BMW 3-Series Lease Questions

dan12

If you want a new car every couple of years I see absolutely nothing wrong with leasing, hell, I've been leasing since the mid 1980s and have every intension of continuing that practice.

Doesn't that get extremely expensive over time? So far I have been buying my cars outright with the plan of holding on to them for 10 years. But in reality I get a new car every 4-5 years or so. I think about 6 years is my practical limit before my drooling over new cars gets excessive. So I'm trying to figure out how much more expensive it is to do 3 year leases instead of what I've been doing.

moocher

Hey Car_Man, My dealer tells me that with a very high credit rating (800+) that I qualify for an "Elite Tier," that, as opposed to standard rates, gives me a bit of an edge. Any idea what sort of MF discount I can expect? I thought BMW was strictly Pass/Fail?? I find nothing that speakes to this in BimmerZone, Roadfly or here??

Thanks!

moocher

Hi Shipo,

I think it may not make sense to buy a 328i outright right now as long as you can earn more than 3.36% (MF = .0014) +$625 acquisition costs on your money after tax. If your financing a car on an outright purchase, the interest rate would have to be low (about 4.0% as the $625 acquisition cost is really a big upfront interest expense) to beat the lease.

In a state like mine, where taxes of 9% is on the lease payment only, it's especially a no-brainer to lease. First, in terms of taxes on say a $39,000 car, again in my state, I would have to choke-up $3,510 in taxes on Day 1. Over the term of the lease, the same car at a 9% tax rate would incur only $1,500 in tax payments over the duration of the lease.

My decision to lease is simple, I've saved the $42,510 I need to buy my $39,000 car outright but I'm leasing. Why? I'm earning about $165 per month on that money now versus the expected payment ($405 depreciation + $57.69 in finance costs after 7 additional MSDs + $41.69 taxes = $505). My $165 in interest earned per month will come down each month because I'm making the $505 payment out of that account, but after 36 months, I'll have made about $18,177.91 in payments that are offset by roughly $5,000 in earned interest (ignoring income taxes for now). My cash on hand at the end of the lease will be $26,534 plus $2,800 for the returned MSDs or $29,334. My residual will be $24,400 at that time so I can buy the car outright or release another car.

Basically, if I keep running this, and assuming the lease deals and low-risk re-investment rates on cash are as good as now in the future, my $42,500 will buy about 10 to 11 years worth of cars that are all under warranty.

I will not have a $5K to $10K car to sell at the end of that decade, but I will have avoided roughly 4 to 5 Inspection I and IIs (total cost of $4K to 5K if you're lucky), 3 incremental sets of tires (about $1,500), rotors ($450 per time as they'll never turn), and whatever additional repairs I'll need in that time. My 1999 328i currently requires about a $2,000 annuity to my mechanic.

Boy was that ever wordy.

Cheers and have fun with your cars folks!

oceana143

Thank for the comments all. I did an analysis over a 10 year period and found that with two cars purchased over that time (a replacement in year 8-9)and about 11,000 down with each purchase, count on a lease costing $7,000 more over that 10 year period. Naturally, I cannot predict each and every repair or interest rates. But I also do not want to continue driving cars with boat-like handling. I want the feel of a BMW. Personally, I might lease for three years to "test" the experience and if the car is absolutely fantastic with no problems, maybe CPO it and pay in cash. That way, I keep the acqusition costs down and reduce the financing for ONE vehicle, which was another point made.

cdnpinhead

"Boy was that ever wordy."

Not so much, and helpful words to boot. Interesting analysis.

I can't emphasize enough that leases only make sense to people who can't write them off as business expenses when the manufacturer "supports" them with artificially high residuals and/or low interest rates. BMW is in there with botht feet at the moment, but that could change. Always pays to do exactly the analysis that you presented so well. Even considering the tax implications, with today's lease rates, it does appear to make sense to lease . . . right now . . . but maybe not next month.

moocher

Thanks cndpinhead for the kind words. Your point is well taken. I actually had a bead on an Acura TL in July and then by the time August came around, the residuals cratered and the money factor rates went skyward. The 328i may be a terrible lease in September and a screaming cash buy. Nobody knows until their corporate finance department fiddles with the numbers.

