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Car Buying Advice - $2000 BMW Loyal Customer add on to lease buyout

shl0007shl0007 Posts: 4
edited August 2017 in BMW
My 2014 BMW 320i lease expires in a couple of weeks. I am interested in buying the car because it has several options that most 320s don't have, the color is no longer available, the mileage is low and I have maintained it impeccably. The residual is too high for the value, but the BMW dealer is willing to take several thousand dollars off the residual. However, he said he would have to add back $2000 in "customer loyalty" charges. There is nothing in the contract about this. He said it is a BMW requirement to make up for the fact that the residual was too high in the beginning and so I paid less over the term of the lease and because BMW is losing the opportunity to CPO the car and sell it at a profit. I said I would check with other dealerships to see if they would waive the extra fees. He said any BMW owned dealership would charge the same thing but privately owned dealerships could waive the add in. There Is this correct?

Comments

  • kyfdxkyfdx Posts: 130,432
    shl0007 said:

    My 2014 BMW 320i lease expires in a couple of weeks. I am interested in buying the car because it has several options that most 320s don't have, the color is no longer available, the mileage is low and I have maintained it impeccably. The residual is too high for the value, but the BMW dealer is willing to take several thousand dollars off the residual. However, he said he would have to add back $2000 in "customer loyalty" charges. There is nothing in the contract about this. He said it is a BMW requirement to make up for the fact that the residual was too high in the beginning and so I paid less over the term of the lease and because BMW is losing the opportunity to CPO the car and sell it at a profit. I said I would check with other dealerships to see if they would waive the extra fees. He said any BMW owned dealership would charge the same thing but privately owned dealerships could waive the add in. There Is this correct?

    A few years back, customers found that with their off-lease car not being worth the residual, it didn't make any sense to buy it from BMWFS. However, if they turned it in, the dealer could buy it from BMWFS for market value, add a CPO warranty ($2000 value) and sell it back to them for less than the original residual.

    Eventually, this happened often enough that BMWFS saw they were losing out on this deal. Since then, they've moved to restrict this. Since they can't really keep an individual from making a purchase, they've added costs to the dealers. If a dealer re-sells a vehicle to the original lessee, they pay a fee. It's not in your contract, because that deal is between BMWFS and the dealer. You are free to buy the car from the BMW dealer, at whatever price they will sell it to you for. Of course, their costs are higher if they sell it to you, vs. another buyer.

    So... to summarize: Sad, but true.

    You could buy it from a non-BMW dealer, but their price from BMW is likely to be the same as your residual, not the discounted price that the BMW dealer gets.

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • shl0007shl0007 Posts: 4
    Thank you, this is a very helpful explanation. It sounds like that is exactly what is happening here. What if I turn this car in and it goes to auction? Can I buy it there either through this dealer or privately?
  • kyfdxkyfdx Posts: 130,432
    shl0007 said:

    Thank you, this is a very helpful explanation. It sounds like that is exactly what is happening here. What if I turn this car in and it goes to auction? Can I buy it there either through this dealer or privately?

    If it's a low mileage model, eligible for CPO, it will probably never get to auction. Your dealer will buy it from BMWFS. If not, it will go to a BMW dealer-only auction. Not sure what would happen then, but don't see how you'll get it back.

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • Had a 2014 535 on lease. Tried to buy it off of my lease. BMW wanted over $40K in June of 2017 to do so. Turned it in to Baron BMW and they put it on the lot for sale at $32,000 and as a CPO car. BMW financial is a pain to do business with. Bought a CPO X5 from them for $40K -- within two weeks it needed a leaky tranny fixed and a transfer case. Do you really think they inspected it -- all 192 points. NOPE !!! Can't trust sales management at Baron.
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