BMW X5 and X6 Forum 2014-Current
BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read


Post Reply
 
Thread Tools Search this Thread
      03-10-2017, 03:01 PM   #1
X5M50D
Captain
United Kingdom
442
Rep
781
Posts

Drives: X7 M50d
Join Date: Jan 2017
Location: Middlesex, UK

iTrader: (0)

Settlement Figure

I am leasing my car over 4 years with a settlement after the term of the contract.
A number of friends of mine who are towards the end of their lease contracts have said that the settlement figures BMW agreed with them are higher than what the car is worth, and therefore in negative equity.
Have any of you who are leasing X5's in the same position and is this something to be concerned about.
I have heard that BMW over inflate their settlement figures to intice buyers to enter into these contracts - is this true?
My understanding with my new PCP contract is that I can hand the car back without owing any money at the end of the lease contract, regardless whether I'm in negative equity?
__________________
Old Wheels - X5M50d in Carbon Black
New Wheels - X7M50d in Phytonic Blue
Appreciate 0
      03-10-2017, 03:06 PM   #2
stewy604
Lieutenant Colonel
stewy604's Avatar
289
Rep
1,547
Posts

Drives: 2014 BMW X5 xDrive 35d M Sport
Join Date: May 2014
Location: Vancouver, B.C.

iTrader: (0)

When you say settlement, I assume you mean the buyout value or the residual value at the end of the lease? A higher residual value can be used to entice a buyer with lower monthly payments. If your plan is to turn the vehicle in and roll into another BMW, or something else, then its a win/win for you. I haven't had any experience with BMW on this, but I have with two other brands. In both cases, I was able to re-negotiate the buyout amount, threatening to take my business elsewhere. At the end of the day, the dealer/brand wants you to remain loyal (or at least they should). Correct on your last comment, regardless of market value vs. residual value, you're not entitled to pay or be credited the difference.
__________________
2014 BMW X5 xDrive 35d M Sport Mineral White
2011 BMW 135i M Sport Space Grey
2007 Suzuki GSX-R 750
Appreciate 0
      03-10-2017, 08:28 PM   #3
Thawke
Second Lieutenant
Thawke's Avatar
164
Rep
204
Posts

Drives: 2024 M240i XDrive
Join Date: Dec 2016
Location: Devon

iTrader: (0)

I leased my last car from BMW (2015 M135i) with a settlement figure at the end of the agreement, but only lasted 18 months into that before I shifted to the X6.

(Long story, but essentially, I like a bit of luxury in my interiors and the 1 series interior was a bit on the cheap side - interior wise, so that 320BHP 3 Litre engine in a small hatch wasn't enough to keep me satisfied)

Anyway, the Settlement figure BMW Finance gave me for the M135i was less than it was worth part exchanging when i did this so I actually ended up with credit (money in my pocket) that went towards the X6 lease.

I say its a win/win myself, just swap cars after 2-3 years and you should be even-stevens.

Or.... if you go the full term and need to pay off the GFV to "own" the car, it's as if you're paying it with a 4.9% loan or whatever percentage your lease was.
__________________

Ordered: 2024 BMW M240i XDrive
Current: 2020 BMW X6 Xdrive40i M Sport
Previous: 2020 Porsche Cayman S
Previous: 2017 BMW X6 Xdrive40d M Sport
Appreciate 0
      03-11-2017, 02:43 AM   #4
NikonMan
First Lieutenant
United_States
67
Rep
308
Posts

Drives: 2017 X5M Azurite on Nutmeg
Join Date: Oct 2013
Location: Orange County, CA

iTrader: (0)

The buyout figure is predetermined at lease inception based on the estimated residual value - which is a percent of the sales price. You pay for the depreciation of the vehicle during the lease period, plus interest (money factor) and tax - as a monthly payment. The residual percentage is not negotiable and is set by BMW. Typically BMW inflates the residual to lower the depreciation - and hence the payment - to entice leasing customers. Depending on market trends and sales goals, BMW will adjust the lease money factors or buy rates to move certain vehicles. Typically, buy rates are lower when they want to shift sales from leases to purchases or vice versa. Usually this occurs when there are too many lease returns for a given model. BMW makes money on lease returns by selling the vehicles back to dealers for less than residual as the dealers assume the CPO prep costs - other vehicles go to auction. You are contractually bound to the terms of the lease agreement - rarely will BMW adjust the residual at lease end - but depending on the model they may. It generally makes little sense to buy a leased car unless it has very little mileage. Financing a lease buyout makes even less sense as the rates are usually higher. If you have equity in a lease due to low mileage etc., you can sell the car privately and pay off BMW - they don't care as long as they receive the payoff amount - and pocket the remainder. Dealers will never transfer positive equity back to you - unless there is a BMW jump ahead program where BMW will waive remaining payments - to get you into a new car. Negative equity on a lease is generally not something to worry about as it's BMW's issue - just drop the car off and walk away or get into a new vehicle.

