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Discussion Starter #1
Went to a NJ BMW dealer to lease a 2017 340ix. Had the whole thing priced out, and was ready to place a factory order with all of my picks for options/features, etc.

But then, the CA told me the residual is 57% on 2017 vs 66% on 2016 model (both for 10k lease). The week before, I was lead to believe the 2017 would be close to 66% also. Can’t imagine paying 9% more for virtually the same vehicle, so I switched gears and closed on a 2016 model.

I think it was a pretty decent deal. Here are the details:

MSRP: $57,025
Invoice: $53,120
Purchase Price: $52,775
Down Payment: $3,000
Payment: $524 (including 7% NJ tax)
Money Factor: .00147 (equates to a 3.53% interest rate)
Residual: 65% (on 12k miles)

After closing the deal they tried to hit me up for after market stuff:
1. Glasscoat - $814
2. Lease Excess wear and tear - $1,095
3. Road Hazard Tire and Wheel Protection – $1,995
4. Ding Shield – $1,095

I told them I’d get back to them. After a little research on the web, I turned them all down.

I'm interested in any comments on my deal/decisions.

Thanks
 

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You did the right thing by passing on all of the add-ons.
 

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Discussion Starter #5
Lionnutz,

Thanks for the info. about MSDs.

I negotiated a deal with a 3,000 down payment and no MSDs (didn't know about them at the time).

Shouldn***8217;t the dealer have told me that I could instead use the 3,000 as MSDs, and get a better MF?

If I applied the 3,000 as MSDs, it would have lowered my MF by about .0049, and lowered my lease costs by about $2,000.

I'm not taking delivery until today, and haven't signed all the official papers yet.

Do I have a right to tell them to apply the 3,000 as MSDs, and get the lower MF?

Thanks
 

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Lionnutz,

Thanks for the info. about MSDs.

I negotiated a deal with a 3,000 down payment and no MSDs (didn't know about them at the time).

Shouldn't the dealer have told me that I could instead use the 3,000 as MSDs, and get a better MF?

If I applied the 3,000 as MSDs, it would have lowered my MF by about .0049, and lowered my lease costs by about $2,000.

I'm not taking delivery until today, and haven't signed all the official papers yet.

Do I have a right to tell them to apply the 3,000 as MSDs, and get the lower MF?

Thanks
I answered this on the other thread you asked this on, but the dealer is under no obligation to tell consumers about multiple security deposits. For many consumers, all that will do is confuse them and cause them to say "let me get back to you after I research that"... which is NOT what a dealer wants. They want to close a deal NOW, and they do not want to do anything that causes a consumer to reconsider.

Many people dont quite understand how the security deposits work, so I am SURE that dealers dont mention them to anyone. People that know about them that ask by name will get them, as they dont have to explain it to those people, and those people have already decided it is right for them.

You should have the right to apply the cap cost reduction to MSDs if you havent left with the car. They will reduce your money factor from where it is right now, by .00007 for each MSD up to a maximum of 7 (.00049 discount). Money factor for Tier 1 credit is negotiable this month between .00137 and .00177, for tier one credit, and they have it marked up only .00010 (to .00147). That is not a big mark up. I would concentrate on making sure the base money factor if you add msds stays the same (IE stays at .00147 to start, THEN subtract your MSDs).

That way, you are not trying to change the financial parameters of the deal on them. If you ask for base money factor BEFORE the MSDs, you are changing the deal from what you already negotiated... and they did not mark it up that much.
 

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Discussion Starter #7
Thanks jjrandorin

I understand everything in your post.

A key point was your comment that .00137 is the minimum MF. So, the best I could get is a .00010 drop.

When I run the numbers, this is only worth ~$100, so not inclined to re-open the deal for this amount.

Thanks for all your help.
 

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Thanks jjrandorin

I understand everything in your post.

A key point was your comment that .00137 is the minimum MF. So, the best I could get is a .00010 drop.

When I run the numbers, this is only worth ~$100, so not inclined to re-open the deal for this amount.

Thanks for all your help.
Sure, No problem. I would still consider doing the MSDs though, instead of the 3k in cap cost reduction. That shouldnt hassle them that much if at all. You would just need to make sure you are clear that you expect the money factor to be .00147 - .00049, so with full MSDs it would be .00098. It does save you some money over the course of the deal.

Also, just FYI, the dealer is not pulling your leg on the residual difference between the 2016 and 2017. Doesnt make any sense that a 2016 would have a higher residual than a 2017, but thats how BMW does it when they want to move product.
 

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Discussion Starter #9
Maybe I misunderstood your earlier post, where I thought you were suggesting that the MF (the net MF after any MSD discounts) is negotiable, but not below .000137. If that were correct, then I calculated that the .00010 would only save me about $100.

But, are you saying that the minimum gross MF is .000137, and that I could get .00049 off that via the 7 MSDs, and then have an effective MF of .00098?

If so, that would be worth some real money.

Thanks
 

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Maybe I misunderstood your earlier post, where I thought you were suggesting that the MF (the net MF after any MSD discounts) is negotiable, but not below .000137. If that were correct, then I calculated that the .00010 would only save me about $100.

