No Lease Available on US i3?

[kttvpab]

Just got off the phone with my GSM friend in So Cal. Been excited about leasing the new i3. But he told me Quote: "They won't be doing leases. Will be available on a ballon purchases which give you ownership with a buy out at the end. BMW is doing this for tax purposes? Can someone confirm or explain what this means?

 

[kttvpab]

This is what i just found. Please correct me if i'm wrong, but it seems like at the end of the term - you can turn car back in but will be responsible for the 7500 added to the final cost. Even if you turn back in, you got to pay the 7500?


BMW i FINANCING

Overview
Financing Products
Flexible Payment Options
Protection Products

FINANCING PRODUCTS

At BMW Financial Services, we believe vehicles this revolutionary deserve equally innovative leasing and financing opportunities. Just as BMW i is more than just a form of transportation, BMW Financial Services is more than just a means to owning a vehicle. We are dedicated to making your BMW i ownership experience as easy and rewarding as possible.

OWNERSCHOICE1

Enjoy all the benefits of vehicle ownership with flexibility similar to a lease. At the end of your OwnersChoice term, you have the option to sell your BMW i back to us for the predetermined price and walkaway, choose to keep your BMW i by paying off your remaining balloon balance in full or may be eligible to refinance through BMW Financial Services.2

OWNERSCHOICE WITH FLEX
OwnersChoice with Flex is designed to further lower the monthly payments for your BMW i.3
Here's how OwnersChoice with Flex works: We will increase your final balloon payment due at the end of your OwnersChoice BMW i contract term by up to $7,500.4 The increased final balloon payment reduces the amount of your regular monthly payments, and at the end of your contract term, you will owe the increased balloon payment amount.

As with our regular OwnersChoice product, at the end of your contract term, you have the option to sell your BMW i back to us for the predetermined price and walkaway.5 If you choose to sell your BMW i back to us, you will also owe the Flex amount (which is the amount by which we increased the balloon).6

Alternatively, as with our regular OwnersChoice product, you may choose to keep your BMW i by paying the final balloon payment amount in full at the end of your contract term — or, you may be eligible to refinance the final balloon payment amount through BMW Financial Services.7

At your option, you may choose to make prepayments during your contract term that will reduce the balloon payment amount. The sooner you choose to prepay and reduce the balloon payment amount, the lesser finance charges you will owe.

TRADITIONAL FINANCE
We offer you a choice of flexible terms, attractive rates and customized financing to fit your personal needs. With the benefit of ownership, you can pay off your balance in full without financial penalties, or extend the term at any time.7

LEASE
BMW Financial Services works to meet your personal needs with customizable lease terms and mileage options. Leasing does not require the same cash commitment as a traditional financing product and you only pay for the usage part of the vehicle. At the end of your lease you have the flexibility to turn in your BMW i for another, release for an additional term, buy at the set agreement amount or turn it in and walkaway.

Every finance and lease option comes with BMW Financial Services' award-winning customer service. This includes flexible payment options and an array of protection products created specifically for
BMW i drivers.

 

[TomMoloughney]

Just got off the phone with my GSM friend in So Cal. Been excited about leasing the new i3. But he told me Quote: "They won't be doing leases. Will be available on a ballon purchases which give you ownership with a buy out at the end. BMW is doing this for tax purposes? Can someone confirm or explain what this means?

I don't have all the details, but yes it is a lease basically a lease regardless of what they are calling or structuring it. The $7,500 balloon payment is because the federal tax credit is $7,500 for the i3. You don't get the tax credit if you lease it, the "owner" does which is BMW FS and they don't qualify for the full $7,500 like individuals do so BMW created this "lease that is structured like a sale" so you can take full advantage of the $7,500 federal tax credit. It benefits the consumer, not BMW. Although it kinda benefits them also because it should help them sell (lease) more i3's. Also, I'm pretty sure you don't have to do it this way if you don't want to, but I don't know why you would pass up on savings. Plus, you can prepay the $7,500 when you get the tax credit the first year you do your taxes so you don't owe it years later when the "lease" is up.

 

[kttvpab]

Thanks Tom. The way I read the fine print makes it sound like at the end of the term - you can simply turn in the car by selling it back to BMW, but you still have to PAY the 7500.00 upon turn in. Yes lower payments, but at the end you are on the hook for that amount which is unlike a regular lease. Since it is a new model car, i'm not inclined to keep it beyoud a 3 year term. So when you say you don't have to do it this way, i'm not sure i get it. Sounds like you can roll in extra payments to the term, but at 36 mos. that would add a little more than 200.00 a month to the payment. So not sure what the benefit is?

