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G30 (2017 - Current)
The next generation 5 Series, chassis code G30, arrives at dealers in February 2017. Looking like a scaled down 7 Series and riding on the CLAR platform, the new 5 Series will have a focus on lightweight and sporty performance. Engines options will come from BMW's new B family for the 530 and 540 and a turbocharged V8 for the M550i. Read more about the 2017 5 Series

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  #1  
Old 04-24-2019, 03:03 PM
vqdriver vqdriver is offline
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lease advice - getting mine tomorrow

been lurking for a while now and after a few cars over the years, i'm finally pulling the trigger on a bimmer

found one on a boat last month and got the message it arrived so i'll be dropping by the dealer tomorrow.
have questions on a lease since the last few cars have been outright purchases. the whole money factor, depreciation thing is lost on me. and to be honest, i don't really care that much. i'm just going to go by the total cost of payments. the dealership can justify it however they want to on paper. i've come to terms with maintenance and repair costs so that is what it is.
meaning, for me the most important thing will be how much i actually pay the dealer during the lease term.

so here's what i'm getting:
2019 530e
msrp 61500
36/mo at 12k miles/yr

according to truecar my trade-in is worth between 10,700 and 12k so i'll just use 11,200 in my calculations and hope i get close

i'm in los angeles, so there's still state and federal incentives, as well as the ability to use the hov sticker
according to the irs, this car carries a 4668 federal tax credit. so if the dealer takes that, i'm just lumping that in with my trade in, yes?

for my calculations, i'm using 58% residual and 9.5% sales tax
considering the above and my (very) rudimentary math, is it unrealistic to aim for ~340/mo including tax?

whats the word on a 48mo lease term? i hear different things but that bmw leases are really pricey beyond 36mo.
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  #2  
Old 04-24-2019, 03:43 PM
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quackbury quackbury is offline
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Just so you know... It sounds like you are going to use your trade in to reduce the cap cost by 11,000 or so. If you drive off the dealer's lot and your shiny new car gets totaled by some inattentive driver, what happens to that $11,000 of equity? Pretty important question. If you don't know the answer, leasing probably isn't for you.

Do yourself a HUGE favor and reach out to Greg Poland at Pacific BMW. He'll structure a deal that will be eminently fair to even a first time lessee like you.
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  #3  
Old 04-24-2019, 06:13 PM
wkndroadtrips wkndroadtrips is offline
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Originally Posted by quackbury View Post
Just so you know... It sounds like you are going to use your trade in to reduce the cap cost by 11,000 or so. If you drive off the dealer's lot and your shiny new car gets totaled by some inattentive driver, what happens to that $11,000 of equity? Pretty important question. If you don't know the answer, leasing probably isn't for you.

Do yourself a HUGE favor and reach out to Greg Poland at Pacific BMW. He'll structure a deal that will be eminently fair to even a first time lessee like you.
+1

Also, the 530e tax credit doesn't apply to leasing. You may get a portion of that $4.6k back but BMW has generally not been passing that savings to customers on leased vehicles.

As quack says, you'd be a moron to put any money at all into a cap cost reduction. You should max out the security deposit using a technique called multiple security deposits. BMW stopped allowing this for a while but I've seen posters say it's back again. By making multiple security deposits you effectively reduce the interest you're paying with the lease and you get the deposit back when you turn in the car.
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Old 04-24-2019, 06:40 PM
vqdriver vqdriver is offline
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glad i asked. someone school me on why a cap cost reduction is such a bad idea.
seems to me, the only number that matters is the overall dollar amount paid in relation to the cost of the vehicle. so at the end of 3 years, how much did i pay... why does it matter if it's up front or spread out over the term of the lease?

multiple security deposits? i'll have to read up on that. that's completely new to me.

in the scenario quackbury posits, my answer is that the same thing that would happen to my current car if it was totaled. if i'm out i'm out.


