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White/cognac leather, new not demo. I showed him the ad from the BMW home page that quoted 36 mos. $459. per month with $3999. drive off, 10k miles on a $43,800 msrp. The sales person pointed out that the msrp on the car I was looking at was $48,8XX so I was about $5k away on the msrp. I took it for a test drive and did a vin search and options suit me. I got back from the test drive and the sales person said I could lease the car for $1000 more cash and $17 more a month so $476.00 + tax and $5000. drive off. I reminded him both before and after the test drive that I had $1360. left on my 2017, M240 lease. He has zero interest in my leased car even though it has only 14,000 miles. I felt like this was a pretty good deal with the little information I had so I asked about the $1360. to cover the final two payments on my lease and he shrugged said he would talk to his manager turned and left. My wife bought an X3 from this salesperson this past October and he seemed like a bottom line type of guy.
Thanks for any advice or insights on whether this is a decent deal. Thanks in advance.
 

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Not enough info here to determine.

What is the actual sales price they offered you? I dont see that anywhere (just the MSRP)
What is the money factor on the lease (interest)

You can make your lease payment whatever you want by putting money down, and not all money down is actual cap cost reduction, some of it is drive offs. What is the actual amount of money being used as cap cost reduction?
What incentives do you qualify for that they applied to your deal?

What are taxes and fees (doc fees, other official and non official fees)?

No one can tell you if this is a decent deal or not because there is almost zero information here to determine that.

I dont really evaluate deals here any longer, but even if I was inclined to try to help you, I couldnt. If you know all that information, maybe if you post it, someone who still evaluates deals here can help you. If you dont, then you need to start by getting it.
 

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Well I am embarrassed. I was afraid I would elicit your response and will provide more information. Do you think I will ever hear from the sales person again based on what I did tell you.
 

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Well I am embarrassed. I was afraid I would elicit your response and will provide more information. Do you think I will ever hear from the sales person again based on what I did tell you.
yeah I think you will. They currently have you focused on a monthly payment number, and asking them about "last two payments" rather than asking for base rate on money factor and checking their fees.

They likely think they can reel you in fairly easily at this point. If I had to guess ( and I dont work in the industry, I just used to do a lot of evaluating these deals for people ), I would say that if they dont sell the car very soon to someone else, they will come back to you and say something like:

I talked to my manager and we can split the difference with you. We can cover one of those payments but not both. Do we have a deal if we can do that?

(without going over the other stuff I asked you about).

EDIT:

Just a little more about the "down payment" cap cost reduction thing.


I am going to use your own example numbers in the post. If you put down 5000 (remember, the offer had 3999 which is 4k, and they told you that you need to put down another 1k with it, so now thats 5k), all of that money does not go as cap cost reduction, but some of it does. "Cap cost reduction" = down payment. I can only give you approximate numbers for california because we dont have your numbers....

On a car with a payment of "476+ tax" (which would be about $520 a month here or so), first month payment is $520, then doc fee + registration + "misc other fees" likely will be aother 1100 -1400, so lets estimate 2k in non cap cost reduction fees and such. That leaves 3k for "cap cost reduction" and that 3k just reduces your monthly payment, but does not reduce the amount you actually are paying to rent the car. 3000 over 36 months is 83.33 a month, so what you are ACTUALLY paying is 520 a month + 83 a month or 619 a month for a car with a MSRP of 48k ish.

For some reason many people just "forget about" the money they put down on these deals. The example I always fall back on, is if you rented an apartment, for 3 years, and the rent was 1000 a month (no taxes etc lets keep the example simple), that apartment would cost you 36,000 (1K per month, 36 months, 36k total cost). If you put "10k down" on that apartment, now, your monthly payment is 722.22 a month, but your total cost of 36k didnt change. However, you get to tell everyone who visits you that "everyone else is paying 1k a month for this apartment, but due to my awesome negotiating skills "I" am only paying 722 a month!"

So, include that 5k "down" as part of your monthly payment at least when you are calculating the cost to rent the car for 3 years. You can make your payment 100 a month if you want to (just put more down), so the monthly doesnt really mean much as far as whether its a "good deal" or not.
 

