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Thread: Ultimate Lease Guide thread

  1. #1
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    Ultimate Lease Guide thread

    Is there a dummies guide to leasing?

    What about a lease calc to compare what I'm really paying in the end vs if I got a loan.

    Thanks.

    Also, is leasing a 'good' option for those who will be buying their car anyway when the term is due?
    Last edited by mryakan; 12-28-2010 at 02:11 PM.

  2. #2
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    Comparing the out-of-pocket is simple. Add together all your out of pocket expenses for each method and compare. Don't forget "hidden" fees like the lease disposition fee (fee imposed if you turn in the car and don't re-lease another one), etc.

    Digging deeper into the comparison requires a knowledge of financial principles like ROI and opportunity cost of money. Basically the argument is that with the lower payment of a lease (versus a traditional finance payment) you could invest the difference and earn more than you are "paying" in interest.

    Edmunds has a decent lease calculator. You can also just use the basic calculation (below) which is always posted monthly with the current BMW lease rates on the financing forum at RoadFly (link to 5/08 rates below).

    http://forums.roadfly.com/forums/fin...8931147-1.html

    (Capitalized Cost – Residual Value) / Term = Depreciation Expense
    (Capitalized Cost + Residual Value) * Money Factor = Interest Expense
    Depreciation Expense + Interest Expense = Base Monthly Payment

    Add to the Base Monthly Payment any other monthly out of pocket items (some states divide sales tax over the # of lease payments) to get your end-all-be-all lease payment.
    Last edited by aftp302; 05-23-2008 at 01:56 AM.
    Current:
    2010 Mazda6iT
    2007 Honda CR-V EX-L
    2009 Kawasaki Concours14 Black (my true summer ride)
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    2007 E90 335i-6MT-SG/Black/Al-ZPP-ZSP-Navi-Heated-CA-iPod-Blacklines
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  3. #3
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    Moderator Note

    PLEASE DON'T DISCUSS LEASE VS BUY/FINANCE MERITS OR DISADVANTAGES HERE, use the following thread instead:
    http://forums.bimmerforums.com/forum...d.php?t=987540

    Use this thread to give out LEASE ONLY information.
    "Mit der Dummheit kämpfen Götter selbst vergebens", Friedrich von Schiller
    "Life is simple, people make it complicated"
    About me: http://forums.bimmerforums.com/forum...82&postcount=4
    Current Car (delivered 15/12/17): 2018 F30 340i xDrive M-sport; 6MT; TanzaniteBlau(X10)/Black Dakota w/Oyster stitch(LCL8); M-perfPkg(Z5Z)+MPPSK(ZP2); 704M wheels; Premium(Z4E)+Premium Enhanced(Z4F); MODS: OEM CF trunk spoiler
    <click to view album>
    Previous Cars: 2013 F30 335ix 6MT Msport (Nov 2013-17); 2011 e90 328i 6MT ZSP (Aug 10-Nov 13); 07 e90-323i ZSP (May 07 - Aug 10); 97-318ti ZSP (Feb 97 - May 07)

  4. #4
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    Multiple Security Deposits

    BMW offers a program called Multiple Security Deposits (MSD) with their leasing programs. The gist is, you can put down up to 7 additional security deposits (above and beyond the 1 required) and for each one you will receive a .00007 reduction in your lease Money Factor. At the end of the lease BMWFS will return those 7 extra security deposits to you, assuming none of them are needed to absorb damage, excess miles, etc.

    Example: Lease payment of $500 and initial MF of .00150

    Putting down the maximum of 7 additional security deposits you would owe BMWFS $3500 more at signing (7 * $500) and in turn they would reduce your money factor from .00150 to .00101.

    Two considerations when evaluating whether MSD's are for you.

