[Weaselboy]

I'm still not clear how the 10% return is calculated. Can someone shed some light on this?

In really round numbers, let's says you use $4,200 for MSDs. At a 10% annual return in a bank account/investment you would earn $420 a year in interest. 3 x 420 = $1,260.

So if using MSDs lowers your total lease payments over 36 months by $1,260 you have effectively earned a ten percent annual return on your $4,200 in MSDs.

For simplicity here, I am ignoring compounding interest.

 

[phantom701]

In really round numbers, let's says you use $4,200 for MSDs. At a 10% annual return in a bank account/investment you would earn $420 a year in interest. 3 x 420 = $1,260.

So if using MSDs lowers your total lease payments over 36 months by $1,260 you have effectively earned a ten percent annual return on your $4,200 in MSDs.

For simplicity here, I am ignoring compounding interest.

Gotcha. I was only thinking about the $4,200 MSDs, as in your example, that I put down as you don't get a return on that money

When you put it in the context of reduced payment, it makes sense.

 

[Bunky]

Are there any rules on how the MSDs are paid? Can I put it all on my credit card to get miles, and then pay it off next month?

 

[CTSoxFan]

Are there any rules on how the MSDs are paid? Can I put it all on my credit card to get miles, and then pay it off next month?

It is added into your amount due at signing. It depends on the individual dealership and their policy around credit card acceptance. Many dealers have a cap on how much you can put on a CC, some don't.

 

[Ninong]

Are there any rules on how the MSDs are paid? Can I put it all on my credit card to get miles, and then pay it off next month?

This depends entirely on the individual dealership and, to a great extent, on the customer and the deal. Don't say, "would it be okay if I put all of the drive-offs on my credit card so that I can earn miles?" Say, "I'm going to have to put all of this on my credit card because I don't have enough cash in my checking account at the moment to make this work otherwise and won't for another couple of weeks." The later will get approved by the person approving the deal even if it's $8,000 and they have a rule of not taking more than $5,000 on a credit card.

One more tip that should be obvious. If you want to go above their limit -- if they even have a limit -- don't try to do it on an American Express card. Even if the dealership accepts AmEx cards, remember that they charge a lot more than VISA or MasterCard, so don't push it. Especially don't try to put the entire purchase price of the car on your AmEx card unless it's an extremely good gross and they can afford to take it on that deal -- assuming they know who you are.

Rules are made to be broken and the rules on how much you can put on your credit card fall into that category.

 

[Ninong]

One more point that should be obvious but that I forgot to mention. The proper time to mention that you intend to put all of the drive-offs on your credit card is before the deal is completed. You're making it a condition of the deal and the person approving the deal has to be told by the client advisor. "He needs to put the entire drive-offs on his credit card otherwise he said he's going to have to wait another two or three weeks to do this."

 

[rocketman48]

You are overthinking this

A normal security deposit is one months payment. An MSD is just multiple of that deposit (rounded), and for each one you get the .00007 deduction in MF.

My payment was $550 with the reduced MF with 7 MSD. Thus, I had to deposit $3850.

Is the payment that the MSD is calculated from the base monthly payment before tax or the total payment with tax, in states that tax the payment only?

 

[CTSoxFan]

Total payment including sales tax.

 

[Bay0u]

MSDs and Owners Choice

Are MSDs for traditional leases only? Or can you also use them with Owners Choice?

I like the idea of MSDs and the savings they present, but seeing as how I live in Texas Owners Choice tends to be a more favorable option...

Thanks!

 

[Ninong]

Are MSDs for traditional leases only?

They are for "leases" only.

Or can you also use them with Owners Choice?

Owner's Choice is not a lease. It is a conventional finance contract with a balloon payment and various options, but it is not a lease. You cannot do MSDs on Owner's Choice.

I like the idea of MSDs and the savings they present, but seeing as how I live in Texas Owners Choice tends to be a more favorable option...

Owner's Choice was created specifically for the few remaining states, like Texas, that still charge full tax on the selling price rather than the monthly payment. Many Texas customers prefer it to a lease.

 

[gushou]

a quick question, is MSD calculation based on monthly payment before or after tax?

