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  #1  
Old 12-18-2012, 08:02 AM
djsaad1 djsaad1 is offline
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2 year lease with 3rd year option

This is somewhat of a dumb question but I figured I would ask just in case.

Is there a way to do a 2 year lease and pay the 24 month price but have an option for a third year? And if I do opt to take the third year the price of the whole lease readjusts as if it was a three year lease?
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  #2  
Old 12-18-2012, 08:15 AM
chrischeung chrischeung is offline
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Basically no. There are a few extension offers, for varying times, but nothing that doesn't come with significant strings and/or costs attached.

What you should do is get the term/deal that looks best for what you predict now, then as maturity approaches, look at what options you have, and what you would like to do at the time.
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  #3  
Old 12-18-2012, 01:41 PM
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So what you're saying Chris, if I read you correctly (just clarifying not trying to be smart), is if 24 mos works, do that, if 36 mos works do that, but you COULD lease for 36 months and in the last year do swaplease/leasetrader assuming that you do not put down MSD's. Is that right?
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  #4  
Old 12-18-2012, 02:04 PM
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Originally Posted by cha777 View Post
So what you're saying Chris, if I read you correctly (just clarifying not trying to be smart), is if 24 mos works, do that, if 36 mos works do that, but you COULD lease for 36 months and in the last year do swaplease/leasetrader assuming that you do not put down MSD's. Is that right?
You can swap in/out of the lease at any time (except the first/last 6 months, IIRC) and MSDs don't preclude you from doing that. It adds one more detail to the lease transfer process but doesn't make it impossible.

If you look on forums and on the swap sites, you'll see every variation of a lease out there. MSDs, asking for some sort of down payment, pro-rated lump sum of a one-pay lease, etc.
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  #5  
Old 12-18-2012, 05:08 PM
chrischeung chrischeung is offline
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Originally Posted by cha777 View Post
So what you're saying Chris, if I read you correctly (just clarifying not trying to be smart), is if 24 mos works, do that, if 36 mos works do that, but you COULD lease for 36 months and in the last year do swaplease/leasetrader assuming that you do not put down MSD's. Is that right?
Sort of - look at both options, evaluating all terms and pricing, and choose the best fit now. I chose a 36 month, even though a 24 month was $30 cheaper/month since I liked the car. If you want to do a 24 month, don't get a 36 month then sell the lease. Lease transactions are often not worth the time and effort, generally speaking.
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  #6  
Old 12-18-2012, 07:35 PM
djsaad1 djsaad1 is offline
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Thanks for the answers guys. I feel like it would be a good system for bmw to add. BMW could make more money by adding some type of process or admin fee if you did opt for the 3rd year. And they would be getting more money up front on a possible 3 year lease which could work to their advantage.
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Old 12-18-2012, 07:39 PM
saranr saranr is offline
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Quote:
Originally Posted by djsaad1 View Post
This is somewhat of a dumb question but I figured I would ask just in case.

Is there a way to do a 2 year lease and pay the 24 month price but have an option for a third year? And if I do opt to take the third year the price of the whole lease readjusts as if it was a three year lease?

If you lease through BMWFS and get another BMW after the current lease they can extend you lease by 6 months at the same rate! Please check with BMWFS directly as I did this few years ago.
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  #8  
Old 12-18-2012, 08:49 PM
chrischeung chrischeung is offline
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Originally Posted by saranr View Post
If you lease through BMWFS and get another BMW after the current lease they can extend you lease by 6 months at the same rate!
You can't do that if you want a Benz - hence my reference to "strings". BMW is like a casino - they usually only offer you something if there is some benefit to them.
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  #9  
Old 12-18-2012, 08:52 PM
chrischeung chrischeung is offline
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Originally Posted by djsaad1 View Post
BMW could make more money by adding some type of process or admin fee if you did opt for the 3rd year.
Are you sure? Wouldn't they make more money selling you a new car? Say they make $5000 selling you a new car. Would you pay a $2000 fee, or thereabouts, to extend your lease for a year?

