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Discussion Starter #1 (Edited)
I am trying to understand the "CURRENT DEALS" on BMW website and confused.

Example:

The website says a 2016 320xi lease for 36 month/$309.00 per month.

Due at Signing is $3,984.00, which includes $309.00 first month payment, $2,750.00 down and $995.00 destination.

The lease is 10000 miles per year and MSRP is $36,145.00

Here is where I have the questions.

1. $309.00 per month includes both Depreciation Cost and Financing Cost. This is pretty low if we use a normal assumption of 63% residual/0.00135 MF. I think in order to arrive this number, there must be a big discount on car price, or the residual value must be greatly boosted, or the MF must be greatly reduced, or all of them. How do we find out what terms that BMW uses to arrive this number?

2. The car in the lease ad is a base model with zero options. Obviously dealers do not carry such cars on their lots (or it is very hard to find one). Let's say we now know the BMW terms from question 1, can we apply these favorable terms to the cars that we want to lease? (Say if I want a 320xi with a few options, it is not the exact car in the lease ad, but can I still get the same favorable terms?)

3. Generally speaking, are these specials on the BMW website good? Or they are there just to attract customers to the showrooms and everything will be different once you are at the dealership?

4. Do this specials apply only to the cars on dealers lots or I can do a factory order but still receive the special deal?

Any comment is appreciated! Thanks guys
 

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I am trying to understand the "CURRENT DEALS" on BMW website and confused.

Example:

The website says a 2016 320xi lease for 36 month/$309.00 per month.

Due at Signing is $3,984.00, which includes $309.00 first month payment, $2,750.00 down and $995.00 destination.

The lease is 10000 miles per year and MSRP is $36,145.00

Here is where I have the questions.

1. $309.00 per month includes both Depreciation Cost and Financing Cost. This is pretty low if we use a normal assumption of 63% residual/0.00135 MF. I think in order to arrive this number, there must be a big discount on car price, or the residual value must be greatly boosted, or the MF must be greatly reduced, or all of them. How do we find out what terms that BMW uses to arrive this number?

2. The car in the lease ad is a base model with zero options. Obviously dealers do not carry such cars on their lots (or it is very hard to find one). Let's say we now know the BMW terms from question 1, can we apply these favorable terms to the cars that we want to lease? (Say if I want a 320xi with a few options, it is not the exact car in the lease ad, but can I still get the same favorable terms?)

3. Generally speaking, are these specials on the BMW website good? Or they are there just to attract customers to the showrooms and everything will be different once you are at the dealership?

4. Do this specials apply only to the cars on dealers lots or I can do a factory order but still receive the special deal?

Any comment is appreciated! Thanks guys
There is no need to "assume" the residual. The information about the residual is in the offer:

The offer you are talking about has a residual value at lease end of $23,856.00. This means the 36/10 residual on this is 66 percent. The offer also has a cap cost reduction as you mentioned of 2750.

The price that is quoted probably does have some "dealer participation" but not enough to take the car to invoice pricing.

To answer your final question, you can almost always do better than the offer on BMWUSA. You can either get more car for the money the are quoting, or, negotiate your deal to be less than what they are advertising. They really hope you just come in and say you want that car at that price... you would find that the money factor is probably marked up to the maximum, etc.

There really usually isnt a "Special deal" so yes you can expect to order a car and get pricing similar.... depending on where you are.
 

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There is no need to "assume" the residual. The information about the residual is in the offer:

The offer you are talking about has a residual value at lease end of $23,856.00. This means the 36/10 residual on this is 66 percent. The offer also has a cap cost reduction as you mentioned of 2750.

The price that is quoted probably does have some "dealer participation" but not enough to take the car to invoice pricing.

To answer your final question, you can almost always do better than the offer on BMWUSA. You can either get more car for the money the are quoting, or, negotiate your deal to be less than what they are advertising. They really hope you just come in and say you want that car at that price... you would find that the money factor is probably marked up to the maximum, etc.

There really usually isnt a "Special deal" so yes you can expect to order a car and get pricing similar.... depending on where you are.
+1 - one small detail, they actually do use the base money factor when they advertise these deals
 

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My one piece of advice: Ignore the advertised "deals". You need to know 4 numbers for leasing and from there you can do your own math for the monthly payment, Never ever shop for a specific payment amount.
 

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There is no need to "assume" the residual. The information about the residual is in the offer:

The offer you are talking about has a residual value at lease end of $23,856.00. This means the 36/10 residual on this is 66 percent. The offer also has a cap cost reduction as you mentioned of 2750.

