Quote:
Originally Posted by fj58
(If this has been asked before I cannot find it and apologize for the WOB.)
I am searching for a specific configuration for my wife and have found several 2012s listed by dealers as "used" (generally in the 1k/mi range).
The first question is: Can they be leased through BMWFS? The answer is yes (a buddy did it). What I don't know are the guidelines.
Although residual values and money factors are easily found for "new" vehicles, are they the same for "used?" Is the capital cost based on original MSRP or? Are there any other considerations (max miles, etc.)?
I asked this of BMWFS and they basically said "ask the dealer!"
TIA
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Leases are calculated using the same mathematical formula, regardless of whether the car is new or used.
Residual values are based on depreciation schedules that are determined by the financing agency; although, it's worth noting that the dealer can "mark up" any of these terms, so watch out. Only they can provide this number. The depreciation for common purchases can be found online, but used is going to be much harder to find.
Capital cost is capital cost, plain and simpmle. It's the current purchase price of the car, not the original. When you lease a car, the lease financing company actually buys the car from the seller and writes them a check, so that's why it's the current cost, not the original.
You really are going to have to "ask the dealer" (or "a" dealer), because only they can get the "inputs" for the lease formula.
If you want to understand the math behind a lease, Lease Guide has an excellent
monthly lease payment formula explanation. Here's a quick run down. When you lease, you're dealing with the following terms:
Term - The length of time you want to use the car
Depreciation - The difference between the current value of the car and the anticipated value at the end of the lease term
Finance fee - The fee you will pay the financing company to borrow the money (remember, they actually buy the car from the seller)
Leasing is basically pre-negotiating the sale of your car at the future date you agree to sell it, then financing the difference. The current value, anticipated value, and finance fee are all negotiable, so don't be afraid to ask for improvement on each of those terms. Go to the dealer and have them work up the financing on a car you like. If you understand the math behind a lease, you'll get a lot more credibility with the finance department, and may get a better deal as a result.
I know you're not asking for it, but I would advise against leasing a used car. Interest rates on leases are typically worse than purchases, even with great credit. Interest rates on used cars are worse than new cars, so you've compounded two scenarios where your financing terms are going to be crap. I love leasing. I lease every car I buy, because I have no intention of keeping them past 3 years, even if I bought them. However, I have great credit, and I'm not afraid to beat the hell out of the finance department because of it.
Do not underestimate the impact of a bad finance rate on a deal. Even if you mange to negotiate the depreciation well, a bad finance rate can kill the deal in a hurry.