why would I part with $6,250 now to save $2,011? Because the future value of that is $8,261, representing a IRR of 9.75% annually, tax free. Show me anywhere else that I can get that type of return, guaranteed? But what if I exceed 12K miles a year? Maybe I should go for 15k miles. I modeled that as well and concluded that I could drive 14,302 miles per year (at 20 cents a mile) before I was worse off in selecting the 12K lease. At 16 cents a mile, I could drive 14,878 miles a year. Conclusion... I'll risk it and take the 12K miles terms.

This is a very long post. So let me net it out... in my particular analysis, for the four scenarios I described at the top, I modeled my 36 month TCO as...

1) $31,641 (assumed future trade in value of $38K, sales tax is 6%)
2) $31,920 (0.9% is really cheep money, remember I was only going to borrow $20K)
3) $32,937 (lease maximum MSD)
4) $34,948 (no MSD)

So, even though I handicapped purchasing with a lower future value, buying cash worked out the best option. And leasing the worst.

So, why then did I end up leasing? 1) because I bought down my TCO with the maximum security deposit option, getting it to roughly $1000 of purchasing. and 2) its a hassle to try and sell a car yourself in 3 years. Especially such a high value car loaded with options. I think it took me 5 weeks to find a buyer for my 2007 X5, and was within days of picking up my 2011 which would have resulted in me trading in (and being worse of to the tune of $1,500).

But, my situation may be different than yours, so don't take my word for it. Its not hard to build a spreadsheet to model this all yourself. I recommend it.

David

P.S. I did the math for 48 months too.... BMWFS residuals really drop for that last year making leasing a much worse scenario. 36 months is the sweet spot for leasing. If you want to drive the car for longer, buy.

dunderhi
10-27-2010, 08:00 PM
Money Factor and Residual can usually be found here:

http://www.mbworld.org/forums/automotive-leasing-financing-73/

ihumphrey
10-28-2010, 04:12 AM
I just leased a 2011 535i xDrive after analyzing
This is a very long post. So let me net it out... in my particular analysis, for the four scenarios I described at the top, I modeled my 36 month TCO as...

1) $31,641 (assumed future trade in value of $38K, sales tax is 6%)
2) $31,920 (0.9% is really cheep money, remember I was only going to borrow $20K)
3) $32,937 (lease maximum MSD)
4) $34,948 (no MSD)

So, even though I handicapped purchasing with a lower future value, buying cash worked out the best option. And leasing the worst.

So, why then did I end up leasing? 1) because I bought down my TCO with the maximum security deposit option, getting it to roughly $1000 of purchasing. and 2) its a hassle to try and sell a car yourself in 3 years. Especially such a high value car loaded with options. I think it took me 5 weeks to find a buyer for my 2007 X5, and was within days of picking up my 2011 which would have resulted in me trading in (and being worse of to the tune of $1,500).

But, my situation may be different than yours, so don't take my word for it. Its not hard to build a spreadsheet to model this all yourself. I recommend it.

David


This is a very comprehesive review. I did virtually the same deal, you said your MSD was about $6500, that seems a little low...I put down almost $8000 in MSD and my MSRP was $67k, sales price 1K above invoice...interesting.

Your analysis is excellent, this is exactly the same conclusion I came to. It is worth buying down the MF with the MSD. Otherwise you can enjoy your 1% interest in whatever crappy money market or savings account you have!

laser
10-28-2010, 05:05 AM
This is very helpful, thanks for taking the time to share your experience and calculations!

I guess a big "duh" to veterans of leasing but the ability to bake in an "optimistic residual value" on the front end versus selling in the private market or taking dealer trade in offer on the back end must the the big factor here.

dadesidon
10-28-2010, 05:33 AM
That's some in depth quality analysis. Very nice.

gEEkChris
10-28-2010, 06:44 AM
dkerr, great analysis.

I have been running the same calculations you have over and over as well. I tend to agree that no matter how you do it, the numbers work out to be pretty close. It is definitely not a no-brainer in any one direction. I had gotten to the point where I was against leasing, but one other thing I have taken into account is the cash (my car is paid for) that is sitting in your car if you buy it outright. There are not alot of good, safe investments these days, but if you come across one, it is then hard to justify having 30, 40, or 60K sitting in a depreciating asset. This is the thing that has been driving me back to the idea that leasing may be the way to go.

dkerr
10-28-2010, 07:08 AM
This is a very comprehesive review. I did virtually the same deal, you said your MSD was about $6500, that seems a little low...I put down almost $8000 in MSD and my MSRP was $67k, sales price 1K above invoice...interesting.