now..... if bmw is going to take the tax credit and put it in its back pocket, then F that.
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Old 04-24-2019, 07:17 PM
wkndroadtrips wkndroadtrips is offline
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Originally Posted by vqdriver View Post
glad i asked. someone school me on why a cap cost reduction is such a bad idea.
seems to me, the only number that matters is the overall dollar amount paid in relation to the cost of the vehicle. so at the end of 3 years, how much did i pay... why does it matter if it's up front or spread out over the term of the lease?

multiple security deposits? i'll have to read up on that. that's completely new to me.

in the scenario quackbury posits, my answer is that the same thing that would happen to my current car if it was totaled. if i'm out i'm out.
You actually described why a cap cost reduction is bad perfectly. Whether you do a cap cost reduction or not, the total cost of the lease is the same you're just distributing payments differently.

So there is absolutely no financial benefit to doing a cap cost reduction.

On the other hand, there is a huge drawback. You put $11k as a cap cost reduction, drive off the lot and total the car. Your $11k is gone completely. If you made no cap cost reduction, you would still have your $11k.

Multiple security deposits are different. They actually do reduce the total cost of the lease because you are "borrowing" less money, so you're paying less money on interest. It actually makes quite a big difference and is one of the best ways to reduce the cost of the lease. Since they are security deposits, you get the money back when the car is returned and the money isn't at risk if the car is totaled.

You'll want to negotiate a buying price first and then base the lease off of that negotiated price. If you get into a convo with the sales guy about monthly payments they'll fleece you. Agree to a price that is no more than invoice, although you should be able to get below invoice at this point. Once you agree on that price you can structure the lease based on that and the residual (standard non negotiable set by BMW each month) and the money factor which is a factor of your credit score.

Greg Poland is a great person to deal with. I will also highly recommend Rusnak at west lake village where I got mine. I basically emailed them asking for their best price, they replied pretty quickly with a fair number and had the two cars I wanted to test drive waiting for me when I got there. No BS, first class experience. The guy that helped me at Rusnak is Roger Carroll (think he's the internet sales manager or something) and I would not hesitate to recommend reaching out to him for a quote. I also happened to stop by Rusnak-Westlake the other day and spoke to an SA name Claude I haven't dealt with him, but he seemed like a very straightforward and nice person. As an aside, I stopped at Porsche afterwards and was appalled by the rude and pushy sales guys there compared to the great experience I had at BMW
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Old 04-24-2019, 08:21 PM
vqdriver vqdriver is offline
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gotcha.
i was mostly thinking of the convenience of trading in my current car in the same transaction. without applying it to the new car, i need to deal with selling it separately.
but i get your point.
so structure of payments aside. is there a quick and dirty method to know if a deal is good or bad? back to the entire cost thing, i was planning on using 42% of agreed vehicle price as a my benchmark.

tangentially, why are these selling for below invoice now? i don't doubt per se that i can get it at invoice, but they do know i want this particular car because i had them divert it from another dealership in northern cal.

i'm glad you had a good experience at rusnak bimmer. my own experiences with rusnak in pasadena (both audi and bentley) have been shockingly bad. pretty sure i won't be going back to a rusnak dealer.



Quote:
Originally Posted by ssquared View Post
You actually described why a cap cost reduction is bad perfectly. Whether you do a cap cost reduction or not, the total cost of the lease is the same you're just distributing payments differently.

So there is absolutely no financial benefit to doing a cap cost reduction.

On the other hand, there is a huge drawback. You put $11k as a cap cost reduction, drive off the lot and total the car. Your $11k is gone completely. If you made no cap cost reduction, you would still have your $11k.

Multiple security deposits are different. They actually do reduce the total cost of the lease because you are "borrowing" less money, so you're paying less money on interest. It actually makes quite a big difference and is one of the best ways to reduce the cost of the lease. Since they are security deposits, you get the money back when the car is returned and the money isn't at risk if the car is totaled.