The price that is quoted probably does have some "dealer participation" but not enough to take the car to invoice pricing.

To answer your final question, you can almost always do better than the offer on BMWUSA. You can either get more car for the money the are quoting, or, negotiate your deal to be less than what they are advertising. They really hope you just come in and say you want that car at that price... you would find that the money factor is probably marked up to the maximum, etc.

There really usually isnt a "Special deal" so yes you can expect to order a car and get pricing similar.... depending on where you are.
Is it possible to lease a car by paying all of the depreciation upfront and then having a $0 lease payment and thus not paying any interest?
 

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Is it possible to lease a car by paying all of the depreciation upfront and then having a $0 lease payment and thus not paying any interest?
No. You're still financing the residual for the term of lease. At its core a lease is a balloon loan.
 

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No. You're still financing the residual for the term of lease. At its core a lease is a balloon loan.
Bummer. I don't like paying interest.

If I could pay the whole price of the car upfront and then have BMW give me a check for the residual at the end of the "lease" I would consider that. The main reason to take advantage of the inflated residuals.
 

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Discussion Starter #9
My one piece of advice: Ignore the advertised "deals". You need to know 4 numbers for leasing and from there you can do your own math for the monthly payment, Never ever shop for a specific payment amount.
Yes you are right. I never actually believe the dealer or manufacturer's "specials" and I always do my calculation to the cent before I go to the dealer. The reason I ask these questions is I would like to know how I can apply the favorable terms on the car that I want to lease, but in the meantime avoid the catch.

Say in this website special, the residual value is 66%. If I remember correctly, usually it is 63%/10000, 62%/12000 and 60%/15000 so a 66% on 10000 miles is boosted. If I want to go with 15000 miles per year, can I ask the dealer to boost the residual value on 15000 miles by 3% as well because the 10000 miles residual is boosted this much?

Also where should I start negotiating the price with the dealer? Do you think TRUECAR price is good? I built a 320xi with a few options. TRUECAR gives a below invoice price and says the participating dealers will accept so there is not need for negotiation. But again, most dealer inventories are different than the car that I built on TRUECAR so there is another round of headache...

Thanks
 

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Bummer. I don't like paying interest.

If I could pay the whole price of the car upfront and then have BMW give me a check for the residual at the end of the "lease" I would consider that. The main reason to take advantage of the inflated residuals.
The whole point of offering lease(especially of inflated RV) is to collect interest on both cap cost and RV. :)
 

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Is it possible to lease a car by paying all of the depreciation upfront and then having a $0 lease payment and thus not paying any interest?
No. You're still financing the residual for the term of lease. At its core a lease is a balloon loan.
Bummer. I don't like paying interest.

If I could pay the whole price of the car upfront and then have BMW give me a check for the residual at the end of the "lease" I would consider that. The main reason to take advantage of the inflated residuals.
That would be the same as asking BMW to loan you the residual value of the car for 3 years at zero interest. Why would they do that - It cost them money to build that car and like any business their purpose is to invest their money into things that provide a return.

There is a way to avoid paying interest, though. Buy the car with cash initially, then hold it for 6 years or more so that you don't get killed on the depreciation when you sell it.

Better yet, buy the car for cash when it's 2 years old - although the proliferation of questionable aftermarket tune products may keep me from doing that with a BMW at this time. I'm not interested in driving someone's $60,000 car that they slapped a $300 chip on to mysteriously coax power out of the engine that BMW didn't decide to give it in the first place.
 

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Because I don't want to own one of these out of warranty and I drive so many miles, I will be able to keep the car for 5 years tops.

I get the part about getting a free Liam fur the residual value. Perhaps what I'm really liking for is a guaranteed no hassle buyback price that allows one to take advantage of the inflated residual but I don't think such a thing exists. And that is because as someone suggested, BMW is able to offer inflated residuals because they get interest on it.
 

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Then buy an extended warranty for $2000 that covers you to 100,000 miles. You're still way, way ahead on the economics.

I think people just like to drive new cars every few years. Just say it. That's a totally legitimate thing to want, if maybe it's an expensive hobby.

"I don't want to own a BMW out of warranty" is a red herring that doesn't stand up to the slightest bit of rigor in total cost analysis over a period of time. 99 times in 100, keeping a well-maintained but aging car another 2-3 years is cheaper than buying a new one to avoid repair costs, when the car is less than 10 years old and has less than 100,000 miles on it.
 