Your analysis is excellent, this is exactly the same conclusion I came to. It is worth buying down the MF with the MSD. Otherwise you can enjoy your 1% interest in whatever crappy money market or savings account you have!

The capital cost on my deal was $65,040, with MSD this is a payment of $820.32 + 6% tax = $869.54. Thus my security deposit was $900. I did not roll in state registration fees, dealer doc fees, etc. into the cap cost, I paid them up front.

This MSD is $6300. Plus the required one = $7200. However when calculating IRR the present value of the "investment" is $6,250 because without the MSD my payments would have exceeded $900 per month, making the single security deposit $950.

Further analysis that would further favor leasing or borrowing (at 0.9%) is to model what you do with the cash you don't tie up in the car. I didn't bother to model this.

DAK

ihumphrey
10-28-2010, 07:57 AM
The capital cost on my deal was $65,040, with MSD this is a payment of $820.32 + 6% tax = $869.54. Thus my security deposit was $900. I did not roll in state registration fees, dealer doc fees, etc. into the cap cost, I paid them up front.

This MSD is $6300. Plus the required one = $7200. However when calculating IRR the present value of the "investment" is $6,250 because without the MSD my payments would have exceeded $900 per month, making the single security deposit $950.

Further analysis that would further favor leasing or borrowing (at 0.9%) is to model what you do with the cash you don't tie up in the car. I didn't bother to model this.

DAK

Ah, thanks that makes sense, I had rolled my other fees in and it looks like about the same then, as you say 1 of the SDs is required!

ihumphrey
10-28-2010, 08:00 AM
The capital cost on my deal was $65,040, with MSD this is a payment of $820.32 + 6% tax = $869.54. Thus my security deposit was $900. I did not roll in state registration fees, dealer doc fees, etc. into the cap cost, I paid them up front.

This MSD is $6300. Plus the required one = $7200. However when calculating IRR the present value of the "investment" is $6,250 because without the MSD my payments would have exceeded $900 per month, making the single security deposit $950.

Further analysis that would further favor leasing or borrowing (at 0.9%) is to model what you do with the cash you don't tie up in the car. I didn't bother to model this.

DAK

Also, one other thing you could have analyzed would be the "paid in full lease" you can do. If you have the cash (which you did since you thought about paying cash) you can pay all lease payments up front and this saves further on the total cost of the payments. Did you look at this option at all??

jimefam
10-28-2010, 11:22 AM
It all depends on what you can do with the cash. At 0.9 percent I will finance as much as I possibly can because I'll do much better putting 75k into my business. If you are not self employed and don't feel comfortable investing in anything with any risk(who does with today's conditions) I guess I could see paying cash.

VicTexas2010
10-28-2010, 01:21 PM
Hello folks..............

I am amazed and overwhelmed by the amount of information I have to digest. I really want to THANK ALL OF YOU who took their valuable time in responding to my silly query.

I am currently driving 2002 (bought in 2001) Lexus ES 300 and replacing my old 1997 Toyota Avalon with New leased BMW 55oi/535i. I have no prior auto leasing experience.

Any way...............it will take a few days to digest this information.

Again........THANKS A LOT

:thumbup::beerchug:

dkerr
10-28-2010, 01:25 PM
Also, one other thing you could have analyzed would be the "paid in full lease" you can do. If you have the cash (which you did since you thought about paying cash) you can pay all lease payments up front and this saves further on the total cost of the payments. Did you look at this option at all??

No I did not look at that option.

DAK

dkerr
10-28-2010, 01:30 PM
It all depends on what you can do with the cash. At 0.9 percent I will finance as much as I possibly can because I'll do much better putting 75k into my business. If you are not self employed and don't feel comfortable investing in anything with any risk(who does with today's conditions) I guess I could see paying cash.

0.9% is as close to free money as you can get. It makes a lot of sense to borrow as much as you can at that rate and invest the cash you might otherwise have used.