jr2219

My wife has a 2005 325i that is several months away from the end of the lease term. Recently, we went to a local dealership to do some preliminary leg work to see what the cost would be for a new 328. The sales person told us that he would be able to get her into a new car now. He explained that BMW financial would essentially eat the last few months of payments to facilitate the new vehicle. Yesterday we get a call that the terms of the deal had changed and that in order to get this new vehicle we would have to pay for the last payments for the car she has now and the fees, etc for the new car. Does anyone know of any program to turn in a car early? In this case the car is due in November. Also, what is the truth on the MF for the car (328i Sport, Premium Package, Xenon lights) and any customer loyalty programs through BMW Financial? The sales person we dealt with made the numbers of the deal very vague. I appreciate the help.

kateki

I had the exact same experience when I started looking into turning in my X5 for a 5 series. BMW has a "pull out" program where it claims it will pay off the last 2-3 months of your lease if you lease another vehicle. After settling on a number, the dealer came back the next day (today) and told me she had to add the final two payments into the new lease. I walked away from the deal and was later told by another dealer, that BMW Financial covers the final payments, so the first dealer should not have tried to recoup those costs. I'm getting conflicting info on this from various dealers.

jr2219

I just wish that it was possible to get a straight answer from a dealer. We have an email into BMW Financial Services to see if it possible to get an actual idea as to what we are truly working with. I have never seen such resistance to entering a new lease for customers in good standing.

CarMan@Edmunds

Welcome Pete. $900 over dealer invoice sounds like a reasonable price for this car to me. You can always stop by the following discussion to compare this price to what other community members have reported paying for similar cars lately though: "BMW 3-Series: Prices Paid & Buying Experience". Just make sure that the dealer you are working with uses BMW's latest buy rate lease money factor of .00150 (with the payment of a security deposit at lease signing) to calculate your monthly payment and you're in business.

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CarMan@Edmunds

Hi ericliaw. The selling price that you were quoted looks pretty good to me. Just make sure that the dealer that you are working with uses BMW Financial Services' latest buy rate lease money factor of .00150 (for a lease of an '07 328xi with the payment of a security deposit at signing) and you're all set.

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CarMan@Edmunds

Here's the information that you're looking for, morales4. BMW Financial Services' August buy rate lease money factor and residual value for a 24 month lease of a 2007 BMW 328i with 15,000 miles per year are .00140 and 71%, respectively. The numbers for an otherwise identical 36 month lease are .00140 and 61%. It is difficult to say what BMW's lease program will be like when the 2008 3-Series is introduced. However, I am sure that dealers will be more willing to discount a 2007 model now than they will be willing to discount the 2008 models when they first arrive.

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CarMan@Edmunds

Hi oceana143. BMW Financial Services is currently offering special lease rates on the 2007 3-Series, but no special rates for conventional loans. If you want to finance the 3-Series that you are interested in right now, you will either have to do so through BMW FS using its standard interest rates or go through an independent bank. Chances are that you will be able to find an independent bank that has a more attractive rate than BMW FS' standard rate. It is in your best interest to get pre-approved to finance the car that you want with a bank or credit union prior to discussing financing with dealers. Doing so will give you an idea of what rate you qualify for and it often motivates dealers to try to beat the rate that you already have in hand.

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CarMan@Edmunds

Congratulations on getting good deals on your new vehicles, john634. Thanks for taking the time to share the details of your lease with everyone. Make sure to stop by the new Dealer Ratings & Reviews section to share your thoughts on your recent dealer experience. Enjoy your new rides!

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CarMan@Edmunds

Hi vikvaliant. The money factor that you were quoted is too high. BMW Financial Services' August buy rate lease money factor and residual value for the 2007 335i is only .00175. It provides a .00007 reduction for every additional money factor that consumers make, up to a total of 7 additional deposits. This would result in a .00049 reduction in your vehicle's money factor, putting the buy rate at .00126. Shoot for that. Furthermore, the dealer that you are working with is marking BMW FS' base acquisition fee up by $200. Try to get that knocked off as well.

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CarMan@Edmunds

Hello kanchis. Have you tried comparison shopping with a couple other BMW dealers? You can't do much worse than paying full MSRP for it, so you don't have anything to lose. Make sure to stop by the following discussion to see how much other community members have paid for similar cars lately: "BMW 3-Series: Prices Paid & Buying Experience".