But, are you saying that the minimum gross MF is .000137, and that I could get .00049 off that via the 7 MSDs, and then have an effective MF of .00098?

If so, that would be worth some real money.

Thanks
Issue 1:
The base MF from BMW is .00137. The dealer has it marked up to .00147. You could've probably negotiated this up front to .00137. So that .0001 drop that you're talking about is only in regard to the base MF and has nothing to do with MSDs.

The only theoretical minimum for a MF (regardless of company) is 0.0000 which is essentially an interest free lease which I doubt exist. I was able to lease my previous car (a Toyota Avalon) at a MF of .000001 because they were trying realllllllly hard to get rid of 2013s and also 24 month leases.

Completely separate Issue 2:
Using the 3k for MSD vs Deposit. This can lower your MF by .00007 x 7 MSDs (or .00049) bringing your MF down to .00098.

So while you agreed to the MF markup to .00147 when you initially negotiated and probably shouldn't ask that it be changed (though I'm sure you COULD), you should definitely have them apply the 3k as MSDs instead of a down payment.

As a down payment, if you total the car you lose that 3k. You'd recoup that money if you used it for MSDs.

I went the MSD route on my car and it lowered my monthly payment by around $50/month if I recall correctly. No, it won't lower your payment as much as a down payment would, but you also get all that money back at the end of the lease (or can continually roll it over into MSDs on a new BMW should you stick with the brand).
 

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Maybe I misunderstood your earlier post, where I thought you were suggesting that the MF (the net MF after any MSD discounts) is negotiable, but not below .000137. If that were correct, then I calculated that the .00010 would only save me about $100.

But, are you saying that the minimum gross MF is .000137, and that I could get .00049 off that via the 7 MSDs, and then have an effective MF of .00098?

If so, that would be worth some real money.


Thanks
Your second statement is correct (that the base money factor can be reduced further by the MSDs, although your math is just a bit off in the above example.

The buy rate for tier 1 right now is .00137. if you apply max MSDs to it, you will end up as .00088. YOUR quoted money factor from the dealer is .00147, a .00010 markup. If you apply the 7 MSDs to it, you will end up at .00098 (still the same .00010 markup).

My original advice was not to fight on the .00010 markup as it is minimal as you mentioned, but you should still think about doing the MSDs instead of cap cost reduction to get to .00098. They probably wont hesitate too much because the markup (.00010) is the same. You just need to make sure that you and they are on the same page at the money factor at the end.
 

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Issue 1:
The base MF from BMW is .00137. The dealer has it marked up to .00147. You could've probably negotiated this up front to .00137. So that .0001 drop that you're talking about is only in regard to the base MF and has nothing to do with MSDs.

The only theoretical minimum for a MF (regardless of company) is 0.0000 which is essentially an interest free lease which I doubt exist. I was able to lease my previous car (a Toyota Avalon) at a MF of .000001 because they were trying realllllllly hard to get rid of 2013s and also 24 month leases.

Completely separate Issue 2:
Using the 3k for MSD vs Deposit. This can lower your MF by .00007 x 7 MSDs (or .00049) bringing your MF down to .00098.

So while you agreed to the MF markup to .00147 when you initially negotiated and probably shouldn't ask that it be changed (though I'm sure you COULD), you should definitely have them apply the 3k as MSDs instead of a down payment.

As a down payment, if you total the car you lose that 3k. You'd recoup that money if you used it for MSDs.

I went the MSD route on my car and it lowered my monthly payment by around $50/month if I recall correctly. No, it won't lower your payment as much as a down payment would, but you also get all that money back at the end of the lease (or can continually roll it over into MSDs on a new BMW should you stick with the brand).
Thanks, thats what I was trying to advice OP to do. Nice summary.
 

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Went to a NJ BMW dealer to lease a 2017 340ix. Had the whole thing priced out, and was ready to place a factory order with all of my picks for options/features, etc.

But then, the CA told me the residual is 57% on 2017 vs 66% on 2016 model (both for 10k lease). The week before, I was lead to believe the 2017 would be close to 66% also. Can't imagine paying 9% more for virtually the same vehicle, so I switched gears and closed on a 2016 model.

I think it was a pretty decent deal. Here are the details:

MSRP: $57,025
Invoice: $53,120
Purchase Price: $52,775
Down Payment: $3,000
Payment: $524 (including 7% NJ tax)
Money Factor: .00147 (equates to a 3.53% interest rate)
Residual: 65% (on 12k miles)

After closing the deal they tried to hit me up for after market stuff:
1. Glasscoat - $814
2. Lease Excess wear and tear - $1,095
3. Road Hazard Tire and Wheel Protection ***8211; $1,995
4. Ding Shield ***8211; $1,095

I told them I'd get back to them. After a little research on the web, I turned them all down.

I'm interested in any comments on my deal/decisions.

Thanks
So, the TLDR is - congrats, you did fine.

The money factor is marked up slightly, but not enough to worry about. For future reference put your money into MSDs rather than a down payment. Seven MSDs will reduce the money factor equivalent interest rate by a little more than 1%.

Your contract is locked in now, so don't worry about any of this. You did well this time and you'll do better next time.