Everything about a BMW lease, from the terms, the return process, marketing etc., has been designed to get you back, as far as possible, into another new BMW at lease end.
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  #10  
Old 12-18-2012, 09:23 PM
djsaad1 djsaad1 is offline
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Originally Posted by chrischeung View Post
Are you sure? Wouldn't they make more money selling you a new car? Say they make $5000 selling you a new car. Would you pay a $2000 fee, or thereabouts, to extend your lease for a year?

Everything about a BMW lease, from the terms, the return process, marketing etc., has been designed to get you back, as far as possible, into another new BMW at lease end.
It would be aimed towards people that would do a three year lease if this option wasn't available. So the fee plus getting more money on the front end could help. They would also still be in a BMW so that doesn't take away from them being able to put them in another one once the third year is over. It could also help bmw get people into a new car sooner since some people that would have normally done a three year lease might not opt for that third year.

Even if I knew I would need the car for 3 years, I would pay more money on the front end knowing I could have an out after 2 years if necessary. The fee wouldn't be able to be that much maybe a couple hundred dollars, but it would add up.

Last edited by djsaad1; 12-18-2012 at 09:52 PM.
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  #11  
Old 12-18-2012, 10:21 PM
ard ard is online now
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Originally Posted by 1985mb View Post
You can swap in/out of the lease at any time (except the first/last 6 months, IIRC) and MSDs don't preclude you from doing that. It adds one more detail to the lease transfer process but doesn't make it impossible.

If you look on forums and on the swap sites, you'll see every variation of a lease out there. MSDs, asking for some sort of down payment, pro-rated lump sum of a one-pay lease, etc.
The most common theme on 'all those swaps' is the person getting OUT of the lease typically pay A LOT to get out from under. This is especially true when you put money down or have MSDs tied up.

I am sure there will be success stories, but my impression is that most of the time it is a lease assumptors market.
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  #12  
Old 12-19-2012, 05:58 AM
chrischeung chrischeung is offline
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Originally Posted by djsaad1 View Post
Even if I knew I would need the car for 3 years, I would pay more money on the front end knowing I could have an out after 2 years if necessary. The fee wouldn't be able to be that much maybe a couple hundred dollars, but it would add up.
OK - I misunderstood. But doesn't that option exist now? You get the true value of the car, pay it off, and there is an in built "fee" in the payout? Plus BMW sometimes offers pull ahead programs.

The other problem is, if it is "attractive", then you suddenly have a flood of cars onto the used lot, that BMW may have to sacrifice at auction. It would be havoc for their supply/demand plans. Plus they are going to take a residual hit. Remember, the residual on a 3 year lease is only slightly lower than a 2 year. So again, that fee would need to be high to bridge that gap - again say $2000 (perhaps 2-3% of the MSRP). The final thing is, people may be getting into a new "cheap" lease - that BMW would make less money on. So by giving people that option, they can "time" the market. The other way, they are captive to the rates at the time of lease end, or shortly thereafter.

Final thought - if this was so beneficial for BMW, wouldn't they have already done it? The pros/cons of doing something like this don't weigh in BMW's favor. BMW's generally pretty savvy about making a buck.

Good discussion - really getting the brain cells going.
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  #13  
Old 12-19-2012, 06:42 AM
djsaad1 djsaad1 is offline
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Originally Posted by chrischeung View Post
OK - I misunderstood. But doesn't that option exist now? You get the true value of the car, pay it off, and there is an in built "fee" in the payout? Plus BMW sometimes offers pull ahead programs.

The other problem is, if it is "attractive", then you suddenly have a flood of cars onto the used lot, that BMW may have to sacrifice at auction. It would be havoc for their supply/demand plans. Plus they are going to take a residual hit. Remember, the residual on a 3 year lease is only slightly lower than a 2 year. So again, that fee would need to be high to bridge that gap - again say $2000 (perhaps 2-3% of the MSRP). The final thing is, people may be getting into a new "cheap" lease - that BMW would make less money on. So by giving people that option, they can "time" the market. The other way, they are captive to the rates at the time of lease end, or shortly thereafter.

