Quote:
Originally Posted by maze446
A handful of questions on this:
1. Are they "selling" you the car for MSRP? A lot of folks on this board are getting discounts in the $2500-$3000 range at minimum (before other incentives like loyalty, Costco, etc).
2. What's the residual? The lease on my 50i at 36/10K was 59% (this is set by BMWFS every month).
3. What money factor are they using? At least for August, the base money factor was 0.00166 (this is set by BMWFS every month). A lot of dealers will try to use a higher money factor so they make more on the lease. I would not accept anything but the base money factor.
4. Does the $7000 drive off include taxes and fees? Would need to know what portion of that $7000 is going towards capital cost reduction.
Whether a lease is a "good" deal really comes down to three things: (i) negotiated sale price (lower the better), (ii) residual (higher the better) and (iii) money factor (lower the better). Everything else is just math since the lease payment is simply the spread between the negotiated sale price and the residual value at the end of the lease (i.e., depreciation) plus a finance charge (i.e., the money factor). Since residual and base money factor is set in stone by BMW (at least on a monthly basis), the only thing you can really control is the negotiated sale price (at least insofar as you are negotiating a discount to MSRP outside of any incentives). I typically like dealers to give me the number just taking into account those three things because you can screw around with cap cost reductions, up front payments, etc. to get to an attractive monthly payment.
There was a guy that came up with a guide to figure out whether a lease was a good deal: First you take the real monthly payment (i.e., monthly payment assuming no cap cost reduction, all taxes fees paid up front, etc.) and divide by MSRP. Next, you take that number (should be a decimal) and multiply by $10,000. If the resulting number is around $125 or lower for a luxury car at 10K miles per year or $141 or lower for a luxury car at 12K miles per year, the lease is supposed to be a good deal. Effectively, the formula tries to equalize the playing field by figuring out what you are paying for every $10,000 worth of car. For example, with my negotiated sale price of $81,510 for the 50i with an MSRP of $85,510, I was quoted a payment of $1,081 (with no cap cost reduction and me paying all fees / taxes upfront) for 36/10K. $1,081 / MSRP of $85,510 = 0.0126417962811367. 0.0126417962811367 * $10,000 = $126.41 so my lease is pretty close to being a good deal.
I've leased every car that I've ever had so I am kind of a nerd when it comes to these things.
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I like that lease rule of thumb...easy to do.