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      08-21-2012, 01:25 PM   #23
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Originally Posted by Patsc23 View Post
Finance rates @ 1.99%, crappy residual and mileage limitations, no brainer for me. Purchase all the way based on what I'm used to and expected hold period. Leasing has just never been for me.

Am I correct in thinking those that do ED have a higher residual right off the bat?

Have you found a bank/credit union that is willing to finance at 1.99% for the entire amount? > 100k? If so, please share!
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      08-21-2012, 02:50 PM   #24
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Originally Posted by M5 Orthodox View Post
Have you found a bank/credit union that is willing to finance at 1.99% for the entire amount? > 100k? If so, please share!
Navy Federal will do the total amount at 1.79% for 60 months.
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      08-21-2012, 03:29 PM   #25
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Penfed is doing at 1.49% but the max amount is $70 K. Navy fed is doing full amount at 1.79%. Good luck !

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Originally Posted by M5 Orthodox View Post
Have you found a bank/credit union that is willing to finance at 1.99% for the entire amount? > 100k? If so, please share!
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      08-21-2012, 11:56 PM   #26
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Originally Posted by journeyguy View Post
Penfed is doing at 1.49% but the max amount is $70 K. Navy fed is doing full amount at 1.79%. Good luck !
PenFed was what I was referring to - I thought they were at 1.99 but I guess even lower now. Theyre great, I have my mortgage with them at 3.75%.

What are ED guys doing with financing?
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      08-22-2012, 04:35 AM   #27
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Originally Posted by Patsc23 View Post
PenFed was what I was referring to - I thought they were at 1.99 but I guess even lower now. Theyre great, I have my mortgage with them at 3.75%.

What are ED guys doing with financing?
I haven't decided yet, but I have time. I don't pick up until the first week of October. Totally agree with the analysis that AGS showed.

When you boil it down, a car is just a depreciation and interest expense. You can define the depreciation rate using a lease, but you sacrifice some flexibility, but not as much as you may think- read my last paragraph. The "put" has economic value- year 1 model, easily crashable, etc...

With a 100K car, the Interest expense is material. For me, this will be the primary factor in buy vs lease.

Its also possible to negotiate your buyout at the end of the lease. I leased my 550 back in '06, good rate and 58% residual which came ot to 37K. At the end of the lease I wanted to keep it, but didn't want to pay 37K. Used car values had dropped- little thing we call the global economic crisis... Anyway, called BMW, and they sold it to me for 32K w/CPO and %0.9 for 60 months.
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      08-22-2012, 07:43 AM   #28
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Originally Posted by lllwlf View Post
Its also possible to negotiate your buyout at the end of the lease. I leased my 550 back in '06, good rate and 58% residual which came ot to 37K. At the end of the lease I wanted to keep it, but didn't want to pay 37K. Used car values had dropped- little thing we call the global economic crisis... Anyway, called BMW, and they sold it to me for 32K w/CPO and %0.9 for 60 months.
Yet another reason why a lease is a great option. BMW FS is incentivized to negotiate because they cannot afford to take all lease returns back on their books. In fact, BMW requires its dealers to buy a certain number of the lease returns from BMW FS each year to help mitigate the problem.

Leases in general get a bad rap, but I think it's because many people really don't understand them and the benefits they provide. I've heard many people say "... but you don't own anything at the end." That's exactly why they are so great - the "free" put option. If you want to own the car at the end you can, but you don't have to. If the car depreciates faster then expected (as in lllwlf's example), you can give it back no questions asked OR negotiate a market deal to buy it - a win/win situation for the customer.

On the other hand, if the car is worth more than the residual value you still have a number of options:
1. Turn it in and move on to your next vehicle, or
2. Buy it out at the below market price, or
3. If the market's strong enough negotiate a payout of the equity with a dealer. When used Acura MDX's were in short supply last year, a buddy of mine had two dealers bidding for him to turn his leased MDX in at their store. In the end, one of the dealers cut him a check for $5,300 JUST TO TURN THE CAR INTO HIS STORE!!! What a deal!

The only downside to leases, assuming the money factor is roughly consistent with prevailing financing rates which is generally the case, is the limited flexibility to get rid of the car during the lease period. As I've said before, they may not be right for everyone but they should always be considered and analyzed as one option.
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      08-22-2012, 08:04 AM   #29
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Quote:
Originally Posted by AGS View Post
Yet another reason why a lease is a great option. BMW FS is incentivized to negotiate because they cannot afford to take all lease returns back on their books. In fact, BMW requires its dealers to buy a certain number of the lease returns from BMW FS each year to help mitigate the problem.

Leases in general get a bad rap, but I think it's because many people really don't understand them and the benefits they provide. I've heard many people say "... but you don't own anything at the end." That's exactly why they are so great - the "free" put option. If you want to own the car at the end you can, but you don't have to. If the car depreciates faster then expected (as in lllwlf's example), you can give it back no questions asked OR negotiate a market deal to buy it - a win/win situation for the customer.

On the other hand, if the car is worth more than the residual value you still have a number of options:
1. Turn it in and move on to your next vehicle, or
2. Buy it out at the below market price, or
3. If the market's strong enough negotiate a payout of the equity with a dealer. When used Acura MDX's were in short supply last year, a buddy of mine had two dealers bidding for him to turn his leased MDX in at their store. In the end, one of the dealers cut him a check for $5,300 JUST TO TURN THE CAR INTO HIS STORE!!! What a deal!

