BMWFS Improves the MSD Program!

In a bulletin released today, BMWFS made some changes to the MSD (multiple security deposit) program.

The current program is up to 5 over the required amount, and a 0.00005 reduction in the money factor for each one.

The new program is up to 7 over the required amount, and a reduction of 0.0007 per.

Really, that's great! Can anyone else confirm?


Not that I don't trust you Sarafil

Originally Posted by SARAFIL

In a bulletin released today, BMWFS made some changes to the MSD (multiple security deposit) program.

The current program is up to 5 over the required amount, and a 0.00005 reduction in the money factor for each one.

The new program is up to 7 over the required amount, and a reduction of 0.0007 per.

do you mean .00007?

All these decimal places in the MF is so stupid...they really need a new way to represent this number....

Also, could someone explain how these MSDs work?

Wow that is a great return on investment. I worked 7 additional SD's into the current deal I am trying to work and for a $4900 investment ($700 * 7) it reduces my payment by $39.40 per month.

Over my 24 month lease that's a total savings of $945.60 (on a $4,900 investment) or 19.3% for the two years.

That's a darn good two year after tax total return you would be hard pressed to match in Wall Street.

SARAFIL:
I am locked on the December program and will be signing my papers on Monday.
Can is I use the 0.0007 negative adder on the old rates too or is it only for new lock ins?

I have a related question:

If a leased car is totalled or stolen, is the security deposit refunded to me or is it applied to the "gap" between the actual cash value (paid by my insurance) and the money owed to BMWFS?

I'd probably walk away from the MSD program if there was a chance I'd lose that money if the car was written off. Has this happened to anyone?

Originally Posted by AEC

I have a related question:

If a leased car is totalled or stolen, is the security deposit refunded to me or is it applied to the "gap" between the actual cash value (paid by my insurance) and the money owed to BMWFS?

I'd probably walk away from the MSD program if there was a chance I'd lose that money if the car was written off. Has this happened to anyone?

I'm not a dealer but I did ask BMWFS this question and Security Deposit is as it is named, a deposit. It is fully refundable. BUT be careful that when the lease numbers are done that the security deposit is entered in the line "Refundable Security Deposit:" on the paperwork and NOT on the "Capatilized Cost Reduction:" line (Which is non refundable and subject to loss if car totalled)..

Originally Posted by schley

do you mean .00007?

Oops... yes, 0.00007.

Originally Posted by AEC

I have a related question:

If a leased car is totalled or stolen, is the security deposit refunded to me or is it applied to the "gap" between the actual cash value (paid by my insurance) and the money owed to BMWFS?

I'd probably walk away from the MSD program if there was a chance I'd lose that money if the car was written off. Has this happened to anyone?

The Security Deposits are refunded if the car is totalled. BMWFS will only keep a portion of the Security Deposit to pay unpaid charges at the end of the lease... excess wear and tear, mileage, late payments, etc.

Originally Posted by Ågent99

All these decimal places in the MF is so stupid...they really need a new way to represent this number....

Also, could someone explain how these MSDs work?

Your normal security deposit is your monthly payment rounded to the next $50. So, $300 payment = $300 deposit, $302 payment = $350 deposit, $350 payment = $350 deposit, etc.

You are required to pay one deposit at lease signing unless a) you are a current BMWFS customer, or b) you increase the money factor to waive it. You don't get a reduction in the MF for this one required deposit.

In addition to that required one, you can now put down up to 7 additional ones, and you get a decrease of 0.00007 to the MF for each one. So, on a buy rate of 0.0025, you can put down 7 deposits extra and get your new MF to 0.00201.

At the end of the lease, this is fully refundable. They will only keep part of it if you have excess wear charges, mileage penalties, etc. (which they would bill you for regardless of your security deposits, so you'd pay it anyways even if you didn't do MSD.)

If you have a little bit of cash on hand, it's a great investment opportunity. As some have calculated, you can get a very high return (monthly payment savings over the term) on your investment.

Originally Posted by pfitzpa1

I'm not a dealer but I did ask BMWFS this question and Security Deposit is as it is named, a deposit. It is fully refundable. BUT be careful that when the lease numbers are done that the security deposit is entered in the line "Refundable Security Deposit:" on the paperwork and NOT on the "Capatilized Cost Reduction:" line (Which is non refundable and subject to loss if car totalled)..

