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F10 / F11 (2011 - Current)
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  #26  
Old 08-28-2014, 03:03 PM
tonyscv tonyscv is offline
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Originally Posted by Squiddie View Post
I really don't think that it will be impossible to pass MSDs on. Many people trolling leasetrader and smaller sites understand what it does and what it did to the money factor.
Not true. Most people trolling LeaseTrader couldn't give a flip about MSD's, or even know about them, because it's not something dealerships peddle. People on these sites know about them, but that's a relatively small number of lease customers.

It is next to impossible to get out of a lease with a large security deposit attached. Ask anyone who is trying. It's a deal-killer. Most people, despite all the education you can give them, don't care about anything but cash outlay up front (specifically, none) and monthly payment. That's the allure of assuming a lease. All the one-time fees have already been paid, so it's just taking over monthly payments. Asking someone to front a huge amount only to get it back later just sounds shady to anyone who isn't very familiar with MSD's, and by the time you're done explaining why it's legit, the prospective transferee has moved on.

Not to mention, some or most of the MSD ROI has already been realized by the original lessor, so asking a transferee to put up thousands of dollars to gain back a few hundred dollars at most... again, by this point in the discussion, any prospective transferee has most likely moved on.

Quote:
Originally Posted by WillInDenver View Post
Logically, yes. The reality of the lease transfer market is that 19 of 20 "buyers" - or more - are there to get into a lease quickly with no cash out of pocket.
19 of 20 is probably generous - probably more like 99 out of 100. As someone who has transferred out of a lease early 3 times now, I keep a regular eye on LeaseTrader and swapalease. Every listing that asks for thousands up front to the current lessor (usually to reimburse for security deposit(s) or down payments) just sits and sits and sits. The 3 people I've done lease transfers with have all cared about 2 things, getting a car for a very short term (6-18 months), and monthly payment. That's it.

Last edited by tonyscv; 08-28-2014 at 03:17 PM.
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  #27  
Old 08-28-2014, 03:04 PM
Squiddie Squiddie is offline
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Quote:
Originally Posted by WillInDenver View Post
My case was a down payment, not an MSD. As the lessee, I get a little of it back in each payment.
Fair enough.

I was just asking because upwards in this thread we were specifically bashing MSDs, which are refundable.
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  #28  
Old 08-28-2014, 03:08 PM
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WillInDenver WillInDenver is online now
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Please school me on lease negotiation.

Quote:
Originally Posted by tonyscv View Post
Not true. Most people trolling LeaseTrader couldn't give a flip about MSD's, or even know about them, because it's not something dealerships peddle. People on these sites know about them, but that's a relatively small number of lease customers.

It is next to impossible to get out of a lease with a large security deposit attached. Ask anyone who is trying. It's a deal-killer. Most people, despite all the education you can give them, don't care about anything but cash outlay up front (specifically, none) and monthly payment. That's the allure of assuming a lease. All the one-time fees have already been paid, so it's just taking over monthly payments. Asking someone to front a huge amount only to get it back later just sounds shady to anyone who isn't very familiar with MSD's, and by the time you're done explaining why it's legit, the prospective transferee has moved on.

Not to mention, some or most of the MSD ROI has already been realized by the original lessor, so asking a transferee to put up thousands of dollars to gain back a few hundred dollars at most... again, by this point in the discussion, any prospective transferee has most likely moved on.

Seriously. In ten or twelve conversations of mine, only one person has even bothered to explain to me that they don't want to put any cash into the deal. The rest just stop talking to me the second I tell them there's a buyin. They seem not to wonder why my lease payment is about $200 lower than anything they've ever seen on a 535.


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  #29  
Old 08-28-2014, 03:30 PM
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Originally Posted by tonyscv View Post
As someone who has transferred out of a lease early 3 times now...
I'm curious, why have you needed/wanted to get out of a lease?

I consider my lease a 3 year rental. I have been leasing cars for over 15 years and never had any desire to get out early. To me, MSDs is a no-brainer. In this environment, If I could find a guaranteed no-risk 10% APR in some other investment, I'd put a good chunk of my savings into it.
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  #30  
Old 08-28-2014, 03:32 PM
tonyscv tonyscv is offline
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Originally Posted by Squiddie View Post
Fair enough.

I was just asking because upwards in this thread we were specifically bashing MSDs, which are refundable.
No one is bashing MSD's. There was an implication that there was no risk or downside. There is. Specifically if you would ever want to exit a lease early for any reason.

