Prepaid lease - one time payment

[Lectro]

Does anyone know of any benefits to doing one time lease payment vs MSD’s?

I was told by doing a one-time lease payment I would get a 0.0008 rate reduction on the money factor (0.00125 – 0.0008 = 0.00045). Is this true?

Any feedback is greatly appreciated

 

[ryandesign]

Does anyone know of any benefits to doing one time lease payment vs MSD’s?

I was told by doing a one-time lease payment I would get a 0.0008 rate reduction on the money factor (0.00125 – 0.0008 = 0.00045). Is this true?

Any feedback is greatly appreciated

The benefit to pre-paying the lease is that you're not paying interest on the amount you paid, only on the residual value.

I was told pre-paying a lease would get a reduction of .25% APR, which would be a 0.00008 reduction of the money factor. (0.00125 - 0.00008 = 0.00117.) In the end I chose Owner's Choice financing, not a lease, and sadly this reduction was not available with OC.

 

[jelloslug]

Unless there is a specific exemption in the paperwork for a prepaid lease, any money that is put down on a lease cannot be recovered from the finance company in the event of a total loss situation.

 

[michaelbmw]

Unless there is a specific exemption in the paperwork for a prepaid lease, any money that is put down on a lease cannot be recovered from the finance company in the event of a total loss situation.

That is the biggest flaw in a prepaid lease. In fact, it a reason to prefer zero driveaway leases, and a reason not to use a trade in as part of a lease. If it's totalled or stolen, your equity is lost.

 

[Leafdriver90]

Unless there is a specific exemption in the paperwork for a prepaid lease, any money that is put down on a lease cannot be recovered from the finance company in the event of a total loss situation.

+1000

 

[Lectro]

I did some research on this topic and I thought I would share my findings with you guys.

One payment lease is very different from a cap cost reduction. In a cap cost reduction, the principle is reduced and you could lose some of that money in case of a total loss. In a one-pay lease, the money is kept in an escrow account and deducted monthly. Initially I was skeptical of this till I realized how the pre-pay lease is calculated.
Your lease payment is actually calculated as zero down (no cap cost reduction) but you get a significant discount on the money factor for pre-paying, and that equates to a lower monthly payment if you were to pay it monthly.

I was wondering if anyone knew what the money factor discount actually was for march/april as this does change periodically.
There is a lengthy discussion about this on the bimmerfest forum if anyone is curious.

 

[jelloslug]

As long as you don't have the possibility of losing the money the only other thing to consider is the difference between the incentive you get with the lease vs the federal and, if applicable, state tax credits.

 

[Lectro]

The best option for me would have been owners choice in order to maximize the tax benefits, but unfortunately OC is illegal in my state.
now trying to figure out the best lease option.