[rjdoc74]

My dad is leasing and X5 and his lease is over in June. He was told by his BMW dealer that he may extend his lease for another year (it's a 3 year original lease) with same payment. I am in the market for 335i this summer, so I've been thinking- is it possible to start with a 2 year lease (maybe get a better deal because of higher residual, etc. ) and then extend it for another year to make a 3 year total? Has anyone done that?

Any thoughts are appreciated.

 

[ckm1515]

My dad is leasing and X5 and his lease is over in June. He was told by his BMW dealer that he may extend his lease for another year (it's a 3 year original lease) with same payment. I am in the market for 335i this summer, so I've been thinking- is it possible to start with a 2 year lease (maybe get a better deal because of higher residual, etc. ) and then extend it for another year to make a 3 year total? Has anyone done that?

Any thoughts are appreciated.

Find it hard to believe that your dad is quoted the same payment as of today. BMWFS will determine a lease payment within about 30 days out from lease maturity when they can determine current RV, LRF, etc.

I wouldn't recommend starting a 2 year lease with a lease extension as BMWFS will have recouped all of their economics during the life of the 2 year lease and the extended rents are profit. Wouldn't be in your best interest. You could negotiate a better deal from the start.

Only time I would recommend extending lease is if you are getting into another BMW and didn't sync up delivery, production etc.

 

[eddiethekub]

I wouldn't recommend starting a 2 year lease with a lease extension as BMWFS will have recouped all of their economics during the life of the 2 year lease and the extended rents are profit.

The extended rents are not profit. There is additional depreciation (lower residual after 3 years v.s 2 years) and the cost of money over that extra year.

 

[zarex]

The extended rents are not profit. There is additional depreciation (lower residual after 3 years v.s 2 years) and the cost of money over that extra year.

Correct, but the amount of depreciation between years 2-3 is far less than between 0-2, so if the payment remained the same it's an awesome deal for the dealer, and much more profitable. They payments should ideally be much lower for any lease extension. But good luck getting them to agree to it, which is why it's usually a bad idea.

 

[ckm1515]

The extended rents are not profit. There is additional depreciation (lower residual after 3 years v.s 2 years) and the cost of money over that extra year.

I would tend to disagree with that statement. Assuming all of the economics are covered during the life of the lease term, it is what is called "evergreen".

I should know...I work for the biggest computer leasing company in the world. I'm not gonna argue as there are a myriad of factors but, all things equal, not a good strategy.

 

[mrvuml]

OP: Its not a lease extension, its a re-lease. Its a minimum of 1 year and a max of 3 years IIRC. I did it with my 03 E46 330i when the original 3 year lease ended. An additional 2 years reduced monthly payment by $60/month. There was a $325 acq. fee. I did it to tide me over until the 335 came out. On hindsight I should have done it for just one year as warranty was 4 years and 335 came out in 2007. If I were you I would get a 3 year lease from the get-go and not mess with 2+1 as you may end up in a worse position due to residual.