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BMW 5-Series (G30) Forum G30 Pricing, Ordering, Tracking, European Delivery Question about leasing

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      10-23-2018, 02:38 PM   #1
mzabbas
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Question about leasing

Hi Guys,

I am looking to get into a MY2018 540d and would be leasing for the first time. Previously I have always just bought the cars.

- Is the MF and Residual different for 540d?
- I would be driving more than 12K per year. Wondering if I should prepay for miles, or go with minimum 10K. Wondering if the same rules apply as money down in a lease. Meaning if the car gets totaled, do I loose what I prepaid for mileage?
- There is a 90% chance, I would want to buy the car at lease end. In that case, if there is a gap in actual market value and residual, does BMW negotiate a better buy price? If I trade for another lease, do they forgive extra mileage?

Thanks for your help in advance.
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      10-24-2018, 01:39 AM   #2
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Quote:
Originally Posted by mzabbas View Post
Hi Guys,

I am looking to get into a MY2018 540d and would be leasing for the first time. Previously I have always just bought the cars.

- Is the MF and Residual different for 540d?
- I would be driving more than 12K per year. Wondering if I should prepay for miles, or go with minimum 10K. Wondering if the same rules apply as money down in a lease. Meaning if the car gets totaled, do I loose what I prepaid for mileage?
- There is a 90% chance, I would want to buy the car at lease end. In that case, if there is a gap in actual market value and residual, does BMW negotiate a better buy price? If I trade for another lease, do they forgive extra mileage?

Thanks for your help in advance.
I'm not the most knowledgeable but here we go.
MF should be the same across the board unless there is some published BMWNA incentive on a particular model.

Residual will be different on the various models and the mileage you choose at signing also affects residual meaning Residual for a 5 series at 10K mi is 61% but at 12K mi it is 60%. Hence partially why the increase in payment amount.

If you know you are going to average 12k per year mileage then take that payment (or 10K or 15K) But if you feel you are probably above 12k but not really 15k mileage then take the lesser of the 2. Reason being is BMW "allows" you to pre-purchase miles up until you hand the keys back over to the dealership. It is usually $0.03-0.06 cents per mi cheaper than paying the penalty rate. that way at turn in you are not leaving miles on the table soo to speak.

I am of the "club" believing any additional money out of pocket above the required drive-off is just not wise. All you are really doing is buying down your payment upfront. And yes, in most cases if you total your car you are out that upfront money. GAP insurance typically does not cover this as it covers the value of its worth v the amount of remaining loan.

BMW will typically offer you a courtesy "discount" about 90 days before lease end. I have heard others being able to negotiate a better deal in the past. Usually most lease cars end up at auction.

Unfortunately no, BMWNA will not forgive mileage if you lease a new model. Some models do fair well on the secondary market so you can always sell on your own to avoid fees or I have heard of a few cases where CarMax offer was better than the turn in penalties (mileage, dings, tears)
Typically if the dealership is offering to "forgive" your mileage if you lease/buy a new car then all they are doing is just paying the penalty fees out of the profit on your deal. (meaning you are leaving too much money on the table in you deal as they have a decent $$$ cushion to afford the cost)

Hope that helps.
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      10-24-2018, 11:10 PM   #3
jjrandorin
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Quote:
Originally Posted by mzabbas View Post
Hi Guys,

I am looking to get into a MY2018 540d and would be leasing for the first time. Previously I have always just bought the cars.

- Is the MF and Residual different for 540d?
- I would be driving more than 12K per year. Wondering if I should prepay for miles, or go with minimum 10K. Wondering if the same rules apply as money down in a lease. Meaning if the car gets totaled, do I loose what I prepaid for mileage?
- There is a 90% chance, I would want to buy the car at lease end. In that case, if there is a gap in actual market value and residual, does BMW negotiate a better buy price? If I trade for another lease, do they forgive extra mileage?

