Multiple Security Deposits - Your Thoughts?

[supraking]

This seems like an easy way to lower your lease payments. Explain the catch

[Vitacura]

No catch really. You just put down MSD's to lower the MF and at the end of the lease you get them back.

[supraking]

My salesman just told me "don't do it unless the credit department asks you to. You only save about $30/month."

Yeah, but you get your money back and $30/month adds up over 4 years. I would have to earn 30% on that money to equal out to the same savings if I didn't put it towards security deposits.

[Angry3]

Originally Posted by supraking

My salesman just told me "don't do it unless the credit department asks you to. You only save about $30/month."

Yeah, but you get your money back and $30/month adds up over 4 years. I would have to earn 30% on that money to equal out to the same savings if I didn't put it towards security deposits.

Your salesman is interested in closing your deal, and assumes that you (like most people) are a payment buyer that would be get a bigger payment break by using your $ to reduce the cap cost. Ignore him.

MSDs are a great use of money, *if* you are in a position where you can give up the use of that money and not worry about it.

IMO, there's no "catch" with MSDs as long as:

A. You take reasonably good care of your leased car and return it with an acceptable level of wear and tear.

B. You honor your payment obligations under the lease.

C. You understand that if something happens to you and you need to get out of your lease, or want to get out early to get another car, that the MSDs may hinder your ability to do that.

There are so many ways to structure a lease, and they all have pros and cons. I ended up putting 3 MSDs down on my 135 lease, which dropped my MF from .00050 to .00029. I then rolled the acq. fee back into the lease (at ~.8% interest, why not). I settled on 3 deposits because it was a comfortable amount for me financially, and was just enough to drop my recalculated payment down below the next $50 deposit interval.

MSDs can be a great savings tool, but they aren't for everyone.

That my .02, hope it helps. Good luck!

[supraking]

Originally Posted by Angry3

Your salesman is interested in closing your deal, and assumes that you (like most people) are a payment buyer that would be get a bigger payment break by using your $ to reduce the cap cost. Ignore him.

MSDs are a great use of money, *if* you are in a position where you can give up the use of that money and not worry about it.

IMO, there's no "catch" with MSDs as long as:

A. You take reasonably good care of your leased car and return it with an acceptable level of wear and tear.

B. You honor your payment obligations under the lease.

C. You understand that if something happens to you and you need to get out of your lease, or want to get out early to get another car, that the MSDs may hinder your ability to do that.

There are so many ways to structure a lease, and they all have pros and cons. I ended up putting 3 MSDs down on my 135 lease, which dropped my MF from .00050 to .00029. I then rolled the acq. fee back into the lease (at ~.8% interest, why not). I settled on 3 deposits because it was a comfortable amount for me financially, and was just enough to drop my recalculated payment down below the next $50 deposit interval.

MSDs can be a great savings tool, but they aren't for everyone.

That my .02, hope it helps. Good luck!

Thanks for the info! Putting 9 MSD's down, I would save about $35/month. Over 4 years that's $1680 in my pocket. Had I kept the roughly $5400, I would need earn about 8% annually to make it worth keeping. I work in a service industry with little overhead and no inventory, so I'm really thinking whether that money would be well invested elsewhere, especially in this economy.

I plan to take extremely good care of my car, so I feel that it might just be a smart move to put the additional 9 payments in, save some cash every month, and get it back at the end. Are dealers really shady about the whole "wear and tear" issue, or can I just call them out if they're being totally unreasonable? Is there a place that they define "wear and tear?"

[Angry3]

Originally Posted by supraking

Thanks for the info! Putting 9 MSD's down, I would save about $35/month. Over 4 years that's $1680 in my pocket. Had I kept the roughly $5400, I would need earn about 8% annually to make it worth keeping. I work in a service industry with little overhead and no inventory, so I'm really thinking whether that money would be well invested elsewhere, especially in this economy.

I plan to take extremely good care of my car, so I feel that it might just be a smart move to put the additional 9 payments in, save some cash every month, and get it back at the end. Are dealers really shady about the whole "wear and tear" issue, or can I just call them out if they're being totally unreasonable? Is there a place that they define "wear and tear?"

On the MSD thing, you're on the money (literally) thinking of it as in investment. The reality these days is there aren't too many options for getting a guaranteed 8-12% return, so it makes sense for folks who know about the option and can spare the cash.

I've heard BMWFS isn't anywhere near as bad as others at nickel and diming folks at turn-in. I read up on this some, and didn't see much in the way of horror stories. If I had I would not have done the MSDs since that kills your negotiating leverage in any dispute about wear and tear.

A few months before turn-in you will be sent all of the details on what is o.k. and what isn't. They have specific guidelines on the size of dings, windshield chips, scratches, and tire tread depth that are set out. If you want details on it ask your selling dealer to see the turn-in literature, or do some forum searching. Cheers!