Am I being over charged for this 2012 135i lease?

[startover]

My 2008 135i is coming off lease in about a week and I'm going to lease a new 2012 one. Here's what the dealer wants.

Car: 2012 135i 6MT. MSRP $44300.00 after configuration. (includes destination charge). 36 month @ 10k miles / year.

Dealer willing to take $1750 off MSRP ($42550 effective). I know I can probably negotiate the price down a bit more. But dealer is willing to throw in floor mats and take care of my last month's payment on my current lease (since the new car will take a month to be built, normally I would have to ask BMW FS to extend my current lease for a month. Dealer says they'll do it for me for free).

Now with $0 down, the monthly lease comes down to $648.00, which is higher than I expected because BMW's website lists the 135i leasing offer as $429/month with $2500 down based on a $42757 MSRP. When I questioned the dealer they claimed that the website's price doesn't include taxes etc, and that my quote is based on a 0.00235 money factor which includes loyalty discount (dealer claims that the rate would have been 0.00195 but security deposit would be required).

My current 2008 lease is only $455/month but that's because I paid a large down payment back in 2008 (now I understand that it's a bad choice). But still this calculation seems somewhat "wrong" to me but I don't know exactly where to attack because dealer showed me all the numbers on the computer.

Your advice would be greatly appreciated.

[Boxtyp3]

In my situation, the dealer shouldered my negative on previous car ($4000ish). Got my '10 135 M/T for $40,000 form $45,000ish with no down and 10k miles/ year for 36 mos. and about the same monthly. I think you can still pull the monthly payment a bit more.

[FJUNO78]

Originally Posted by startover

My 2008 135i is coming off lease in about a week and I'm going to lease a new 2012 one. Here's what the dealer wants.

Car: 2012 135i 6MT. MSRP $44300.00 after configuration. (includes destination charge). 36 month @ 10k miles / year.

Dealer willing to take $1750 off MSRP ($42550 effective). I know I can probably negotiate the price down a bit more. But dealer is willing to throw in floor mats and take care of my last month's payment on my current lease (since the new car will take a month to be built, normally I would have to ask BMW FS to extend my current lease for a month. Dealer says they'll do it for me for free).

Now with $0 down, the monthly lease comes down to $648.00, which is higher than I expected because BMW's website lists the 135i leasing offer as $429/month with $2500 down based on a $42757 MSRP. When I questioned the dealer they claimed that the website's price doesn't include taxes etc, and that my quote is based on a 0.00235 money factor which includes loyalty discount (dealer claims that the rate would have been 0.00195 but security deposit would be required).

My current 2008 lease is only $455/month but that's because I paid a large down payment back in 2008 (now I understand that it's a bad choice). But still this calculation seems somewhat "wrong" to me but I don't know exactly where to attack because dealer showed me all the numbers on the computer.

Your advice would be greatly appreciated.

Depending on your state, you may pay taxes on the entire purchase point of the car, not just the lease price. You have to find out what your tax liability is.


Next you need to you would be find out the specifics about the current program. Also, find a good lease calculator online. Plug the numbers in, and see where you are off. That BMW deal accounts for $2500 down. That cap cost is saving you roughly 75/ a month. 429 + 75 + taxes seems like you should be somewhere in the mid 5's if you held on to the $2500.

From what you telling me, I would certainly pay a security deposit to avoid such a markup in MF. But this doesnt sound right. Loyalty is a lower money factor and you get the security waived (unless something has changed since my last lease)

Also, I have learned that you can usually do a bit better than the national deals you are looking at. I would find invoice of the car, and start there. I wouldn't agree to more than $500 over invoice, especially given the current market. If the dealer is marking up the MF, adjust the selling price of the car down even less than $500.


Good luck.

[MGallop]

Sept of this year.. all the new 135i's will come standard with floor mats

[jpd]

Some good advice here especially about the MF. Some dealers mark it up to pad their profit. Total markup is 8% from invoice. This means you are getting a discount of 5%. You 08 sticker was significantly less. Taxes and other fees add another 2K usually. In the end the price of admission to a 2012 is going to be high unless you want to buy down the lease with more $$.

[startover]

So my understanding is that the prices I got is not the "best" of deal, but somewhat normal and reasonable. Is that correct?

I'm planning to keep the price as is but press for a free (or at least heavily discounted) BMW performance suspension on the final negotiation. BMW's website lists the item as $1400 (including labor I think), how much do you think it actually costs the dealer for the item? Do I have a shot at this?

[FJUNO78]

Originally Posted by startover

So my understanding is that the prices I got is not the "best" of deal, but somewhat normal and reasonable. Is that correct?