You'll want to negotiate a buying price first and then base the lease off of that negotiated price. If you get into a convo with the sales guy about monthly payments they'll fleece you. Agree to a price that is no more than invoice, although you should be able to get below invoice at this point. Once you agree on that price you can structure the lease based on that and the residual (standard non negotiable set by BMW each month) and the money factor which is a factor of your credit score.

Greg Poland is a great person to deal with. I will also highly recommend Rusnak at west lake village where I got mine. I basically emailed them asking for their best price, they replied pretty quickly with a fair number and had the two cars I wanted to test drive waiting for me when I got there. No BS, first class experience. The guy that helped me at Rusnak is Roger Carroll (think he's the internet sales manager or something) and I would not hesitate to recommend reaching out to him for a quote. I also happened to stop by Rusnak-Westlake the other day and spoke to an SA name Claude I haven't dealt with him, but he seemed like a very straightforward and nice person. As an aside, I stopped at Porsche afterwards and was appalled by the rude and pushy sales guys there compared to the great experience I had at BMW
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Old 04-24-2019, 08:27 PM
vqdriver vqdriver is offline
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where do you get (a reliable) invoice price anyway?
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Old 04-24-2019, 08:45 PM
wkndroadtrips wkndroadtrips is offline
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Understand your frustration with Rusnak, like I said, my experience at their Porsche dealer was miserable but BMW was a night and day difference.

As for trading the car in, don't see why you can't just ask them to use the money as monthly security deposit or pay you out in cash instead of paying it to cap cost.

Why is the car selling below invoice? Probably because it's overpriced to begin with and Audi, BMW, and Mercedes always have inflated MSRP. Also people are shifting towards SUV so maybe that plays a factor as well, but I'm sure I could get an X3 or x5 at or below invoice.

I got my 530 4-5 months after the G30 was introduced so still pretty new. The invoice was $65k and with no hassle and exchanging 2-3 emails they agreed to $58k. Could have gotten it cheaper had I waited about 2 months when BMW applies some credits. Many people on this forum have posted deals 8-12% below MSRP

As far as the residual value goes I think you had mentioned 42% depreciation or something? You can't negotiate residual values, they are set each month by BMW and they have different residual values for 10, 12, and 15k miles. I believe the residual on mine is 61% for 12k miles but I can't remember exactly.

You won't be able to negotiate the money factor (lease term for interest rate) either.

It doesn't matter that you had them divert a car. Many on this forum got below invoice pricing on special ordered cars, so whether it's in stock or diverted or just a completely new order doesn't matter much. Dealers pay less than invoice because of credits and sales quota bonuses so even at invoice they're making a profit.

NADA guide has MSRP and Invoice pricing for the car and options. Edmunds used to not sure if they still do

Last edited by wkndroadtrips; 04-24-2019 at 08:51 PM.
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Old 04-24-2019, 09:38 PM
jjrandorin jjrandorin is offline
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Quote:
Originally Posted by vqdriver View Post
been lurking for a while now and after a few cars over the years, i'm finally pulling the trigger on a bimmer

found one on a boat last month and got the message it arrived so i'll be dropping by the dealer tomorrow.
have questions on a lease since the last few cars have been outright purchases. the whole money factor, depreciation thing is lost on me. and to be honest, i don't really care that much. i'm just going to go by the total cost of payments. the dealership can justify it however they want to on paper. i've come to terms with maintenance and repair costs so that is what it is.
meaning, for me the most important thing will be how much i actually pay the dealer during the lease term.

so here's what i'm getting:
2019 530e
msrp 61500
36/mo at 12k miles/yr

according to truecar my trade-in is worth between 10,700 and 12k so i'll just use 11,200 in my calculations and hope i get close



i'm in los angeles, so there's still state and federal incentives, as well as the ability to use the hov sticker
according to the irs, this car carries a 4668 federal tax credit. so if the dealer takes that, i'm just lumping that in with my trade in, yes?

for my calculations, i'm using 58% residual and 9.5% sales tax
considering the above and my (very) rudimentary math, is it unrealistic to aim for ~340/mo including tax?

whats the word on a 48mo lease term? i hear different things but that bmw leases are really pricey beyond 36mo.

