02-16-2014, 09:15 PM | #1 |
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Educate me on Leasing
I'm considering trading or selling my 2011 550i M sport with Dinan stage 4 tuning. I want to replace it with a 2014 M5 and I am considering lease versus purchase. I have never leased a car and don't have a clue what is a good deal and how it works. Please help me understand how it works and what are good rates on Money Factor, Residual Factor etc...
First offer I have on the table so far without negotiating is $111,725 MSRP and $103,365 selling price. I think I can do better and tend to drive a hard bargain. Money factor is 0.013 and Residual is 55%, 36 months, 15,000 miles per year and monthly payment of $1502.67. Thank you for the help. |
02-17-2014, 07:27 AM | #2 |
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Where did you get that quote from? Did you try to contact GOLFFRR? He is a good contact with Steve Thomas BMW.
I'll try to explain it to you to the best of my ability. Think of money factor as APR, like 4% APR etc… Residual is what the "value" of the vehicle at the end of the lease. Thus, if you decided to buy it, that would be the agreed price. So in this example of yours, 55% of $103K is $56.6k. Now, they quoted you .0130. You can actually buy down the rate, by putting multiple security deposits. You can do up to 7 of them. I don't know how much on the M5. Those security deposits are yours to keep at the end. I hope that helps. |
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02-17-2014, 10:11 AM | #3 | |
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02-17-2014, 09:14 PM | #4 | |
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Did you contact GOLFFRR? |
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02-18-2014, 12:10 AM | #5 |
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What you need to know about leasing:
1. Residual and money factor are set by BMWFS. Dealer might try to mark up MF. Don't allow it. 2. Negotiate the lowest possible purchase price (cap cost) that you can. 3. Do not put any money down (no cap cost reduction). 4. Put as many MSDs down as you can afford (you get it all back). 5. You can do a lease with Euro Delivery. 6. Contact GOLFFRR for the best deal!
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02-18-2014, 08:09 AM | #6 | ||
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The residual is based off of MSRP. So every dollar you negotiate off of the purchase price comes out of the depreciable amount. Quote:
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02-18-2014, 10:14 PM | #7 |
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Thank you for the responses and I will print out that checklist. I'm undecided on leasing or purchasing but leaning towards leasing for the first time. Now I need to decide on color and if the competition package is worth it.
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02-19-2014, 06:37 AM | #8 | |
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Quote:
pretty much sums it up
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02-19-2014, 07:41 AM | #9 | |
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http://f10.m5post.com/forums/showthread.php?t=734047 If you plan to keep the car at least 3 years, and the money factor on a lease and the finance rate are roughly equal, you should lease. Embedded in the lease is a free put option at the end of 3 years, so if you get a lemon or the market value of the car tanks you can simply give it back to BMW. On the other hand, if you want to keep the car you can always buy it out at the end of the lease (and frequently you can buy it out for less than the residual value!).
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02-20-2014, 09:17 AM | #10 |
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Best calculator - http://www.th**********calculator.com It has been exact every time. If the dealers number are different then they are playing games with you. I use it w/ my iPad while working on the deal in the dealers finance dept.
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02-22-2014, 07:33 PM | #11 | |
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02-22-2014, 09:33 PM | #12 |
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An auto lease is really just a financing broken into two parts:
Part 1: you are renting the car for the lease term. The const of renting the car is the purchase price (or Cap Cost) less the residual value with an interest charge equal to the financing rate (or money factor). In other words, if you lease a $100k car with a 55% residual for 36 months, you are effectively borrowing $45K ($100k purchase price less the $55K expected value of the car at the end of the lease) and making periodic payments, not much different than a mortgage loan. Part 2: You are borrowing the amount of the residual value (in our example, $55K) on a bullet loan basis: meaning that you will make interest only payments during the life of the lease and then must pay the residual back in one lump sum at the end. Only, in this case, you have the option of satisfying that payment obligation with cash or by delivering the car. In most circumstances, leasing allows you to get more car for less money in the short term but will be more expensive in the long term. However, depending on the MF and the residual value, leasing can be a cheaper financing alternative. In many cases, manufacturers don;t want to give big discounts on their flagship cars because of the optics. Another more subtle way to make the car more affordable is to provide leases with inflated residuals. This means the company will take the hit at the end of the lease, but it allows them to defer that discount and keep up the "prestige" of certain models.
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03-11-2014, 07:44 PM | #13 |
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If all this info is correct, then I may be able to afford more car then I thought. I am going to do a ED with a Ind paint and Ind trim....I wish I could get the total break down so I can see what I can truly afford.
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03-14-2014, 07:52 AM | #15 |
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Putting money down on a lease is not recommended to reduce the cap cost. If you happen to get into an accident where the car is totaled, you would lose that money. I never pay anything up front other than first month's payment and fees.
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