The only downside to leases, assuming the money factor is roughly consistent with prevailing financing rates which is generally the case, is the limited flexibility to get rid of the car during the lease period. As I've said before, they may not be right for everyone but they should always be considered and analyzed as one option.
Agreed - I have personally always favored financing, and current rates are very appealing. It is very nice however to turn a car in w/o any consequence. One of my biggest pet peeves is worrying about what value I will get when it comes time for a trade-in, since I hate dealing with a private sale on my own.
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      08-22-2012, 08:11 AM   #30
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Originally Posted by Patsc23 View Post
... since I hate dealing with a private sale on my own.
Agreed, a lot of tire kickers out there. Unforetunately it's the worst with high end cars. You get people who have no intent of buying and just want a to go for a test drive because it's likely the only way they'll ever drive an M5.
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      08-22-2012, 05:20 PM   #31
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I love to lease, for taxes purposes.......
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      08-22-2012, 07:56 PM   #32
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I purchased. Told the dealer I was offered 2.49% from a lender and BMW Finance matched the offer. Not a bad rate with no paperwork necessary.
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      08-22-2012, 10:21 PM   #33
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Originally Posted by BodyPlexM5 View Post
I purchased. Told the dealer I was offered 2.49% from a lender and BMW Finance matched the offer. Not a bad rate with no paperwork necessary.
what did you agree to put down? I'm going back if they came off the rate that quick. Does BMW FS regularly come off advertised specials? just for future reference...
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      08-22-2012, 10:41 PM   #34
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I didn't know they come off the percentage rate either. I didn't even try to haggle. I just tried to find a better deal and they came after me to match when I told them
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      09-04-2012, 08:56 AM   #35
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Originally Posted by AGS View Post
If you know you will keep the car for at least 3 years you should lease. The lease money factor is .00145 which equates to 3.48%. Plus you can do multiple security deposits to buy the money factor down to .00096 or 2.30%. The after tax return on doing MSDs is unbeatable in today's market. For me, it saved over $77 per payment which equates to a 9.4% annualized after tax return. Also, you get the free "put" at the end of the lease to hand the car back if it turns out to be a lemon.

The only downside is what Tourbillion mentioned - you give up some flexibility to get rid of the car before the lease ends.
Doing some modeling- quick question- For the MSD's, how many/ how do you determine the # of deposits and the amount of each deposit?
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      09-04-2012, 09:08 AM   #36
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Originally Posted by lllwlf View Post
Doing some modeling- quick question- For the MSD's, how many/ how do you determine the # of deposits and the amount of each deposit?
Each MSD is equal to one monthly payment (total including tax) on your lease rounded up to the nearest $50.

Each MSD reduces your MF by 0.00007

Maximum of 7 MSD per lease.

You determine how many just based on how much you want to put forward / tie up for the term of the lease, for what rate reduction, within the maximum confines above.

So for a $1000 monthly payment lease, you can reduce your MF by 0.00049 by putting $7000 (7 MSD @ $1000 each).

Edit: To get normal human interest rate percentage from the money factor (MF), just multiply by 2400. So your maximum rate reduction is 1.176% ( this is the reduction of interest rate for the life of the lease, it really is a great deal! )

Last edited by ddk632; 09-04-2012 at 09:13 AM. Reason: Added more info
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      09-04-2012, 09:10 AM   #37
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Originally Posted by lllwlf View Post
Doing some modeling- quick question- For the MSD's, how many/ how do you determine the # of deposits and the amount of each deposit?
You can do up to 7 MSDs, your choice on how many you want to do. Each deposit takes 0.00007 off of the lease money factor (up to 0.00049). The current BMW FS money factor is .00145 so you can buy it down to 0.00096. From your signature it looks like you're doing ED - there's a 0.0003 bump to the money factor for ED leases, but in exchange BMW FS makes the second lease payment for you.

The amount of each deposit is your lease payment rounded up to the nearest $50.
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      09-04-2012, 10:19 AM   #38
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got it. thank you- hope you're recovering from your trip!

would you know if the lease payment is the initial lease payment or final-- i'm probably going to do a cap cost reduction.
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      09-04-2012, 12:28 PM   #39
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Originally Posted by lllwlf View Post
would you know if the lease payment is the initial lease payment or final-- i'm probably going to do a cap cost reduction.
The deposit is based on whatever your final lease payment is after factoring in your negotiated price and any rebates or cap cost reductions.

Regarding cap cost reductions, take a look at posts 8, 9, and 11 in this thread:

http://f10.m5post.com/forums/showthread.php?t=739770

Cap cost reductions are generally not a good idea because in most cases your insurance will not reimburse you if the car is totaled during the lease. All you are doing is prepaying a portion of your scheduled payments, so the earlier in the lease the loss happens, the bigger the financial hit you take. As cpiguy pointed out in post #9, the exception to the rule is if the loss happens very early in the lease, but even this is dependant on your insurance carrier's rules. You are better off putting the money in a savings account and transferring in a portion each month as you make the lease payments. You achieve the same effect of lowering your net payment, but the cash remains in your control.
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      09-05-2012, 06:32 AM   #40
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thanks-

get it on the cap costs. just hitting a specific number that's easy for the "kitchen congress" to digest.
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