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Then buy an extended warranty for $2000 that covers you to 100,000 miles. You're still way, way ahead on the economics.

I think people just like to drive new cars every few years. Just say it. That's a totally legitimate thing to want, if maybe it's an expensive hobby.

"I don't want to own a BMW out of warranty" is a red herring that doesn't stand up to the slightest bit of rigor in total cost analysis over a period of time. 99 times in 100, keeping a well-maintained but aging car another 2-3 years is cheaper than buying a new one to avoid repair costs, when the car is less than 10 years old and has less than 100,000 miles on it.
I disagree. I kept my E46 till 200K+ miles because I did not like the E90 and it was very expensive to keep it well maintained, because I don't do maintenance myself. I had the extended warranty and maintenance to 100K, but after that I was spending roughly $5K per year in maintenance, but I was driving 25K miles a year. And this was with an indie shop. And despite that I was driving a car where trim pieces started to fall off and there were cracks in the leatherette in the driver seat.

Unless one is doing their own maintenance, or one is not driving very much, these cars are too expensive to maintain out of warranty. Now if one is the type that doesn't care about keeping the car in pristine condition that is different story--using non OEM parts, or not fixing things that don't absolutely need fixing, waiting till the car leaves you stranded before fixing something instead of doing preventive maintenance, etc.
 

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Yes you are right. I never actually believe the dealer or manufacturer's "specials" and I always do my calculation to the cent before I go to the dealer. The reason I ask these questions is I would like to know how I can apply the favorable terms on the car that I want to lease, but in the meantime avoid the catch.

Say in this website special, the residual value is 66%. If I remember correctly, usually it is 63%/10000, 62%/12000 and 60%/15000 so a 66% on 10000 miles is boosted. If I want to go with 15000 miles per year, can I ask the dealer to boost the residual value on 15000 miles by 3% as well because the 10000 miles residual is boosted this much?

Also where should I start negotiating the price with the dealer? Do you think TRUECAR price is good? I built a 320xi with a few options. TRUECAR gives a below invoice price and says the participating dealers will accept so there is not need for negotiation. But again, most dealer inventories are different than the car that I built on TRUECAR so there is another round of headache...

Thanks
Where you are slipping up, is there is no special residual on the website offers vs what you can do on another car. The residual is the residual, and can not be negotiated. If the website offer is 66% residual, ALL of the cars of that exact model type have the exact same residual.

Not sure if I am being clear but you keep saying "usually the residual is XXX and on the website special offer its YYY".. thats not the case. If the website special offer on a Car (like a 535) is 66%, that means all 535s are 66% at that time, not just that one.
 

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I did limit my statement to less than 10 years old, less than 100,000 miles. But if you look at your numbers, $5K a year on maintenance is still way cheaper than buying a new car would have been over that second 100K if you were driving 25K per year.

Clearly, past a certain point people want something new. I get that part.
 

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Then buy an extended warranty for $2000 that covers you to 100,000 miles. You're still way, way ahead on the economics.
BMW's extended warranty maxes out at 7-yr/100k for about $3k platinum coverage. There are aftermarket contracts that can go 7-yr/100k on top of 4-yr/50k, for about $2k to $3k(dependent on current mileage). The coverage looks similar to platinum, but it is unclear if the underwriter will stay in business for duration of the contract.
 

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I disagree. I kept my E46 till 200K+ miles because I did not like the E90 and it was very expensive to keep it well maintained, because I don't do maintenance myself. I had the extended warranty and maintenance to 100K, but after that I was spending roughly $5K per year in maintenance, but I was driving 25K miles a year. And this was with an indie shop. And despite that I was driving a car where trim pieces started to fall off and there were cracks in the leatherette in the driver seat.

Unless one is doing their own maintenance, or one is not driving very much, these cars are too expensive to maintain out of warranty. Now if one is the type that doesn't care about keeping the car in pristine condition that is different story--using non OEM parts, or not fixing things that don't absolutely need fixing, waiting till the car leaves you stranded before fixing something instead of doing preventive maintenance, etc.
My local indy predicted that the F30 inline 4 is not as costly to maintain/repair as E46/E90, mainly due to the reduced displacement(and heat) and ample space to work around in engine bay. The turbo can be a factor, in fact, aftermarket service contract carries turbo surcharge for F30. If the car has PZEV warranty, the turbo(and many other expensive emission parts) will be covered 15-yr/150k.
 
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