Not only are you paying full MSRP for this car, but the dealer that you are working with is marking its money factor up as well. BMW Financial Services' current buy rate lease money factor for the 2007 328i Coupe is only .00160 with the payment of a security deposit and .00175 with the deposit waived. Make sure that the dealer uses this rate to calculate your car's monthly payment.

I suspect that you will be able to beat this deal by shopping around.

Car_man
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CarMan@Edmunds

Welcome knowrat. Since you have never leased before, you definitely should check out the following informative articles that are available here at Edmunds.com prior to visiting any dealers: 10 Steps to Leasing a New Car and Calculate Your Own Lease Payment.

The selling price that you were quoted for this car is OK. Consumers who are in an area that has a decent level of competition are usually able to beat Edmunds.com's TMV for vehicles. Make sure to stop by the following discussion to see how much others have paid for similar cars lately: "BMW 3-Series: Prices Paid & Buying Experience".

Also, the dealer is marking up your car's money factor to add additional hidden, back-end profit to your deal. BMW Financial Services' buy rate lease money factor for the '07 335i is currently only .00175 with the payment of a security deposit at lease signing. Try to get the dealer to use this money factor to calculate your monthly payment.

I am not personally all that familiar with what the Austin, TX market is like, but I suspect that you will be able to beat this deal by shopping around with a couple other dealers.

Car_man
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CarMan@Edmunds

Hello osetia1. $500 over dealer invoice + MACO is a good deal on an '07 328xi. Unfortunately, it appears as though the dealer that you are working with is making up for some of the profit that it lost on the front-end of this deal by marking up your car's money factor and acquisition fee. BMW Financial Services' current buy rate lease money factor for this car is .00150 with the payment of a security deposit at lease signing. Its base acquisition fee is $625. See if you can get the dealer to give you this price and use the buy rate and base acquisition fee. If you can do this, this will be an excellent deal.

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CarMan@Edmunds

Hi d9o9c. The condition of your current vehicle doesn't really have anything to do with the dealer that you got it or your new car from. It is between you and BMW FS. I don't believe that it is all that strict when evaluating returned vehicles for excess wear and tear, but you may end up getting assessed a penalty for any major dings or scratches.

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CarMan@Edmunds

Hi 962chat. $600 below dealer invoice is a very good price for a 2007 328xi, even one that already has 3,000 miles on it. I usually find that dealers are not willing to discount demo vehicles enough for me to justify purchasing or leasing one over a similar brand new car, but this deal is pretty good. Just make sure that the dealer you are working with uses BMW Financial Services' current buy rate lease money factor of .00150 (with the payment of a security deposit at signing) to calculate your monthly payment and you're in business.

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CarMan@Edmunds

Hi ixjunitxi. The car that you described probably has a spread of around $3,200 between its full MSRP and its dealer invoice price. You are only being given a discount of $850 on it. You are in an area that has a decent amount of competition, so I personally would not be surprised if you were able to beat this deal by shopping around a little bit.

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CarMan@Edmunds

Hey kmouradian. BMW is not currently providing any lease support on the 2007 328i Convertible. As a result, if your friend wants to lease one through BMW Financial Services, she will have to use its standard lease money factor. I believe that its buy rate standard money factor varies somewhat by region, but it is probably currently around .00320 or so with the payment of a security deposit. BMW FS' current 36 month, 15,000 mile per year residual value for this car is 60%. BMW FS will waive its security deposit requirement for free tor returning lessees.

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CarMan@Edmunds

Hi Eric. What you heard is correct. BMW publishes a new lease program every month or two. Consumers who order new vehicles can usually lock-in the program that was available at the time that they ordered it. If the program that is available on the car when it arrives is more attractive than the one that has been locked in, consumers can usually take advantage of the new program. Through August 31st, BMW Financial Services' buy rate lease money factor for the 2007 335i Coupe is .00200 with the payment of a security deposit at lease signing. Make sure that the dealer you are working with uses this factor to calculate your monthly payment. If they use a higher factor, they are marking up your car's money factor to add additional hidden, back-end profit to your deal. this dealer is marking up BMW FS' base acquisition fee of $625 as well.