    1) You have to have the extra cash lying around and not need it for the duration of your lease.
    2) You need to be comfortable that you could not take that extra money, invest it (wherever) and earn more interest than the sum of your savings due to the decreased lease money factor.
    Current:
    2010 Mazda6iT
    2007 Honda CR-V EX-L
    2009 Kawasaki Concours14 Black (my true summer ride)
    1996 Honda Nighthawk 750


    Past:
    2007 E90 335i-6MT-SG/Black/Al-ZPP-ZSP-Navi-Heated-CA-iPod-Blacklines
    2002 MB C230K Coupe
    2000 Altima SE (Ugh...)
    1990 CRX Si (the one that got away)

  5. #5
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    "Due At Signing"

    People typically discuss the amount due at signing as one of the "terms" of their lease. There can be many components of this figure, and some but not all may apply to your individual scenario or in your home state:

    1) Capitalized Cost Reduction (aka down payment - this is just a portion of your depreciation expense that you are pre-paying to lower your subsequent monthly payments)
    2) First months payment
    3) Security Deposit (and any MSD's)
    4) Acquisition Fee (sometimes called "bank fee", set by BMWFS at $625)
    5) Sales Tax (if your state requires tax up front, not divided over lease payments)
    Current:
    2010 Mazda6iT
    2007 Honda CR-V EX-L
    2009 Kawasaki Concours14 Black (my true summer ride)
    1996 Honda Nighthawk 750


    Past:
    2007 E90 335i-6MT-SG/Black/Al-ZPP-ZSP-Navi-Heated-CA-iPod-Blacklines
    2002 MB C230K Coupe
    2000 Altima SE (Ugh...)
    1990 CRX Si (the one that got away)

  6. #6
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    "Real World Example Calculation"

    My particular Lease details to illustrate the above information:

    2007 BMW 335i Sedan
    MSRP $47020
    Negotiated Price (Capitalized Cost) $45813
    BMWFS Money Factor .00150
    Residual (36 mos 15k miles) 61%
    Extra Security Deposits 2 for MF reduction of .00014

    (Capitalized Cost – Residual Value) / Term = Depreciation Expense
    (Capitalized Cost + Residual Value) * Money Factor = Interest Expense
    Depreciation Expense + Interest Expense = Base Monthly Payment

    (45813 – (.61*47020)) / 36 = 475.86
    (45813 + (.61*47020)) * .00136 = 101.31
    475.86 + 101.31 = $577.17

    Delaware charges a "sales tax" on the monthly lease payment of .0192% so that adds $11.08 to my payment for a grand total of $588.25 per month.

    My "due at signing" amount was $4514.11 comprised of:
    1) First months payment of $588.25
    2) Security deposits of $1800
    3) Delaware state tax of $1259.86
    4) Acquisition Fee of $625
    5) Tags/Title/Registration of $241

    At the end of my lease term (assuming I return the car with no damage and below mileage) I should get back 3 security deposits ($1800) and have to pay a disposition fee of $350.
    Current:
    2010 Mazda6iT
    2007 Honda CR-V EX-L
    2009 Kawasaki Concours14 Black (my true summer ride)
    1996 Honda Nighthawk 750


    Past:
    2007 E90 335i-6MT-SG/Black/Al-ZPP-ZSP-Navi-Heated-CA-iPod-Blacklines
    2002 MB C230K Coupe
    2000 Altima SE (Ugh...)
    1990 CRX Si (the one that got away)

  7. #7
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    More on Mutliple Security Deposits

    "Mit der Dummheit kämpfen Götter selbst vergebens", Friedrich von Schiller
    "Life is simple, people make it complicated"
    About me: http://forums.bimmerforums.com/forum...82&postcount=4
    Current Car (delivered 15/12/17): 2018 F30 340i xDrive M-sport; 6MT; TanzaniteBlau(X10)/Black Dakota w/Oyster stitch(LCL8); M-perfPkg(Z5Z)+MPPSK(ZP2); 704M wheels; Premium(Z4E)+Premium Enhanced(Z4F); MODS: OEM CF trunk spoiler
    <click to view album>
    Previous Cars: 2013 F30 335ix 6MT Msport (Nov 2013-17); 2011 e90 328i 6MT ZSP (Aug 10-Nov 13); 07 e90-323i ZSP (May 07 - Aug 10); 97-318ti ZSP (Feb 97 - May 07)