Last edited by NikonMan; 03-11-2017 at 02:49 AM..
Appreciate 0
      03-12-2017, 07:10 AM   #5
X5M50D
Captain
United Kingdom
442
Rep
781
Posts

Drives: X7 M50d
Join Date: Jan 2017
Location: Middlesex, UK

iTrader: (0)

Thanks for your responses guys:thumbsup
Over in the U.K. you have four options once you have reached the end of the lease period and when the settlement figure is
1. Pay off the settlement figure and own the car.
2. Re finance the money owing with a new lease contract.
3. Hand the car back to the lease company and owe nothing as long as you don't go over you stipulated mileage, otherwise pay the additional mileage cost.
4. PX the vehicle for a new car assuming the car is worth more than the settlement figure.
It's option 4 I'm more concerned about after completing a 4 year lease contract, and whether I'm in negative equity as I do like changing my car every 3-4 years.
Cheers
__________________
Old Wheels - X5M50d in Carbon Black
New Wheels - X7M50d in Phytonic Blue
Appreciate 0
      03-12-2017, 07:25 AM   #6
GeeRam
Major
GeeRam's Avatar
United Kingdom
195
Rep
1,317
Posts

Drives: X5 40d SE
Join Date: Apr 2010
Location: Berkshire,UK

iTrader: (0)

Quote:
Originally Posted by X5M50D View Post
Thanks for your responses guys:thumbsup
Over in the U.K. you have four options once you have reached the end of the lease period and when the settlement figure is
1. Pay off the settlement figure and own the car.
2. Re finance the money owing with a new lease contract.
3. Hand the car back to the lease company and owe nothing as long as you don't go over you stipulated mileage, otherwise pay the additional mileage cost.
4. PX the vehicle for a new car assuming the car is worth more than the settlement figure.
It's option 4 I'm more concerned about after completing a 4 year lease contract, and whether I'm in negative equity as I do like changing my car every 3-4 years.
Cheers
I'm confused.....

I thought leasing was just that, you pay a set amount a month to effectively hire the car, which includes or doesn't include maintenance, for a fixed term say, 2 or 3 years, at the end of which you hand the car back. No settlement figure, no option to buy at end of term etc.

What you are describing sounds more like a PCP finance arrangement...??
__________________
2017 X5 4.0dSE ~ Atlas Cedar:Ind.Amaro Brown Merino&Piano Blk, Sport Auto, DHP, Comfort seats, Cold weather pack, HK audio, Electric towbar, Sun protection glass.
Appreciate 0
      03-12-2017, 07:51 AM   #7
X5M50D
Captain
United Kingdom
442
Rep
781
Posts

Drives: X7 M50d
Join Date: Jan 2017
Location: Middlesex, UK

iTrader: (0)

Quote:
Originally Posted by GeeRam View Post
I'm confused.....

I thought leasing was just that, you pay a set amount a month to effectively hire the car, which includes or doesn't include maintenance, for a fixed term say, 2 or 3 years, at the end of which you hand the car back. No settlement figure, no option to buy at end of term etc.

What you are describing sounds more like a PCP finance arrangement...??
Sorry for confusing matters but yes I'm referring to a PCP contract.
__________________
Old Wheels - X5M50d in Carbon Black
New Wheels - X7M50d in Phytonic Blue
Appreciate 0
      03-12-2017, 08:39 AM   #8
GeeRam
Major
GeeRam's Avatar
United Kingdom
195
Rep
1,317
Posts

Drives: X5 40d SE
Join Date: Apr 2010
Location: Berkshire,UK

iTrader: (0)

Quote:
Originally Posted by X5M50D View Post
Sorry for confusing matters but yes I'm referring to a PCP contract.
Right oh.

I bought my (sold yesterday) E82 135i on PCP back in 2011, on a 5 year term.

Yes, you can just hand the car back in at the end of the term, with the GFV figure given as the value that is then put towards a new car. Basically they are pre-agreeing up front what your part exchange value is for when you do this. So, for you if they have over-valued the car for what it maybe worth in 4 years time, you are quids in, as you are getting a better deal. If they undervalue it, then you're not getting a good deal. Of course in that case, you do have the option of paying the settlement value, buying the car, and then trading it in straight away on a normal part-ex deal, if the trade in value is actually more than the GVF (if you have the cash to do so)


When I look back at what my 135i cost over 5 years on PCP, it makes me wince.....

Only good thing was that being a niche model, and now in demand, with so few sold in the UK, the GVF on my deal at 5 years was a few quid over 9k, which was way less than what it was worth even at trade value, so I was happy to pay of the settlement figure last year, and sold it privately yesterday, for 15k.
__________________
2017 X5 4.0dSE ~ Atlas Cedar:Ind.Amaro Brown Merino&Piano Blk, Sport Auto, DHP, Comfort seats, Cold weather pack, HK audio, Electric towbar, Sun protection glass.
Appreciate 0
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 02:44 PM.




xbimmers
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST