Calling all lease experts, need help determining EARLY lease payoff formula:

[IS350]

If I lease tomorrow a 2011 M3, and want to determine buyout in as early as even 1 day is this the accurate formula? Trying to determine if EARLY lease buyout is based more on the negotiated sale price or MSRP or both? I'm the buyout is the residaul plus the total of the monthly payments I've negotiated, correct?

The numbers are as follows: 75,425 MSRP, Sale price: 68,060. Residual is 59% of MSRP=44,500.75

Monthly negotiated payment for 3 years at 15k miles=889.00
So 36 payments X 889= 32,004 + 44,500.75(residual) = 76,504.75. That's more than MSRP, If I want to buy the car out of my lease within the first month of the lease and certainly MUCH more than the buy it now price of 68,060. Even if I financed that amount at 1.9 apr over 48 months at 1473.60 that's 69,292.80.

So if there is ANY debate about needing to sell this car, be it for uncertainty or otherwise in say 1.5 years, and I've decided I want this car, it's MUCH smarter to finance. Does anyone disagree?

That being said, if I keep this lease for the full 3 year duration, I can potentially negotiate the buy price, and save some money. But I can't ever really negotiate the buy price DURING the lease, correct

Thanks!

[AMP]

The buyout is the residual + the total of the remaining payments (without tax). The buyout amount is fully taxed.

If you want out early your best bet is to look into a lease assumption (check leastrader or swapalease). I just walked away from an F10 550i after 6 weeks using this approach. In fact if you have a good lease deal it's usually cheaper and easier to find someone to assume it than it is to sell a financed car.

[IS350]

Originally Posted by AMP

The buyout is the residual + the total of the remaining payments (without tax). The buyout amount is fully taxed.

If you want out early your best bet is to look into a lease assumption (check leastrader or swapalease). I just walked away from an F10 550i after 6 weeks using this approach. In fact if you have a good lease deal it's usually cheaper and easier to find someone to assume it than it is to sell a financed car.

Do you agree the remaining lease payments paid early don't include interest? So to figure those remaining payment amounts I subtract residual 44k from negotiated sale price 68k=24k and divide that by the 36 months=600? So payoff is 68 on day 1, and reduce payoff by roughly 600/month? Even though total payment is 889? (tax is 300 total, paid up front)

Nice job on the lease, why selling so quickly?

[cloud8r]

Correct my if I'm wrong, but it sounds like you're asking about paying off a lease, as in buying it out and keeping the car, not get out of the lease, right? Here are the schools of thought behind this.

Unless you plan on modding up the car to the point where it doesn't make sense or it's not possible to undo the mods (some mods are ok) OR, and more significantly, you plan on putting ALOT of miles and/or wear on the car, it makes FAR better financial sense to lease a car as opposed to buying it. A car is a depreciating asset. Aside from these exceptions, the last thing you want is to own a depreciating asset -- making full payments on something that isn't any longer worth what you're paying for. Otherwise, you would have to keep a car for about 10 years on average for it to make sense financing/buying it.

Now here's another trick, what you can always do is finance a previous model year car (used or cpo doesn't matter, but for sports cars, I would only do cpo if I'm going this route) with a balloon payment. This is sometimes referred to as super-saver loans or lease-to-own used, etc. Everyone knows that cars depreciate most when they're new and this slows down over time. This makes leasing a better option than financing for a new car, but financing with a balloon payment an even better choice for a used car. The used car isn't going to depreciate as much, so you'll still have a fairly new car, but with very low payments. Now this only works on some cars and there's a little risk that the car depreciates more than expected leaving you to make up the difference when the term is up. You also have to have an exit strategy, either sell the car before the term is up, trade it (sell to a dealer), or plan to refinance or buy it out in cash. This is different from a traditional lease where you can just return the car and walk away. I did this for my 2007 M Coupe, a cpo I picked up in 2009, had it for a couple years of a 4 year super saver through Pentagon Federal Credit Union, and sold it private party for about the same as I bought it. This isn't for everyone, but it worked for me then.