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Discussion Starter #5
I have to laugh because what I did was show him the June lease special on the BMW website and said I would like this deal. I have never received the advertised deal because the cars I want are always much more expensive than the advertised special which is the case here. The lost leader as usual was the advertised car that had an MSRP $5000. less than the car I wanted. I get that the $5000 has to be made up somewhere and my share of the $5000. was an additional $1000. cap cost reduction and $17. more a month in payments. I would have negotiated the $1000 additional cap cost reduction but with my final 2 payments thrown in it was too much for both of us. When I say too much for both of us it was weird negotiating in the face of a resurgent Covid 19. We were both masked up and trying to social distance. The dealership had a a dozen or so folks, about a third the usual Wednesday. He threw me the key and license plate and ran back inside. I must say it was efficient. :)
 

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yeah I think you will. They currently have you focused on a monthly payment number, and asking them about "last two payments" rather than asking for base rate on money factor and checking their fees.

They likely think they can reel you in fairly easily at this point. If I had to guess ( and I dont work in the industry, I just used to do a lot of evaluating these deals for people ), I would say that if they dont sell the car very soon to someone else, they will come back to you and say something like:

I talked to my manager and we can split the difference with you. We can cover one of those payments but not both. Do we have a deal if we can do that?

(without going over the other stuff I asked you about).

EDIT:

Just a little more about the "down payment" cap cost reduction thing.


I am going to use your own example numbers in the post. If you put down 5000 (remember, the offer had 3999 which is 4k, and they told you that you need to put down another 1k with it, so now thats 5k), all of that money does not go as cap cost reduction, but some of it does. "Cap cost reduction" = down payment. I can only give you approximate numbers for california because we dont have your numbers....

On a car with a payment of "476+ tax" (which would be about $520 a month here or so), first month payment is $520, then doc fee + registration + "misc other fees" likely will be aother 1100 -1400, so lets estimate 2k in non cap cost reduction fees and such. That leaves 3k for "cap cost reduction" and that 3k just reduces your monthly payment, but does not reduce the amount you actually are paying to rent the car. 3000 over 36 months is 83.33 a month, so what you are ACTUALLY paying is 520 a month + 83 a month or 619 a month for a car with a MSRP of 48k ish.

For some reason many people just "forget about" the money they put down on these deals. The example I always fall back on, is if you rented an apartment, for 3 years, and the rent was 1000 a month (no taxes etc lets keep the example simple), that apartment would cost you 36,000 (1K per month, 36 months, 36k total cost). If you put "10k down" on that apartment, now, your monthly payment is 722.22 a month, but your total cost of 36k didnt change. However, you get to tell everyone who visits you that "everyone else is paying 1k a month for this apartment, but due to my awesome negotiating skills "I" am only paying 722 a month!"

So, include that 5k "down" as part of your monthly payment at least when you are calculating the cost to rent the car for 3 years. You can make your payment 100 a month if you want to (just put more down), so the monthly doesnt really mean much as far as whether its a "good deal" or not.
Good post. I always thought that everyone did this calculation but apparently not. And, of course, when one puts down more money up front, one (a) loses the time value of the money and (b) if something happens, you have lost the entire amount compared to a lease ending accident (for example).
 

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Discussion Starter #7
Thanks SteveinArizona that was very helpful. I did talk to sales guy about putting down less thereby increasing the payment but I sometimes lose sight of the true cost to me. Your numbers are pretty much right so I guess my question is what is a reasonable price for the car as a percentage off MSRP then deduct incentives? Is the rule of thumb $17. per $1000. financed to arrive at monthly payment?
 

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Thanks SteveinArizona that was very helpful. I did talk to sales guy about putting down less thereby increasing the payment but I sometimes lose sight of the true cost to me. Your numbers are pretty much right so I guess my question is what is a reasonable price for the car as a percentage off MSRP then deduct incentives? Is the rule of thumb $17. per $1000. financed to arrive at monthly payment?
I am guessing you ment my numbers, since @steveinarizona was quoting my post, but didnt speculate on numbers.

As it pertains to "rule of thumbs" my response is below.

=======================

No....

download yourself a lease calculator. The best one I have found is called "leasematic" for ios (not sure if its available for android as I dont use my androif phone for anything other than as a media player and hotspot).

