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Lease rates are so ridiculous; do you know how they calculate them? They take the residual value of the car (let's say it's a $40k 330i and the res. is 60%) and add it to the cap cost of the car ($40k). Then they multiply the lease rate (let's say 0.0025 x 24) by the sum of the residual and cap cost, then divide by the lease term to get the "interest" they're gonna charge you.
In short...
(($40,000 + (0.6 * $40,000)) * (0.0025 * 24)) / 36 months = your monthly lease surcharge... = $106/month
...on top of your lease payment...
($40,000 * 0.4) / 36 months = $444
... so ...
$444 + $106 = $550
And that's if you pay the tax up-front (which you'd be wise to do as you don't wanna pay interest on tax!).
So you really end up paying an extra $3800 for the 3 years, and that's lost money so if you finance the baloon cost at the end, well, you're screwin yerself once more especially if the residual was very optimistic (unless you negotiate the lease-end buyout cost well).
Of course I say this with my foot in my mouth, as I am currently a lessee. =)
In short...
(($40,000 + (0.6 * $40,000)) * (0.0025 * 24)) / 36 months = your monthly lease surcharge... = $106/month
...on top of your lease payment...
($40,000 * 0.4) / 36 months = $444
... so ...
$444 + $106 = $550
And that's if you pay the tax up-front (which you'd be wise to do as you don't wanna pay interest on tax!).
So you really end up paying an extra $3800 for the 3 years, and that's lost money so if you finance the baloon cost at the end, well, you're screwin yerself once more especially if the residual was very optimistic (unless you negotiate the lease-end buyout cost well).
Of course I say this with my foot in my mouth, as I am currently a lessee. =)
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Hmm as of last week the 330ci was 61%, down from 62% (for 3 years, 12k mi/yr).
I was told that BMWNA adjusts these between the 4th and 8th of each month (didn't confirm this though).
I was also told that because of this, you can't lock lease numbers in on an ordered car, because by the time you take delivery of the car the numbers could change enough to hurt the dealer. Is this true?
--SONET
I was told that BMWNA adjusts these between the 4th and 8th of each month (didn't confirm this though).
I was also told that because of this, you can't lock lease numbers in on an ordered car, because by the time you take delivery of the car the numbers could change enough to hurt the dealer. Is this true?
--SONET
Leasing
Your not figuring in a few factors of buying the car:
1. If you did buy the car, in three years you wouldn't get 61% of your origional purchase price when you trade in the car (you may get that if you sold it - but that's a huge pain in the ass)
2. You would pay at least $5000 in interest to borrow the 40k over 3 years.
3. You would have to pay the sales tax on 40k instead of around 20k.
Your not figuring in a few factors of buying the car:
1. If you did buy the car, in three years you wouldn't get 61% of your origional purchase price when you trade in the car (you may get that if you sold it - but that's a huge pain in the ass)
2. You would pay at least $5000 in interest to borrow the 40k over 3 years.
3. You would have to pay the sales tax on 40k instead of around 20k.
Lock in lease price
I purchased the car at WagnerBMW of W.Springfield, MA - I don't know what other dealers do, but this reputable dealer locks in all lease prices for 60 days on ordered cars. If the lease rates, or anything else changes in that time, WagnerBMW will take the hit.
I purchased the car at WagnerBMW of W.Springfield, MA - I don't know what other dealers do, but this reputable dealer locks in all lease prices for 60 days on ordered cars. If the lease rates, or anything else changes in that time, WagnerBMW will take the hit.
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2,193 Posts
Re: Leasing
My residual was also an example figure.
Sonet, thaydith's dealer did the same for me (the 60-day lock) but I was told that was the "promotion length" and as long as you ordered your car within that time-frame, you were guaranteed the lease rate. Whether this is a dealer or BMW policy I'm not sure.
thaydith, I am aware, hence my leasing rather than buying (plus I plan on moving to an M3 when my lease is up anyhow). I was merely illustrating the procedure for caculating interest on a lease, which is far different from that of a purchase. Even if you did pay $5000 on $40k over 3 years, rather than $3800 on $20k, the ratio is still in your favor for "money saved via interest" if you buy. You're paying $0.19/dollar in the lease instead of $0.13/dollar with the purchase.
0.0025 (an example figure) is the lease rate, but you multiply it by 24 to get the actual percentage (give it a try and you should get 6%).thaydith said:
My residual was also an example figure.
Sonet, thaydith's dealer did the same for me (the 60-day lock) but I was told that was the "promotion length" and as long as you ordered your car within that time-frame, you were guaranteed the lease rate. Whether this is a dealer or BMW policy I'm not sure.
thaydith, I am aware, hence my leasing rather than buying (plus I plan on moving to an M3 when my lease is up anyhow). I was merely illustrating the procedure for caculating interest on a lease, which is far different from that of a purchase. Even if you did pay $5000 on $40k over 3 years, rather than $3800 on $20k, the ratio is still in your favor for "money saved via interest" if you buy. You're paying $0.19/dollar in the lease instead of $0.13/dollar with the purchase.
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2,193 Posts
Re: Leasing
At least with the lease I can always sell or swap, no problems. Plus I got away with basically nothing down, so it was even easier. I don't think I'd buy a $40k car to begin with, simply because of the financial burden it could become.
On the other hand, I hate mileage constraints.
You know I often ask myself that question ... and I always tell myself "no" simply because the monthly payment is about what, $300 less if I was to finance for 4 years. I'd rather have that cash freed up or tucked away in some sort of savings instead of "tucking" it into partial equity in my car.thaydith said:Ahhh I see on the .0025 * 24 - Thanks
Would you purchase if you could do it all over?
At least with the lease I can always sell or swap, no problems. Plus I got away with basically nothing down, so it was even easier. I don't think I'd buy a $40k car to begin with, simply because of the financial burden it could become.
On the other hand, I hate mileage constraints.
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1,456 Posts
Re: Re: Leasing
:thumb: :thumb: :thumb: :thumb: :thumb:webguy330i said:
You know I often ask myself that question ... and I always tell myself "no" simply because the monthly payment is about what, $300 less if I was to finance for 4 years. I'd rather have that cash freed up or tucked away in some sort of savings instead of "tucking" it into partial equity in my car.
At least with the lease I can always sell or swap, no problems. Plus I got away with basically nothing down, so it was even easier. I don't think I'd buy a $40k car to begin with, simply because of the financial burden it could become.
On the other hand, I hate mileage constraints.
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