[POBEP]

Hi All,

I am looking to pickup custom ordered 2016 F25 tomorrow.
Could you please advise if dealer's offer is reasonable.
( It appears as if money factor is a bit inflated. )

MSRP: $59,145
Invoice: $55,020
Negotiated Price: $54,000 (Before $1,500 BMW lease credit)
Money Factor: 0.00152
Residual: 59% ($34,895.55)
Lease Term: 36 mo
GAP fee: $925
Lease Payment (pre-tax): 621.85
Lease Payment (with CA tax): $676.26
Doc Fee: $80
Drive Off: $2,379.45 (first payment, doc fee+tax, GAP+tax, CA Taxes on lease credit, registration)

Thanks in advance!

[mde83]

Looks pretty good to me. You are $1,000+ below invoice before incentives? That's very good. The money factor is marked up 20bp, but if you are getting the vehicle so far below invoice they have to make money somehow. Plus I do not know if you are tier 1 or tier 2 credit. Either way, solid deal for sure...

Not sure if you know about multiple security deposits (MSD's) to buy down the money factor. Or if you are looking to minimize your cash outlay on the transaction. But if you have about $4,900 in cash sitting around, consider it...

[west1]

you're spending $22,386.60 over 36 mos to drive a new car (tax excluded). if that's money you want to depart with then that's the deal.

with the residual so high I'd find it hard to see you having any equity at lease term so it's going to be hard to extract any cash at the end.

question, what X3 are you buying that's generating such a high residual value?

personally i wouldn't spend that much money to own nothing but that's just me.

you could buy a CPO and spend the same per month and at least build some equity. unless of course you're just writing this off in a business and your choice is spend the money or pay taxes on it as income (even then there's better ways to spend $22k).

[Pinewood]

Renting a house is never as good as buying, and so it is with cars imo.
Buy and keep for a minimum of 5 years.
Nobody NEEDS a new vehicle every 3 years.
Spend $676 per month for 3 years = $24,336 and you will have nothing to show for it.
Consider buying your car with a bank loan would be my advice, if your budget won't allow you to buy it outright.

[mde83]

I don't think the OP asked for anyone's financial advise relative to buying verses leasing being more "financially sound" and whatnot. He asked for advice relative to the lease deal at hand.

[farmir]

you know that they are marking up MF? Current MF by BMWFS is 0.00135. I just picked up mine with that MF (minus my MSD to bring it down to 0.00086) a day ago. So, considering the mark up, you are not getting that good of a deal. With BMWFS's MF and a nominal 6% off MSRP negotiated price, you can bring down you monthly payment (after tax) to $647. And Definitely use Multiple Security Deposit (MSD) program. That would bring your monthly payment to $600 a month, again with 6% off MSRP.

I always prefer to ask the dealer to not mark up MF or anything else, and negotiate on the price. Way easier to do apple to apple comparison this way.

[west1]

crappy deal. here's why: Money factor is always expressed as a very small number, such as .00275. To convert to an equivalent annual interest percentage rate (APR), simply multiply by 2400. Therefore, in our example, .00275 multiplied by 2400 yields 6.6% as the equivalent interest APR.

the MF to market rate on this deal is 3.648% APR. you can buy and get 1.9% -2.9% from most credit unions and even BMWFS on a purchase.

and again, which X3 is driving this high residual value? pretty much you can bank on a residual value of around $29-31k.

X3 2.8s are a dime a dozen and hold low value. they sell for cheap at auction and are abundant.

again, if someone wants to lease they are buying a different value proposition. one has to negotiate the agreed upon price, the MF and the residual to be able to extract any equity at lease term. unless you are okay giving your money away.

[ba ba boosh]

The residual seems extremely high, usually above 55% or higher is the residual for most Japanese brands. Lexus, Acura, Infiniti, Because they have high resale values. I haven't leased a car in 6 years, I leased a 2010 Audi Q5 3.2 Quattro and my residual was 52% at the time. Buyout was $27k and that was with no down payment at all. Looking back it was a total waste of money, I don't own my own business, therefore I could not claim it as a tax write off, but if you can claim it, by all means go for it. You get a nice new luxury car every 2-3 years for free.

[farmir]

59% is the standard BMW X3 residual for 3 years/30k miles (march/april 2016). The fact that BMW residuals are so high is one reason that people actually lease them.