Congrats on the new car and welcome to the dark side. BMWs are a disease for which there is no cure.

Don't forget this is the internet....pics or it didn't happen. :)

edit: two times my computer ate my edit. :( A little more info on why we prefer MSDs rather than down payments. Because you get MSDs back at the end of the lease the amount they reduce your monthly payment creates a Return on Investment. The ROI is generally between 7% - 12% depending on the details of each individual lease. Say you have $3,000 in MSDs and they reduce your monthly payment by $20, that's an annual savings of $240, which translates to an 8% ROI.

All BMWFS leases include GAP coverage which pays the difference between the insurance value of the car in case of total loss and the payoff amount on the lease at that time. By making a down payment you reduce that gap right up front and therefore shift some of that risk onto yourself. Having said that the reality is the risk is minimal, because the odds are very small of experiencing a total loss on the vehicle during the term of the lease.
 

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Discussion Starter #15
YOU GUYS ARE GREAT!!!

As you suggested, I renegotiated the deal with the 7 MSDs (instead of a down payment). Got the MF down to .00100. Saved me about $1,400 over the course of the lease. I reposted the entire deal below. Thanks again.

Car is great. The fun of the ride is just like (ok, maybe better) what I remember from when I drove my 1995 540i (stick shift) many years ago. I will post pics soon.

DEAL SUMMARY
Went to a NJ BMW dealer to lease a 2017 340ix. Had the whole thing priced out, and was ready to place a factory order with all of my picks for options/features, etc.

But then, the CA told me the residual is 57% on 2017 vs 66% on 2016 model (both for 10k lease). The week before, I was lead to believe the 2017 would be close to 66% also. Can***8217;t imagine paying 9% more for virtually the same vehicle, so I switched gears and closed on a 2016 model.

I think it was a pretty decent deal. Here are the details:

MSRP: $57,025
Invoice: $53,120
Purchase Price: $52,775
Down Payment: $0
Refundable Monthly Security Deposits: $4,200 (7 deposits of $600)
Payment: $567 (including 7% NJ tax)
Money Factor: .00100 (equates to a 2.40% interest rate)
Residual: 65% (on 12k miles)
Note: Paying 7 MSDs saved me $1,450 in interest over the life of the lease.

After closing the deal they tried to hit me up for after market stuff:
1. Glasscoat - $814
2. Lease Excess wear and tear - $1,095
3. Road Hazard Tire and Wheel Protection ***8211; $1,995
4. Ding Shield ***8211; $1,095

I told them I***8217;d get back to them. After a little research on the web, I turned them all down.

I'm interested in any comments on my deal/decisions.

Thanks
 

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Discussion Starter #16
Blazinskunk,

Glasscoat is BMWs paint sealant product. Based on my research, it's not worth what they want for it.

Dealer was in Flemington, NJ.
 

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Congratulations!
 

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YOU GUYS ARE GREAT!!!

As you suggested, I renegotiated the deal with the 7 MSDs (instead of a down payment). Got the MF down to .00100. Saved me about $1,400 over the course of the lease. I reposted the entire deal below. Thanks again.

Car is great. The fun of the ride is just like (ok, maybe better) what I remember from when I drove my 1995 540i (stick shift) many years ago. I will post pics soon.

DEAL SUMMARY
Went to a NJ BMW dealer to lease a 2017 340ix. Had the whole thing priced out, and was ready to place a factory order with all of my picks for options/features, etc.

But then, the CA told me the residual is 57% on 2017 vs 66% on 2016 model (both for 10k lease). The week before, I was lead to believe the 2017 would be close to 66% also. Can't imagine paying 9% more for virtually the same vehicle, so I switched gears and closed on a 2016 model.

I think it was a pretty decent deal. Here are the details:

MSRP: $57,025
Invoice: $53,120
Purchase Price: $52,775
Down Payment: $0
Refundable Monthly Security Deposits: $4,200 (7 deposits of $600)
Payment: $567 (including 7% NJ tax)
Money Factor: .00100 (equates to a 2.40% interest rate)
Residual: 65% (on 12k miles)
Note: Paying 7 MSDs saved me $1,450 in interest over the life of the lease.

After closing the deal they tried to hit me up for after market stuff:
1. Glasscoat - $814
2. Lease Excess wear and tear - $1,095
3. Road Hazard Tire and Wheel Protection ***8211; $1,995
4. Ding Shield ***8211; $1,095

I told them I'd get back to them. After a little research on the web, I turned them all down.

I'm interested in any comments on my deal/decisions.

Thanks
Wow! I'm impressed. Had you signed the previous deal and taken delivery of the car?

Here's one extra little tidbit for next time. When the payment is close to a $50 MSD bump point make a small down payment to get it under that $50 cutoff. In your case with your $567 payment you could have made a small down payment to get the payment to $549. That would have made your MSDs $3,850 saving you $350 on your MSDs and making your ROI even higher. Just some very quick and basic math indicates your ROI on the deal you made is about 11.5%. Congrats.

Now, pics or it didn't happen. :p
 

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I went to the dealership yesterday and was told they can no longer order a 2016 and I must take whatever is available. Is that true?
 
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