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F10 / F11 (2011 - Current)
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  #1  
Old 08-23-2014, 03:08 PM
waynedog waynedog is offline
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Is this a good lease deal for a 535d?

Looking at a 2014 535d. Sticker is ~$67k. Almost $10k off plus fees/tax = net cost of $58k. Lease offer is 36 months, 12k miles, $0 down, $672 per month. Would not tell me MF or residual but I could get it if I asked more. How does this compare to others lease deals?
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  #2  
Old 08-24-2014, 03:50 AM
iwantone iwantone is online now
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Quote:
Originally Posted by waynedog View Post
Looking at a 2014 535d. Sticker is ~$67k. Almost $10k off plus fees/tax = net cost of $58k. Lease offer is 36 months, 12k miles, $0 down, $672 per month. Would not tell me MF or residual but I could get it if I asked more. How does this compare to others lease deals?
If the dealer won't give you details..it's s bad deal. That's my rule of thumb. I personally think you can do better anyways..my friend just got a $67k 5 series in NJ and his payment is approx $585..no down payment, no msd..tax in payment not upfront.

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  #3  
Old 08-24-2014, 08:27 AM
Yinzer Yinzer is offline
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Does that include the 3500 credit?
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  #4  
Old 08-24-2014, 08:53 AM
waynedog waynedog is offline
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Yes it does. That is how they are offering it at $10k off of MSRP.
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  #5  
Old 08-24-2014, 09:02 AM
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markl53 markl53 is online now
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Why would they not tell you residual or MF? Those are needed for calculating depreciation and finance fees. Are they secret? That's like a bank making a loan and not telling you the interest rate -- same thing.

Residual = MSRP * Residual Factor (MSRP, not negotiated price)
Net Cap Cost = Negotiated price + fees + taxes + anything else going into the lease
Depreciation Fee = (Net Cap Cost - Residual) / Term
Finance Fee = (Net Cap Cost + Residual) * MF (Yes, PLUS residual)

These added together are your monthly lease cost.

We just did a 36-month lease on my wife's new '15 TLX -- the MF was .00123 (x2400 = 2.95%), residual was a whopping .62!
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  #6  
Old 08-24-2014, 09:32 AM
waynedog waynedog is offline
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My salesman could not tell me the MF or residual. Then the sales manager came in and kept dancing around the questions saying the residual was "typically around 60%" and the MF varied depending on credit rating. I gave them my info to check out credit and they came back with their "final offer" - $672 with $0 down (3 yr, 12k per year, $0 down). This was lower than their initial offer of same monthly payment and $1,500 down. When I plug numbers into internet leasing calculators, I think this is what they are offering me:
MSRP - $67,000
Residual - 60% ($40,000)
Interest rate - 4% (0.0017 MF)
3 yrs, $0 down
Monthly payment = $672

If this is correct, then the raal question is:
* is 4% (0.0017 MF) the best MF rate I can get from BMW? I can get 1% from Lexus on a lease (0.0004 MF)
* is 60% residual after 3 years a typical residual for a 535d BMW lease?

Seems like the MF/interest rate is the big difference since if I apply the Lexus 0.0004/1% rate to the BMW lease, then my payment drops $100/month. I have the absolute best possible credit rating. So the question is, why is BMW interest rates 4x what Lexus is? By the way, I am a Lexus LS460 owner (have owned Lexus LS models for 10 years).
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  #7  
Old 08-24-2014, 11:26 AM
wesleyan92 wesleyan92 is offline
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Quote:
Originally Posted by waynedog View Post
My salesman could not tell me the MF or residual. Then the sales manager came in and kept dancing around the questions saying the residual was "typically around 60%" and the MF varied depending on credit rating. I gave them my info to check out credit and they came back with their "final offer" - $672 with $0 down (3 yr, 12k per year, $0 down). This was lower than their initial offer of same monthly payment and $1,500 down. When I plug numbers into internet leasing calculators, I think this is what they are offering me:
MSRP - $67,000
Residual - 60% ($40,000)
Interest rate - 4% (0.0017 MF)
3 yrs, $0 down
Monthly payment = $672

If this is correct, then the raal question is:
* is 4% (0.0017 MF) the best MF rate I can get from BMW? I can get 1% from Lexus on a lease (0.0004 MF)
* is 60% residual after 3 years a typical residual for a 535d BMW lease?