Download the "leasematic" app on iPhone (might be available on android as well). Plug in the values, and you will see what your payment will be. If you dont have a value to put in the app. then get it from the dealer.

Take it with you to calculate it while you are there.

I am out of the lease evaluation stuff here on bimmerfest, but I used to do a whole lot of it here. The numbers you want to figure out your deal:

MSRP
Selling price (agreed upon price of the car) before any incentives
Any incentives you qualify for
Residual value (set by BMW and not negotiable for lease term / mileage)
Number of miles (10k/12k/15k)
Lease term (36 month is sweet spot for BMW, in most cases. anything shorter OR longer doesnt make much sense at all... you mention 48 month lease, instead of a 58% residual, you might end up with a 48% for example... in made up numbers)
FEES Both official and unofficial. Registration = official fee, doc fee = unofficial fee.. pay attention to these as this is one place dealership money is made.
Money factor used (almost certainly marked up to max unless you negotiate it).

Down payment / cap cost reduction if any (not drive offs, cap cost reduction).

Note on cap cost reduction. If you put 11k down (as you trade) on a lease this just pre pays part of the lease, and in many cases tends to hide how much someone is paying from themselves.

In your example, if you put 11k "down" as your trade on a 3 year lease, you have to divide your down payment bv 36 to see how much a month you are actually paying.

So thats 305 a month in down payments, not counting your monthly payment. If your monthly payment with that amount of down works out to 410 a month, what you ACTUALLY are paying is 715 a month. Important if you care about how much you are spending. If you dont, just let the dealership figure out the numbers for you... guarentee you will be on your way painlessly... just likely much lighter in the wallet.

One "mistake" you already have made is telling them to get you the car without agreeing on the price. If you actually want the best price, you have to be prepared to walk, but you are not going to, and they know that... because THAT car is definitely the one you want, because you told them to get it for you.

Anyway, download leasematic, plug in the numbers while you are there, and it will help you understand what numbers you need to ensure they are not cramming something in there you dont know about.
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Old 04-25-2019, 12:06 AM
vqdriver vqdriver is offline
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Thanks guys.
Now its coming back to me why I just bought my last 3 cars.

In regards to the tax credit. If the dealership actually does pocket that then I'm out the door for sure.
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Old 04-25-2019, 05:37 AM
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quackbury quackbury is offline
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Originally Posted by vqdriver View Post
in the scenario quackbury posits, my answer is that the same thing that would happen to my current car if it was totaled. if i'm out i'm out.
No. If your current car was totaled, the insurance company would give you a check for what it was worth, say $11,000. You would be made whole. You need to understand what happens when you plop down $11,000 as a cap cost reduction on a lease. A very different result.

Quote:
Originally Posted by vqdriver View Post
now..... if bmw is going to take the tax credit and put it in its back pocket, then F that.
I guess you also need to read up on how the Internal Revenue Code works. Tax credits are ALWAYS paid to the vehicle owner. When you lease, BMW Financial Services is the vehicle owner. By law, they get the tax credit. It's not like they - or you - have any say in the matter.

Seriously, hit up Greg Poland. You're just wasting your time trying to sort this all out on your own.
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2008 X5 3.0
2007 X5 3.0
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Old 04-25-2019, 06:29 AM
jjrandorin jjrandorin is offline
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Quote:
Originally Posted by vqdriver View Post
Thanks guys.
Now its coming back to me why I just bought my last 3 cars.

In regards to the tax credit. If the dealership actually does pocket that then I'm out the door for sure.
Then, as quackbury says, you are already out the door...for the reason quack says. The owner gets the tax credit, and on a lease you are not the owner.

