This really is a nice, concise leasing guide. Good contribution, Scott.

 

Thanks Calvin.

I forgot to add one last leasing tip. There is a way to put money up front that will actually reduce your monthly payment and the total cost of the lease: by the payment of multiple security deposits (MSDs).

Under the MSD program, BMWFS will allow the leasee to make a deposit of up to seven (7) months of lease payments (7 MSDs). The payment of each MSD reduces the lease's money factor (and therefore the lease's monthly payment) and, unlike a cap cost reduction, the MSD paymemt is fully refundable to the leasee at the end of the lease.

This is a great way to reduce your lease's monthly payment and your total cost of the lease at no risk to you.

But you have to be clear to the dealer that you want to pay MSDs and not a cap cost reduction.

I do not recall the exact amount that each MSD reduces the money factor charged by BMWFS but if you type in "MSD" into the search function here and in Bimmerfes.com, you will quickly find the answer.

 

sdg1871 -

Nice information on leases, but I am a little lost. What is the difference (or how do you get screwed) between two leases if you chose the lower lease payment and you give no upfront money and don't plan on buying the car. I am looking to understand leases more. Thanks.

 

The problem with making a cap cost reduction is that the upfront money is not refundable. Accordingly, if your car is totaled or stolen (causing a premature termination of your lease), you lose the upfront money. By contrast, if you don't make a cap cost reduction, there is no upfront money to lose if you lease terminates prematurely. It is for this reason that I also always roll the sales tax into the monthly payment and I never pay it up front.

Again, if you have $$$ burning a hole in your pocket and want to lower your monthly payment in a risk-free manner, take advantage of BMWFS's MSD (multiple security deposits) program. Again, the MSDs lower the lease's money factor which leads to a lower monthly payment and are refunded to the customer at lease termination (whether premature termination or regular termination at the end of the lease term).

 

Let me put together the numbers for you.

BMW's December numbers (money factor and residual) for the 528i are:

36-month | 15k miles | residual 58% | .00245 base money factor (http://www.ridewithg.com/index.php/2...december-2009/)

58% is a very good residual considering the F10 is coming out. The money factor is not that good, about 6% interest per annum.

BMW also has a $2,500 holiday credit you should get.

Using your MSRP, here is the number if you didn't negotiate ANYTHING off the MSRP, (These numbers are derived from Leaseguide.com, their lease calculator) plug in the real numbers yourself to find what you should be paying.

MSRP: $55,875
Base Cap Cost (negotiated price of car): $55,875
Costs added to lease (acquisition fee): $725
Cap Cost Reductions ($2,500 credit from BMW): $2,500
Adjusted cap cost (real price of leased car, your payment is based on this): $54,100
Residual Value (MSRP x .58): $32,408
Money factor (5.88% interest): .00245
Term: 36 months
Sales tax (using NYC for example): 8.875%

Monthly payment = $814.50 + $72.29 tax = $886.79 a month

Depreciation: $21,692
Rent charge (interest): $7,630

Based on the $699.00 a month number (assuming it doesn't include tax, probably doesn't), I would say the dealer is probably giving you the car for a shade over $52,000 (the base cap cost, for reference purposes)

Here are the numbers with my assumptions:

MSRP: $55,875
Base Cap Cost (negotiated price of car): $52,000
Costs added to lease (acquisition fee): $725
Cap Cost Reductions ($2,500 credit from BMW): $2,500
Adjusted cap cost (real price of leased car, your payment is based on this): $50,225
Residual Value (MSRP x .58): $32,408
Money factor (5.88% interest): .00245
Term: 36 months
Sales tax (using NYC for example): 8.875%

Payment: $697.37 + $61.89 tax = $759.26 a month

Depreciation: $17,817
Rent charge (interest): $7,288

Go to leaseguide.com and plug in these numbers in their "lease calculator" and double check them for yourself. This is actually the BEST tool a person can have when leasing, and give you some real bargaining power knowing the real numbers. This calculators has the same functions as the sales guys at their dealer with the computers.

As for the deal they are offering, it is mediocre, only because of the high money factor. Consider that the finance (or rent charge, for lease terms) is anywhere from $7,288 to $7630, or just a tad over 25% of the lease payment. That's very high. If the money factor were 0.0%, your payment even at MSRP would be $602.00 a month excluding tax.

With that said, money factors and residuals are never negotiable. As SDG stated, Multiple security deposits are available to lower the money factor. However, in New York, BMWFS informed me that they are restricted by law to 2, and not 7.

In summary, I would say that with the $52,000 price of the car I think the dealer is giving you, and the $2,500 credit, the lease payment your posted is fairly desirable. However, there is probably far more room for negotiation with the F10 coming out.

Good luck with your purchase, and I hope this information is helpful. Let us know how it goes.

 

Great post. You are really nice for running the numbers for the OP. There are still 3 missing pieces to the puzzle: the invoice price of the car with the options, the BMW training fee and the MACO charge (a marketing fee that us charged to dealers that varies by region).

The OP can get the invoice from Edmunds.com. I have found the MACO and training fees by searching Bimmerfest.com's "Ask A Dealer Forum".

I agree with your numbers. The only thing is that you cannot negotiate a money factor, assuming a BMWFS lease, that is lower than BMWFS's base rate money factor. BUT, BMWFS allows dealers to mark up the money factor so, as a result, the customers needs to know what that base rate money factor is and to insist to the dealer that that is the MF used for the lease.

I am very surprised that for the 528, the BMWFS money factor is so high. That should drop a lot as the F10 launch date approaches as BMW gets aggressive on lease deals when it is clearing out inventories of outgoing models to make room for the next generation.

 

I was actually shocked by the money factor as well. My guess is that BMWFS is offsetting the $2,500 holiday incentive with higher money factors across the board. The parent Company generally has the same margins, regardless of incentives (they just play with money factors, residuals, or cap cost limits etc.).

Does not look like a great month to lease an E60, in any case.

 

Damn, you guys are good!

 

+1 ... You guys need to go to DC and make sense of the pending legislation

 

That would take an intellectual capacity much much much greater than my limited capabilities.

I educated myself on leasing because I prefer to lease and did not want to get ripped off as I did on the Q45 lease.