  8. #8
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    Lease vs Buy

    Not to turn this into a lease vs buy debate (no one dares I hope ), here is a useful link for anyone debating whether to lease or buy:
    http://www.bankingmyway.com/calculator/buy-vs-lease
    "Mit der Dummheit kämpfen Götter selbst vergebens", Friedrich von Schiller
    "Life is simple, people make it complicated"
    About me: http://forums.bimmerforums.com/forum...82&postcount=4
    Current Car (delivered 15/12/17): 2018 F30 340i xDrive M-sport; 6MT; TanzaniteBlau(X10)/Black Dakota w/Oyster stitch(LCL8); M-perfPkg(Z5Z)+MPPSK(ZP2); 704M wheels; Premium(Z4E)+Premium Enhanced(Z4F); MODS: OEM CF trunk spoiler
    <click to view album>
    Previous Cars: 2013 F30 335ix 6MT Msport (Nov 2013-17); 2011 e90 328i 6MT ZSP (Aug 10-Nov 13); 07 e90-323i ZSP (May 07 - Aug 10); 97-318ti ZSP (Feb 97 - May 07)

  9. #9
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    nice link thank you

  10. #10
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    BMW Select?

    Quote Originally Posted by mryakan View Post
    Not to turn this into a lease vs buy debate (no one dares I hope ), here is a useful link for anyone debating whether to lease or buy:]
    What about the BMW select financing option? Here your monthly payments are based on a portion of the total cost of the car -- much like a lease. Under that senario, your "lost interest" would be less. I'd like to see a calculation with that factored in.

  11. #11
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    Quote Originally Posted by offdwall View Post
    What about the BMW select financing option? Here your monthly payments are based on a portion of the total cost of the car -- much like a lease. Under that senario, your "lost interest" would be less. I'd like to see a calculation with that factored in.
    Feel free to open a thread about this. If enough info is posted, I can sticky that thread or merge it with this one if appropriate. For now, let's keep this thread dedicated to leasing information only.
    Thanks
    "Mit der Dummheit kämpfen Götter selbst vergebens", Friedrich von Schiller
    "Life is simple, people make it complicated"
    About me: http://forums.bimmerforums.com/forum...82&postcount=4
    Current Car (delivered 15/12/17): 2018 F30 340i xDrive M-sport; 6MT; TanzaniteBlau(X10)/Black Dakota w/Oyster stitch(LCL8); M-perfPkg(Z5Z)+MPPSK(ZP2); 704M wheels; Premium(Z4E)+Premium Enhanced(Z4F); MODS: OEM CF trunk spoiler
    <click to view album>
    Previous Cars: 2013 F30 335ix 6MT Msport (Nov 2013-17); 2011 e90 328i 6MT ZSP (Aug 10-Nov 13); 07 e90-323i ZSP (May 07 - Aug 10); 97-318ti ZSP (Feb 97 - May 07)

  12. #12
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    good info.
    Last edited by veightkiller; 12-13-2008 at 09:40 AM.

  13. #13
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    2009 328XI & 335XI Current Lease Money Factors

    I waited for 1 month and no one replied on the lease sticky thread.....so I will ask again .....

    Hi all: I was trying to search specifically for the Current 2009 Residual & Money Factors for the 2009 328XI and the 335XI. I was not able to find 2009 figures. Does anyone know where I can obtain that info? Thanks in advance.
    Last edited by mryakan; 12-29-2008 at 11:46 AM.

  14. #14
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    http://forums.roadfly.com/forums/fin...9151926-1.html

    These are the December 2008 rates. They will change as of 1/1/09 and the new rates are always posted on roadfly about a week into each new month.
    Current:
    2010 Mazda6iT
    2007 Honda CR-V EX-L
    2009 Kawasaki Concours14 Black (my true summer ride)
    1996 Honda Nighthawk 750


    Past:
    2007 E90 335i-6MT-SG/Black/Al-ZPP-ZSP-Navi-Heated-CA-iPod-Blacklines
    2002 MB C230K Coupe
    2000 Altima SE (Ugh...)
    1990 CRX Si (the one that got away)

  15. #15
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    These are the December 2008 rates. They will change as of 1/1/09 and the new rates are always posted on roadfly about a week into each new month.[/quote]


    Thank you aftp302 for responding.

