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  #1  
Old 11-15-2012, 05:29 PM
xi2d xi2d is offline
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Calculating security deposits

When paying the 7 MSDs, how is each SD calculated? Is it rounding up the monthly payment to the next multiple of 50 before applying the MSD rate reduction or after?

On 3 prior BMWFS leases, the center rounded up after applying the 7 MSD rate reduction. On the latest lease, they rounded up from the monthly payment before applying the MSD rate reduction. I questioned this and both the sales manager and the finance manager said they calculated it correctly. Has the calculation changed in the past year? I know I get it back in the end, but the extra $350 reduces my rate of return.

I called BMWFS knowing that they audit each contract but they said it is up to the center to determine the security deposits and MFs. I know this is BS as they corrected a dealer MF error on a prior lease resulting in a lower payment.

So dealers, how do you calculate it? I'm thinking there must be a BMWFS document in the finance binder that explains this. Thanks!
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Last edited by xi2d; 11-16-2012 at 08:19 AM.
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  #2  
Old 11-15-2012, 05:34 PM
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mclaren mclaren is offline
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After. You calculate the lease payment with the reduced money factor then round up to the next $50 increment. If the payment including tax was say $604 I would do a cap cost reduction or get the dealer to make the payment $600 even or pennies less.
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  #3  
Old 11-15-2012, 05:59 PM
xi2d xi2d is offline
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Originally Posted by mclaren View Post
After. You calculate the lease payment with the reduced money factor then round up to the next $50 increment. If the payment including tax was say $604 I would do a cap cost reduction or get the dealer to make the payment $600 even or pennies less.
After was my understanding based on past experience. Agree, I base my offers so that the monthly does not go over a $50 increment.
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  #4  
Old 11-15-2012, 07:20 PM
gekisai29 gekisai29 is offline
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seems to be no clear advantage either way if you do the math. i personally would pay a higher refundable deposit than the slightly lower monthly with alarger nonrefundable initial cash outlay
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  #5  
Old 11-15-2012, 08:27 PM
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SARAFIL SARAFIL is offline
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Originally Posted by gekisai29 View Post
seems to be no clear advantage either way if you do the math. i personally would pay a higher refundable deposit than the slightly lower monthly with alarger nonrefundable initial cash outlay
what are you trying to say? that makes no sense?

we're not saying anything about the payment, just how much you have to pay for MSD. Wouldn't paying the least amount possible for each security deposit be the "best" outcome for you? Why give BMW more money than they need from you?


To answer the OP... security deposit is calculated on the payment with sales tax using the discount money factor adjusted for the number of MSD you plan to do.
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  #6  
Old 11-15-2012, 11:02 PM
oneon3putts oneon3putts is offline
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Originally Posted by SARAFIL View Post
what are you trying to say? that makes no sense?

we're not saying anything about the payment, just how much you have to pay for MSD. Wouldn't paying the least amount possible for each security deposit be the "best" outcome for you? Why give BMW more money than they need from you?
Because it affects your drive off. The break off calculation is basically $350 (assuming you're doing max MSD) divided by your local tax rate. For instance, my payment with max MSDs is $866.55, with a drive off of $4501.30 (with all the credits taken at drive off). If I try to get the payment down to under $850, in this case I would have to put down $530 to bring payment down to $849.93, total drive off would be $4711.05. So why give them more money up front. Your security deposit is refundable anyway.
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  #7  
Old 11-16-2012, 07:38 AM
xi2d xi2d is offline
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Originally Posted by SARAFIL View Post

To answer the OP... security deposit is calculated on the payment with sales tax using the discount money factor adjusted for the number of MSD you plan to do.
Thanks Sarafil. Based on your past experience behind the desk, do you think my issue is correctable? Is the SD calculation memo in the binder together with the programs, rates, MFs, ED adder, LAF waiver adder, SD waiver adder, etc?

For the others, my question in the original post had nothing to do with cap cost reduction. My monthly payment including tax with max MSD is $708. Based on this monthly, I believe each SD should be $750. The dealer assessed it as $800 each.
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  #8  
Old 11-16-2012, 09:27 AM
gekisai29 gekisai29 is offline
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my point is just what my friend in LA posted.
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  #9  
Old 11-16-2012, 01:24 PM
MonkeyCMonkeyDo MonkeyCMonkeyDo is offline
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Quote:
Originally Posted by oneon3putts View Post
Because it affects your drive off. The break off calculation is basically $350 (assuming you're doing max MSD) divided by your local tax rate. For instance, my payment with max MSDs is $866.55, with a drive off of $4501.30 (with all the credits taken at drive off). If I try to get the payment down to under $850, in this case I would have to put down $530 to bring payment down to $849.93, total drive off would be $4711.05. So why give them more money up front. Your security deposit is refundable anyway.
Yes but looking at the big picture. the 530 down yields only an extra 210 dollars in OTD costs but saves you over 600 for the length of the lease. That is where your cost benefit is. Instead of paying 350 extra in security deposits to save only 210 in drive-off. You can pay 210 more and save 600 for the life of the lease.

There is a method to the MSD game.
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  #10  
Old 11-16-2012, 01:44 PM
oneon3putts oneon3putts is offline
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Originally Posted by MonkeyCMonkeyDo View Post
Yes but looking at the big picture. the 530 down yields only an extra 210 dollars in OTD costs but saves you over 600 for the length of the lease. That is where your cost benefit is. Instead of paying 350 extra in security deposits to save only 210 in drive-off. You can pay 210 more and save 600 for the life of the lease.

There is a method to the MSD game.
You're only saving $5.32. You're paying $530 as cap cost reduction already. Add the tax in my case would bring the total to $576.38. The difference in payment over the life of the lease is $581.70 ($16.52*35 (BMW making 2nd payment on lease)...$581.70-$576.38 is $5.32, not $600...Just as any cap cost reduction will save you money because of the monthly rent..."No money down", isn't that the first rule of leasing? Plus, you get the $350 back at the end of your lease.
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Last edited by oneon3putts; 11-17-2012 at 12:16 AM.
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  #11  
Old 11-19-2012, 07:31 PM
xi2d xi2d is offline
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Quote:
Originally Posted by xi2d View Post
I called BMWFS knowing that they audit each contract but they said it is up to the center to determine the security deposits and MFs. I know this is BS as they corrected a dealer MF error on a prior lease resulting in a lower payment.
Each time I call FS re the MSDs, I get the each dealership is independently owned and they set the security deposits and the MFs and they do not correct errors line.

FS said the error on my last lease referenced in the original post above was "called in by the dealership" who corrected their own error. That's strange since FS mailed me a letter dated 4 days after signing the prior lease stating, "….Recently, we discovered an error in the rent charge which impacts the monthly payment calculation. We are correcting this error and consequently lowering the monthly payment, rent charges, and the total of payments due during the contract period…."

Fortunately, it's a deposit and hopefully I get it back at the end.
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