 

[kttvpab]

Also not sure as you say I don't get the federal tax credit, bmw does? Last time I did this on a 335d from the same dealership, was supposed to get 1000.00 back but CPA said I made too much money. Guess I don't have to worry about it now. MY GSM friend was going to lease me a 328Xd Wagon since me lease is up on Monday, than just trade it out when the i3 came in. Also the m235 looks very appealing. So I have some options. BTW here is a little Youtube Review I did on the i3 at the LA Auto Show last month. http://www.myfoxla.com/story/24068703/la-auto-show-2013-no-longer-a-need-to

 

[Alexander99]

If they don't do traditional leases on this car it is going to be a HUGE mistake on BMW's part.

About $399 a month with a $2500 cap reduction would be about right for an non-REX car.

Chevy volt, Nissan leaf are both available with traditional leases. Finance just rolls the rebate into the deal like a cap cost reduction. That's why you see 24 month $199 leases on $34,000 Volt cars. With the incentives they are really $26,000.

Maybe they're trying to copy Elon's concept....

 

[Jkoeller]

It sounds like it's structured very similar to a traditional lease, but they're using different terminology and it's disguised a bit as a purchase. In this case, rather than BMW claiming the $7500 (or less, as Tom mentioned), the $7500 is claimed on your taxes by you. You are then obligated to give that $7500 to BMW at some point during/after the 3 year 'lease' (just like a lease, you don't get to keep the rebate). in my case I'll be giving it up after my first tax return so I don't have to worry about it at the end of the term.

Because the $7500 'Flex' amount is added to the predetermined 'balloon' payment (the 'balloon' payment is comparable to the 'Residual Value' of a traditional lease), it doesn't affect your monthly payments, hopefully keeping them comparatively low like the Volt and Leaf leases are.

When the end of the term comes, just like a lease, you have the option to either give/sell it back to BMW for the predetermined balloon (residual) amount + the $7500 if you haven't given that up yet (ideally, no cash would need to trade hands at this point, as the balloon amount would be the only outstanding balance), or you can keep the i3 by paying the balloon amount at the end of the term.

 

[Alexander99]

Sounds like the financials would work the same. It will be interesting to see how it's advertised.

I also wonder why they aren't following other manufacturers path and just keeping the $7,500 up front...

 

[uter]

I'm interested to see if the residual value, as a percentage of MSRP, is a different percentage when comparing the EV versus REx.
Many folks has postulated that the REx will hold its value better, but I wonder if BMW FS predicts that value will be discernible at the end of just 3 years.

 

[Mike74jcw]

I will take a guess and say the REx will have a slightly better residual value than the BEV - perhaps 50-55% on the low end and 60-65% on the high end after 3 years.

 

[saisiv]

What would be typical interest rate from BMW financial for buying... many banks or CU gives 1.99% for 72 months...

 

[michael]

.

I don't have all the details, but yes it is a lease basically a lease regardless of what they are calling or structuring it. The $7,500 balloon payment is because the federal tax credit is $7,500 for the i3. You don't get the tax credit if you lease it, the "owner" does which is BMW FS and they don't qualify for the full $7,500 like individuals do so BMW created this "lease that is structured like a sale" so you can take full advantage of the $7,500 federal tax credit. ..

I dont understand....? What is your basis for saying that BMW FS doesn't qualify for the full $7500? Every other (Ford, Nissan, GM, etc) EV lease includes this amount as a capital reduction. Why should BMW be any different?

 

[davidrshelton]

More information has surfaced since this thread but a few points of attempted clarification:

1) BMW will be offering the traditional leasing option along with the new OwnersChoice and OwnersChoice with Flex (balloon).
2) If you choose the traditional leasing route, BMW will incorporate $4875 of the possible $7500 Federal credit as a cap cost reduction.
3) The OwnersChoice programs were developed as way for owners to claim the full $7500. It sounds as if we effectively become owners of the car but with a contractual buy-back from BMW option (i.e., BMW buys the car back from the owner).
4) Sadly, the residual values are much lower (you can search on the Web for the table of values). I know with top credit, it's 42% with 10K miles with a 3-year lease.
5) OwnersChoice will be offered in most, but not all, 50 states. (I think NC, PA, NV come to mind, but I think there are more.)

DRS