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      12-09-2011, 10:35 AM   #1
SilverRevlis
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X3 Lease Rates

Is there any idea when the lease rates may come back to reality for the X3s? I am looking to pick up a 35i -Tech/Premium/Prem Sound/Cold Weather, and this will be our first BMW lease (currently have a Honda lease we are getting out of early).
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      12-09-2011, 11:40 AM   #2
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what's reality? the current base rate mf @bmwfs afaik is .00195, which you can lower to .00146 with msd [7 deposits]. that's roughly 3.5% financing? is that not reality?

the current residual on a '12 is 54% @15k miles/yr, 36mo. i signed a contract on those numbers 1.5 weeks ago. pcd scheduled for january. do you think reality will be much sweeter?


ps. fyi got the mf rates from ridewithg.com, got the residuals from bimmerfest.com

Last edited by jk; 12-09-2011 at 11:51 AM..
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      12-09-2011, 11:53 AM   #3
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From the 2 dealers I have spoken to in GA and TN, I am getting lease prices in the high 700s for a 28i stickered at $48K (Prem, Prem Audi,Convenience, Tech) with 12k mi/yr for 39 months, taxes rolled into lease (9.25%) ,drive-offs (1st payment, fees, no sec deposit), and a $495 Cap Red. And again, thats only for a 28i, not a 35i. I thought in reality the payments would be roughly $100 lower for a 35i with the same options.
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      12-09-2011, 12:03 PM   #4
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from what i've read, you'll get better number for 36 months- apparently that's the sweet spot for them to turn around the vehicle as a cpo, so you get a better residual. the residual is 54% for 15k@36mo, and adjusted 2% for 12k [i.e. to 56%], another 1% for 10k.

i can't speak to the tax issue. do you know what money factor is being used? if not, ask. then pay 7 security deposits to lower the rate by .00007*7=.00049, for a pretty good guaranteed tax free rate of return.

there's good info on calculating all the stuff at the 2 websites i mentioned.

btw, on my x3 35i with premium, tech, premium sound and sap, with my 6.35% sales tax rolled in, the payment is about 770.

you might also check with adrian at s. atlanta. he's a bimmerfest sponsor and a number of board members have spoken well of him as a straight shooter.
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      12-10-2011, 10:13 AM   #5
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Quote:
Originally Posted by jk View Post
from what i've read, you'll get better number for 36 months- apparently that's the sweet spot for them to turn around the vehicle as a cpo, so you get a better residual. the residual is 54% for 15k@36mo, and adjusted 2% for 12k [i.e. to 56%], another 1% for 10k.

i can't speak to the tax issue. do you know what money factor is being used? if not, ask. then pay 7 security deposits to lower the rate by .00007*7=.00049, for a pretty good guaranteed tax free rate of return.

there's good info on calculating all the stuff at the 2 websites i mentioned.

btw, on my x3 35i with premium, tech, premium sound and sap, with my 6.35% sales tax rolled in, the payment is about 770.

you might also check with adrian at s. atlanta. he's a bimmerfest sponsor and a number of board members have spoken well of him as a straight shooter.
Never having leased a vehicle and don't know the ins/outs of it, i just did a quick calculation of what you are paying over 3 years. 770x36=27720. Divide that by 3 and its 9240/year. So basically it's costing you over 9k per year to own that vehicle...am I right in my thinking? Since I usually own my cars for around 10 years, I try to get my yearly car costs way below that. But I was just wondering how much it would cost me to own this for just 3 years. Suppose I didn't lease it and decided to sell it on my own, how much do you think a 54K X3 would be worth in 3 years if I were to sell it privately?
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      12-10-2011, 01:59 PM   #6
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Originally Posted by cadman50 View Post
Never having leased a vehicle and don't know the ins/outs of it, i just did a quick calculation of what you are paying over 3 years. 770x36=27720. Divide that by 3 and its 9240/year. So basically it's costing you over 9k per year to own that vehicle...am I right in my thinking? Since I usually own my cars for around 10 years, I try to get my yearly car costs way below that. But I was just wondering how much it would cost me to own this for just 3 years. Suppose I didn't lease it and decided to sell it on my own, how much do you think a 54K X3 would be worth in 3 years if I were to sell it privately?
i'm paying the depreciation on a vehicle with an msrp of about $54k, with a calculated residual value in 3 years of 54% of that [with 15k mi/yr], or a bit over $29k. so the depreciation is $25k from msrp, or $21.3k from negotiated price, the rest is finance charges and 6.35% state sales tax. backing out the sales tax, i'm actually paying about $26k+tax over the 3 years. if i like it and want to keep it [i've kept all except 1 of my cars for over 10years], i can buy it for the $29k price. or i can negotiate a 2nd round of leasing on the then used vehicle.