Seems like the MF/interest rate is the big difference since if I apply the Lexus 0.0004/1% rate to the BMW lease, then my payment drops $100/month. I have the absolute best possible credit rating. So the question is, why is BMW interest rates 4x what Lexus is? By the way, I am a Lexus LS460 owner (have owned Lexus LS models for 10 years).
Total BS - ask them for a printout of the quote details where they have to list out the MF and Residual. Also, if you can afford it, do the multiple security deposit which will bring the rate down further (assuming you already know about this). Good luck!
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  #8  
Old 08-24-2014, 04:39 PM
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rkinra rkinra is offline
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It looks like they have marked up the MF, the base MF = .00130. Also, Residual is based on the annual milage... You should be able to figure it out using bmwusa.com and backing into what they are offering for 10k miles. I think 12k miles is 2% less (so if 10k miles = 62%, then 12k miles = 60%). Ridewg.com has the 535 at 61% for 12k miles -- http://www.ridewithg.com/bmw-lease-rates/.
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  #9  
Old 08-24-2014, 06:01 PM
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While I agree your dealer has marked up the MF and is not being transparent, don't be fooled by the Lexus MF. The BMWFS buy rate is 0.00130. No BMW dealer will go lower. If you value the MF more than the car, by all means spring for the Lexus.
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  #10  
Old 08-24-2014, 06:08 PM
Autoputzer Autoputzer is offline
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Here's a good source for predicted residuals by year, make, model, term, annual mileage:

http://www.cars.com/go/alg/index.jsp...RIES&year=2015

You can work backwards (using the residual and sales price) to get the money factor.
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  #11  
Old 08-24-2014, 08:17 PM
Autoputzer Autoputzer is offline
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Quote:
Originally Posted by markl53 View Post
Why would they not tell you residual or MF? Those are needed for calculating depreciation and finance fees. Are they secret? That's like a bank making a loan and not telling you the interest rate -- same thing.

Residual = MSRP * Residual Factor (MSRP, not negotiated price)
Net Cap Cost = Negotiated price + fees + taxes + anything else going into the lease
Depreciation Fee = (Net Cap Cost - Residual) / Term
Finance Fee = (Net Cap Cost + Residual) * MF (Yes, PLUS residual)

These added together are your monthly lease cost.

We just did a 36-month lease on my wife's new '15 TLX -- the MF was .00123 (x2400 = 2.95%), residual was a whopping .62!
Good info. I learned something tonight (and confirmed it on the Interwebs.)

But comparing MF x 2400 to the interest you'd pay on a car loan is "apples to oranges."
Monthly interest on a car loan is only paid on the remaining balance, and it goes down every month. If you compare the total finance fees paid on a 0.00123 MF lease to a 2.95% amortized car loan's interest rate, you're paying about another $1000 on $50k. Your MF of 0.00123 is more like a loan interest rate somewhere north of 4%. (I'm too tired to do the exact math.)

That extra 0.14 of the residual over a 535i (0.48) is because Acura/Honda's maintenance costs are much lower, and that results in better re-sale value. There's a big hit out past 100k miles when a Honda/Acura's timing belt needs replacing and the valves need adjusting. But, most new car buyers don't have the car by then, and even at $2k, you still way ahead of what you'd spend keeping a BMW in one piece for 100k miles.

The only maintenance on my wife's Honda Accord in 100k miles were: fluids, filters, wiper blades, tires (78k miles), and a battery. At 115k, the driver's floor mat still looks new. My 535i's is showing wear at 6k miles.

Last edited by Autoputzer; 08-24-2014 at 08:19 PM.
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  #12  
Old 08-25-2014, 07:30 AM
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mason mason is offline
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They need to tell you the MF and residual. If they include $3500, that's not $10k discount. it's $6500 discount. That $3500 should go toward cap cost reduction.
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  #13  
Old 08-25-2014, 01:02 PM
madhotm3 madhotm3 is offline
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Your fees are typically around $1,500 - bank fee $725 (dealers allowed to mark-up to $925); DMV fees ~$350; Doc fee $399.
I'm assuming your "net cost" includes all fees since you say $0 down, so your sale price is technically $58,000 - $1,500 = $56,500 ($10,500 or 15.7% under MSRP). Not bad at all...I would say anything over 11% or so is usually a good deal.

