Leasing X5: Any tips?

[Doc5513]

We are getting ready to lease our first BMW. Actually, this is my first lease experience. I've read some great posts on the forums, but am still finding the process confusing. I'd like to get some tips or shared experiences to guide me a bit.
We are doing a lease on a '16 X5 35i. The terms I've received are MF 0.0017, 56% residual, on a 36 month, 12k/yr . MSRP 71,070. Sale price 65,505(68,292 w TTF).
Lease payment: $1033/mo

Does that look like a reasonable lease arrangement? I notice that the MF for August is 0.0013.....but the offered 0.0017? Any idea why?

I was considering adjusting options a bit, and wonder how leasing should affect that decision. For example, was maybe going to add DHP or DDC...but does it make sense to increase my lease payment for those options *if* I'm not sure I will keep car?

They also try to offer a lot of extended warranty and service contracts for additional years beyond lease term. I assume you only buy these if you know you will buy at the end of the lease.
P67

[turboawd]

you negotiate a lease the same way as if you were to buy the car. they threw the higher money factor at you to see if you'd bite.
residual appears little low too.

[Kzang]

Same discussion going on here.. http://www.bimmerfest.com/forums/sho...d.php?t=866238

[touchdown83]

Quick formulas for you to make sure they aren't screwing with you:

Purchase price + any capitalized items (taxes, lease acquisition fee, negative equity, etc) less any money down (includes dealer cash back, incentives but NOT including first month payment) = Net Capitalized Cost

MSRP * Residual Percentage = Residual Value

IMPORTANT DISTINCTION - Residual Value is based on MSRP, but Net Capitalized Cost is based on what you are actually agreeing to pay.

(Net Capitalized Cost - Residual Value ) / 36 months = Depreciation Charge

( Net Capitalized Cost + Residual Value )* Money Factor = Finance Charge

Depreciation Charge + Finance Charge = Lease Payment

Make sure they give you all the numbers above and you double check the calculations, they can sometimes try to slide things by you

Also, the money factor they quoted you is for an APR based on credit, divided by 24.

For instance, 2.4% APR = MF of .00010.

So if you back into the money factors you saw versus the ones they gave you, it's a very VERY small difference. Nonetheless, make them earn your business.

[Chem14]

Buy leasematic from App Store. Saved me when heading to the finance dept.

[turboawd]

Originally Posted by Chem14

Buy leasematic from App Store. Saved me when heading to the finance dept.

why pay for an app, when there are plenty of free ones online?

http://www.bankrate.com/calculators/...alculator.aspx

[touchdown83]

Purchase Price (incl rolled in items) = Net Capitalized Cost= 68,292
LESS : Residual Value = (39,800)
Total Cost to Lease = 28,492 /36 = $791 Monthly Depreciation Charge

68,292 + 39,800 = 108,092 * .0017 =$184 Monthly Finance Charge

Total $975 Monthly Payment

[Chem14]

Originally Posted by turboawd

why pay for an app, when there are plenty of free ones online?

http://www.bankrate.com/calculators/...alculator.aspx

Because the free ones are not user friendly on mobile, and compared to this app do not have the level of detail required imo. And finally this app was created by a forum member, which it's always nice to support forum members here when possible.

[Chem14]

Here is a screen shot. There are lots of sub menus that are very useful.

[turboawd]

Originally Posted by Chem14

Because the free ones are not user friendly on mobile, and compared to this app do not have the level of detail required imo. And finally this app was created by a forum member, which it's always nice to support forum members here when possible.

you must have an iphone

[Doc5513]

Thanks for the comments.
As an aside: I went through the USAA buying service, and the price I was offered was almost $3000 less than the first dealer I spoke with. I was told by them that the sale price was "only $500 more than what we pay for the car".
Is there a way to see true dealer invoice costs and true costs for options? I read that BMW doesn't have dealer hold backs, but I'm sure they make money.
P67

[Terp335]

Originally Posted by touchdown83

Purchase Price (incl rolled in items) = Net Capitalized Cost= 68,292
LESS : Residual Value = (39,800)
Total Cost to Lease = 28,492 /36 = $791 Monthly Depreciation Charge

68,292 + 39,800 = 108,092 * .0017 =$184 Monthly Finance Charge

Total $975 Monthly Payment

Really great explanation for everyone on here. Why would you add the residual to the net capitalized value before multiplying by the money factor to determine the financing charge of the lease? Wouldn't the net capitalized value already include the residual so aren't we inflating the financed amount by adding it to the NCV?