Final thought - if this was so beneficial for BMW, wouldn't they have already done it? The pros/cons of doing something like this don't weigh in BMW's favor. BMW's generally pretty savvy about making a buck.

I agree, there must be something I am not thinking of and that is why it doesn't seem like any manufacture does it. I am guessing three year leases benefit them more than 2 year leases, so they wouldn't want to try to give people more options to get out after the 2nd year.

But to give an example of what I was thinking with the payment of a 2+1. These are completely random numbers but lets say it costs you $1000 a month to lease a car for 2 years and $800 a month to lease the same car for 3 years. You would pay $1000 a month for the first 2 years and if you opted to take that 3rd year you would only pay $400 a month that last year since you already paid for most of the lease the first 2 years. On top of that there would be a $150-$350 processing fee.

I don't think it would give them a flood of cars though, I don't believe many people would want or be able to pay that much the first two years. Actually there might not be a big enough customer base for this to really have an affect at all. I know I would do it, but there might not be enough people that really want that option or could afford it.

Last edited by djsaad1; 12-19-2012 at 06:55 AM.
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  #14  
Old 12-19-2012, 09:20 AM
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1985mb 1985mb is offline
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The most common theme on 'all those swaps' is the person getting OUT of the lease typically pay A LOT to get out from under. This is especially true when you put money down or have MSDs tied up.

I am sure there will be success stories, but my impression is that most of the time it is a lease assumptors market.
I think you have to find a market-clearing price. Aside from the value of a shorter term, one can't really expect a buyer to pay more than what new leases are going for currently. And my guess is that a lot of the leases on swap sites were poorly negotiated to begin with and will require a haircut to achieve parity with market values.

I wouldn't be surprised if most leases in the real world were based on msrp (or a little less) as selling price, a marked up mf and laf, and other dealer fees baked into the lease payment. A savvy would-be lessor knows roughly what they could get at invoice-plus and buy rate mf and laf. So that disparity needs to be addressed to clear the market IMHO
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Old 12-19-2012, 10:12 AM
chrischeung chrischeung is offline
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I wouldn't be surprised if most leases in the real world were based on msrp (or a little less) as selling price, a marked up mf and laf, and other dealer fees baked into the lease payment.
I would be surprised if that actually was the case. A few reasons:

1. The proliferation of information on the internet
2. The fact that a car is generally the second most expensive an item that is bought
3. Someone is savvy enough to use swapalease, but not research their original lease

If you're leasing a car, common sense would be that you would research the purchase prior to doing the transaction. At the least, you would consult someone else to help you out. The days where someone would unknowingly pay close to MSRP, and marked up rates are getting fewer and farther between. To do so would be ingnorant and/or indifferent. It's not as though these are "spur of the moment" decisions, where there is no planning or prior thought. Think about "Best Buy" - how many folks don't know about "Amazon". So potentially everyone who shops online, would do research online prior to car shopping.

Those "poor leases" are more likely due to things like best deal out there at the end of a prior lease, wanting a specific car/model, negative equity roll in, local market conditions etc. Even if you took the "advertised special price" on a lease, you probably only paid $2000 more than a very savvy and hard working buyer - usually translating perhaps into $70 a month extra - not the worst of deals.

I think back to when I bought my first house. Knew next to nothing about it. I did my research, and talked to friends in the industry, and looked at a lot of houses. Why wouldn't someone not comfortable with car buying not do the same? They knowingly want to leave money on the table?

When was the last time someone you knew unknowingly got a bad deal at a dealership?
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  #16  
Old 12-19-2012, 10:37 AM
djsaad1 djsaad1 is offline
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Originally Posted by chrischeung View Post
I would be surprised if that actually was the case. A few reasons:

1. The proliferation of information on the internet
2. The fact that a car is generally the second most expensive an item that is bought

If you're leasing a car, common sense would be that you would research the purchase prior to doing the transaction. At the least, you would consult someone else to help you out. The days where someone would unknowingly pay close to MSRP, and marked up rates are getting fewer and farther between. To do so would be ingnorant and/or indifferent. It's not as though these are "spur of the moment" decisions, where there is no planning or prior thought. Think about "Best Buy" - how many folks don't know about "Amazon". So potentially everyone who shops online, would do research online prior to car shopping.