EDIT: If you're comfortable with the idea, you can do a super saver for a new car as well if you're just not sure whether you want to keep it or not. You'll just usually end up paying more than a new lease but less than a traditional finance.

[bvernon]

Originally Posted by ramyar

Correct my if I'm wrong, but it sounds like you're asking about paying off a lease, as in buying it out and keeping the car, not get out of the lease, right? Here are the schools of thought behind this.

Unless you plan on modding up the car to the point where it doesn't make sense or it's not possible to undo the mods (some mods are ok) OR, and more significantly, you plan on putting ALOT of miles and/or wear on the car, it makes FAR better financial sense to lease a car as opposed to buying it. A car is a depreciating asset. Aside from these exceptions, the last thing you want is to own a depreciating asset -- making full payments on something that isn't any longer worth what you're paying for. Otherwise, you would have to keep a car for about 10 years on average for it to make sense financing/buying it.

Now here's another trick, what you can always do is finance a previous model year car (used or cpo doesn't matter, but for sports cars, I would only do cpo if I'm going this route) with a balloon payment. This is sometimes referred to as super-saver loans or lease-to-own used, etc. Everyone knows that cars depreciate most when they're new and this slows down over time. This makes leasing a better option than financing for a new car, but financing with a balloon payment an even better choice for a used car. The used car isn't going to depreciate as much, so you'll still have a fairly new car, but with very low payments. Now this only works on some cars and there's a little risk that the car depreciates more than expected leaving you to make up the difference when the term is up. You also have to have an exit strategy, either sell the car before the term is up, trade it (sell to a dealer), or plan to refinance or buy it out in cash. This is different from a traditional lease where you can just return the car and walk away. I did this for my 2007 M Coupe, a cpo I picked up in 2009, had it for a couple years of a 4 year super saver through Pentagon Federal Credit Union, and sold it private party for about the same as I bought it. This isn't for everyone, but it worked for me then.

EDIT: If you're comfortable with the idea, you can do a super saver for a new car as well if you're just not sure whether you want to keep it or not. You'll just usually end up paying more than a new lease but less than a traditional finance.

The problem which has been stated in this thread is that the OP is asking about getting out of the lease as early as one month or at any other point during the lease term. What always gets people that lease in trouble are two things: 1)putting excess mileage on the car so you end up owing a big penalty at lease end and you have to buy it or 2)deciding you want out of the lease 6 months into it and then you're totally screwed........

[bredi]

The car is always more expensive if you lease it, then buy it.

[esquire]

Originally Posted by bredi

The car is always more expensive if you lease it, then buy it.

this is actually not true. there are no absolutes in life. more often than you think, car manufacturers, AND individual dealerships offer mind-numbing lease deals for the purpose of bringing customers onto their lot. usually there are only 1 or 2 cars on their lot subjet to this deal, and they usually require stellar credit to qualify. but if you do your research, and you have the right credit, you can walk away with a lease deal that nets INSTANT EQUITY. In other words, you could turn around the next day and sell it to another dealership and MAKE MONEY IN THE PROCESS. when can you say that about ANY new purchase?

but you have be an alert buyer... and not be a sucker.

- esquire

[IS350]

Thanks for all your comments.
My M3 is at the dealer and the only hold-up now is my unanswered question on what the estimated lease buyout is. So any immediate help is greatly appreciated!

Mostly I want to know what the equity rate is on the lease. So that say in a 2 years, if I'd like to buy or sell the car. How much it's gonna cost.

BMW Financial can't tell me what the buyout price is, nor can my dealer, even after day 1 of the lease or month 1. UNTIL I commit. But I can better decide whether to finance or lease based on the buyout knowledge. Here's a note from my dealer, that doesn't explain much.

The terms of the lease and some information I recieved from other forum members is below too.



