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      10-04-2011, 10:48 PM   #1
dagolfpro
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MSD Pros and Cons

Looking to lease a M3 E90 and was told that by paying 7 MSDs, I can lower the MF from .00185 to .00143.

Therefore, my APR on my lease is go from about 4.4% to 3.432%. If this is true, what are the pros and cons of paying the MSD.

I was told this is very different then paying down the cap since you don't get the cap back if something happens to the car and/or when you turn it in. Whereas, you're get your MSD back at the end of the lease assuming there is no major damage to the car.

I'm trying to figure out why more people don't do this so they can lower their interest rates on their leases.

So, what am I missing here?

Please advise.
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      10-04-2011, 11:00 PM   #2
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pros: a) payment is lower, b) you won't loose the security deposit in case of: accident and total loss of the vehicle, lease return or trading in the car.
The only con i can think of is paying 6k+. Most people don't want to fork out that much, and rather save that.
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      10-04-2011, 11:33 PM   #3
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hmmm never knew about this lol... I may do that
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      10-04-2011, 11:40 PM   #4
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Originally Posted by MR///M3 View Post
hmmm never knew about this lol... I may do that
I just found out about MSD last week. It looks like if you put down $4900, you can save $500/year on payments. Which is about 10% return on $4900 "investment". I'll take 10% ROI in this lousy stock market and bank CD rates.

Still need to know if any other down side of putting the MSD.
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      10-04-2011, 11:44 PM   #5
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Quote:
Originally Posted by eatrach73 View Post
pros: a) payment is lower, b) you won't loose the security deposit in case of: accident and total loss of the vehicle, lease return or trading in the car.
The only con i can think of is paying 6k+. Most people don't want to fork out that much, and rather save that.
I knew about the lower payment but wasn't sure what else. It's good to know that you don't lose the MSD if car is stolen or totaled. Unlike paying a cap reduction. It just goes to show you that sales people don't tell you all your options. Forums like this is what helps keep one informed.
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      10-04-2011, 11:49 PM   #6
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Quote:
Originally Posted by dagolfpro View Post
Forums like this is what helps keep one informed.
yep, this forum has a lot of helpful insights.
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      10-05-2011, 07:48 AM   #7
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There are no cons unless you need the MSD for something other than your lease.

I put also 7 MSD on my lease, going from 4.68% to 3.5% and saving about $1800 in payments in 36 months.
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      10-05-2011, 02:44 PM   #8
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does anyone know how much the money factor goes down per MSD and what is the max number of MSD's you can put down?
thanks!
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      10-05-2011, 02:58 PM   #9
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Quote:
Originally Posted by MR///M3 View Post
does anyone know how much the money factor goes down per MSD and what is the max number of MSD's you can put down?
thanks!
According to this article: http://www.bmwblog.com/2009/02/04/car-leasing-tips/

The answer is: The point of an MSD is that each additional security deposit cuts the money factor by .00007, so if you do all seven you’ll cut your money factor by .00049
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      10-05-2011, 07:38 PM   #10
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Only other downside is if you want to get out of your lease and transfer it to someone people are reluctant to pay you for the MSDs.
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      10-05-2011, 07:53 PM   #11
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Quote:
Originally Posted by THE TECH View Post
According to this article: http://www.bmwblog.com/2009/02/04/car-leasing-tips/

The answer is: The point of an MSD is that each additional security deposit cuts the money factor by .00007, so if you do all seven you’ll cut your money factor by .00049
Thanks!
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      10-05-2011, 09:02 PM   #12
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Quote:
Originally Posted by MR///M3 View Post
Thanks!
Glad I could help!
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      10-05-2011, 11:21 PM   #13
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Quote:
Originally Posted by BMWFanboy View Post
Only other downside is if you want to get out of your lease and transfer it to someone people are reluctant to pay you for the MSDs.
If you transfer the lease to someone else, what happens to your MSDs? To whom are they returned?
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      10-06-2011, 09:27 PM   #14
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Quote:
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If you transfer the lease to someone else, what happens to your MSDs? To whom are they returned?
Guy who assumes the lease will get them.
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      10-07-2011, 08:58 PM   #15
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Very timely thread--I am considering using multiple SDs in lieu of a cap reduction as well. My problem is that the initial MF that I'm being offered is .002500 instead of .00200--so I need improve that starting point before I work on lowering it with MSDs.

Seems like a no-brainer though if you already intended to put $5k down--you are just putting it in one bucket instead of the other, and that money eventually comes back to you. It does feel like I am missing something though, as anyone who was putting money into the deal should be taking this route.
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      10-07-2011, 10:41 PM   #16
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Quote:
Originally Posted by CFM3 View Post
Quote:
Originally Posted by BMWFanboy View Post
Only other downside is if you want to get out of your lease and transfer it to someone people are reluctant to pay you for the MSDs.
If you transfer the lease to someone else, what happens to your MSDs? To whom are they returned?
I took over someone's lease who had MSDs and I cut him a check. I called up BMW to verify first. My lease is almost up and it is kind of nice to have that cushion of cash.
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      10-08-2011, 12:03 AM   #17
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Quote:
Originally Posted by tx_bmw View Post
Very timely thread--I am considering using multiple SDs in lieu of a cap reduction as well. My problem is that the initial MF that I'm being offered is .002500 instead of .00200--so I need improve that starting point before I work on lowering it with MSDs.

Seems like a no-brainer though if you already intended to put $5k down--you are just putting it in one bucket instead of the other, and that money eventually comes back to you. It does feel like I am missing something though, as anyone who was putting money into the deal should be taking this route.
I'm looking at another lease and they want .00235 vs. .00195 as well. I'm torn as they have an allocation left to do ED (which is actually even more @ .00265). Trying to get them to drop it down so I can think about doing a ED. But Munich in Dec, don't know if I want to do that yet.
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      10-10-2011, 02:26 PM   #18
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Quote:
Originally Posted by username11 View Post
Cons: only if you don't have the cash flow OR you think you may want to trade the lease
I have the cash and want to keep it and probably buy it back at the end of the lease. I was concerned with if the car was totaled or stolen, do I get the MSD back or not. Been told both by various BMW salesman.
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      10-12-2011, 01:34 PM   #19
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+1 if you have extra cash around why not, you get a return back on it and it lowers your monthly bill. win-win
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      10-13-2011, 01:50 AM   #20
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I can see the finish line

About to pull the trigger on this deal but still not finished negotiating. Some unanswered questions on various fees being a little higher then others.

-2011 M3 E90
-MSRP $73,075
-Term: 36 months
-Miles: 10,000/year
-Payment $867 includes CA sales tax
-7 MSD of $6300 which saves me $55/month in interests.
-Nothing else down (no Cap Reduction).

-Acquisition Fee is $925. I thought that BMW Lease Acquisition Fee was $725.
-Upfront Taxes: $84.05? Don't know what upfront taxes
-Fees & Insurance: $646.00. They didn't break it down.

-There's Doc Fees but they didn't list it where.
-Tire Fee $7

Any thoughts?
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