  16. #16
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    Quote Originally Posted by aftp302 View Post
    My particular Lease details to illustrate the above information:

    2007 BMW 335i Sedan
    MSRP $47020
    Negotiated Price (Capitalized Cost) $45813
    BMWFS Money Factor .00150
    Residual (36 mos 15k miles) 61%
    Extra Security Deposits 2 for MF reduction of .00014

    (Capitalized Cost – Residual Value) / Term = Depreciation Expense
    (Capitalized Cost + Residual Value) * Money Factor = Interest Expense
    Depreciation Expense + Interest Expense = Base Monthly Payment

    (45813 – (.61*47020)) / 36 = 475.86
    (45813 + (.61*47020)) * .00136 = 101.31
    475.86 + 101.31 = $577.17

    Delaware charges a "sales tax" on the monthly lease payment of .0192% so that adds $11.08 to my payment for a grand total of $588.25 per month.

    My "due at signing" amount was $4514.11 comprised of:
    1) First months payment of $588.25
    2) Security deposits of $1800
    3) Delaware state tax of $1259.86
    4) Acquisition Fee of $625
    5) Tags/Title/Registration of $241

    At the end of my lease term (assuming I return the car with no damage and below mileage) I should get back 3 security deposits ($1800) and have to pay a disposition fee of $350.
    What's up with the state tax? Some sort of luxury tax maybe? I've never had to deal with that on any of my leases, then again, my sales tax is 6.5% on the monthly payment, not 1.9%

  17. #17
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    I had a quick question. If the MSRP on a car is 39,000 and you want to lease it. Not counting the down payment could you negotiate with the dealer to bring that to like 38,000. and then you put the down payment on that 38k and calculate your lease from there. Or is it hard to do now? Or is it possible?
    Thanks

  18. #18
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    Quote Originally Posted by armenh View Post
    I had a quick question. If the MSRP on a car is 39,000 and you want to lease it. Not counting the down payment could you negotiate with the dealer to bring that to like 38,000. and then you put the down payment on that 38k and calculate your lease from there. Or is it hard to do now? Or is it possible?
    Thanks
    That's how it works. The "Capitalized Cost"is the price you negotiate with the dealer (which is really only dependent on your negotiation skill and market conditions, it is completely independent of the lease formula), minus any downpayment. However, the "Residual Value" is calculated based on MSRP no matter what the Cap Cost ends up being.
    Last edited by mryakan; 01-02-2009 at 04:03 AM.
    "Mit der Dummheit kämpfen Götter selbst vergebens", Friedrich von Schiller
    "Life is simple, people make it complicated"
    About me: http://forums.bimmerforums.com/forum...82&postcount=4
    Current Car (delivered 15/12/17): 2018 F30 340i xDrive M-sport; 6MT; TanzaniteBlau(X10)/Black Dakota w/Oyster stitch(LCL8); M-perfPkg(Z5Z)+MPPSK(ZP2); 704M wheels; Premium(Z4E)+Premium Enhanced(Z4F); MODS: OEM CF trunk spoiler
    <click to view album>
    Previous Cars: 2013 F30 335ix 6MT Msport (Nov 2013-17); 2011 e90 328i 6MT ZSP (Aug 10-Nov 13); 07 e90-323i ZSP (May 07 - Aug 10); 97-318ti ZSP (Feb 97 - May 07)

  19. #19
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    Quote Originally Posted by sor View Post
    What's up with the state tax? Some sort of luxury tax maybe? I've never had to deal with that on any of my leases, then again, my sales tax is 6.5% on the monthly payment, not 1.9%
    Tax laws differ from state to state/province. If someone has a link to a good summary of the various leasing tax laws that could be helpful. This really doesn't affect your lease calculations. It's either some extra money that needs to be paid upfront, or in addition to each payment or a combination of both.
    "Mit der Dummheit kämpfen Götter selbst vergebens", Friedrich von Schiller
    "Life is simple, people make it complicated"
    About me: http://forums.bimmerforums.com/forum...82&postcount=4
    Current Car (delivered 15/12/17): 2018 F30 340i xDrive M-sport; 6MT; TanzaniteBlau(X10)/Black Dakota w/Oyster stitch(LCL8); M-perfPkg(Z5Z)+MPPSK(ZP2); 704M wheels; Premium(Z4E)+Premium Enhanced(Z4F); MODS: OEM CF trunk spoiler
    <click to view album>
    Previous Cars: 2013 F30 335ix 6MT Msport (Nov 2013-17); 2011 e90 328i 6MT ZSP (Aug 10-Nov 13); 07 e90-323i ZSP (May 07 - Aug 10); 97-318ti ZSP (Feb 97 - May 07)