The ROI on MSD's is fantastic, and for people who are certain they will carry their leases to full term, it's an excellent option. Given this is an education thread, it's good to be clear on pros and cons.
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  #31  
Old 08-28-2014, 04:15 PM
Squiddie Squiddie is offline
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Originally Posted by WillInDenver View Post
Seriously. In ten or twelve conversations of mine, only one person has even bothered to explain to me that they don't want to put any cash into the deal. The rest just stop talking to me the second I tell them there's a buyin. They seem not to wonder why my lease payment is about $200 lower than anything they've ever seen on a 535.
Do you think that those people would
- follow through and actually want yours (as opposed to looking for car charming forever)?
- be in a financial state to be accepted by BMWFS?
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  #32  
Old 08-28-2014, 05:37 PM
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WillInDenver WillInDenver is online now
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Originally Posted by Squiddie View Post
Do you think that those people would

- follow through and actually want yours (as opposed to looking for car charming forever)?

- be in a financial state to be accepted by BMWFS?

I see what you're getting at there. Although, LeaseTrader does a pre-credit check on prospects before they expose them to "sellers" as interested.


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  #33  
Old 08-29-2014, 02:20 PM
jseltzer jseltzer is offline
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I'm 44 years-old, and I've never bought a car. I've leased almost too many to count. Currently, I lease a 2014 535i M-Sport. As you probably know, there are many things that determine a monthly lease price: cap reduction, money factor, holdbacks, dealer incentives, residual, etc. In the past, I tried to understand and factor all these things into consideration.

Forget all that. You'll never figure it out. Instead, here's my advice:

1. Avoid "cap reduction" at all costs. Your goal should be to pay nothing up front.
2. If you do pay up front, only pay drive-off (first payment, registration, tax)
3. When negotiating, forget all the variables that go into determining a monthly payment
4. Just negotiate the monthly cost - let them figure out what variables/levers to pull to get you there
5. Decide ahead of time what you want to pay monthly, and tell them this number right away: "We have a deal if I can pay nothing up-front except drive-off, and monthly payment has a 6 in front of it"
6. Make sure they give you monthly payments inclusive of tax, etc. Tell them your goal number includes taxes, etc.
7. TIP: They will no doubt come back to you with, "Come on, it's only $10 a month more..." You say, "I agree, it's only $10 a month...hardly seems enough to prevent a sale." (That gets them every time!)

Bottom line: just concern yourself with the monthly payment. That's why you are leasing in the first place.
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  #34  
Old 08-29-2014, 03:24 PM
Squiddie Squiddie is offline
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Quote:
Originally Posted by jseltzer View Post
I'm 44 years-old, and I've never bought a car. I've leased almost too many to count. Currently, I lease a 2014 535i M-Sport. As you probably know, there are many things that determine a monthly lease price: cap reduction, money factor, holdbacks, dealer incentives, residual, etc. In the past, I tried to understand and factor all these things into consideration.

Forget all that. You'll never figure it out. Instead, here's my advice:

1. Avoid "cap reduction" at all costs. Your goal should be to pay nothing up front.
2. If you do pay up front, only pay drive-off (first payment, registration, tax)
3. When negotiating, forget all the variables that go into determining a monthly payment
4. Just negotiate the monthly cost - let them figure out what variables/levers to pull to get you there
5. Decide ahead of time what you want to pay monthly, and tell them this number right away: "We have a deal if I can pay nothing up-front except drive-off, and monthly payment has a 6 in front of it"
6. Make sure they give you monthly payments inclusive of tax, etc. Tell them your goal number includes taxes, etc.
7. TIP: They will no doubt come back to you with, "Come on, it's only $10 a month more..." You say, "I agree, it's only $10 a month...hardly seems enough to prevent a sale." (That gets them every time!)

Bottom line: just concern yourself with the monthly payment. That's why you are leasing in the first place.
This optimization really only makes it easier to find somebody to take over.

Obviously MSDs are good for yourself to lower total cost.

Using downpayments can make sense. While they are not covered by the gap insurance you also don't pay for that amount of the gap insurance. It isn't anything you give away for free. You will have to cover the gap yourself if you total but if not the total amount your payed into the lease when it ends is lower due to the reduction in financial cost (interest), and yes by not paying for some of the gap insurance.

If you buy normal insurance, do you pay extra to avoid deductibles? It's a bit like that.

It is all a question of what you want to optimize for.
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  #35  
Old 08-31-2014, 08:33 AM
bobfrapples bobfrapples is offline
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Quote:
Originally Posted by jseltzer View Post
I'm 44 years-old, and I've never bought a car. I've leased almost too many to count. Currently, I lease a 2014 535i M-Sport. As you probably know, there are many things that determine a monthly lease price: cap reduction, money factor, holdbacks, dealer incentives, residual, etc. In the past, I tried to understand and factor all these things into consideration.