Those "poor leases" are more likely due to things like best deal out there at the end of a prior lease, wanting a specific car/model, negative equity roll in, local market conditions etc. Even if you took the "advertised special price" on a lease, you probably only paid $2000 more than a very savvy and hard working buyer - usually translating perhaps into $70 a month extra - not the worst of deals.

I think back to when I bought my first house. Knew next to nothing about it. I did my research, and talked to friends in the industry, and looked at a lot of houses. Why wouldn't someone not comfortable with car buying not do the same? They knowingly want to leave money on the table?

When was the last time someone you knew unknowingly got a bad deal at a dealership?

I really don't know about BMW since this will be my first, but I have talked to many other range rover owners and almost everyone I have talked to has been very close to MSRP.

There is much more info out there about BMW's but I still think majority of leases/purchases are closer to MSRP. People just don't do the research, and they don't know it's out there. I was one of those people, I had to renegotiate my deal after I found out what others were getting.
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Old 12-19-2012, 11:10 AM
chrischeung chrischeung is offline
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Originally Posted by djsaad1 View Post
I really don't know about BMW since this will be my first, but I have talked to many other range rover owners and almost everyone I have talked to has been very close to MSRP.
Did you ask them why they paid close to MSRP? Is it local conditions? Or because they just went to the dealership, for example? Do those people strike you as the type who wouldn't do prior research? It could also be that the market in Texas is relatively strong - and your friends made a choice not to go further for their cars. I'm just trying to understand any circumstances.

I'm married to someone who doesn't really care about pricing often - it's more a convenience to pay and move to the next thing they want to do, her argument being that the potential differential is not worth the effort.
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  #18  
Old 12-19-2012, 03:46 PM
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1985mb 1985mb is offline
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Quote:
Originally Posted by chrischeung View Post
I would be surprised if that actually was the case. A few reasons:

1. The proliferation of information on the internet
2. The fact that a car is generally the second most expensive an item that is bought
3. Someone is savvy enough to use swapalease, but not research their original lease

If you're leasing a car, common sense would be that you would research the purchase prior to doing the transaction. At the least, you would consult someone else to help you out. The days where someone would unknowingly pay close to MSRP, and marked up rates are getting fewer and farther between. To do so would be ingnorant and/or indifferent. It's not as though these are "spur of the moment" decisions, where there is no planning or prior thought. Think about "Best Buy" - how many folks don't know about "Amazon". So potentially everyone who shops online, would do research online prior to car shopping.

Those "poor leases" are more likely due to things like best deal out there at the end of a prior lease, wanting a specific car/model, negative equity roll in, local market conditions etc. Even if you took the "advertised special price" on a lease, you probably only paid $2000 more than a very savvy and hard working buyer - usually translating perhaps into $70 a month extra - not the worst of deals.

I think back to when I bought my first house. Knew next to nothing about it. I did my research, and talked to friends in the industry, and looked at a lot of houses. Why wouldn't someone not comfortable with car buying not do the same? They knowingly want to leave money on the table?

When was the last time someone you knew unknowingly got a bad deal at a dealership?
Unfortunately, I see this all the time. Because I engage people about their car purchases frequently. Like the guy who's paying in the 600s for a demo X3. A demo! Like the guy who's paying $150/month for the same car as me, without the prepaid maintenance, and I don't even know if he has the same level of options (probably unlikely because we talked about MB-tex, and in my experience it's hard to find an MB-tex equipped E-class with more options). Like the guy who was willing to pay for a 1yr old 911 the same price as I found him for a comparable brand new one.

Lots of educated people out there who just don't have inclination to spend some time learning the basics of leasing math and how to find info online.
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