The other negotiable aspect of your deal is your car's selling price. You should try to negotiate as low a selling price as possible on the vehicle that you want. Ideally one would negotiate as low a price as possible before placing the order for the car that they want.

Car_man
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CarMan@Edmunds

Hey moocher. Unlike some other banks that have tiered money factors, BMW Financial Services' special lease program uses a pass / fail system. Either one qualifies for its best money factors on a vehicle or they don't. I believe that the only time that the factor your credit score is so good would have an impact upon your vehicle's money factor is if you were leasing one that does not have a special program available on it. On unsupported vehicles you would be able to use BMW FS' best standard money factor to calculate your lease payment.

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grantchstr

My 3 yr lease on a stick-shift 2005 325xi is about to expire - the residual is $19,400. This appears to be significantly below the real market value - so am I correct to buy the car at lease termination rather than return it?

jr2219

I am amazed by the amount of information available on this site. This week a internet sales manager pulled a fast one and our deal changed from a pull ahead program through BMW Financial to you pay the last two months and the fees for the new vehicle if you really want it. I am not going back to this person again and we walked away from the deal. The car my wife wants is a 328i with premium and sport package. What should we be working with as far as MF, any customer loyalty programs and the pull ahead program in Los Angeles? The car we were originally looking at had a MSRP of 40,575. All input is greatly appreciated!

fourizonly007

Hi Car_man,

Can you please let me know if this is a decent deal for the Los Angles area? What would be the monthly payment if the drive off is only $2,000? Thank you for your assistance.

2007 BMW 328i Sedan base plus automatic transmission.
MSRP $34,450
Selling $33,155

Lender BMW Financial Services
Term 36 Months
Mileage 12,000/year
Money Factor 1.65
Residual Factor 63%

Selling Price $33,155.00
Bank Fee $825.00

Total Capitalized Cost
$33,980.00

Residual Value $21,703.50
Total Depreciation $9,991.80
Capital Reduction $2,284.70
Monthly Depreciation $277.55
Monthly Rent $88.11

Monthly Payment $365.66
Tax (7.75%) $28.34

Monthly Payment + Tax $394.00

Capital Reduction $2,284.70
Cap Reduction Tax (7.75%) $180.55
License & Registration $284.75
Documentation Fee $45.00
First Payment $394.00
Security Deposit $0.00

Drive Off $3,189.00

cdnpinhead

Car_Man is extremely helpful when he can find time to respond which, based on what I've seen, is every couple or three weeks. There are some others who are often very helpful who show up more often, so maybe one of them will be able to help you.

I guess what I'm trying to say is that you will get an answer, but it may not be anytime really soon. At least you gave them every possible scrap of information, which is helpful.

About all I can say is that $825 "bank fee" is the thing that many dealers mark up from the $625, which is what it should cost. Oh, and the "cap cost reduction" usually isn't a good idea. You only got ~$1300 off the sticker price on a car that's about to become a year old when the '08s come out.

oceana143

I am looking at leasing, then buying if I like the car and have analyzed this scenario. If you have a great car, no problems, etc., buying it with cash or a two-year loan (so that total financing is five years max)can be a very good deal. A dealer in Toledo, Ohio last night told me that customers have been doing that rather than re-leasing if the residual and vehicle experience meet expectations.

fourizonly007

cdnpinhead,

Thanks for the helpful information. So, I shouldn't pay for any cap cost reduction at all? I like to keep the drive off as low as possible given this is a lease. Thank you!

austinro30

What do you think for wife:

2007 328i sedan
auto
Red
$34,450 msrp
32,450 selling price
36/15k
$443 plus tax ($470 all in)
0 due at signing- out the door-sign and drive

Also 9k trade in for '02 325i
with 90k miles, auto, premium package

Thanks for your imput..

kyfdx

$9K for an '02 325i??

I'd be tempted to try and sell this myself...

frooky

This is EXACTLY why I've started leasing. Just FYI, Capital One money market accounts are earning 5% right now which is what I'm using to subsidize my lease payments. I plan on having 10 grand saved up by the time I start my lease on a BMW which minus the initial security deposits and property tax should leave somewhere in the neighborhood of 5 grand earning 5% interest over the 36 month lease in addition to the $400 a month going into the money market right now for my current Honda lease. This will not disrupt my socking away of $500 a month for my next, next car which will hopefully be a 528i. :shades:

jabber

Carman,

Can you provide the variables for a 36 month lease of a 2007 335xi sedan for both 10K and 12K miles/yr? Looking of course for:

money factor
residual
acquisition fee
over mileage fee
security deposit requirement

Assume top tier credit rating. Also, are there any special lease programs or dealer incentives on this vehicle?