  20. #20
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    Quote Originally Posted by mryakan View Post
    That's how it works. The "Capitalized Cost"is the price you negotiate with the dealer (which is really only dependent on your negotiation skill and market conditions, it is completely independent of the lease formula), minus any downpayment. However, the "Residual Value" is calculated based on MSRP no matter what the Cap Cost ends up being.
    How much can you negotiate usually is 2k off the msrp of a 40k car ordinary?

  21. #21
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    Quote Originally Posted by armenh View Post
    How much can you negotiate usually is 2k off the msrp of a 40k car ordinary?
    You should go from invoice price up, not from MSRP down. In current economic environment you can get a car for $500 above invoice price.

  22. #22
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    Intro to Leasing

    A guide for dummies that explains terminology (Capitalized Cost, Capitalized Cost Reduction, Money Factor, etc) for those that dont know:
    http://www.autobrag.com/guides/Intro...ing_Guide.html

  23. #23
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    Multiple security deposits helped me out with my current lease, I maxed out my MSDs, I'd recommend it as a good way to keep your monthly payments minimized.

    Quote Originally Posted by venom7777 View Post
    You should go from invoice price up, not from MSRP down. In current economic environment you can get a car for $500 above invoice price.
    Oh, and this is true even in a normal economy. Depending on the dealer and what you're looking for, you might even be able to get something under/at invoice.
    Last edited by psucelticXI; 04-05-2009 at 09:22 PM. Reason: Automerged Doublepost

  24. #24
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    I did a write up on leasing a few years ago. Do a search on "Leasing 101"
    Current: 2012 Porsche Boxster Spyder, 2012 X5 xDrive 35d
    Current demo: 2012 528xi
    Past: 1994 Porshce 964 3.6 turbo, 1999 M3 cv, 2000 323ci 2006 Z4 3.0si, 2009 335i Mcp, 2010 535xiT

  25. #25
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    I'm not sure why we keep trying to make leasing so difficult...

    ...when it is really quite simple once you get past all the mumbo-jumbo.

    Negotiate the selling price of the car as if you were buying it. It today's market that should be right around invoice. You can get an approximation of invoice at places like Edmunds or KBB. Let's look at an MSRP of $10000

    In leasing terms that is your "Capitalized Cost."

    For calculation purposes let's call that price $9000

    Thereafter we have the residual value. Think of that as a prenegotiated trade in value at the end of your lease. Let's call that $5000 (or 50% of MSRP)

    We also hae a cap cost reduction (or down payment) Let's call that $500

    Then there all sorts of "add on costs that have little to do with the actual lease, but add money to your cost.

    Aquisition cost (what you pay the dealer for the privilege of leasing you the car), the lease disposition fee at the end of the lease. Let's call both of those number a total of $1000

    Let's also assume that the dealer works your monthly payments out to $150 a month for a 3 year lease. Is that a good deal?

    Let's check.

    3 years @ $150 = $5400
    add aquisition and disposition fees and you're at $6400
    add the down payment and you're at $6900
    add the residual value and you're at $11900 - which is the true cost of the car without taxes, tags and whatnot.

    So the moral of the story is:

    Add up all the proposed costs (monthly payments plus down payment plus taxes plus tags plus dealer fees [aquisition, disposition etc] - everything but refundable fees like security deposits) and add that to the residual to get the actual cost of the car. You can subtract the residual again to see exactly what the lease will cost you.

    Only you can decide if that car is worth that amount to you.

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