The reason I modeled $20K loan at 0.9% is because I had a figure in mind that I wanted my payment to be... and when I first started the analysis BMWFS offered 0.9% for 24 months only and the math on that worked out to roughly the same as a lease payment (albeit for 24 months rather than 36). Then in Oct, BMWFS extended the terms to 36 months, I could have changed the loan amount to $30K or something, but it would not have changed the final decision.

DAK

dkerr
10-28-2010, 01:36 PM
Hello folks..............

I am amazed and overwhelmed by the amount of information I have to digest. I really want to THANK ALL OF YOU who took their valuable time in responding to my silly query.

I am currently driving 2002 (bought in 2001) Lexus ES 300 and replacing my old 1997 Toyota Avalon with New leased BMW 55oi/535i. I have no prior auto leasing experience.

Any way...............it will take a few days to digest this information.

Again........THANKS A LOT

:thumbup::beerchug:

Finally... I note that you are in Texas. Texas is a state that has unfavorable tax laws for leasing so be sure to really understand how it all works. For example, in TX you pay sales tax up front on the full price of the car. In almost every other state you pay sales tax on the monthly payment. Also, property tax rules in some jurisdictions that exempt a personally owned car don't exempt leased cars because they are "owned" by a business not an individual for personal use. BMWFS has special programs for texas to help with these peculiarities but I am not familiar with them (nor the laws) and so cannot advise. Be sure to check.

DAK

carnuts3
10-28-2010, 04:48 PM
Also, one other thing you could have analyzed would be the "paid in full lease" you can do. If you have the cash (which you did since you thought about paying cash) you can pay all lease payments up front and this saves further on the total cost of the payments. Did you look at this option at all??

I looked at this option recently but did not pursue because I couldn't get a clear answer (not from BMWFS but from a competitor) on whether my money would be protected by gap insurance in case my car was totaled/stolen...... What I personally concluded was that if I prepaid the lease there would be no "gap" to protect hence no gap insurance coverage if it was needed (money would be lost - same as a cost cap reduction). IMO, best approach is to go with max MSD's. This reduces the MF plus the entire MSD is returned at lease end.

laser
10-28-2010, 05:09 PM
Lost in all the obsession with the money part which of course is necessary, I'm betting you guys are going to love the F10 you have on order or are contemplating.

Compared to the E60 the car is an order of magnitude more enjoyable to drive ...... after 700 miles I couldn't be more pleased!

ihumphrey
10-28-2010, 10:44 PM
I looked at this option recently but did not pursue because I couldn't get a clear answer (not from BMWFS but from a competitor) on whether my money would be protected by gap insurance in case my car was totaled/stolen...... What I personally concluded was that if I prepaid the lease there would be no "gap" to protect hence no gap insurance coverage if it was needed (money would be lost - same as a cost cap reduction). IMO, best approach is to go with max MSD's. This reduces the MF plus the entire MSD is returned at lease end.

That is a very good point, I never got far enough into it to look at that. That is one other cost to consider if you are financing a lot of the car, gap insurance...but overall I agree the MSDs with no cap reduction is the way to go.

VicTexas2010
10-29-2010, 09:17 AM
Finally... I note that you are in Texas. Texas is a state that has unfavorable tax laws for leasing so be sure to really understand how it all works. For example, in TX you pay sales tax up front on the full price of the car. In almost every other state you pay sales tax on the monthly payment. Also, property tax rules in some jurisdictions that exempt a personally owned car don't exempt leased cars because they are "owned" by a business not an individual for personal use. BMWFS has special programs for texas to help with these peculiarities but I am not familiar with them (nor the laws) and so cannot advise. Be sure to check.

DAK

Yes I am aware of this issue. But, I was/am NOT aware that BMWFS has special program for Texas to help with these peculiarities . Any way.............THANKS A LOT for bringing this up else I may have forgotten.

Can somebody (from Texas) throw some light on this PLEASE or shall I post a new query ?

Vic

smr
10-29-2010, 10:41 AM
Another important factor to consider in leasing is the potential ability to write off a portion of the cost of the lease as a business expense, depending upon the number of miles you drive for business related purposes. This can make the after tax cost of a lease much more attractive than the after tax cost of a purchase.