[BMWrules7]

Originally Posted by annat

Hi All,

I am looking to pickup custom ordered 2016 F25 tomorrow.
Could you please advise if dealer's offer is reasonable.
( It appears as if money factor is a bit inflated. )

MSRP: $59,145
Invoice: $55,020
Negotiated Price: $54,000 (Before $1,500 BMW lease credit)
Money Factor: 0.00152
Residual: 59% ($34,895.55)
Lease Term: 36 mo
GAP fee: $925
Lease Payment (pre-tax): 621.85
Lease Payment (with CA tax): $676.26
Doc Fee: $80
Drive Off: $2,379.45 (first payment, doc fee+tax, GAP+tax, CA Taxes on lease credit, registration)

Thanks in advance!

What's the mileage per year?

[POBEP]

Originally Posted by BMWrules7

What's the mileage per year?

10,000. My spouse daily commute is very small 10 miles tops, normally 4 per day.

[POBEP]

Thank you all for your feedback!

I end up taking offer - dealership refused to negotiate any lower.
Finance manager cited that dealer needs to show profit - hence MF markup was to compensate for below invoice pricing.

Ironically, 5 minutes after signing paperwork I got quote ( from another dealer ) - payment pre-tax was $21/mo lower.

Overall I am very happy with the car, yet buying experience in BayArea certainly could be better.
Local market seems to be inflated with $$ and dealers are less open to negotiate today.
All other quotes were above the invoice, none wanted to make an effort of placing custom order.

My past experience ordering E70 was more pleasant (so as pricing options).

[west1]

glad it worked out for you. enjoy!

your experience is why i bought my X3 in Utah and drove it home to CA.

CA dealers, especially Bay Area, just don't care. they sell plenty of cars to people willing to pay top dollar.

my last two bimmers were from AZ and now UT. it makes for a nice drive home anyway.

[Roundown]

Originally Posted by Pinewood

Renting a house is never as good as buying, and so it is with cars imo.
Buy and keep for a minimum of 5 years.
Nobody NEEDS a new vehicle every 3 years.
Spend $676 per month for 3 years = $24,336 and you will have nothing to show for it.
Consider buying your car with a bank loan would be my advice, if your budget won't allow you to buy it outright.

This is non-sense.

If the residual is higher than depreciation + inception fees, then you're better off leasing (which is more than likely on the F25 in its final model year).

Add in the fact that you'll never suffer diminished value issues on a lease, and in many cases you're WAY better off.

Also- in many cases renting a house is a way more rational decision than buying. PM me if you want some Econ 101.

[west1]

Originally Posted by Roundown

This is non-sense.

If the residual is higher than depreciation + inception fees, then you're better off leasing (which is more than likely on the F25 in its final model year).

Add in the fact that you'll never suffer diminished value issues on a lease, and in many cases you're WAY better off.

Also- in many cases renting a house is a way more rational decision than buying. PM me if you want some Econ 101.

okay, i'm listening. sell this to me because your math makes zero sense to me.

[Pinewood]

Originally Posted by Roundown

This is non-sense.

If the residual is higher than depreciation + inception fees, then you're better off leasing (which is more than likely on the F25 in its final model year).

Add in the fact that you'll never suffer diminished value issues on a lease, and in many cases you're WAY better off.

Also- in many cases renting a house is a way more rational decision than buying. PM me if you want some Econ 101.

So you rent a house or car for x number of years and have nothing to show for it but an empty bank account? Hmmm ok.
The finance company and garage make money from your lease and you give the car or house back after the agreed period with nothing to show for it. Rental is almost as expensive as buying (mortgage) in the UK, and often more so when we talk about the London region. I can't speak for NA, but i suggest you would be hard pressed to make me beleive otherwise

[Pinewood]

My car was £35,500 advertised.
I bought it cash, with a negotiated discount of £700 if i bought the 5 year maintenance package for £690.
The car is now mine.
If i had leased this car over 3 years, it would have cost me around £15,000, after which they would take the car back and i would be left with zilch.
If i sell this car after 3 years, it's possible i would lose £15k in depreciation.
Now consider i keep that car beyond 3 years?, i keep it another 2 years as i bought the 5 year maintenance package. It won't cost me another £10k in depreciation and i still have the car to sell after the 5 year period. I also have the option of keeping the car beyond 5 years with a cost of servicing as my only expenditure. Econ 101 would mean i was close to leasing my 3rd vehicle in that time.
Over to you sir....