It costs $2-$3, but is worth it, as I know it works. It has a "wizard" mode. The best part of that wizard mode for you, would be that it asks for your numbers for input to calculate your monthly payment (thereby telling you what you need to ask the dealer for, because it sounds like you dont have any of it).

The information you need to even begin to figure out if this is a "good price" or not

MSRP (you have this, it sounds like)
Selling price of vehicle prior to any incentives applied to the transaction
Any incentives you qualify for
Selling price after incentives
Number of months / miles of the lease ( 36 month 10k? 36 month 12k?)
Residual percentage (based on months / miles, not negotiable but need for calcs)
Money factor (interest rate for a lease)
Fees (both official and non official, like registration, document fee, and any other cap adds)
Down Payment / Cap cost reduction
Total Drive offs (amount you need to write a check for, to leave with the vehicle)

Proposed monthly payment by dealer (both pre and post tax)


Most of the above you would plug into a lease calculator like leasematic, using the wizard mode and it will tell you monthly payment based on the inputs above. "rules of thumb" dont work for more than eyeballing something, to decide if you want to do the math to figure it out.

Of course, you dont have to do any of the above and can just focus on the monthly payment like most people do, but in general, unless you know the above, things can be moved around on you.

An example of this would be that 5k "down" you were talking about a few times. It would be laughably easy for the dealer to tell you "we will cover one of your payments" and then, have a fee in your deal for something or other that equals that payment. You would never know unless you know what the inputs are. I am not saying they will do that, just that they "could".

While they likely wouldnt do that specifically, you might find things like additional warranties that have been "helpfully" bundled into the price ("we include ultimate care on all our deals, because our customers want that") or some other fees.

You either need to know how to look at all that stuff, or buy from a dealer who you know doesnt play games with that stuff (Like Jon, or Greg Poland), or, finance the car instead of leasing it because there are a few less moving parts (although those things can also be bundled into a finance transaction, you dont have as many moving parts like residual values, and money factors that they dont have to disclose, while interest rate on finance legally has to be disclosed).

Of course, you dont have to do any of that, and you can just lease the car with a monthly payment number you like, like most people do, and drive off. if you like the monthly payment number and dont care how they got to it, that works.


Note: Saavy buyers can still focus on monthly payment numbers (I will pick on @1968 here). He calculates everything out ahead of time, then comes up with a monthly payment number he likes (after knowing all the data) and challenges the dealer to hit a number that he is aware is attainable but very aggressive.

Thats completely different than taking the loss leader add into the dealer, asking for a car thats 5k more and saying I need this price on it. The minute you do that, a dealer knows that you dont know how leases work. A better approach would be to use the offer number to get the residual values, etc, and apply those factors to the car you choose.

Anyway, I am droning on now, and as I mentioned, I dont really do this anymore so I am not sure why I felt compelled to parcel out all this unsolicited advice.

Sorry for the "lecturing" tone of the post, I just can tell that its likely that the deal you are currently tracking to get likely wouldnt be considered "agressive" by us but that doesnt matter.. at the end of the day as long as the monthly payment is something you like, you can simply go with that, as well.
 

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Saavy buyers can still focus on monthly payment numbers (I will pick on @1968 here). He calculates everything out ahead of time, then comes up with a monthly payment number he likes (after knowing all the data) and challenges the dealer to hit a number that he is aware is attainable but very aggressive.
Why yes, yes indeed, that's what wily old 1968 does, when he's on his game. ;)

But your main points, jj, are kindly laid out for OP to study and learn. Also, the leasing sticky in this forum is a good place to school one's self on leasing.

1. Know all the moving parts in your lease deal, as jj has listed.

2. Know invoice and incentives so you can understand what a "reasonable" offer might look like.

3. Determine your "yes" numbers -- what the deal you would gladly sign looks like.

4. If you want the car, tell the dealer what you're prepared to say yes to.

5. Get the deal, or close enough to it, so you can drive what you love and feel good about it, because, in the end, we drive the cars, not the deals.

Best of luck.
 