Using $58,000 as your capped cost with a MF of 0.0013; residual at 60%; and sales tax of 7% you are right at $672/month. Looks like that's what the dealer is using.
Bottom line - great deal!

Last edited by madhotm3; 08-25-2014 at 01:05 PM.
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  #14  
Old 08-25-2014, 01:38 PM
waynedog waynedog is offline
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Maybe $672/month is a good deal given the MF rates that BMW sets and the ~60% residual. The way I look at it, $672x36 months = $24,200 to drive the car for 3 years. On the other hand, if the sale price (cash) is ~$58k, and the residual is 60% x MSRP ($67k) = $40k which means I could sell it in 3 years for $40k? Do 3 year old 535d models with 36k miles sell for $40k?

So if I paid cash, my 3 year cost would be $58k - $40k = $18k vs total lease payments of $24k or a savings of $6k over 3 years. Is that the right math? If I instead leased and put the $58k in a 3 yr CD, best rates now are 1.4% which would give me $2,500 over 3 years. So it looks like leasing is $3,500 more expensive? Are there other advantages to the lease that make up for the $3,500?
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Old 08-25-2014, 04:51 PM
BudFox007 BudFox007 is offline
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Quote:
Originally Posted by waynedog View Post
Maybe $672/month is a good deal given the MF rates that BMW sets and the ~60% residual. The way I look at it, $672x36 months = $24,200 to drive the car for 3 years. On the other hand, if the sale price (cash) is ~$58k, and the residual is 60% x MSRP ($67k) = $40k which means I could sell it in 3 years for $40k? Do 3 year old 535d models with 36k miles sell for $40k?

So if I paid cash, my 3 year cost would be $58k - $40k = $18k vs total lease payments of $24k or a savings of $6k over 3 years. Is that the right math? If I instead leased and put the $58k in a 3 yr CD, best rates now are 1.4% which would give me $2,500 over 3 years. So it looks like leasing is $3,500 more expensive? Are there other advantages to the lease that make up for the $3,500?
Unless you are in a non-tax state, you are missing the sales tax on the total $58K purchase price if you paid cash.

I don't think a 535d will sell for 60% of MSRP in 3 years. At that time there will be a new 5 Series (MY 2017 will be the first year). Plus getting that amount in a private sale will be tough since it won't have a CPO warranty like the dealer can offer.

You should check what the 2011 and 2012 535d's are selling for today (3 years after they were introduced) and see how close those prices are to 60% of MSRP back then. You can use KBB for this exercise. I think it will be lower.
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Old 08-25-2014, 05:29 PM
Squiddie Squiddie is offline
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Quote:
Originally Posted by waynedog View Post
Looking at a 2014 535d. Sticker is ~$67k. Almost $10k off plus fees/tax = net cost of $58k. Lease offer is 36 months, 12k miles, $0 down, $672 per month. Would not tell me MF or residual but I could get it if I asked more. How does this compare to others lease deals?
I just ran it with a residual of 0.60, mf 0.0016, acquisition fee of 925. All that is dealer marked up. The residual is fantasy since BMW sets it, not the dealer, but I'm putting it as a bad deal.

Nothing down, no msds. Comes to $678.74 + tax.

So you are well in zone of meh deals.
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Old 08-25-2014, 06:04 PM
BudFox007 BudFox007 is offline
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This is a good reminder that you should always assess deals relative to invoice rather than MSRP. $10K off MSRP sounds like a great deal, but how much better is this than invoice?

Rough math suggests invoice is about $62K (93% of $56.6K base MY2014 535d MSRP + 91% of $10.4K of options). What is the agreed value, i.e., the price before taxes? What is the tax rate in SC?

