[dmicah]

Anybody else facing this? To be clear, I'm not facing it til 1/2023, but I'm starting to get worried about supply chain issues. People who leased 2019 X3s are probably right in the thick of this.

I custom ordered a 2020 M40i. I optioned it reeeeally well--perhaps stupidly for a lease. Exec package, adaptive, sport diff, HK, acoustic glass, 699's, rear shades spare tire and maybe a few other items I can't recall at the moment. Like an idiot I paid the dealer to put an xpel bra on it--I might have been drunk. I was purchasing, at the time, in the PNW where discounts basically don't exist, but there were some good incentives back then. Everything in including destination was 66,878 and I got 4,250 of incentives to net down to 62,626. I then leased the thing because I figured I'm old and I wanted sweet new cars all the way down from now on. My residual is 57% = 38,258.

I just looked at the current value of the car if I were to own it and want to sell it and KBB is giving me numbers in the mid 50's for a private party transaction. Admittedly it'll have another 10k miles on it when I'm done with it, but I baby the thing because, well, I love it.

I...I think I gotta buy this thing when the lease is done! I had totally planned to return it and get, I dunno, an I4 M50. But who knows when I'll be able to get my hands on any new car let alone any kind of special one. Things might be different in 15 months when I need it, but I kinda don't think they'll be back to where they were...at all.

I assume anyone coming off a lease is facing some strong incentives to buy. Amiright?

[Orient330iNYC]

i'm in that boat. my lease was supposed to end at the end of the month. i've already extended it to end of december, but there's a waiting list at my dealer for X5s.
I could buy it out and turn around and sell it for about 11k over my buyout, but the cancelled options are making me think im going to buy it out and keep it for another year or so. also the X5 LCI is supposed to come out in early 2023 as MY 2024... hopefully by then the supply issues will be over or at least coming back to normal.

[taek]

Yes it's been extremely common to buyout leases and then sell the car for a profit over your residual. It's been so rampant most manufacturers have put in policies this year that disallow 3rd party buyouts like Carvana.

[strohw]

BMW has that policy in place. You need to either sell it to a BMW dealer or buy it out yourself and then sell it to the 3rd party.

[lap777]

Just a FYI, if a leased BMW gets totaled/stolen,etc., any extra equity goes to BMWFS (don't ask how I know, just read your contract). So if you are sure you want to buyout the car anyway, maybe consider doing it sooner rather than later. The downside of owning is if you have an accident that doesn't total the car and it's value tanks.

[calbears]

Originally Posted by lap777

Just a FYI, if a leased BMW gets totaled/stolen,etc., any extra equity goes to BMWFS (don't ask how I know, just read your contract). So if you are sure you want to buyout the car anyway, maybe consider doing it sooner rather than later. The downside of owning is if you have an accident that doesn't total the car and it's value tanks.

When my 2018 M3 got totaled by a guy who ran a red light, insurance settled, paid off BMW and I got the amount over that back.

[brettl]

Originally Posted by strohw

BMW has that policy in place. You need to either sell it to a BMW dealer or buy it out yourself and then sell it to the 3rd party.

Is this on new lease contracts or is the policy retroactive to existing lease contracts?

[Orient330iNYC]

Originally Posted by brettl

Is this on new lease contracts or is the policy retroactive to existing lease contracts?

policy applies to all lease contracts.

i dont think you ever had a right to sell to a third party, they just allowed you to do so. they're now enforcing

Effective October 1, 2021, payoffs received from a Non-BMW Group Dealer will not be accepted by BMW Group Financial Services for Lease accounts. In accordance with the terms of the Motor Vehicle Lease agreement, Customers may either purchase their Lease, return or trade-in the vehicle to an authorized BMW Group Dealership.

my payoff docs say:

In accordance with the terms of your Motor Vehicle Lease Agreement, you may either
purchase your leased vehicle or return or trade-in the vehicle to an authorized BMW Center.
BMW Financial Services will not honor payoffs received from third-party dealerships.
In the event a payoff is received from a third-party dealership, BMW Financial Services
will return the payment by mail to the original sender. Please contact your preferred BMW
Center for further information on your purchase options.