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Let's just state the brutal truth...dealers absolutely salivate over people who can't calculate lease payments and even more over those that bring in an ad.:eek::tsk:

Go to leasehackr or similar and learn variables and calculations.:thumbup:

Also, I think I remember OP mentioning another leased vehicle being turned in way under mileage...which means way over payments...make sure to use a more realistic lease term...or if you are low miles just pay cash or finance as that will probably work out better.:bigpimp:
 

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Let's just state the brutal truth...dealers absolutely salivate over people who can't calculate lease payments and even more over those that bring in an ad.:eek::tsk:

Go to leasehackr or similar and learn variables and calculations.:thumbup:

Also, I think I remember OP mentioning another leased vehicle being turned in way under mileage...which means way over payments...make sure to use a more realistic lease term...or if you are low miles just pay cash or finance as that will probably work out better.:bigpimp:
+++

I used to think that bringing in the ad and then pointing to a more expensive version of the car that the dealer had and I wanted, and then proposing that if I could have the desired car for the terms in the ad I'd sign, was a good strategy. But the deals in the ad always have that darned cap reduction payment!

Once I figured out the best way to get cap reduction was through dealer discounts and incentives, new worlds opened.

In the end, over time, they get all my money. I just try to give it to them in smaller increments.:rolleyes:
 

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+++

I used to think that bringing in the ad and then pointing to a more expensive version of the car that the dealer had and I wanted, and then proposing that if I could have the desired car for the terms in the ad I'd sign, was a good strategy. But the deals in the ad always have that darned cap reduction payment!

Once I figured out the best way to get cap reduction was through dealer discounts and incentives, new worlds opened.

In the end, over time, they get all my money. I just try to give it to them in smaller increments.:rolleyes:
Haha!

Man, back in day BMW had some great lease deals based on ultra low MF with MSD and subsidized residuals but I just recently placed an order (not leasing per reasons below plus cray cray Chicago taxation) for a 21 992 C2S Cab and their 36/10 residuals are in the 60 range but MF base is 0.002!!!...so Porsche really makes out because their cars tend to be worth more than residual at lease end (most don't put more than 30K on it or buy it) while the poor saps have been paying 5+% on it with MF dealer mark up for 3 years.:eeps:
 

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Haha!

Man, back in day BMW had some great lease deals based on ultra low MF with MSD and subsidized residuals but I just recently placed an order (not leasing per reasons below plus cray cray Chicago taxation) for a 21 992 C2S Cab and their 36/10 residuals are in the 60 range but MF base is 0.002!!!...so Porsche really makes out because their cars tend to be worth more than residual at lease end (most don't put more than 30K on it or buy it) while the poor saps have been paying 5+% on it with MF dealer mark up for 3 years.:eeps:
Drive what you love/pay what you have to.... but not a dollar more;)
 

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Drive what you love/pay what you have to.... but not a dollar more;)
Absolutely but that requires really knowing what you are doing and calculating...and how many lease buyers actually put the time in and do...it has to be a very low percentage...I remember walking into dealer when leasing my first BMW back in late 90s with my laptop and the salesguy asking me what that was for and telling him I had spreadsheet with my lease calcs on it...he freaked...and is still a friend today!:thumbup:
 

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Discussion Starter #15
I could quote all of you here so thanks for the help and sound advice. I will definitely drill down on the numbers. The sales person never called back anyway so they didn't want to reel me in too bad. The lease I am turning in is for a M240i that I assumed the last 7 months of a36 month lease. When I assumed the lease the car only had 8,000 miles after he paid on in for 2 years. I was going to drive cross country but not now.
 

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The lease I am turning in is for a M240i that I assumed the last 7 months of a36 month lease. When I assumed the lease the car only had 8,000 miles after he paid on in for 2 years.
It would be interesting to see what, if any, discounted buyout offer BMWFS might have for you.

If you're only in the car 7 payments, and all of the original drive-off costs were paid by the first leasee, and the car is low-mileage, in good condition, and you enjoy it, a below-residual buyout might, and I mean might, almost work well. Worth a look, unless you're ready to move on to something else.
 

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Let's just state the brutal truth...dealers absolutely salivate over people who can't calculate lease payments and even more over those that bring in an ad.:eek::tsk:
It would be hard to do a WORSE job of negotiating a lease. Where to start?