Agree with Squiddie that it looks like the money factor is marked up here. You should definitely ask the dealer for this number, and shoot to get 0.0013, especially since this is a 2014 model.
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  #18  
Old 08-27-2014, 06:16 PM
xofruitcake xofruitcake is offline
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Quote:
Originally Posted by waynedog View Post
Maybe $672/month is a good deal given the MF rates that BMW sets and the ~60% residual. The way I look at it, $672x36 months = $24,200 to drive the car for 3 years. On the other hand, if the sale price (cash) is ~$58k, and the residual is 60% x MSRP ($67k) = $40k which means I could sell it in 3 years for $40k? Do 3 year old 535d models with 36k miles sell for $40k?

So if I paid cash, my 3 year cost would be $58k - $40k = $18k vs total lease payments of $24k or a savings of $6k over 3 years. Is that the right math? If I instead leased and put the $58k in a 3 yr CD, best rates now are 1.4% which would give me $2,500 over 3 years. So it looks like leasing is $3,500 more expensive? Are there other advantages to the lease that make up for the $3,500?
In the lease number they quote, it include DMV, tire fee, disposition fee etc. that your purchase will have to include as well. The only fee that is unique to lease is the acquisition cost which is about 950. The interest rate is higher with lease now is 0.0013x2400=3.12% which is higher than your CD rate of 1.4%. And don't forget the sales tax. In a lease payment the sale tax treatment are different for different state. In California, we only pay tax on lease payment while car purchase demand full tax on the purchase price (other state have different tax treatment for lease vs buy). So if you were in California, you would have to throw the tax into your car purchase calculation. The difference is more like 1500 to 2000.

And what you get in a BMW lease is that you get gap insurance as part of the deal i.e. if you have an accident and total your car, you can turn your payment from the insurance company to BMW and you can terminate the lease. And if you were to purchase your car, the insurance payment may be a lot lower than you thought and increase the ownership cost. The second thing you get is the guarantee residual. Try selling your BMW car at the end of 3 year from now at 60-63% residual (which is the residual that BMW use for 2014 5 series lease that you are comparing now) is at best a crap shot. This is a form of subsidy that BMW like to use for lease program. When they need to move their car through the lease program, they will artificially raise the residual and lower the lease payment. Right now BMW is doing exactly that to move their 2014. They use the similar residual at the beginning of the 2014 MY back in 2013. There is no way that the residual stay the same after 12 months.

I leased a 2013 535 with a 2 years lease back in 12/2012. At that time, BMW raised the residual for 535 2 year lease from 68% in Nov 13 to 73% in Dec 13. That change alone saved me $3250 or roughly 155 or so a month (when factor in interest cost and tax in addition to the depreciation saving) in my payment since my car has a 65K MSRP and have a tax rate of close to 9%.
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Old 08-27-2014, 06:53 PM
waynedog waynedog is offline
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Update - the best deal I can get is $19,900 total cost one time payment up front for a 3 year, 12k/yr lease on the $65k 535. This includes all fees, taxes ($300), etc. This is probably the best deal I will get. This equates to $550 per month, no money down. Residual is high (61%) and MF low (0.0005). Do you agree?
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Old 08-28-2014, 07:31 AM
Yinzer Yinzer is offline
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so with that one time payment what happens if you were to total it or it was stolen?
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  #21  
Old 08-28-2014, 07:32 AM
Yinzer Yinzer is offline
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@ markl53 if you dont mind me asking what kind of deals are they doing on the tlx?
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  #22  
Old 08-28-2014, 08:27 AM
Squiddie Squiddie is offline
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Originally Posted by Yinzer View Post
so with that one time payment what happens if you were to total it or it was stolen?
Nothing special. People are getting confused. The accident insurance doesn't care whether it is leased or bought, they pay the same money for the same age/shape car. In the lease case they pay to BMW and they do math to see how that works out with the terminated lease. They can't just keep money because you payed upfront.

In the specific case of BMW leases you are better off than a buyer, because it always comes with gap insurance, something that is rare for buyers. It lets you go back to a new car if you wrecked a 15 month old car, something that a buyer has to pay out of pocket for.

The only special thing is that downpayments are not covered by the gap insurance. But they you do end up paying less for the gap insurance (which is in your monthly finance cost via the money factor), so it is like every other insurance, you decide whether you need this insurance or not after looking at the premium.
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