bmwfs is basically saying they think that in 3 years my x3 will be worth 54% of current msrp.

my accountant said i'm better off leasing through my business, since i can deduct all the lease charges, while if i owned it the depreciation is limited to about $11k in the first 3 years.
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      12-10-2011, 10:19 PM   #7
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Quote:
Originally Posted by jk View Post
i'm paying the depreciation on a vehicle with an msrp of about $54k, with a calculated residual value in 3 years of 54% of that [with 15k mi/yr], or a bit over $29k. so the depreciation is $25k from msrp, or $21.3k from negotiated price, the rest is finance charges and 6.35% state sales tax. backing out the sales tax, i'm actually paying about $26k+tax over the 3 years. if i like it and want to keep it [i've kept all except 1 of my cars for over 10years], i can buy it for the $29k price. or i can negotiate a 2nd round of leasing on the then used vehicle.

bmwfs is basically saying they think that in 3 years my x3 will be worth 54% of current msrp.

my accountant said i'm better off leasing through my business, since i can deduct all the lease charges, while if i owned it the depreciation is limited to about $11k in the first 3 years.


So I think you answered my first question. Discounting the finance charges it looks like it will cost you a little over 7K/year (21.3K/3 years). If you lease or buy you still have finance charges so you have to take that out of the equation, right? Seems like you always have a car finance charge unless you pay cash for the car. So i wonder if after 3 years you decide to sell it privately what is a reasonable asking price? You say that BMW says your car is worth 29K.
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      12-11-2011, 08:16 AM   #8
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Quote:
Originally Posted by cadman50 View Post

So I think you answered my first question. Discounting the finance charges it looks like it will cost you a little over 7K/year (21.3K/3 years). If you lease or buy you still have finance charges so you have to take that out of the equation, right? Seems like you always have a car finance charge unless you pay cash for the car. So i wonder if after 3 years you decide to sell it privately what is a reasonable asking price? You say that BMW says your car is worth 29K.
i could have gotten a finance rate lower than bmwfs' if i had purchased outright, but the finance savings were going to be less than the tax advantages of doing it as a lease. as to what the private value of the depreciated car will be in 3 years, that's very much a crap shoot depending not only on the car itself, and whether i've actually driven it the 15kmi/yr or more or less than that, but on the availability and prices of competing used vehicles, the state of the u.s. economy, and so on. i assume that captive finance companies, such as bmwfs, have an interest in estimating residual values on the high side, since that lowers the leasing cost and thus "sells" more vehicles. however, they also have an interest in not losing money.
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      12-11-2011, 11:24 AM   #9
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Quote:
Originally Posted by jk View Post
i could have gotten a finance rate lower than bmwfs' if i had purchased outright, but the finance savings were going to be less than the tax advantages of doing it as a lease. as to what the private value of the depreciated car will be in 3 years, that's very much a crap shoot depending not only on the car itself, and whether i've actually driven it the 15kmi/yr or more or less than that, but on the availability and prices of competing used vehicles, the state of the u.s. economy, and so on. i assume that captive finance companies, such as bmwfs, have an interest in estimating residual values on the high side, since that lowers the leasing cost and thus "sells" more vehicles. however, they also have an interest in not losing money.