Thanks!

-Jabber

bmw328lease

Hi Carman,

I have 3 options to choose from. Need some help to decide the best one:

1. 2007 328i with Auto
$328/mo + tax for 24 month
$3490.00 total drive off due at lease inception, includes $1747.43 cap reduction and $0 security deposit
10000 Miles Per year
Selling Price $33,527.80
MSRP $34,925.00

2. 2007 328i with Auto
$399/mo + tax for 36 month
$1675.00 total drive off due at lease inception, includes $0 cap reduction and $0 security deposit
10000 Miles Per year

3. 2007 BMW 328i with Auto (Sedan Lease Offer from BMW)
http://www.bmwusa.com/vehicles/3/2007328iSedan/programs.htm?PanelID=4

$339 p.m. + Tax
10k miles/yr

$339 First month's payment
$2,500 Down payment
$350 Security deposit
$3,189 Cash due at signing
MSRP of $34,450.00

Or does it make sense to just wait till the 2008 models are out and hope to get lease specials on 2007 models??

Your inputs would be greatly appreciated.

Thanks!
:confuse:

fourizonly007

I just got a 2007 328i with Auto, Sparkling Graphite, floor mats and chrome exhause similar to your deal #2. I got the car from a deal in LA.

$448/mo includes tax for 36 month
$888.00 total drive off due at lease inception.
10,000 miles per year

I think I could have gotten the deal with 12k/yr.

jabber

Carman,

Can you also provide me the same lease details for the 335xi Coupe as well as the Sedan??

Thanks.

-Jabber

tigerkitty

Hello Car_Man,

I've started to ask for quotes from different dealers on the upcoming 2008 328i coupe with following options ~

Premium package
Automatic transmission
White color with aluminum trim

MSRP $40,600

However, I went to several dealerships and they are not willing to give me much discount on the car price. The best I've got so far is $39,800. But I know some people in this forum got a better deal than that on the 07 model. :confuse:
The dealers told me the 328i coupe is very popular and sold out quickly before it hits the showroom. And I have to pre-order! :surprise:

Also, another dealer quotes me a lease plan as follow ~

Car price: $40,000 ( $600 off MSRP )
36 months
15K miles
$2000 drive off
$612 per month

P.S. Anyone in Los Angeles area can recommand a dealer to me?

Thanks,
Sil

cdnpinhead

You need to keep in mind that '07 models get much (much) larger discounts than the '08's. They're a year older & are on the verge of becoming distressed merchandise, when the lot is full of '08's.

In addition, sedans are in less demand than coupes and both are in less demand than the convertible. You want an '08 convertible, you pay sticker or more -- an '07 sedan, possibly invoice or less.

tigerkitty

I just got another quote on the 08' 328i coupe

MSRP $40600
Selling price $39800

36 months
15K miles
$999 drive off
$639 + tax monthly

jr2219

Sounds pretty good. Where did you get your car from?

guy1974

There will be larger discounts for the '07 obviously but '07's are not "distressed" merchandise! The differences between an '07 and '08 328 are minimal with chrome exhuast and gear changing steering wheel mounted paddles for the auto and sports.

I very much doubt you can get an 07 328 for invoice or below, a good deal is $500-1000 over invoice for a 328i. BMW does not give holdbacks so a dealer would lose money if they sold a car for less than invoice (the fees would help).

Anyway BMW's are cheap in the US when compared to Europe so stop trying to get a great car for $1.99!

tigerkitty

A German friend told me BMW in Germany is like Toyota in Japan, it's very common and U can see them everywhere...
He thinks we are paying too much for that in US...