[chrisny]

Seems you've already found this out when talking to USAA, but that first lease was a disgustingly high payment. I pay over $200 less than that for my $85,000 MSRP 550 that I just got in June and 300 less for our F15 (mind you with a sticker price 6k less than yours, but that should only make up about a $75 -100 difference) that we got about 2 years ago, when the F15 first came out (literally the first or second month of production)! Neither of mine are a perfect comparison, different rates and residuals, etc.. but a 71k BMW should not cost over $1000 even with 12k miles (ours both have 10k) and even if you rolled the tax in instead of paying up front like I did (debatable which is better, paying up front or rolling in, but I wanted payment lower and had rebates to offset it).

You seem to be getting discounts big enough, but why is that residual (from the first quote you mentioned) so low? What was the payment USAA quoted you and what are the due at signing costs? IMHO you shouldn't be paying any more than $800/month for this car, and that's if you're rolling the sales tax in the payment.

Also, YES, get the DHP. I didn't get it on the X5 and regret it very often. Still love the car, but if you care about handling and more importantly don't like body roll, get it..

Nice taste in watches, BTW.

[touchdown83]

Originally Posted by Terp335

Really great explanation for everyone on here. Why would you add the residual to the net capitalized value before multiplying by the money factor to determine the financing charge of the lease? Wouldn't the net capitalized value already include the residual so aren't we inflating the financed amount by adding it to the NCV?

I've always wondered that as well. It's a calculation used to simplify the average amount financed, and it's built into the MF, which is what you are using instead of the traditional APR.

If you were to finance the full $68k over 36 months at an APR of 4.08% (MF converts to APR by multiplying by 24, .0017*24 = .0408 = 4.8%) then your total interest cost would be about $4,400. $4,400 / 36 months = $122/month. But that $122 is the average based on you paying the principle down, in a lease you never pay it down below the residual value. Think of it more like a balloon loan, with the residual coming due at the end of the lease term. A balloon note using 4.08% APR, with 36 months of payments, amortized over a 5 year period will result in about $6,500 of interest. Which is about $181/month.

This is why MF uses Net Capitalized Cost + Residual. It gets you to the same place as a balloon note. But in the case of a balloon note, instead of making that last balloon payment of $39k, you just turn the car in, which has a set value = to $39k.

[touchdown83]

Originally Posted by panerai67

I was considering adjusting options a bit, and wonder how leasing should affect that decision. For example, was maybe going to add DHP or DDC...but does it make sense to increase my lease payment for those options *if* I'm not sure I will keep car?

Add in as many options as you want. Since you are leasing you will really only be paying for 44% of the cost of the options, as any add-ons you have will get residualized. That means by increasing the MSRP AND the Purchase price by the same $, you are only left paying [1-Residual %].

So the $4500 DHP package will only cost you an additional:

Cost of Package - 4500 * .44 = 1,980 over 36 months = $55/month
plus the finance charge of 4500 * .0017 = $7.65
= $62.65 monthly increase * 36 months = $2,255 total increase of cost to own.

Originally Posted by panerai67

They also try to offer a lot of extended warranty and service contracts for additional years beyond lease term. I assume you only buy these if you know you will buy at the end of the lease.
P67ll keep car?

This is true. You won't need the extended warranty unless you decide to purchase.

[jlstyle]

As a comparison, I pay $780 including tax for my X5 with MSRP of $70,200. I believe I negotiated the price down to $65,000 or so.
I put down maximum MSD with no other money down, and the deal was for 12k a year.

[Doc5513]

Here's the details. why is the payment so high? MF.0017, residual 58%

[touchdown83]

Tell them you want to know the money factor and you want them to walk you through the entire calculation, because the math doesn't work on this. They are using 58% residual, which sounds right for 36/10k miles, as opposed to the 56% you mentioned on 36/36k miles. With nothing down, these numbers would result in about $950/month.