[lap777]

Originally Posted by calbears

When my 2018 M3 got totaled by a guy who ran a red light, insurance settled, paid off BMW and I got the amount over that back.

They only do prorated cash-down now.

[thedead]

I'm in the same boat on a 2019 M40i. I think I'm leaning towards buying it out as I also have snow tires on it and in Chicago you pay tax on the entire vehicle up front, so I might as well.

I found through these forms a dealer for BMW bumper to bumper warranty for ~2500 too.

[BimmerX5kid]

Originally Posted by lap777

They only do prorated cash-down now.

Has this occurred to anybody in actual practice or is this a theory? I'm skeptical. An insurance company will pay XX dollar amount on a claim based on your insurance company contract (replacement cost or depreciated cash value).

One's lease agreement after money down (its not even called cap cost reduction is it on a lease?) is just a financing mechanism to maneuver your monthly payment higher or lower (almost like buying up or down an interest rate). I'm gobsmacked that the financing company would give the pro-rata back of money down.

Has this really happened to someone? Again, i look at it this way: you are being relieved of your lease contract because the insurance company is effectively buying the car for you and taking it to the junk yard. The lease company will take the money for the car ("the buyout") and cancel your remaining lease.. i just cannot see why they would say "oh you prepaid some of your in lieu of lower payments so here is pro-rata back". Conversly this: lets say i wanted to end a lease one year early. i would write a check for my remaining 12 months and hand them the car back, would they give me a pro-rata of my money down because i "paid off/returned" the car early?

If someone says it happened to them i'll believe it. I'm just saying this goes against everything i've known about leasing "never put money down!" If it is really true i'd rethink it..

[sbt007]

Originally Posted by BimmerX5kid

Has this occurred to anybody in actual practice or is this a theory? I'm skeptical. An insurance company will pay XX dollar amount on a claim based on your insurance company contract (replacement cost or depreciated cash value).

One's lease agreement after money down (its not even called cap cost reduction is it on a lease?) is just a financing mechanism to maneuver your monthly payment higher or lower (almost like buying up or down an interest rate). I'm gobsmacked that the financing company would give the pro-rata back of money down.

Has this really happened to someone? Again, i look at it this way: you are being relieved of your lease contract because the insurance company is effectively buying the car for you and taking it to the junk yard. The lease company will take the money for the car ("the buyout") and cancel your remaining lease.. i just cannot see why they would say "oh you prepaid some of your in lieu of lower payments so here is pro-rata back". Conversly this: lets say i wanted to end a lease one year early. i would write a check for my remaining 12 months and hand them the car back, would they give me a pro-rata of my money down because i "paid off/returned" the car early?

If someone says it happened to them i'll believe it. I'm just saying this goes against everything i've known about leasing "never put money down!" If it is really true i'd rethink it..

To my knowledge the pro-rated refund happens for one-payment leases, not for regular leases.

Now if the value of the car paid by the insurance company is more than what the payoff amount was I think the leasing company should forward that to the customer. The no money down logic comes from the fact that gap insurance provides for any shortfall between market value and buyout value. But if you put money down, that amount will reduce the buyout so effectively it is lost. In the current market many people could have lower buyout that what insurance will pay, so it will be interesting to see what will happen if car is totaled - I feel that leasing company is owed only what the buyout/payoff amount is.

[luckylingy]

Originally Posted by taek

Yes it's been extremely common to buyout leases and then sell the car for a profit over your residual. It's been so rampant most manufacturers have put in policies this year that disallow 3rd party buyouts like Carvana.

BMW FS disallowed third party buyouts effective October 1, 2021. Carvana bought out our leased G05 X5 on September 30, and we pocketed $6,000 (plus avoided $1,200 in excess mileage penalty). BMW FS was among the last captive lessors to withdraw third party buyouts.

