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1136 Views 15 Replies 5 Participants Last post by  ashecnc
well, bmwusa site is way off on the calculator..I just went to play around and it cost more payment wise for a 330 then an M3 almost..what a it just my end? :eek: :bigpimp:
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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. =)
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Re: Leasing

thaydith said:
Thanks for the info., but how is this a lease rate? 0.0025 * 24

Also the residual on a 330i is 59%
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%).

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.
Re: Leasing

thaydith said:
Ahhh I see on the .0025 * 24 - Thanks :)

Would you purchase if you could do it all over?
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. :mad:
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