Forget all that. You'll never figure it out. Instead, here's my advice:

1. Avoid "cap reduction" at all costs. Your goal should be to pay nothing up front.
2. If you do pay up front, only pay drive-off (first payment, registration, tax)
3. When negotiating, forget all the variables that go into determining a monthly payment
4. Just negotiate the monthly cost - let them figure out what variables/levers to pull to get you there
5. Decide ahead of time what you want to pay monthly, and tell them this number right away: "We have a deal if I can pay nothing up-front except drive-off, and monthly payment has a 6 in front of it"
6. Make sure they give you monthly payments inclusive of tax, etc. Tell them your goal number includes taxes, etc.
7. TIP: They will no doubt come back to you with, "Come on, it's only $10 a month more..." You say, "I agree, it's only $10 a month...hardly seems enough to prevent a sale." (That gets them every time!)

Bottom line: just concern yourself with the monthly payment. That's why you are leasing in the first place.
I'm shopping for a lease of a 535i M-Sport now. The method above seems to land you in a position of paying what you are willing as a buyer, but assumes that you have done your own research and calculation of what MF and cost of the car should be. If you don't calculate that yourself ahead of time, and just pick a monthly payment that you are targeting, then you could be leaving money on the table.
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  #36  
Old 08-31-2014, 09:28 AM
jseltzer jseltzer is offline
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You might be right. I might have gotten a better deal. Not sure. But, you can say the same thing for a lot of big ticket purchases, e.g. a house. Maybe I should have called this a "philosophy" vs. advice. For me, I want a monthly payment I'm comfortable with and seems to be fair and in-line with what I know others pay. Ultimately, there are so many levers a dealer can pull to manipulate the price, that's all you are trying to do anyone - find a comfortable monthly price.

For me, the beauty of my style is that is reduces the amount of time I'm in the dealer - that alone is worth a few bucks.
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  #37  
Old 09-01-2014, 02:29 AM
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Originally Posted by RaveD View Post
I did the pull-ahead offer, turning in my car 2 months ahead of time. The full MSD was returned.

I agree with dunderhi that you should not consider a lease if you have any inclination to terminate or transfer the lease prior to the term. If you have any reason to believe that you cannot comfortably afford the lease payment for the duration, then you should not consider that lease.

If you are forced to transfer for some emergency reason, then you should collect the MSDs from the person assuming the lease since they will get it back at the end.
For the most part not many people terminate leases early, some people do as they get bored and want the newest and greatest. As someone stated, 36 months isn't a lot of time and if BMW does offer the "pull ahead offer" then BMW should refund the MSD's.
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  #38  
Old 09-01-2014, 09:11 AM
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Originally Posted by bobfrapples View Post
I'm shopping for a lease of a 535i M-Sport now. The method above seems to land you in a position of paying what you are willing as a buyer, but assumes that you have done your own research and calculation of what MF and cost of the car should be. If you don't calculate that yourself ahead of time, and just pick a monthly payment that you are targeting, then you could be leaving money on the table.
I agree. You should educate yourself as best as possible. Everything you need to know is out there on this forum and elsewhere. Know the residual and money factor and how the latter is affected by additional security deposits. Know the price of the car that is "fair" in your area based on what other people are actually paying (Edmunds.com or Truecar.com for example).

In my opinion you should negotiate the price of the car first and foremost, starting with the invoice price, not MSRP. Once you agree on the price of the car you can then worry about the lease payments. If you negotiate the monthly price it leaves wiggle room for the dealer to hide markups that the educated consumer need not pay. Let them use those tricks on the next guy who doesn't know as much as you.
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  #39  
Old 09-02-2014, 10:57 AM
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WillInDenver WillInDenver is online now
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Quote:
Originally Posted by jseltzer View Post
I'm 44 years-old, and I've never bought a car. I've leased almost too many to count. Currently, I lease a 2014 535i M-Sport. As you probably know, there are many things that determine a monthly lease price: cap reduction, money factor, holdbacks, dealer incentives, residual, etc. In the past, I tried to understand and factor all these things into consideration.