------
My Question:
If I lease tomorrow and want to determine buyout in as early as even 1 day. The numbers are as follows: 75,425 MSRP, Sale price: 68,060. Residual is 59% of MSRP=44,500.75

Monthly negotiated payment for 3 years at 15k miles=889.00
So 36 payments X 889= 32,004 + 44,500.75(residual) = 76,504.75. That's more than MSRP, If I want to buy the car out of my lease within the first month of the lease and certainly MUCH more than the buy it now price of 68,060. Even if I financed that amount at 1.9 apr over 48 months at 1473.60 that's 69,292.80.

So if there is ANY debate about needing to sell this car, be it for uncertainty or otherwise in say 1.5 years, and I've decided I want this car, it's MUCH smarter to finance. Does anyone disagree?

That being said, if I keep this lease for the full 3 year duration, I can potentially negotiate the buy price, and save some money. But I can't ever really negotiate the buy price DURING the lease, correct
--
Dealer Response:

I visited with my BMW Financial Services Rep yesterday and he clerified with me that BMW does not have an amaturazation schedule (i.e. no, they can't tell you the confirmed buyout after a specified period of time), however, I do know that BMW does not charge you the intrest if you pay it off early. Keep in mind that you're paying a very small money facto, so the intrest is minimal. He also told me that BMW Financial Services will be able to sell you the vehicle back for the contracted residual amount at lease end, they do not negotiate that figure. Based on the information that I recieved from him yesterday, what you are reading online is false.

[positiveions]

if I may ask you first, how much is tax over there. I mean 889 for 15k is too good to be true. I am getting a quote of almost 1k a month.

BTW, did you know that you can renegotiate the Residual amount. What I would do, find out how much you paid to rent the vehicle, which is the amount you paid to lease the car, and deduct it from the residual. Ask for that discount from the dealer. 99% of the time they will meet that price. Of course, that can only be accomplished after the lease is over,and you are ready to turn in the car.

[Mr. ///M3 RD]

Originally Posted by SehrSchnell

Dude, seriously, don't lease if you start off like that already. If you think you might wanna buy-out the lease within the first month of ownership you are doing it all wrong. Leasing is great when you can write-off the payments and dump the car after 3 years, and get the next one.

Sounds to me you should either buy a cheaper car, or get a used M3.

+1

I only leased my company cars (in the past no more now) thru my company. It was advantageous to write off the monthly payments from a tax point of view.

[IS350]

Originally Posted by eatrach73

if I may ask you first, how much is tax over there. I mean 889 for 15k is too good to be true. I am getting a quote of almost 1k a month.

BTW, did you know that you can renegotiate the Residual amount. What I would do, find out how much you paid to rent the vehicle, which is the amount you paid to lease the car, and deduct it from the residual. Ask for that discount from the dealer. 99% of the time they will meet that price. Of course, that can only be accomplished after the lease is over,and you are ready to turn in the car.

Thx. Our taxes are a max of 300 on any new car. So the 889 does not include my one time $300 tax.

Knew about lease end negotiation, thx tho!

[dapopa9]

Good question...I've always wondered this also! Is payoff on day one the original lease sales price($68,060) or the monthly payments in full plus residual(36 payments X 889= 32,004 + 44,500.75(residual) = 76,504.75) ??

Originally Posted by IS350

Do you agree the remaining lease payments paid early don't include interest? So to figure those remaining payment amounts I subtract residual 44k from negotiated sale price 68k=24k and divide that by the 36 months=600? So payoff is 68 on day 1, and reduce payoff by roughly 600/month? Even though total payment is 889? (tax is 300 total, paid up front)

[saeyedoc]

Read your lease agreement, most will take off the unearned interest from the total payoff using an amortization schedule if you buyout early. Early lease termination policies are also in there, on mine it's based on the current wholesale value of the car.

[dapopa9]

@IS350 - let us know what you end up finding out