Lease Components

[jpa2825]

After some research (thanks), an extended test drive (2015 REX) and a few posts, I am ready to get serious about pursuing an i3 to replace 2012 LEAF coming off lease. Will try to break out the topics to avoid it being seriously long and all over the place. For this one, I am looking to document the components of the BMWFS Lease

MSRP - fixed
Sales Price - negotiable
Down payment / Cap Reduction - variable, but should start with $7,500 fed rebate on 2015. (I have been told they can only provide $4,875 on a 2014, but I don't know why that is.)
MSD - up to 7 to reduce the money factor. Not sure what min or max is for each of the 7. If borrowing the $ for the sec dep on a 4% home equity line of credit, is it better to borrow to reduce the MF for the term? Can't imagine that would make sense.
MF - .00131 (3.14%) seems to be the starting point for very good credit (760+); would expect to have 800 or so; will that yield anything lower without MSDs?
Acquisition Fee - $925 seems to be the standard. Is that negotiable?
Tax / Title / Registration Fees - these seem to be state specific. Just need to confirm that dealer is not putting any "fluff" in those figures.
Documentation / Admin / Upfront Fees - are all of these just dealer profit? Are any required by BMWFS? Are they negotiable?
Miles / yr. - 10k seems to be standard; are there other options? If so, presumably would impact the residual as well.
XS Miles - standard seems to be $.20, but suggestions are this can be negotiated down to $.15 or $.16. Also seems to be an option to prepay XS miles. Unless there is a discount to prepaying miles, why would you ever do that?
Term - I am looking for 24. Actually, 23.9 is best for me. Want to paper it to pick up 1.1.16 and turn it in 12.31.17 (I am sure paperwork will show 1.1.18 but I'm hoping I can turn in a few days early. This is because KY charges property tax on the value of whoever owns the car on 1.1. Will try to avoid paying 3 yrs. tax for a 24 mo. lease. Not sure I can.)
Residual - presumably not negotiable. 24 mo. / 10k miles appear to use 63% as the factor off MSRP.
Disposition Fee - seems to be $350 if you turn it in
Purchase Option Fee - seems to be $0 on the deals I have seen, but there is a line for it. Assume this is what you have to pay to exercise your buy right? Can understand why it is $0 as they want to encourage you to buy it.

Above are the elements of the formula. Below is the formula (as I understand it)
MSRP * Residual % = Residual
MSRP - Residual + Acquisition Fee = Cap Cost
Cap Cost - Down Payment / Cap Reduction = Financed amount / depreciation
Financed amount / depreciation * MF = monthly base payment
Monthly base payment + sales tax & anything else = Monthly payment


Can you help me wherever I messed up above?

 

[Leasi3]

MSD - up to 7 to reduce the money factor. Not sure what min or max is for each of the 7. If borrowing the $ for the sec dep on a 4% home equity line of credit, is it better to borrow to reduce the MF for the term? Can't imagine that would make sense.
It can make sense because you are using a small amount of money to move the interest rate on a much larger amount of money. Each MSD is the payment rounded up to the next nearest $50. Each MSD moves the MF down by .00007 (.168% per each). You can do up to seven, reducing "interest rate" by 1.176%. Let's say you get payments in the $340 range, your 7 MSD's will be $2,450. 4% interest on that $2,450 for two years will ~ $200. Your payments may be lowered by about $30 a month (rough numbers) for 24 months, saving you ~$720 in payments, ~$520 after interest costs.




MF - .00131 (3.14%) seems to be the starting point for very good credit (760+); would expect to have 800 or so; will that yield anything lower without MSDs?Not unless some MF incentives are being offered.

Acquisition Fee - $925 seems to be the standard. Is that negotiable?

Not negotiable, but you can increase the MF by .00050 to waive the acq fee. (May save a few bucks a month, likely won't, but it can reduce your out of pocket.)


Documentation / Admin / Upfront Fees - are all of these just dealer profit? Are any required by BMWFS? Are they negotiable?

Acq fee is required, all others are added dealer profit.

Miles / yr. - 10k seems to be standard; are there other options? If so, presumably would impact the residual as well.

15K/yr is the base line published in tables. Lower mileages are low mile leases. Add +2% to residual for 12K/yr and another +1% for 10K/yr.

XS Miles - standard seems to be $.20, but suggestions are this can be negotiated down to $.15 or $.16. Also seems to be an option to prepay XS miles. Unless there is a discount to prepaying miles, why would you ever do that?

$.20 is if you pay excess at lease end. $.15 is if you prepay and roll into monthly payment. $.16 is if you pay for additional miles to BMWFS BEFORE the end of the lease.


Residual - presumably not negotiable. 24 mo. / 10k miles appear to use 63% as the factor off MSRP.

Residual is not negotiable.

Disposition Fee - seems to be $350 if you turn it in

Correct, but usually waived if you lease/buy another BMW. (Some rules apply.)

Your formulas and how you laid them out are hard to follow, you seem to be using the divided by symbol as a seperator.

PMT = Depreciation Charge + Finance Charge

Depreciation Charge = (Cap Cost - Residual) / # of months

Finance Charge = (Cap Cost + Residual) * Money Factor

 

[jpa2825]

<snip>

Your formulas and how you laid them out are hard to follow, you seem to be using the divided by symbol as a seperator.

PMT = Depreciation Charge + Finance Charge

Depreciation Charge = (Cap Cost - Residual) / # of months

Finance Charge = (Cap Cost + Residual) * Money Factor

You are correct. Using "/" in a formula is probably not a great idea. I have seen both terms used in most cases so wanted to make sure I was being clear.

Thanks VERY much for the guidance. Need to start "crunching some #s." I have an Excel spreadsheet from another BMW forum that I am using for starters.

NOTE: I think the 63% residual I have been seeing is for 24 mos. / 10k miles. Based on your post, the residual should be 62% for 24 / 12k and 61% for 24/15k, right?

 

[Leasi3]

NOTE: I think the 63% residual I have been seeing is for 24 mos. / 10k miles. Based on your post, the residual should be 62% for 24 / 12k and 61% for 24/15k, right?

Close.

60% for 24 months @ 15K/yr
62% for 24 months @ 12K/yr
63% for 24 months @ 10K/yr


As an aside, the 36 month residual is usually (almost always, really) 6 percentage points lower than the 24 month residual, and it also follows the +2, +1 rule.

 

[Leasi3]

A follow up for anyone following this thread.

The December lease rates are out and the residuals for 2015 i3s have dropped. On the plus side, there is now a $2000 "Happier Holiday" credit in addition to the $7,500 lease credit. MF stays @ .00131 for qualified credit (pre any MSDs).

December 2015 plan.

56% for 24 months @ 15K/yr
58% for 24 months @ 12K/yr
59% for 24 months @ 10K/yr

54% for 30 months @ 15K/yr
56% for 30 months @ 12K/yr
57% for 30 months @ 10K/yr

50% for 36 months @ 15K/yr
52% for 36 months @ 12K/yr
53% for 36 months @ 10K/y


Source: http://forums.edmunds.com/discussion/33950/bmw/i3/2015-bmw-i3-lease-questions/p12

 

[lucycan]

So if the residual on the 24 month / 10k went from 63% to 59% how do I determine what that does to my monthly cost?