 

[Ninong]

a quick question, is MSD calculation based on monthly payment before or after tax?

It's based on the total monthly payment. In your case, that means with tax included because you live in California. Just remember to calculate that total monthly payment using the reduced money factor with the MSD deduction already applied. That's the payment that determines the amount of each security deposit.

 

[FallsT]

Best way to find out the current money factor/ residual value of a car at a dealership?

 

[jjrandorin]

Best way to find out the current money factor/ residual value of a car at a dealership?

They will not tell you what the base money factor is ( you can look at this board or others to find what is current, takes some digging).

As for the Residual, you can either look on these boards, or just ask them. I asked yesterday for the residual percentage on the vehicle I was looking for, because I couldnt find it on the boards (2016 X5 X drive).

The CA i was dealing with by email looked it up and told me it was 58% for Xdrive 35 and 59% for S drive 35 with no hesitation.

I dont believe dealerships can change / mark up the residual as it is set by BMW by car line / model, per what I have read elsewhere here.

 

[FallsT]

They will not tell you what the base money factor is ( you can look at this board or others to find what is current, takes some digging).

As for the Residual, you can either look on these boards, or just ask them. I asked yesterday for the residual percentage on the vehicle I was looking for, because I couldnt find it on the boards (2016 X5 X drive).

The CA i was dealing with by email looked it up and told me it was 58% for Xdrive 35 and 59% for S drive 35 with no hesitation.

I dont believe dealerships can change / mark up the residual as it is set by BMW by car line / model, per what I have read elsewhere here.

Thanks, I tried to ask a Subaru dealership (wife wants a forester) but they refused to tell me... also they apparently don't take security deposits, only down payments. When I asked why... because they are easier to sell than bmw's so they don't need to offer incentives. Gotta love it...

 

[jjrandorin]

Thanks, I tried to ask a Subaru dealership (wife wants a forester) but they refused to tell me... also they apparently don't take security deposits, only down payments. When I asked why... because they are easier to sell than bmw's so they don't need to offer incentives. Gotta love it...

There are some posts on the boards by Ninong that detail how to calculate the residual by looking at the special offers a manufacturer offers, and doing some math. I dont know how to do that, but you might want to start there.

 

[Ninong]

There are some posts on the boards by Ninong that detail how to calculate the residual by looking at the special offers a manufacturer offers, and doing some math. I dont know how to do that, but you might want to start there.

Just look at the fine print lease disclosure and divide the dollar amount of the residual by the MSRP and that gives you the residual percentage for that term (usually 36 months/10,000 miles). BMW's current policy is that the 12,000 miles residual percent is 1% less than 10,000 miles and for 15,000 miles it's 3% less than 10,000 miles.

Even if it's a Subaru lease, you can always verify the money factor they used before you sign the lease. They have to hand you your copy to read before you sign anything (that's federal law). Look for the monthly rental charge. If it's an annual amount, just divide it by 12. Now write down that monthly rental charge. Add the net cap cost and the residual amount together. Now divide the monthly rental charge by the sum of the net cap cost and the residual and that's your money factor. How much they are allowed to mark it up from what the lender is charging them depends on the lender and it varies. Usually banks allow dealers to mark it up more than car manufacturers' captives. At least you would know what it is. That's why the Subaru salesperson refuses to tell you the money factor. He doesn't want you to shop it and it doesn't want to be locked in to a certain number that his sales manager or the F&I manager might change later in the process.

 

[Cantona]

How long to get MSDs back?

Does anybody have experience with how long it takes to get your MSDs back? Now that they can't be rolled over to a new lease....

 

[LycanNyc]

Does anybody have experience with how long it takes to get your MSDs back? Now that they can't be rolled over to a new lease....

They cant be rolled over ?

 

[Ninong]

They cant be rolled over ?

The answer to that question seems to depend on the dealer you chose to do business with. Some Bimmerfesters posted that they were told they couldn't roll them over on the new lease and would have to wait 3-5 weeks for a refund from BMWFS and other Bimmerfesters posted in response to that that they had just rolled them over on their lease the week before. So YMMV.