[Roundown]

Originally Posted by Pinewood

So you rent a house or car for x number of years and have nothing to show for it but an empty bank account? Hmmm ok.
The finance company and garage make money from your lease and you give the car or house back after the agreed period with nothing to show for it. Rental is almost as expensive as buying (mortgage) in the UK, and often more so when we talk about the London region. I can't speak for NA, but i suggest you would be hard pressed to make me beleive otherwise

Again- this is non-sense.

When you lease a car, you pay for depreciation (Sale Price - Residual * MSRP) and to finance that depreciation.

When you buy a car, you own (or are borrowing money to own) a depreciating asset.

Assume an X3 has a $50k MSRP, 60% Residual ($30k), currently sells for invoice ($46.5k) and lease inception fees are $1k (very conservative).

Also assume that after 3 years, that X3 is worth 55% of MSRP ($27.5k, which will likely be generous for a 2016 F25 in 2019 with used G-series X3s available).

Scenario 1: If you lease, you're going to spend $17.5k + interest ($47.5k - $30k) to drive that X3 for 3 years. At the end of the lease, you're free to purchase the car at the stated residual ($30k) or negotiate a better (or market) price ($27.5k). You would do so (and be happy that you saved $1.5k vs. buying new), but your son got into a fender bender with a mailbox in year 2 and you know that a car with a car fax history isn't ideal... so you pass and you splurge on a CPO 2016 F25 35i, now much more affordable vs. the 28i you leased thanks to the steeper depreciation curve for heavily optioned cars.

Scenario 2: If you bought it, you paid $46.5k (plus interest and sales tax) and after 3 years your X3 should be worth $27.5k, so that it would have cost you $19k to drive that car for 3 years. Unfortunately, that fender bender makes the car less sellable and the best price you think you can sell it for is $18.5k. You're unhappy.

Cars are depreciating assets, what "you're left with" is always something (but for a few extreme cases) worth less than you paid.

Understanding depreciation and financing it efficiently should drive your buy vs. lease decision (not some outmoded concept of "ownership"). Some cars are better buys (M2, any Audi) other cars are better leases (most BMWs, especially M4/X5/6M).

Do yourself a favor and do the math.

[Pinewood]

Sorry but i still don't see your math being better than my example, unless my son having a fender bender in my car is mandatory?
I guess we'll agree to disagree on this one. Too many people are happy to borrow for things they want today, but in reality cannot afford. Rather than save, they borrow money to borrow the item they lust after.
Now bring in the sudden loss of an income, due to accident, ill health or redundancy and you have another debt looming over your finances

I'm happy with my choice and plan to keep the x3 for 8+ years

[Pinewood]

P. S so why don't we lease everything in our lives from houses to washing machines?

[Roundown]

Originally Posted by Pinewood

Sorry but i still don't see your math being better than my example, unless my son having a fender bender in my car is mandatory?
I guess we'll agree to disagree on this one. Too many people are happy to borrow for things they want today, but in reality cannot afford. Rather than save, they borrow money to borrow the item they lust after.
Now bring in the sudden loss of an income, due to accident, ill health or redundancy and you have another debt looming over your finances

I'm happy with my choice and plan to keep the x3 for 8+ years

You still have the right/ability to purchase the X3 after year three at market. You own an option. You are no better or worse than having bought, but you're taking less downside risk. A lease with a lower than market residual makes that option more expensive than it's worth, but in the case of the X3, it's attractively priced.

[Roundown]

Originally Posted by Pinewood

P. S so why don't we lease everything in our lives from houses to washing machines?

Time value of money is why many people finance. I suppose we'll have to agree to disagree on how that works.

Also, if you're insinuating that leases and financing are only for those spending beyond their means, let me share my personal anecdote: I can afford my X5M, in cash, many times over, but the <1% interest rate offered to me is less than I am earning on my liquid reserves in an overnight savings account.

Beyond the obviously advantageous liquidity position, I also reap the benefit of loyalty credit when I turn cars over (offered to current BMW FS clients).

And on your last point, the vast majority of home/apartment rental market include appliances...I suppose you could provide your own, but it's more efficient to let the landlord buy, finance and deduct depreciation than it would be for a renter to own.