Lease Buyout Experiences

[flea333]

I'm right in the midst of negotiating lease or purchase of 2013 M3.

After spending hours upon hours manipulating every permutation of the numbers I think I've settled on the max out Security Deposit with nothing down.
I've got a $853.84 payment for a 75,275 MSRP with MF = .00078 (1.872%). Paying $1700 profit and $1674.94 in dealer fee's.

Now my concern left is when I get to lease buyout - are there a bunch of other dealer fee's to deal with again? Have you been successful at negotiating lower than cap cost? Did you end up paying close to interest of a regular loan in the end?

I'm paying $5,800 extra below the residual at the end of my lease, so that kinda sucks compared to the $2k interest paid on a loan.

When I look at total cost car with lease payments at buyout of residual value and compare to a purchase price (less fee's eg acquisition) minus loan interest, I get a difference of $6750. The tradeoff for paying this at lease end is having $6560 extra in my pocket over lease term. So what this means is when it comes down to buyout, if I can't negotiate I get shafted the 6750, if I can knock off 3k, I'm only paying $3750 extra onto the vehicle price.

Either way, I'm not sure what the benefit of leasing, except making lower payments for people who can't afford the car. If people are able to negotiate lower on buyout without extra fee's/haggles, then it might be worth using the extra monthly cash toward other investments. But if the end you get screwed again, I'll want to stay away and finance. The finance rate is 1.74% with ~7k down at $1220/mo.

Let me know your experience please.

[cwg]

I dont think you can normally negotiate the buy out. The residual is set by BMW NA - be interested to hear from members who work for dealers on this point.

[Hyperjack]

Originally Posted by cwg

I dont think you can normally negotiate the buy out. The residual is set by BMW NA - be interested to hear from members who work for dealers on this point.

actually there are times when you can negotiate a lower buyout price. usually with months of the lease's maturity when the bank gets in touch with you, that's a good time to try an knock a couple thousand off.

now, it doesn't work all the time. i believe it depends on the market at the time, among other factors....bottom line, is it's worth the time to try.

i've done it 3 out of 3 times. not with a BMW yet, but i have a friend who has.

on another note...if you do plan to buy after a lease, the key is to get that selling price low enough that after you add up all your payments and add that to the residual price of the car....you're around the MSRP or lower of the time when you leased the car.

IMO, if you can't negotiate that type of price and/or your money factor is costly , a lease buy out is not a wise thing to do.

[cwg]

Most leased BMWs are leased through BMW financial. Like I say, I dont know for sure and of course give it a try, but I dont think BMW financial will negotiate it with you. Right now the moeny rate is 127 - so its a pretty good rate and the residuals are high which makes the lease payments low. I have heard its BMW's business plan to lease the car the first time, get it back and sell it the second time. They try to get two "sales" out of every car.

[flea333]

Originally Posted by cwg

I dont think you can normally negotiate the buy out. The residual is set by BMW NA - be interested to hear from members who work for dealers on this point.

I searched and there are several threads on people discussing lease buyouts and how they negotiated down because the market value was under their buyout (on e90 post). Also it appeared based on my reading of the post that the buyout price is only issued 3 mo prior to lease end and is independant of residual. Residual is only an initial tool, usually kept high to keep lease attractive to buying so they can snag up all those fee's.

For example - my total vehicle payments plus residual at end of lease is $ $79,447 for a $75,275. So I'm paying 4172 over MSRP, and $7,171 over the selling price - not including taxes.

Interestingly if I look at the tax costs per month plus the tax on the residual, I end up over paying in taxes $440, it changes slightly based on how much I put down.

So effectively in total tax difference and costs, I'm overpaying the selling price by $7,611.

This is offset by interest and tax for loan over the same period of $5,560, thus making effective lease cost $2,051 over the period.

This is pretty cheap, about $700/yr. The two have about the same down payment too - except I get the $6300 back at the end of the lease, and for the loan I owe under the residual by $7,970.