Thanks Jk. Seems like a lease is a good option if you only want to keep the car for 3 years and always have payments. you can just walk away after 3 years and have spent a little over 9K/year including finance charges (in your case). Looks like you didn't put much money down either. If I went leasing route, is it crazy to put down a whole lot of money and reduce payments?
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      12-11-2011, 12:40 PM   #10
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Quote:
Originally Posted by cadman50 View Post
If I went leasing route, is it crazy to put down a whole lot of money and reduce payments?
I think the reason most people advise against putting a large down payment on a lease is that if your vehicle is stolen or totaled early in the lease, your down payment is lost forever. However, a down payment will reduce the overall cost of the lease because less money is being financed. Some might say you should keep the money and put it in an interest bering account but by my calculations, you save more in finance charges by doing the down payment than you would earn in interest in today's markets. Also, lower payments would look better on your debt to income ratio should you apply for some other credit (like a home mortgage) during the lease. I'm debating the down payment idea myself right now because I have a vehicle I can trade in and lower the lease payments on my X3 dramatically.
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      12-11-2011, 01:23 PM   #11
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Quote:
Originally Posted by cadman50 View Post

Thanks Jk. Seems like a lease is a good option if you only want to keep the car for 3 years and always have payments. you can just walk away after 3 years and have spent a little over 9K/year including finance charges (in your case). Looks like you didn't put much money down either. If I went leasing route, is it crazy to put down a whole lot of money and reduce payments?
for me, leasing is a better option even if i want to own the vehicle much longer term. i can just buy it or re-lease it in 3 years, depending on my financial calculations at that time.

if you have a limited lump sum to use up front, i think you're better off making 7 security deposits than a down payment. the return from lowering the mf is greater than the finance savings on using that same money as a down payment. otherwise, as pointed out above, the issue is the risk of [financial] loss in an accident or theft scenario. i didn't make ANY downpayment [other than the $500 cap cost credit offered by bmwfs], but i will be putting down 7 security deposit payments [=7*800= 5600] to lower the money factor from .00195 to .00146.

if i 1. return the car in good shape, or 2. buy the car in 3 years, or 3. re-lease the car in 3 years, or 4. total or have the vehicle stolen, i will get that 5600 back and will have saved substantially on my finance charges in the interim.
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      12-11-2011, 03:35 PM   #12
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Quote:
Originally Posted by cadman50 View Post
Since I usually own my cars for around 10 years, I try to get my yearly car costs way below that. But I was just wondering how much it would cost me to own this for just 3 years. Suppose I didn't lease it and decided to sell it on my own, how much do you think a 54K X3 would be worth in 3 years if I were to sell it privately?
i haven't work out the numbers for you, but general rule of thumb on a per year basis is that if you are keeping a car for 10 yrs, buying it will be cheaper than leasing. However, mf vs. finance charges paid (e.g. cash purchase will always be cheapest) need to be determined.

Also, it used to be with inflation, that if you paid off over time you were paying off w inflated $ vs purchase price, etc. plus opportunity cost of paying money up front for cash vs. what it would earn all factor in. With very low inflation rates now , that might be out the window.

Anyone have a financial calculator on them?
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      12-11-2011, 04:24 PM   #13
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Originally Posted by jbinbi View Post
i haven't work out the numbers for you, but general rule of thumb on a per year basis is that if you are keeping a car for 10 yrs, buying it will be cheaper than leasing. However, mf vs. finance charges paid (e.g. cash purchase will always be cheapest) need to be determined.

Also, it used to be with inflation, that if you paid off over time you were paying off w inflated $ vs purchase price, etc. plus opportunity cost of paying money up front for cash vs. what it would earn all factor in. With very low inflation rates now , that might be out the window.

Anyone have a financial calculator on them?
if you really want to do this right, at a minimum you also need to look at the opportunity cost of using the capital in other ways if you indeed have it on hand, the tax consequences of different choices if you are using the vehicle in part for business, possible changes in cash flow and liquidity needs over the period to be examined, and the odds of a war in the middle east skyrocketing the cost of oil and lowering your vehicle value versus more fuel-efficient vehicles. in fact these all went into my decision to lease.
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      12-16-2011, 08:26 AM   #14
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As an update, we have been in touch wth several dealers, and the numbers have been the same. I think its due to the fact that X3's don't sit on lots much. The cars we are cross shopping are the FX35 (which we are getting very good numbers on w/12k/yr-36mo) and the Q5 (a little less expensive per month that the X3, but not by much). Still have more thinking to do.
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