In states like Michigan, which doesn't offer sales tax credit on trade-in values, that's kind of a big deal. Unlike Illinois and some other states, a lessee only pays tax on the payment amount (monthly). To harvest the positive equity at lease-end, you're subject to 6% sales tax on the residual value, even if you immediately resell the vehicle to Carmax, Carvana, et al.

[blschaefer1]

We just moved from a 2019 Q5 to a 2022 X3. Still had a year to go on the Audi lease, but with valuations being crazy these days decided make the move now.

Audi FS has the same policy in place regarding 3rd party transactions. So, trading the car to the BMW dealer was not an option. Nor was selling to Carvana, Vroom, etc. as the sales tax issue would bite us.

But….the BMW dealer was part of a group that also owns a VW dealer across the street. Audi allowed the VW dealer to ‘buy’ the car. The BMW dealer coordinated the price we negotiated with VW dealer. Pretty painless. No sales tax issues. I used the quotes I received from Carvana and Vroom as leverage on the trade value. They basically matched their quotes.

We had $8,500 in positive equity on the Audi which is pretty incredible since there was zero cap reduction on the lease. Once the VW dealer gets the title from Audi FS, they are cutting me a check in this amount.

I paid this amount in the form of drive offs and cap reduction on the new X3. Not crazy about cap reduction on leases, but in this market it’s a different story. The dealer wasn’t discounting the X3 much due to severe inventory constraints. Most are pre sold before they arrive. I got about a $1,000 discount due to being a repeat cusomter. No crazy dealer add ons or fees. I perceive the extra $$ I got from the Audi to be a further ‘discount’ on the X3.

In the end, payment on the X3 is only slightly higher than the Q5, and it’s a much nicer vehicle. Only downside is I’m out the $8,500 for a few weeks.

[dntspeed3]

I just got off that boat. I just turned in my 2019 X3 M40i lease for a new 2022 X4M on the lot. It wasn't my ideal configuration, but the equity on my existing lease was too hard to pass up. I had considered waiting in the spring closer to my lease end (Aug 22) but 1. I had no idea when I could get an M allocation and 2. my SA made a great deal on the lot car and to boot, I've developed a great relationship with them.

Now you might ask why not use that equity on your lease to buy or lease other cars- but as most have alluded, BMWFS as well as other manufacturers have made it difficult to sell. So sticking with BMW was the only plan. And since they had an M car available, I pulled the trigger.

So far I'm very happy with the car.

Who knows what the market will do in 6 months - I might be in the market again.

[Jen4BMW]

I did the same thing. Handed my SA the keys to my 2019 X3 30i and pocketed about $2K in equity. Carvana would have meant about $4k but I didn’t want the hassle. The biggest downside is the hit you take on taxes but the equity more than offsets. It really comes down to negotiating on the new car and availability with various options that you may consider must haves. You have to get what you want when your spending $65K plus.

[luckylingy]

Originally Posted by blschaefer1

We just moved from a 2019 Q5 to a 2022 X3.

The BMW dealer was part of a group that also owns a VW dealer across the street. Audi allowed the VW dealer to ‘buy’ the car. The BMW dealer coordinated the price we negotiated with VW dealer. Pretty painless. No sales tax issues. I used the quotes I received from Carvana and Vroom as leverage on the trade value. They basically matched their quotes.

Smart!! I've negotiated "in & out" deals a couple times years ago, when Dealer A had the car I wanted and Dealer B got the car I was trading. This arrangement helped me get more value for my trade and receive sales tax credit on the trade-in.

It's a reminder for others in similar situations to leverage dealer groups which represent multiple brands. They can circumvent manufacturers' captive finance companies' prohibition of third party buyouts, if they cooperate with a buyer like you. In your case, if the VW store hadn't wanted your Q5, the BMW store could have even bought the Q5 from the VW store for the amount the latter had paid to buy out your lease.

[BimmerX5kid]

i'm a little confused here.. two of the last 3 replies are saying they monetized the equity in their lease on turn-in. But we all know you are not entitled to equity on a lease. One guy said "handed my SA the keys and pocketed $2k". you dont get the equity!. Or is what you are saying is you pre-negotiated that you wanted to BUY the car at the residual contract value, and then sell it back to them same day and the net difference was $2k? And they are accomodating you with all of that without having to actually sign a bill of sale to buy it and then sell it back to them?