I can run a goal seek tomorrow when I get to the office to figure out what money factor they are using to get those numbers, but that's still worse than the calc I did above, and that was with 56% residual.

I'd let them know that you don't appreciate the funny business because those numbers aren't in line with what you expect to see based on what you were told, and if you can get some transparency then you're going to take your business to another dealer. Have them walk you through the formula I posted above, showing you the depreciation charge and the finger charge.

This is the biggest problem with leasing, finance managers try to be slick and sneak thinks by you while trying to get you to focus on a target payment. They might just claim it's some honest mistake, but it's not.

P.S. Don't out anything down unless it's a security deposit, bad idea for a lease.

[Doc5513]

Originally Posted by touchdown83

Tell them you want to know the money factor and you want them to walk you through the entire calculation, because the math doesn't work on this. They are using 58% residual, which sounds right for 36/10k miles, as opposed to the 56% you mentioned on 36/36k miles.

Thanks for your help. Yes, I spoke incorrectly originally... this is for 10k per year. I was told these calculations were using a MF of .0017 and 58% residual.
P67

[ddavtian]

Residuals are set by BMW, dealers cannot change it.
If you can, consider putting 7 security deposits. Each deposit lowers your money factor by 0.00007. So you can lower your MF by 0.00049. Do not put downpayment for lease, use that money as a deposit.

[Shaw]

Originally Posted by panerai67

We are getting ready to lease our first BMW. Actually, this is my first lease experience. I've read some great posts on the forums, but am still finding the process confusing. I'd like to get some tips or shared experiences to guide me a bit.
We are doing a lease on a '16 X5 35i. The terms I've received are MF 0.0017, 56% residual, on a 36 month, 12k/yr . MSRP 71,070. Sale price 65,505(68,292 w TTF).
Lease payment: $1033/mo

Does that look like a reasonable lease arrangement? I notice that the MF for August is 0.0013.....but the offered 0.0017? Any idea why?

I was considering adjusting options a bit, and wonder how leasing should affect that decision. For example, was maybe going to add DHP or DDC...but does it make sense to increase my lease payment for those options *if* I'm not sure I will keep car?

They also try to offer a lot of extended warranty and service contracts for additional years beyond lease term. I assume you only buy these if you know you will buy at the end of the lease.
P67

Not trying to go off track from the subject here...but Financing the car is a way better option IMO. at the least, you own your car...
I've financed 4 brand new BMW's the past 4 years...and whenever I decided to sell it, I found a buyer outside and took'em to the dealership and did a convenience trade...sold the price I wanted, and also benefited from tax savings on my next car...(the amount of tax on the sold/traded vehicle will go towards tax deduction on the new one)...win-win-win.
no wear and tear or extra mileage concerns...you take care of your car and sell it at the right time...
You could even sell the car through the dealership itself, but the dealers offer a very low bargain on your trade, so it is best to find a buyer yourself...I did that 3 times and it worked like a charm every time...
also, in the event that you try to keep it, then you just keep it.

[ddavtian]

Originally Posted by Shaw

Not trying to go off track from the subject here...but Financing the car is a way better option IMO. at the least, you own your car...
I've financed 4 brand new BMW's the past 4 years...and whenever I decided to sell it, I found a buyer outside and took'em to the dealership and did a convenience trade...sold the price I wanted, and also benefited from tax savings on my next car...(the amount of tax on the sold/traded vehicle will go towards tax deduction on the new one)...win-win-win.
no wear and tear or extra mileage concerns...you take care of your car and sell it at the right time...
You could even sell the car through the dealership itself, but the dealers offer a very low bargain on your trade, so it is best to find a buyer yourself...I did that 3 times and it worked like a charm every time...
also, in the event that you try to keep it, then you just keep it.

There is no right or wrong way. For many people, including myself, leasing is a better option. You have bought and traded 4 in 4 years. I have had 5 leases in 9 years. At the end your previous 3 cars are gone (assuming you have your 4th car now), my previous leases are gone. What matters is how much did you pay for your rides through financing vs. what you'd pay through leasing. You bought a new car, took the depreciation, then sold it. Car is gone, you have no equity. I leased the car, returned it, no equity, but I paid lower monthly payment compared to purchasing. For the same monthly payment, lease allows me to drive more car than financing does.