  • You think an advertised deal is a good deal;
  • You clearly don't understand the moving parts of leasing;
  • You have tipped your hand by indicating an interest in a specific in-stock unit.
  • You naively think your under-miles lease return holds some sort of value for the dealer.
  • You are letting the dealer tell YOU what the deal could be, rather than you telling HIM what you are willing to offer;
  • You're clearly not willing to walk away, and would rather sit by the phone waiting for him to call you;
  • You are trying to negotiate during the first week of the month.

Dude, you have a 0% probability of getting a good deal. Nada. Zilch. Unless you are prepared to do your research (invoice, base MF, residual, discounts, incentives, rebates, payment waivers) you are going to get absolutely raped. Go to Leasehackr.com, and find a lease broker in your area who can negotiate a decent deal on your behalf.
 

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Why yes, yes indeed, that's what wily old 1968 does, when he's on his game. ;)

But your main points, jj, are kindly laid out for OP to study and learn. Also, the leasing sticky in this forum is a good place to school one's self on leasing.

1. Know all the moving parts in your lease deal, as jj has listed.

2. Know invoice and incentives so you can understand what a "reasonable" offer might look like.

3. Determine your "yes" numbers -- what the deal you would gladly sign looks like.

4. If you want the car, tell the dealer what you're prepared to say yes to.

5. Get the deal, or close enough to it, so you can drive what you love and feel good about it, because, in the end, we drive the cars, not the deals.

Best of luck.
This was the mistake I made when I did my last lease. I had boned up via this site and leasehackr so I knew my MF, my incentives, MSDs, etc. So rather than focusing on the monthly payment, I focused on how much they were giving me off the MSRP. I figured once we get to a good selling price, the monthly payment will fall into line. I really didn't know what the payment should be, because I know there are all kinds of dealer fees, taxes, etc. that affect the payment. So at one point I asked for another $1,000 off the price. They agreed and it came down to a monthly that I was comfortable with. EXCEPT, what they did was, add back in $600 on an unnecessary "maintenance plan". I didn't catch it until the deal was done. I b*tched and moaned to the Finance guy, at first he tried to double-talk me but eventually he refunded my $600. Then I had to b*tch again until he gave me back the tax on the $600. Somehow on my next lease I'm going to have to know what the monthly payment SHOULD BE at a certain selling price, although it's tough when you don't know what extras they're going to throw into the gross cap cost.
 

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Why would you allow them to throw any extras into the cap cost? The only ones which are mandatory are the lease acquisition fee, plates, and the dealership's document fee. (Plus in some states, the property taxes). But every single one of these should be disclosed up front. Get those in writing, plug them into your lease calculator and run the numbers BEFORE you show up to take delivery. Most of us have the payment worked out to the penny before we set foot in the Finance Manager's office.

Yes, they will try to upsell you on insurance plans, extended maintenance, wear and tear coverage (which actually make sense if you have a light color interior with small kids, or a significant other who cannot parallel park without grinding the alloy wheels against the curb), LoJack, VIN etched in the side windows, Rusty Jones and other nonsense. But every one of those is optional.

If you don't have your own lease calculator, use the one on Leasehackr.com. Just be sure to use the correct sales tax rate for your state.
 

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It would be hard to do a WORSE job of negotiating a lease. Where to start?

  • You think an advertised deal is a good deal;
  • You clearly don't understand the moving parts of leasing;
  • You have tipped your hand by indicating an interest in a specific in-stock unit.
  • You naively think your under-miles lease return holds some sort of value for the dealer.
  • You are letting the dealer tell YOU what the deal could be, rather than you telling HIM what you are willing to offer;
  • You're clearly not willing to walk away, and would rather sit by the phone waiting for him to call you;
  • You are trying to negotiate during the first week of the month.

Dude, you have a 0% probability of getting a good deal. Nada. Zilch. Unless you are prepared to do your research (invoice, base MF, residual, discounts, incentives, rebates, payment waivers) you are going to get absolutely raped. Go to Leasehackr.com, and find a lease broker in your area who can negotiate a decent deal on your behalf.
+++ Most people should just work with a lease broker because they just haven't a clue.
 
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