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01-15-2008, 01:50 AM | #1 |
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BMW Lease Rates on New Models
I will be leasing my new 1 series assuming that it is in my price range. I wanted to ask: Does anyone know the lease rate BMW usually sets on their new models?
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01-15-2008, 10:37 AM | #2 | |
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right now they have encentives on the 3 series for around 4.9%. |
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02-05-2008, 02:32 PM | #5 |
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lease rates from Buds Oakvile are 5.9%
Waiting to see if BMW Canada rates will be a bit lower. Also, residual amounts from dealers (in house) tend to be lower than BMW Canada financing. This makes the lease payments quite high from the dealers. I was quoted $917/month (taxes incl.) for 128i cab for the dealer rates...OUCH |
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02-05-2008, 03:02 PM | #6 | |
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02-05-2008, 07:05 PM | #7 | |
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Are you sure that wasn't for "Financing"? |
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02-06-2008, 10:26 AM | #8 |
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So Buds Oakville is a 3rd party leasing company? I think usually, when you lease from a third party, the lease rate is lower, but the residual is also much lower. The only way I'm getting a 135 is if the monthly lease is less than 700 tax included. Maybe I'm dreaming...
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02-06-2008, 01:58 PM | #13 |
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Because you have to make a certain $ amount of payments during the term of the lease anyway to pay down "1-residual", irrespective of how little you put down. Putting as much down as possible to minimize lease interest charges can be a smart strategy if your personal cost of financing is less than BMW Canada's lease rates. I would definitely consider such a strategy if the lease rate offered is greater than 6%.
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02-06-2008, 02:01 PM | #14 |
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Agreed, if you can make more interest off that money than they will charge than put nothing down, if not put as much as you want down.
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02-06-2008, 02:02 PM | #15 |
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02-06-2008, 02:05 PM | #16 | |
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02-06-2008, 02:12 PM | #17 |
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02-06-2008, 02:22 PM | #18 | |
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1. Those with ample cash to invest or spend. For them, and assuming they're long-term investors, your logic may be appropriate. Just keep in mind that "conservative investing strategies" often means maintaining a balanced portfolio in terms of asset allocation. With 10-year US Treasuries at a minimal 3.6% and 2-year Treasuries at an even lower 1.9%, your assumptions around asset allocation and equity returns need to be even more aggressive than in previous times. This somewhat negates your argument in terms of conservative investing strategies. With the bond market at cyclical highs, it's very difficult to achieve a very conservative approach while coincidentally achieving a 7% target rate of return. And I haven't even touched on the issue of taxes on earned income. 2. Those who have to effectively borrow one way or another. For such a buyer, the interest rate equation becomes a simple "Can I get a better rate anywhere else". There is no "opportunity cost of capital" such as with the first type of buyer. In Canada, the prime bank rate is 5.75% - this is the same rate that I can get on my secured line of credit. I would definitely borrow from such a line at this rate enough to make a significant enough downpayment to lower my lease interest charges if the lease rate is greater than the 5.75% rate. Additionally, I (and most economists) expect the Bank of Canada to lower its overnight rate by a further 50bps at minimum in the coming year. This will further lower my effective financing rate - whereas the BMW Canada rate is fixed not floating. I'm not as familiar with the US situation as it pertains to what banks are lending out on a secured basis, but the overnight rate set by the FOMC is already 100bps lower than the Canadian rate and is primed to go significantly lower in the coming year. |
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02-06-2008, 02:32 PM | #19 | |
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This is generally true and not subject to market conditions. No that it matters, but I have a degree in economics. |
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02-06-2008, 02:47 PM | #20 | |
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The arguments I've posted above are actually rather simple and quite basic. And for someone who's looking to invest money by borrowing money, I find your comment about "big words" to be quite arrogant. And, not that it matters, but I have a Masters degree specializing in finance, a Chartered Financial Analyst designation and have been working in investment management for over a decade. Not that it matters... |
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02-06-2008, 03:36 PM | #21 |
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02-06-2008, 03:56 PM | #22 | |
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Currently 7% is hard to come by with the recent fed actions, unless you have an existing relationship w/ a weath management group or something similar, but 5.9% is still pretty easy to get at most credit unions here in the states. I said "not that it matters" as most of this stuff is pretty simple math and I didn't need a degree to learn any of this, I wasn't being arrogant. At least not on purpose. |
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