[blschaefer1]

Originally Posted by BimmerX5kid

i'm a little confused here.. two of the last 3 replies are saying they monetized the equity in their lease on turn-in. But we all know you are not entitled to equity on a lease. One guy said "handed my SA the keys and pocketed $2k". you dont get the equity!. Or is what you are saying is you pre-negotiated that you wanted to BUY the car at the residual contract value, and then sell it back to them same day and the net difference was $2k? And they are accomodating you with all of that without having to actually sign a bill of sale to buy it and then sell it back to them?

Any lease contract has a buyout price, which is basically the residual value plus any remaining payments.

It used to be that you could trade your car to any third party dealership using this amount as the basis. If the trade value was less than this amount, you'd owe it. If trade value was more, it's positive equity. Since the title passes directly to the dealership in these cases, it is generally not a taxable event.

What's happening now is that manufacturers with captive finance arms (which is nearly all of them) are implementing policies prohibiting the trade/sale of vehicles to third parties. The manufacturers want their cars back due to inventory shortages.

So if working with entities like Carvana, Vroom, Carmax, etc., one needs to first buy the car from the lease/finance company, then you are free to sell it. The downside here is that this is a taxable event on the buyout price of the vehicle.

The workaround is to engage with a multi-dealership entity that has brands for both sides of the deal to get around the third party restrictions and avoid the tax liability.

If it's one BMW to another BMW, this is obviously a non issue.

[sbt007]

Originally Posted by blschaefer1

Any lease contract has a buyout price, which is basically the residual value plus any remaining payments.

It used to be that you could trade your car to any third party dealership using this amount as the basis. If the trade value was less than this amount, you'd owe it. If trade value was more, it's positive equity. Since the title passes directly to the dealership in these cases, it is generally not a taxable event.

What's happening now is that manufacturers with captive finance arms (which is nearly all of them) are implementing policies prohibiting the trade/sale of vehicles to third parties. The manufacturers want their cars back due to inventory shortages.

So if working with entities like Carvana, Vroom, Carmax, etc., one needs to first buy the car from the lease/finance company, then you are free to sell it. The downside here is that this is a taxable event on the buyout price of the vehicle.

The workaround is to engage with a multi-dealership entity that has brands for both sides of the deal to get around the third party restrictions and avoid the tax liability.

If it's one BMW to another BMW, this is obviously a non issue.

Nicely explained. Normally leased cars don't have positive equity because of the low money down but these days they do. So folks please don't just return a lease. Check the market value, and if higher than the buyout - offer to sell it to their used car sales department. They will cut you a check for the difference between the buyout and their offer. If you don't like the dealer's offer, then you will need to go through the annoyance of buying out the car yourself and then selling it to the highest bidder.

[dmicah]

Originally Posted by sbt007

Nicely explained. Normally leased cars don't have positive equity because of the low money down but these days they do. So folks please don't just return a lease. Check the market value, and if higher than the buyout - offer to sell it to their used car sales department. They will cut you a check for the difference between the buyout and their offer. If you don't like the dealer's offer, then you will need to go through the annoyance of buying out the car yourself and then selling it to the highest bidder.

Seconded. Here's an example: You can get your buyout price from the "My Account" section of your "My BMW" account at any time. Right now, with a year remaining on my lease, I can buy the car for $46,581.52. KBB states trade in value for "very good condition" (which I feel is conservative for my car) is between $53,357 and $57,172. So If I turn it into BMW today, I can pocket something between $6,500 and $10,600 of equity.

[antjones21]

I got lucky, I sold my 2019 X4 xDrive 30i to Vroom back in July '21. My lease was due to end Jan 26, 2022. My buyout was $36,100 and Vroom gave me $44k, I sold it to them and they sent BMW a check for the buyout and sent me a check for the difference. I used that to get a 2022 X4 M40i.