Originally Posted by SARAFIL

The Security Deposits are refunded if the car is totalled. BMWFS will only keep a portion of the Security Deposit to pay unpaid charges at the end of the lease... excess wear and tear, mileage, late payments, etc.

Thanks!

SARAFIL: Repost.

Is this for new rate locks only or will it work for my lock on the December program too?

Originally Posted by SARAFIL

The Security Deposits are refunded if the car is totalled. BMWFS will only keep a portion of the Security Deposit to pay unpaid charges at the end of the lease... excess wear and tear, mileage, late payments, etc.

BMWFS also automatically takes the last payment on the lease out of the security deposit.

Originally Posted by DoubleL

Wow that is a great return on investment. I worked 7 additional SD's into the current deal I am trying to work and for a $4900 investment ($700 * 7) it reduces my payment by $39.40 per month.

Over my 24 month lease that's a total savings of $945.60 (on a $4,900 investment) or 19.3% for the two years.

That's a darn good two year after tax total return you would be hard pressed to match in Wall Street.

Not quite. By foregoing the compound interest earned on you $4900 deposit over 2 years, say at 5% per year(or $502.25), your total savings over this period is actually closer to $443.35, or 9% over the lease term. Still good though.

Originally Posted by carnuts3

Not quite. By foregoing the compound interest earned on you $4900 deposit over 2 years, say at 5% per year(or $502.25), your total savings over this period is actually closer to $443.35, or 9% over the lease term. Still good though.

I was trying to figure out why the return seemed so high -good work.

My 19.3% was the two year total (or 9.65 per year in simple interest). Sorry to confuse anyone.

Also "carnuts" you are not deducting the Federal & State taxes you will have to pay on your 5% compound interest if you put your $4,900 in the "bank". All the MSD savings are tax free.

All in all as was said a very smart thing if you have the cash.

Disclaimer: I am an accountant, and accountants are notorious for coming up with strange numbers.

Will the program work in NY state? Have heard from somepeople that the MSD program is not available in NY.

Originally Posted by DoubleL

My 19.3% was the two year total (or 9.65 per year in simple interest). Sorry to confuse anyone.

Also "carnuts" you are not deducting the Federal & State taxes you will have to pay on your 5% compound interest if you put your $4,900 in the "bank". All the MSD savings are tax free.

All in all as was said a very smart thing if you have the cash.

Disclaimer: I am an accountant, and accountants are notorious for coming up with strange numbers.

Does anyone know what the MF reduction on a pre-paid lease is. I've heard there's a significant reduction (better than the MSD) if you can pre-pay.

For prepaid lease the reduction is 0.0008 of the base rates. Many times the special rates are better e.g. The 0.00140 on the 530 vs 0.00290-0,0008 with prepaid.

What do you mean the special lease rate vs a regular lease rate? If I knew there was a special incentive to pre paying the lease I would have because I hasically have a seperate account just to pay for the car automatically so it's pretty much prepaid, but if there was a .0008 reduction in the rate I paid then that would have been $2100 over 3 years..


if you prepay the lease do you still have to pay the .0003 ED adder?

Originally Posted by lilskel

What do you mean the special lease rate vs a regular lease rate? If I knew there was a special incentive to pre paying the lease I would have because I hasically have a seperate account just to pay for the car automatically so it's pretty much prepaid, but if there was a .0008 reduction in the rate I paid then that would have been $2100 over 3 years..


if you prepay the lease do you still have to pay the .0003 ED adder?

I think the "specials" are the ones advertised on BMWUSA website under "shopping/Lease Offers". Could be wrong though..

Originally Posted by lilskel

if you prepay the lease do you still have to pay the .0003 ED adder?

0.0003 ED adder is always present no matter what AFAIK.

BMWFS has a base money factor (currently 0.0029) which applies to all cars.
Then they have model and term specific money factors. If you look at the lease rates posted in the sticky you will see the 0.0029 MF for cars which BMWFS does not want to subsidize (e.g. the 760Li) or for terms more than 36 months. Any MF less than the 0.0029 is a special MF for the particular model and lease term.

In the pre-paid lease you take 0.0008 off the base MF. Very often it is more than the special MF in place for the car you are looking for.

Oh well then forget about the prepay, the monthly MF's are always better than .0029, that would be the day I leased with a MF that high! I shoot for .0010