Don't know how true is that? :P

sprinkler13

The usual thinking is that you shouldn't put anything down for a cap cost reduction. If you were to total the car in an accident, your insurance would cover the ammount to "replace" the car to the bank, however, you would now be out whatever money you put down upfront and would be starting over again with a new car. Also, without actually being able to calculate your numbers at the moment, you can kind of estimate that for every $100 plus or minus in the cap cost will move your monthly payment $3 plus or minus. So, if you were to NOT pay the cap reduction of 2200 bucks, your cap cost would increase by 2200 bucks and thus your monthly payment would go up about $66/month.

guy1974

I am from the UK and the 328i I leased here in the US had an MSRP of $38000 whereas in the UK it would have a list price of GBP30000 which is equivalent to around $60000. The UK price (and most European prices) include sales tax of 17.5% but even accounting for this the UK is overpaying compared to the US by 50%.

Just look at bmw.co.uk and the option prices. Steptronic is GBP1200 which is a 1:1 exchange rate even though it is $2 to GBP1. Metalic paint and comfort access are also much more expensive options in the UK than in the US even though the same factory is used and the delivery distance is much shorter.

It is true that BMW is very popular in Germany, but that just shows that Europeans don`t mind paying for excellence. Whereas lots of Americans what something on the cheap so they buy Hyundai etc. Korean and Japanese manufacturers do not sell well in Europe (just check out Lexus sales comapred to Audi, MB or BMW - they are tiny).

CarMan@Edmunds

Hi fourizonly007. BMW Financial Services' buy rate for a 36 month lease of the 2007 BMW 328i Sedan is currently .00140 with the payment of a security deposit at lease signing. I personally would pay one on this car. It is only equivalent to your vehicle's monthly payment rounded up to the nearest $50 increment and you get it back at lease-end. The money factor that you were quoted is correct for a lease of this car with a waived deposit, so this aspect of your deal looks good.

Now let's take a look at its selling price. This car's dealer invoice price is $31,795. The price that you were quoted is $1,360 over invoice. Plus this dealer is marking up BMW FS $625 base acquisition fee by $200, so you are really paying more like $1,500 over invoice. I would not be surprised if you were able to beat this price if you are in an area that has a decent level of competition. It wouldn't hurt to comparison shop with a few other dealers. Also, make sure to stop by the "BMW 3-Series: Prices Paid & Buying Experience" discussion to see how much other community members have paid for similar cars lately.

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CarMan@Edmunds

Hi Jabber. According to the latest information that I have seen, BMW Financial Services' current buy rate lease money factor and residual value for a 36 month lease of a 2007 BMW 335xi Sedan with 12,000 miles per year are .00190 and 63%, respectively. This car's 10,000 mile per year residual value is 1% higher. BMW FS charges a $625 acquisition fee and a security deposit that's equivalent to your monthly payment rounded up to the nearest $50 increment on every vehicle that it leases. It will waive its security deposit requirement in exchange for a slight increase in the money factor that is used to calculate your car's monthly payment. BMW is not currently providing any cash incentives on this model.

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CarMan@Edmunds

Hi bmw328lease. I believe that the dealer invoice price of the car that you are interested in is $32,225. If this is correct, the selling price that you were quoted is around $1,300 over invoice. This isn't terrible, but if you are in an area that has a decent level of competition I personally would not be surprised if you were able to beat it by a couple hundred dollars. Make sure to stop by the following discussion to see how much other community members have paid for similar cars lately: "BMW 3-Series: Prices Paid & Buying Experience".

Assuming that all of the selling prices of the three deals that you mentioned are the same, the number two looks the best to me because it has no capitalized cost reduction. I always advise consumers against making down payments on leased vehicles. Those who make them risk losing part or all of them if their vehicle is totaled in an accident or stolen and never recovered.

It is difficult to say what BMW's lease program will be like on the 2008 3-Series when it arrives at dealers in the near future, but if I had to make an educated guess I would say that you will probably get a better deal on a leftover '07 model now than you will be able to get on an '08 when it is first available.

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CarMan@Edmunds

Congratulations on getting your new BMW, fourizonly007. Make sure to stop by the new Dealer Ratings & Reviews section of Edmunds.com to share your thoughts on your recent dealer experience with others. Enjoy your new ride :shades: .

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CarMan@Edmunds

Hey Jabber. According to the latest information that I have seen, BMW FS' current buy rate lease money factor and residual value for a 36 month lease of a 2007 BMW 335i Coupe (sweet car btw) with 12,000 miles per year are .00200 and 60%, respectively. Again, this car's 10,000 mile per year residual value is 1% higher.

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