Thanks for your help in advance.
1. No idea if the Residual is different on the 540d vs the other 5 series. Most of the time (but not all of the time) Residuals across a product line are the same. Some examples of where its NOT the same are the X5 40e vs the rest of the X5s, or the M3 vs the rest of the 3 series.

Since Residuals are not negotiable and can not be changed by the dealer for a given set of miles, all dealers will tell you the residual percentage if you ask. You can also calculate it on BMW USAs website (provided you are in the US).

as far as residual percentages go, for 36 month leases, if you have a given mileage residual you know the others. 12k is 1 percentage lower than 10k and 15k is 3% lower. So, if 10k is 61, 12k would be 60 and 15k would be 58.

Currently, MFs across BMW line are the same for all cars. No idea if that will be the case going forward. It has been the case for the 6 or so years I have leased BMWs and followed it, however "things, they are a'changin" so we dont know if that will stay that way. Current MF for tier 1 credit is between .00182 and .00222 negotiable between you and the dealer. Said another way, base rate is .00182 right now, but dealers are allowed to mark it up, up to 40 basis points. Some dealers will offer base rate for tier 1 credit, some wont.

2. If you KNOW you are going to drive more than 12k miles a year, then buy 12k. the cheapest discount rate is buying the miles up front right now at least for 10-12-15k. Try to get what you KNOW you will drive, but estimate a bit short (in case you get a pull ahead etc). So if you think you will drive 13k a year, buy 12 (not 10). If you KNOW you will drive 15k a year, buy that, but only if you KNOW that is what you will drive.

As stated you can pre buy the mileage shortage near the end of your lease (but dont expect a dealer to pay for them for you, because that only happens if there is enough profit in the car you are getting from them for it to make sense). If your dealer says "oh sure I can take care of those miles for you on turn in" if you are over, you KNOW for a FACT that the car you are taking from them has enough room in the deal to pay for it (so you are over paying on that car by at least the amount they are "paying for the miles".

Anyway, get the miles you KNOW you will drive, but estimate short (sounds like 12k in your case). I dont think you can buy 13k. Its 10-12-15 and after 15k THEN you can purchase additional after that.

3. My advice is never go into a lease with the "intention" to buy the car at the end. If you are planning on buying the car at the end, you should just buy it now. If you are not sure, then sure lease it then buy it at the end. Just know that you paid the lease acquisition fee (925, non negotiable) for the ability to do that, so you added almost 1k to the deal. That might be worth it for some.

BMW has changed its stance on buying your leased car at the end, earlier this year. I wont repeat the details (as I posted them before) but at least right now we are not negotiating with dealers for best price. We are currently getting a set discount off of residual.

Who knows what it will be in 3 years when your lease is over? I doubt even BMW knows, so we sure dont. So, no, right now you are not negotiating a difference in actual residual vs the pumped up one. BMW has closed that loophole at least right now. BMW has always inflated residuals so your car will not be worth its residual when you get to the end (meaning you wont have paid for enough of the car for it to make sense to buy it at the end for the residual unless you love it).

Higher residual percentage benefits you with lower payments now, but hurts at the end with the RV being too out of whack for what its worth... meaning that the car wont be worth what you will pay to buy it.

This would be the same if you were buying it and selling it within 3 years... but a lease allows you to walk away from it at 3 years without paying that penalty, while purchasing it and selling in 3 years would result in a big loss.

I think I said this before but No, no one is "forgiving the extra mileage", no matter if you lease another car or not. You will read stories about people who got dealers to pay for their miles. Dealers are "for profit" operations, and the ONLY way they will do that is if makes sense financially.

Either they REALLY need to sell you that car when you turn yours in (to hit some sales bonus etc, which you absolutely can not time / plan for ), or there is enough "meat" in your new lease to pay for outgoing miles on the old one at the going rate (or the buyout price they are getting from BMW will allow them to do so and still make money).

None of those are things you can "plan" for in 3 years so you can not plan on a dealer being able to "pay for your mileage overage". You should plan on paying for it, but it wont hurt to see what happens at the end of the lease.

Hope this long post helps.

--jj
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