I'm planning to keep the price as is but press for a free (or at least heavily discounted) BMW performance suspension on the final negotiation. BMW's website lists the item as $1400 (including labor I think), how much do you think it actually costs the dealer for the item? Do I have a shot at this?

I still think there is ALOT of room for them to come down... what state do you live in? Are you paying taxes on the entire vehicle or just the leased amt?

[fourtailpipes]

don't forget a lease is just a financing arrangement where you finance the car's value down to a specific future value. even if you don't intend to keep the car, it can often still be more cost-effective to finance and trade if you can secure a good rate (which tends to be easier financing than leasing). i financed my car and was able to get the promotional rate of 0.9%, then negotiated it down to 0.0%. the term is 60 months, so the monthly payment is only a little higher than if i were leasing, but there's literally no interest, so if i keep the car for the same term, i'll recoup all of the extra money i've been paying, plus interest, and THEN some.

the kbb value of my car is already about 4k above my current buyout price after 33 months of this financing arrangement. this gap will only increase, as my purchase price decreases linearly while the car's depreciation is leveling off and becoming flatter, so it's only getting even better!

...and the best part of it all is i can trade for another car anytime i want, not at the specific time stipulated in the lease (though that can often be negotiated before lease end).

[xerox445]

why dont you buy a CPE, and trade it in later on?

[FJUNO78]

Buying a car over 30k will never make sense to me...

why would I want to assume the risk of having to find a buyer? Get any body work done to the car, and kiss your resale goodbye.

BMW subsidizes their lease programs, they keep their residuals artificially high. To me this is free money on the table. Financing or buying outright is like turning down that free cash.

[FJUNO78]

Originally Posted by fourtailpipes

... i financed my car and was able to get the promotional rate of 0.9%, then negotiated it down to 0.0%. the term is 60 months, so the monthly payment is only a little higher than if i were leasing, but there's literally no interest, so if i keep the car for the same term, i'll recoup all of the extra money i've been paying, plus interest, and THEN some.

the kbb value of my car is already about 4k above my current buyout price after 33 months of this financing arrangement. this gap will only increase, as my purchase price decreases linearly while the car's depreciation is leveling off and becoming flatter, so it's only getting even better!

...and the best part of it all is i can trade for another car anytime i want, not at the specific time stipulated in the lease (though that can often be negotiated before lease end).

your fail to mention the down payment you had to make to get your prices in line with a lease.

Also, the kbb figure is to be taken with a grain of salt especially given the low demand for the 1 series. If you trade in at a dealer you will get destroyed. If you sell privately, you will have a harder time with a 135i compared to a 328i sedan with xdrive, or better yet a Honda. Remember, a car is only worth what someone is willing to give you.

[fourtailpipes]

Originally Posted by FJUNO78

your fail to mention the down payment you had to make to get your prices in line with a lease.

Also, the kbb figure is to be taken with a grain of salt especially given the low demand for the 1 series. If you trade in at a dealer you will get destroyed. If you sell privately, you will have a harder time with a 135i compared to a 328i sedan with xdrive, or better yet a Honda. Remember, a car is only worth what someone is willing to give you.

no money down. also, i'm looking at the kbb trade-in value, not the private party value or msrp. the dealer has agreed to honor this.

that's the power of a good interest rate!

[xerox445]

You sound like a dealer.

[fourtailpipes]

Originally Posted by xerox445

You sound like a dealer.

i'm very much not a dealer... just pointing out that it really comes down to the interest rate you can secure. it's really just a basic "finance 1" word problem. leasing or financing, the efficiency of the instrument comes down to finding the lowest intrerest rate. it's just usually easier to get a better rate financing than leasing.

[dublinlp]

What is the capitalized cost they are basing your lease off of? What did they say the residual amount or percentage is on a 2012? The money factor seems high at a 5.64% rate but both the money factor and residuals are usually set by the manufacturer and not negotiable. The place where dealers, especially high end dealers, tend to bone you on a lease is all of there hidden, bullshit fee's. What are those; acquisition fee, gov't fee, doc fee, etc. A negotiated sales price doesn't matter on a lease only a purchase. Your lease payment is based off of a gross capitalized cost minus any cap cost reductions (either money you put down or money/discounts they contribute) =adjusted cap cost or net cap cost. Ask them how they derived from the msrp to the gross cap costs and odds are they will not tell you and that is where they throw their fees in. So they can act like they are selling the car for you for $5k under msrp but when they set up your lease worksheet all of that money is thrown back in because it essentially doesn't matter what the selling price is on a lease. Your taxes are added in on the end of the lease payment and will vary by state. A car with a higher residual 57-60% will be cheaper than one with a 50% residual because it is supposed to be worth more at the end of your term and you are paying for the depreciation basically. You can take your money factor and multiply it by 2400 to see what interest rate you are paying which equals 5.64% in this case. I am not a dealer, and hate the games they play trying to rip people off but I have done my homework. Hope this helped some but in order to tell you if it is a good lease, you need to get the answers to the questions above....good luck mate!

