04-20-2016, 08:19 AM | #1 |
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End Of Lease options
Have a quick question. Does anyone know how the end of lease works? If I was to buy the car from BMW will they work on the final price of the car. Or is it set in stone? my residual is $68,091.00 I mean I don't see my M5 being worth that much at the end of the lease. Its not even worth it now and I have 1 year left and 15k miles to go on a 10k a year lease. The car msrp was $112. selling price was around 105k.
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04-20-2016, 09:19 AM | #2 | |
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04-20-2016, 12:31 PM | #3 | |
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04-20-2016, 03:33 PM | #4 |
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Ive wondered this as well since ill be leasing my m5. Good to know its negotiable.
another option could be to see if the dealer is willing to do a 6 month push ahead or forward? Or something i think its called, where they get u out of the car earlier. |
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04-20-2016, 04:26 PM | #5 |
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In my experience, they only do such a thing if you have sufficient equity in the vehicle.
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04-20-2016, 10:10 PM | #7 |
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04-21-2016, 09:08 AM | #9 |
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I know As apexlocator mentioned, you can have equity in a lease. Most common case is if your mileage is much lower than lease terms; given residual is calculated using mileage (amongst other things) at lease end, you can end up with equity in the car (assuming clean carfax, great condition of the car, etc).
But basically, they'll only consider taking the car back early if there's money to be made for them otherwise, why would they eat your remaining payments? |
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04-21-2016, 12:56 PM | #10 | ||
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What can be done is to contact your dealer (preferably the one where it was originally leased) approx 90 days out to see if the car is eligible for Dynamic Buyout. If this program isn't available, at 30 days prior to end of lease, the dealer buyout will drop to an amount that has been reduced by the same number as the combined re-marketing costs and estimated Residual Insurance Deductible. This typically won't occur on M5/M6 and 7er leases as they're almost always residual value incentivized and the market value at the end of the lease is significantly lower than the contract value. Negotiating would prohibit recovery through the Residual Value coverage as this would be deemed an intentional loss. Your contract buyout next year is slightly above the avg wholesale market price for the car right now. Quote:
Pull ahead programs have nothing to do with end of lease contract buyout and are meant to put the consumer in another vehicle during off-peak months, when inventory of certain models exceed an acceptable number of selling days, or pre-owned inventories are low and the number of maturing lease contracts is insufficient to meet the market needs. |
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04-22-2016, 07:22 PM | #11 | |
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ok good to know! so lets say your mileage is much lower than the allotted at time of lease return, they could apply this "equity" to a new lease, a new purchase etc.? |
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04-22-2016, 11:13 PM | #12 | |
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At the end of contract, if you lease or finance another BMW through BMWFS, they'll waive the disposition fee. If the car is significantly under the allotted mileage allowance, they'll forgive some things like 2 tires, curb rash, a couple of small dents or moderate scratches, but the car has to be in far better than Avg overall condition. |
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04-23-2016, 07:54 AM | #14 |
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I had a 2011 E92 M3 that I returned with about 13k miles (30k was the lease term) after 3 years, and got $5k from the dealer (could've been more if I shopped around, probably). I guess there was demand for the car I had, but I agree it's likely rare, and M5 is even more so.
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04-23-2016, 04:13 PM | #16 | ||
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As a whole, approximately 12% of individual consumer close-end leases have earned equity during the life of the contract. 80% of these are on cars with original MSRP's under $30k. Above that range, the probability of realized earned equity is exponentially reduced the higher the MSRP goes. As a whole, less than 25% of leases result in leasee redemption of the vehicle. With BMW/BMWFS, just over half of all the new car transactions are Leased. Certain model lines have higher lease vs buy ratio; 95% of 7 Series sales last year were leases. Within the model lines, certain variants have different ratios. ///M vehicles are in their own unique subset. The reasons for this varies at certain points in time, but it's all geared towards some combination of conquest attrition (internal and from competing brands), revenue generation, CRM, and pre-owned market value influence. The higher the bias to lease, the easier it is to control realized residual values given stable economic conditions. Where it becomes difficult to estimate/control "in-line" residual values is when the cash vs financed ratio reaches a certain ratio. It becomes just enough that future consumer trends cannot be easily quantified. This is why very low captive finance rates (1% or less) are commonly restricted to shorter terms (24-48 months). Over the course of 20+ years and no less than 40 leases, only once have I had a true earned equity situation occur (on a full size Range Rover of all cars). We all were stunned as it occurred very early in the lease, normally the highest point of the depreciation scale, and was a significant amount. Left with a brand new Full Size Range Rover that had slightly more equipment, an earlier termination point, and $12k in cash. Both were $750 over cost adjusted cap ($500 to the house, $250 straight to F/I Manager's Pocket), no cash cap reduction, buy rate MF. It was simply a perfect alignment that occurred. |
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04-23-2016, 10:05 PM | #18 | |
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There are generally 4 specific types of consumers who lease a vehicle: - Consumer A: Likes to have a new car every 2-3 years and enjoys the convenience of "walking away" a closed end lease affords. - Consumer B: Is positioned and capable of utilizing tax benefits to offset the rental expense via deduction or reduced personal tax exposure from a employee benefit. - Consumer C: Likes to have a new car every 1-3 years but has the capacity to determine a lease is more likely to incur a lower cost over the same period compared to a purchase. Consumer D: Leases completely on impulse, likes a new car every 1-2 years, but is enticed to choose a more expensive car than they can truly afford, grows tired of the vehicle, and begins a cycle of regularly rolling negative equity from unowned assets time and time again until there isn't anymore credit available. Last edited by lemetier; 04-23-2016 at 11:14 PM.. |
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04-30-2016, 07:12 AM | #19 |
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Yes, BMW FS will extend a lease up to 6 months if you have a new BMW on order and need time for it to be built and shipped. I extended the lease on my 2009 E60 the full 6 months to get me to the start of production on the 2013 F10s.
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