BMW does not have to share any of the tax credit, but many times they do share some of it (but usually not all of it) in the form of a credit.

In regards to the lease vs buy, the numbers you need are not much different. You need most of that stuff I laid out before to evaluate the dealers real offer... again that is if you care how much you are spending. If not, you can certainly tell the dealer you want to "pay no more than XXX . a month and you figure it out".... but in order to know what is possible for "XXX a month" you still need those numbers or you run the very real possibility of overpaying.

Also note, I am not saying that if you dont get every last dollar out of a deal you are overpaying. What I AM saying is, without knowing the numbers, you will not know what you are actually paying.

Now, your financial situation may be such that you dont care if you pay MSRP minus incentives for your car. Nothing wrong with that either, if that works for you. It may not be worth it to you to try to figure any of this out, and thats ok. knowing the numbers does not mean you are out to "take everything away from the dealer". It just means you would know what you are paying.

In a restaurant, if you leave a large tip for good service, you know how much you are leaving... even if its 40-50%, you are choosing to leave it. Most people (no one I know of, anyway) leaves the line blank and tells the server to "fill in this spot here with what you want"... even if they give good service.

Knowing the numbers allows YOU to fill in the "tip" spot and decide how much you are willing to pay... rather than leaving the spot blank in my example above.

Leasing vs buying doesnt change that... the only difference in the numbers you need on purchase vs buy is, you need an interest rate instead of a money factor (and they have to tell you the interest rate by law, while money factor is not regulated that way), you dont need miles per year or years (no residual value needed), and putting down a down payment is a good thing (since it reduces the amount of your loan on an item you theoretically are going to own at some point).
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Old 04-25-2019, 07:15 PM
jjsC6 jjsC6 is offline
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Quote:
Originally Posted by ssquared View Post
You actually described why a cap cost reduction is bad perfectly. Whether you do a cap cost reduction or not, the total cost of the lease is the same you're just distributing payments differently.

So there is absolutely no financial benefit to doing a cap cost reduction.

On the other hand, there is a huge drawback. You put $11k as a cap cost reduction, drive off the lot and total the car. Your $11k is gone completely. If you made no cap cost reduction, you would still have your $11k.

Multiple security deposits are different. They actually do reduce the total cost of the lease because you are "borrowing" less money, so you're paying less money on interest. It actually makes quite a big difference and is one of the best ways to reduce the cost of the lease. Since they are security deposits, you get the money back when the car is returned and the money isn't at risk if the car is totaled.

You'll want to negotiate a buying price first and then base the lease off of that negotiated price. If you get into a convo with the sales guy about monthly payments they'll fleece you. Agree to a price that is no more than invoice, although you should be able to get below invoice at this point. Once you agree on that price you can structure the lease based on that and the residual (standard non negotiable set by BMW each month) and the money factor which is a factor of your credit score.

Greg Poland is a great person to deal with. I will also highly recommend Rusnak at west lake village where I got mine. I basically emailed them asking for their best price, they replied pretty quickly with a fair number and had the two cars I wanted to test drive waiting for me when I got there. No BS, first class experience. The guy that helped me at Rusnak is Roger Carroll (think he's the internet sales manager or something) and I would not hesitate to recommend reaching out to him for a quote. I also happened to stop by Rusnak-Westlake the other day and spoke to an SA name Claude I haven't dealt with him, but he seemed like a very straightforward and nice person. As an aside, I stopped at Porsche afterwards and was appalled by the rude and pushy sales guys there compared to the great experience I had at BMW
And yet people put down payments on purchases every day that is gone money the next day and not once have I seen any advice to not put a down payment on a purchase.