Forget all that. You'll never figure it out. Instead, here's my advice:



1. Avoid "cap reduction" at all costs. Your goal should be to pay nothing up front.

2. If you do pay up front, only pay drive-off (first payment, registration, tax)

3. When negotiating, forget all the variables that go into determining a monthly payment

4. Just negotiate the monthly cost - let them figure out what variables/levers to pull to get you there

5. Decide ahead of time what you want to pay monthly, and tell them this number right away: "We have a deal if I can pay nothing up-front except drive-off, and monthly payment has a 6 in front of it"

6. Make sure they give you monthly payments inclusive of tax, etc. Tell them your goal number includes taxes, etc.

7. TIP: They will no doubt come back to you with, "Come on, it's only $10 a month more..." You say, "I agree, it's only $10 a month...hardly seems enough to prevent a sale." (That gets them every time!)



Bottom line: just concern yourself with the monthly payment. That's why you are leasing in the first place.

Clearly, using this approach you absolutely must avoid capital cost reductions, because those are an obvious way for the finance guy to get you to your target payment.

I sort of agree with the target payment approach though, because a lot of people go in with the goal to ratchet every single aspect of the lease calculation down to the point where the dealer makes nothing on the deal. They need to make some money on your deal, and as long as you are generally aware of the lease mechanics, a few extra bucks in a documentation fee shouldn't be objectionable as long as your payment is where you want it.


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  #40  
Old 09-02-2014, 01:01 PM
bmw325 bmw325 is online now
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Quote:
Originally Posted by WillInDenver View Post
Clearly, using this approach you absolutely must avoid capital cost reductions, because those are an obvious way for the finance guy to get you to your target payment.

I sort of agree with the target payment approach though, because a lot of people go in with the goal to ratchet every single aspect of the lease calculation down to the point where the dealer makes nothing on the deal. They need to make some money on your deal, and as long as you are generally aware of the lease mechanics, a few extra bucks in a documentation fee shouldn't be objectionable as long as your payment is where you want it.


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Interesting discussion. While I personally prefer to negotiate each part individually (and do so over email), my car buying habits are not the same as most people. I like to order ahead of time and know exactly what I want (even doing BMW European delivery) and am OCD when it comes to knowing all aspects of a deal.

This weekend, however, my brother wanted to lease a honda. He had done only the most rudimentary homeowrk. In his case, I did a quick back of the envelope lease calculation on the car he watned inclusive of tax and just old him to get to that payment with 0 down. Told him to start with that amount minus $10. Made it easier for him. They did the $10 more thing- and I told him to just walk away and call the bluff. Sure enough they met the target payment. Reminded me of how much I prefer my mehtod of buying cars (only dealing with reputable intenret sales people via email and knowing all details upfront). But it worked out in the end i guess.
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  #41  
Old 09-03-2014, 04:38 PM
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Quote:
Originally Posted by WillInDenver View Post
I sort of agree with the target payment approach though, because a lot of people go in with the goal to ratchet every single aspect of the lease calculation down to the point where the dealer makes nothing on the deal. They need to make some money on your deal, and as long as you are generally aware of the lease mechanics, a few extra bucks in a documentation fee shouldn't be objectionable as long as your payment is where you want it.
Why does the dealer need to make extra profit just because you are leasing? How you finance should not matter. The dealer makes his profit on the sale of the car.

Maybe I just have an awesome dealer, but marking up the money factor or acquisition fee or adding a cap cost reduction has never been a factor in our discussions. Last time I walked in, offered to pay $200 over invoice, negotiated to $500 over invoice, and shook hands. There were no hidden surprises in the lease.
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  #42  
Old 09-03-2014, 04:43 PM
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Originally Posted by RaveD View Post
Why does the dealer need to make extra profit just because you are leasing? How you finance should not matter. The dealer makes his profit on the sale of the car.

Maybe I just have an awesome dealer, but marking up the money factor or acquisition fee or adding a cap cost reduction has never been a factor in our discussions. Last time I walked in, offered to pay $200 over invoice, negotiated to $500 over invoice, and shook hands. There were no hidden surprises in the lease.
Where did I say the dealer needs to make "extra profit because you are leasing?"
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  #43  
Old 09-04-2014, 05:55 AM
bklyn550 bklyn550 is offline
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i always use a broker....going to a dealership and negotiating is pointless....leasing companies have good relationships with dealers and play them against each other to make a profit and you benefit...
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  #44  
Old 09-04-2014, 06:55 AM
bmw325 bmw325 is online now
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Please school me on lease negotiation.

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i always use a broker....going to a dealership and negotiating is pointless....leasing companies have good relationships with dealers and play them against each other to make a profit and you benefit...

Intreesting. I see a lot of bmws and Mercedes in NYC with various leasing company license plate frames. Always seemed a bit sketchy to me. Can you order a car from the factory when using a broker or do you have to take somrtyihg off the lot?