[Nifty]

OP, if you're looking for something that will give you an idea of how much a lease will run you based on various factors head over here. There is a lot of useful information on that site.
http://leaseguide.com/calc.htm

I was in the dealership yesterday taking my 09' in for maintenance and decided I would ask some questions about the 2012's since my lease will be up fairly soon and this it what I found:
- Residual on a 2012 135i coupe w/ 15k miles a year and 36 months was 62%
- Money factor was .00195 but with customer loyalty they would reduce that to ~.00165 (This MAY be regional, I'm not sure though)

based on the numbers in your post, the price they've given you seems in the ballpark, especially if you are in a state that charges tax on the entire vehicle not just the depreciated portion. To try to reduce that price I would focus on two things:

1) Get the lowest negotiated price possible. The effect on monthly payments is magnified on a lease.
2) Make sure that the dealer isn't padding their money factor, .00235 seems high.

[sjp3003]

I just went through this (ordered a 2012 in June and took delivery 2 weeks ago). Getting the details straight from the outset is key. I found many small differences vs the national program that added up when taken together:

1. The implied Lease MF BMW was using for their national advert in June was 0.0010 for 36 months for 1 series 2012 convertibles and I was quoted 0.0014 by the dealer (10K miles/year).

2. The advertisement reflected a cap cost reduction of $3000 and I was quoted $2762

3. The advertisement had a $725 Acquisition Cost and I was quoted $925 plus an additional Acquisition Fee of $399

4. The residual is a key variable too. I was quoted 59% for 3 years and 10K miles. Better residuals can be had (see #6 below).

5. As others state above, selling price is key too. I was initially quoted a selling Price that was high too.

6. Last but not least, check the numbers when you get the car. When I went to pick up the car in August my CA advised that the residual had increased from 59% to 65%. Great, I thought, all things being equal that would mean I'd have lower payments for the lease and (and a higher purchase option price). Lo and behold, when I sat down with the the F&I guy they had jacked up the price of the car and the MF to get the same monthly payment I had agreed to ($589 including MD taxes for a $48K MSRP car with the nationally advertised upfront costs). To boot, the purchase option increased from 28K to over 31K! When I pointed this out, they said they didn't think it made much difference because they they kept the payments the same and most people turn in their cars instead of buying them. They shrugged their shoulders when I pointed out that as their customer it would be better to at least have the option to buy the car at a lower price even if I didn't exercise it. They quickly agreed to honor the original terms after calling the Manager, but these guys were truly slimeballs.

A lease calculator is very useful for managing all these variables. Good luck.

[blschaefer1]

FWIW, my lease deal for a 2012 135i M sport was as follows:

MSRP $44875
Cap Cost$ 41050 ($3825 off list)
Cap Cost Reduction of $1806.
Redidual $26950
Money factor .0016
36 Months, 10k miles per year.
Lease payment $448.06 per month, plus tax

Total out of pocket to start the lease was $4,101, including first payment, license, acquisition fee, etc.

[FJUNO78]

Originally Posted by blschaefer1

Total out of pocket to start the lease was $4,101, including first payment, license, acquisition fee, etc.

over 4k? I'm guessing you put money down aka cap cost.

[blschaefer1]

Originally Posted by FJUNO78

over 4k? I'm guessing you put money down aka cap cost.

Yes, $1806 cap reduction.

[saeyedoc]

Residuals are set by the leasing company and are not negotiable.
MF base rate is set by the leasing company and can be marked up by the dealer, the markup is negotiable.
Both of these numbers can be found easily on the internet and may change monthly.
Negotiating a discounted purchase price is essential.
In a car with a lot of options available (hear me Porsche?), there is a max MSRP that can be used to calculate residual. Options get very expensive after that.
Never put down any cap reduction if you can, if you're car gets totaled, you lose it.
Download a loan calculator onto your phone or computer and run the numbers yourself, if they don't line up with the numbers the finance guy gives you, find out why.

[Uptempo80]

I put 5K down on my 2011 128i convertible's lease. And I plan on putting the same ammount down on my next one. Im going to be in a situation in July 2013 when "who knows" what kind of car BMW will have out for me to get. Will there be a 2 series convertible?? If not in July 2013 then I'm stuck into getting a Z4. (3 series are too big).
Not a fun future to think about for me with so many questions to be answered. Maybe I'll know more when I'm 1 year away...

Good luck in obtaining the best deal on your 2012 135i!