Don't get me wrong, I don't put down payments on leases either simply because to me its a benefit of leases. But the arguments about losing the down payment on a lease don't hold water.
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Old 04-25-2019, 07:23 PM
wkndroadtrips wkndroadtrips is offline
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Quote:
Originally Posted by jjsC6 View Post
Quote:
Originally Posted by ssquared View Post
You actually described why a cap cost reduction is bad perfectly. Whether you do a cap cost reduction or not, the total cost of the lease is the same you're just distributing payments differently.

So there is absolutely no financial benefit to doing a cap cost reduction.

On the other hand, there is a huge drawback. You put $11k as a cap cost reduction, drive off the lot and total the car. Your $11k is gone completely. If you made no cap cost reduction, you would still have your $11k.

Multiple security deposits are different. They actually do reduce the total cost of the lease because you are "borrowing" less money, so you're paying less money on interest. It actually makes quite a big difference and is one of the best ways to reduce the cost of the lease. Since they are security deposits, you get the money back when the car is returned and the money isn't at risk if the car is totaled.

You'll want to negotiate a buying price first and then base the lease off of that negotiated price. If you get into a convo with the sales guy about monthly payments they'll fleece you. Agree to a price that is no more than invoice, although you should be able to get below invoice at this point. Once you agree on that price you can structure the lease based on that and the residual (standard non negotiable set by BMW each month) and the money factor which is a factor of your credit score.

Greg Poland is a great person to deal with. I will also highly recommend Rusnak at west lake village where I got mine. I basically emailed them asking for their best price, they replied pretty quickly with a fair number and had the two cars I wanted to test drive waiting for me when I got there. No BS, first class experience. The guy that helped me at Rusnak is Roger Carroll (think he's the internet sales manager or something) and I would not hesitate to recommend reaching out to him for a quote. I also happened to stop by Rusnak-Westlake the other day and spoke to an SA name Claude I haven't dealt with him, but he seemed like a very straightforward and nice person. As an aside, I stopped at Porsche afterwards and was appalled by the rude and pushy sales guys there compared to the great experience I had at BMW
And yet people put down payments on purchases every day that is gone money the next day and not once have I seen any advice to not put a down payment on a purchase.

Don't get me wrong, I don't put down payments on leases either simply because to me its a benefit of leases. But the arguments about losing the down payment on a lease don't hold water.
How does it not hold water? Your cap cost reduction disappears if the car is totaled it's not subjective that's just how it works. A cap cost reduction is just pre-paying your payments.

It's not a down payment like when you're purchasing a car or something else. When you're buying something and you put a down payment you have equity in it and will be made whole by insurance if there is a loss. Additionally, you are reducing the amount of money borrowed so you pay less interest by putting down payment

With a lease you are not refunded your cap cost reduction if there is a loss, and your interest is not reduced because a cap cost reduction is a prepayment, not a down payment. There's a big difference. Multiple security deposits are more like a down payment because you get the money back, and they do reduce the interest paid.

That's just how it works. Sounds like you need to read up more on the fundamentals of leasing.

Last edited by wkndroadtrips; 04-25-2019 at 07:25 PM.
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Old 04-26-2019, 04:15 AM
Pierre Louis Pierre Louis is offline
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Anytime you roll-over an upside-down car payment, lease or purchase, you stand to lose your money on a totaled car. That is what "gap" insurance is for - it pays off the entire loan or lease that is outstanding. You can lose on either a lease or a loan.

Better to buy it with minimum down payment for some, lower monthly payments for others. Depends on your finances.

My view, it really doesn't matter except for effective interest rate on money owed - leasing can be at competitive rates especially from manufacturers.

PL

Last edited by Pierre Louis; 04-26-2019 at 04:20 AM.
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Old 04-26-2019, 04:26 AM
Pierre Louis Pierre Louis is offline
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What a local dealer did on a potential lease (and I've seen it on loans too) was hide the "actual price" even though they gave rates and prices up front: the lease payment was padded with an extra $150/month "out of nowhere" as part of the "negotiation." It's more important to have your math correct than anything else IMO. Lease rates convert to interest rates also, it's not some magical number. It's still the bank's car until it is paid off - lease or loan. I used an app called "Car Payment" which exposed the dealers treachery.