Personally I am quite happy doing my own research, negotiating using all available incentives and doing euro delivery. I kind of doubt one of these brokers could match the deals I've gotten by doing it myself (low 400s, 0 down other than msds, msrps in mid 50s). Only possible way would be if they got me a leftover oddball specced car that a dealer really needs to unload and is willing to lose all of their holdback money on

But it may be preferable to walking in off the street with only a vague notion of how leasing works
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  #45  
Old 09-05-2014, 08:24 AM
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Originally Posted by WillInDenver View Post
Where did I say the dealer needs to make "extra profit because you are leasing?"
Perhaps I misunderstood this statement:

Quote:
I sort of agree with the target payment approach though, because a lot of people go in with the goal to ratchet every single aspect of the lease calculation down to the point where the dealer makes nothing on the deal. They need to make some money on your deal, and as long as you are generally aware of the lease mechanics, a few extra bucks in a documentation fee shouldn't be objectionable as long as your payment is where you want it.
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  #46  
Old 09-05-2014, 11:29 AM
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Originally Posted by RaveD View Post
Perhaps I misunderstood this statement:

Maybe so. I meant that a dealer has to make money somewhere in a deal. People on these boards understand leasing well enough to be able to separate all the variables, then think they are going to walk into a BMW finance office and say:

I'll pay $1000 below invoice
I'll pay the buy rate on the money factor
I'll pay no markup on the documentation fee
All incentives come back to me
Etc
Etc
Etc

It's healthy that people know that much about a lease - but unless there's some trunk money on the car, a lot of dealers would walk for a deal like that. They have to make something somewhere.

But no, not more because it's a lease. In any deal.

That was my point.



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  #47  
Old 09-05-2014, 03:31 PM
bmw325 bmw325 is online now
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Quote:
Originally Posted by WillInDenver View Post
Maybe so. I meant that a dealer has to make money somewhere in a deal. People on these boards understand leasing well enough to be able to separate all the variables, then think they are going to walk into a BMW finance office and say:

I'll pay $1000 below invoice
I'll pay the buy rate on the money factor
I'll pay no markup on the documentation fee
All incentives come back to me
Etc
Etc
Etc

It's healthy that people know that much about a lease - but unless there's some trunk money on the car, a lot of dealers would walk for a deal like that. They have to make something somewhere.

But no, not more because it's a lease. In any deal.

That was my point.



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I think that's what buyers who have just recently learned about leasing are like. But you quickly learn what offers are reaonable. Generally it's easier to keep all the profit confined to the amount over invoice. There are several bf sponsors who work that way
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  #48  
Old 09-05-2014, 03:58 PM
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Originally Posted by bmw325 View Post
I think that's what buyers who have just recently learned about leasing are like. But you quickly learn what offers are reaonable. Generally it's easier to keep all the profit confined to the amount over invoice. There are several bf sponsors who work that way
Agree.
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  #49  
Old 09-05-2014, 09:09 PM
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Eagle11 Eagle11 is offline
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Quote:
Originally Posted by WillInDenver View Post
Maybe so. I meant that a dealer has to make money somewhere in a deal. People on these boards understand leasing well enough to be able to separate all the variables, then think they are going to walk into a BMW finance office and say:

I'll pay $1000 below invoice
I'll pay the buy rate on the money factor
I'll pay no markup on the documentation fee
All incentives come back to me
Etc
Etc
Etc

It's healthy that people know that much about a lease - but unless there's some trunk money on the car, a lot of dealers would walk for a deal like that. They have to make something somewhere.

But no, not more because it's a lease. In any deal.

That was my point.
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There are more people who do not fully understand leasing and how it works then there are that fully understand it. Most people tell the CA, I want a 5 series (with the following options), and I want my payments at or below $600/m w tax. This allows the dealership to work the deal out to it's advantage. This allows people who understand how to work deals out to thier advantage to get the great deals.. It all balances itself out.
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  #50  
Old 09-05-2014, 09:28 PM
namelessman namelessman is online now
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For those well versed in leases, it probably is OK to pre-compute a target monthly payment(e.g. $500/month for a 3-year lease) with the best available cap cost(e.g. invoice minus incentives minus trunk money), residual %, interest rate, desired money down, fees+tax, etc, etc. Also it would be wise to skip trade-in and any F&I product. In this case, the dealer can shift the moving parts any way it sees fit, but any dealer offer can easily be compared to the target, e.g. an extra $25/month for 3 years is $900 profit.
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