PL
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  #17  
Old 04-26-2019, 11:10 AM
vqdriver vqdriver is offline
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update -

as mentioned, i went by yesterday and we went over some numbers. and here's something interesting that may make this entire lease conversation moot.
msrp is 61k, invoice is 57k
they are offering me the car at ~55k
there are a couple rebates he rolled in to the lease, but the federal tax credit didn't even show up on his little list of available incentives. as in, not even selectable or applicable. at about 4600, it's not a blip.

part of me was dubious and just considered this a dealer trick to pocket the credit without passing on the benefit to me. basically acting dumb as if it doesn't exist.

we then moved on to my purchase options. car is offered to me at the same price of 55k. it's a purchase, so the only number i'm really concerned about is price. in a purchase scenario, i never let the payments go the full term so i like to let them feel they will make some money on the interest, then pay it off in month 3 or 4 so i can at least get the bump in my credit score.
in this case, i would also be able to utilize the federal tax credit myself, which brings the price down closer to 50k.

considering the above, it seems buying is the better option here.
unless i'm missing something....

fwiw, i'm supposed to go back tomorrow to pick up and sign paperwork. i just have to text him my choice of lease or purchase ahead of time.
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  #18  
Old 04-26-2019, 05:25 PM
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dce dce is offline
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lease advice - getting mine tomorrow

Good luck, I can pretty much guarantee you will enjoy the ride much more than this acquisition process. Please post your thoughts after driving it a bit!

Ive never leased because I keep my cars longer term and so buying (cash in fact) seemed the better option. Not sure I understand leasing any better after reading all this!

Last edited by dce; 04-26-2019 at 05:26 PM.
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  #19  
Old 04-26-2019, 06:44 PM
jjsC6 jjsC6 is offline
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Quote:
Originally Posted by ssquared View Post
How does it not hold water? Your cap cost reduction disappears if the car is totaled it's not subjective that's just how it works. A cap cost reduction is just pre-paying your payments.

It's not a down payment like when you're purchasing a car or something else. When you're buying something and you put a down payment you have equity in it and will be made whole by insurance if there is a loss. Additionally, you are reducing the amount of money borrowed so you pay less interest by putting down payment

With a lease you are not refunded your cap cost reduction if there is a loss, and your interest is not reduced because a cap cost reduction is a prepayment, not a down payment. There's a big difference. Multiple security deposits are more like a down payment because you get the money back, and they do reduce the interest paid.

That's just how it works. Sounds like you need to read up more on the fundamentals of leasing.
Whether or not you have equity, insurance is not going to reimburse you for 100% of what you paid for the car in most cases. So yes, a chunk of your down payment will be gone money. And many buyers will not have positive equity for a few years. Most of the statements you are making are just plain wrong. There will always be outlier exceptions, of course. Btw, I have leased quite a few cars.
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Last edited by jjsC6; 04-26-2019 at 06:49 PM.
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Old 04-26-2019, 06:54 PM
jjsC6 jjsC6 is offline
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Quote:
Originally Posted by ssquared View Post
How does it not hold water? Your cap cost reduction disappears if the car is totaled it's not subjective that's just how it works. A cap cost reduction is just pre-paying your payments.

It's not a down payment like when you're purchasing a car or something else. When you're buying something and you put a down payment you have equity in it and will be made whole by insurance if there is a loss. Additionally, you are reducing the amount of money borrowed so you pay less interest by putting down payment

With a lease you are not refunded your cap cost reduction if there is a loss, and your interest is not reduced because a cap cost reduction is a prepayment, not a down payment. There's a big difference. Multiple security deposits are more like a down payment because you get the money back, and they do reduce the interest paid.

That's just how it works. Sounds like you need to read up more on the fundamentals of leasing.
Whether or not you have equity, insurance is not going to reimburse you for 100% of what you paid for the car in most cases. So yes, a chunk of your down payment will be gone money. And many buyers will not have positive equity many times for a few years. BTW, I have leased many cars. I know how they work. What you don't seem to understand is how insurance works. An insurance settlement has nothing to do with your downpayment. They could care less whether you recoupe your down payment or not.
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Last edited by jjsC6; 04-26-2019 at 06:58 PM.
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  #21  
Old 04-26-2019, 07:36 PM
wkndroadtrips wkndroadtrips is offline
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Quote:
Originally Posted by jjsC6 View Post
Whether or not you have equity, insurance is not going to reimburse you for 100% of what you paid for the car in most cases. So yes, a chunk of your down payment will be gone money. And many buyers will not have positive equity many times for a few years. BTW, I have leased many cars. I know how they work. What you don't seem to understand is how insurance works. An insurance settlement has nothing to do with your downpayment. They could care less whether you recoupe your down payment or not.
Thats exactly the point. If you don't make a cap cost reduction on a lease you have nothing to recoup. Your insurance pays out the car's market value to BMW FS and gap insurance covers whatever is left. If you have put multiple security deposits down, BMW will return your security deposits once they are made whole. In the same situation, they will not return a cap cost reduction.

If you buy the car, then yes, you'll be paid market value regardless whether you're under water or not. But with leasing you can minimize that risk by not making a cap cost reduction and having gap insurance.

Last edited by wkndroadtrips; 04-26-2019 at 07:42 PM.
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  #22  
Old 04-26-2019, 07:37 PM
vqdriver vqdriver is offline
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Forgot to list the lease details.
Lease offer is 2620 out the door and 742 a month
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  #23  
Old 04-26-2019, 07:38 PM
wkndroadtrips wkndroadtrips is offline
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delete

Last edited by wkndroadtrips; 04-26-2019 at 07:46 PM.
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  #24  
Old 04-26-2019, 07:45 PM
wkndroadtrips wkndroadtrips is offline
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Quote:
Originally Posted by vqdriver View Post
update -

as mentioned, i went by yesterday and we went over some numbers. and here's something interesting that may make this entire lease conversation moot.
msrp is 61k, invoice is 57k
they are offering me the car at ~55k
there are a couple rebates he rolled in to the lease, but the federal tax credit didn't even show up on his little list of available incentives. as in, not even selectable or applicable. at about 4600, it's not a blip.

part of me was dubious and just considered this a dealer trick to pocket the credit without passing on the benefit to me. basically acting dumb as if it doesn't exist.

we then moved on to my purchase options. car is offered to me at the same price of 55k. it's a purchase, so the only number i'm really concerned about is price. in a purchase scenario, i never let the payments go the full term so i like to let them feel they will make some money on the interest, then pay it off in month 3 or 4 so i can at least get the bump in my credit score.
in this case, i would also be able to utilize the federal tax credit myself, which brings the price down closer to 50k.

considering the above, it seems buying is the better option here.
unless i'm missing something....

fwiw, i'm supposed to go back tomorrow to pick up and sign paperwork. i just have to text him my choice of lease or purchase ahead of time.
Good deal on negotiating the price down, that seems like a fair price.

Unless you can deduct your lease payments as a business expense and you have a high enough income, you're probably better off purchasing to get the full tax credit. Without knowing your full financial picture, would be hard for anyone on here to make a recommendation.
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  #25  
Old 04-26-2019, 07:48 PM
wkndroadtrips wkndroadtrips is offline
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Quote:
Originally Posted by vqdriver View Post
Forgot to list the lease details.
Lease offer is 2620 out the door and 742 a month
That seems slightly high, maybe its due to lower residuals or higher money factor compared to when I leased...the agreed upon price on mine was $3k higher, out the door was the same, and my monthly is 745 in the LA area
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