# 2016 BMW 335i - making sense of the numbers

I got a quote for a hypothetical 2016 BMW 335i lease since I just wanted to get an idea of how much it would cost without having an exact car in mind. The price was just an estimate without any negotiation. I have read on Leasehackr that the net capitalized cost - residual = payment / number of months. When the sales person gave me quote, I was really surprised of how off the numbers were.

MSRP - \$50,000
Discount - \$2,250
Selling Price - \$47,250

Sales Tax - \$1,995 (VA)
Dealer Business Tax - \$95
Dealer Fees - \$495
Tags and Fees - \$991

Total Purchase Price - \$50,810

Down Payment - \$0
Monthly Lease Payment - \$744.87

Annual Miles - 12000
Term - 36 months

Residual value - \$30,500

Total Payments - 744.87 * 36 = \$26,815.32 + \$30,500 (residual value) = \$57,315.32

Can you tell me if this deal makes sense? Dealer did not provide the MF.

Any help will be appreciated here.

i don’t have all the answers but a 4.5% discount on a 3 series does not seem like a very aggressive discount to me.

I have not done any negotiation with the sales person yet. I want to understand why the residual value + payments is much greater than the sales price. The sales person said that this is how BMW makes money.

hmm, I think something’s missing.

\$50,000 - \$19,500 (depreciation) = \$30,500 (residual)
\$19,500/36 = \$541.67
\$541.67*36 (their ideal monthly payment) + \$19,500 = \$50,000 (they recuperate full cost of the car).

In your deal (which I agree isn’t aggressive, you should aim for 10-15% off MSRP) you are agreeing to a sale price of \$47,250. So instead of paying for the full \$19,500 of the residual, you are now paying \$47,250 - \$30,500 = \$16,750.

\$16,750/36 = \$465.28 (compare this to \$541.67 from above).

Now your total payments would be \$465.28 * 36 = \$16,750 + 30,500 (residual) = \$47,250.

Tax and fees you must look at separately. The dealer business tax, fees, and tags/fees are constant regardless of what you negotiate (\$95 + \$495 + \$991 = \$1581). VA sales tax is 4.2% of the agreed to sales price, which would be .042 * \$47,250 = \$1,984.50. Together, taxes and fees are costing you another \$3,565.50. This amount will not change significantly, BUT is also added to your monthly payment! (\$3,565.50 / 36 = \$99.04)

That part is a bit confusing, which is why many ads and sites (including leasehackr) will give you the lease rates before tax/fees so you can compare apples to apples.

So although your monthly lease rate after negotiating your car to \$47,250 is \$465.28, you must also add \$99.04 for taxes and fees = \$564.33.

If your dealer is giving you a monthly total payment of \$744.87, something is missing or way off. After removing taxes/fees, \$744.87 - \$99.04 = \$645.83. This is \$180.55 more than \$465.28! Of course, I am not accounting for interest in these calculations but still - that seems to be too much for just interest (38.8%??).

Only other thing I can think of is property tax, which still wouldn’t explain \$180.55. Someone feel free to correct me.

In addition to depreciation, you’re also paying a finance charge as you’re essentially borrowing the capitalized cost of the car. The current rate from BMWFS is .00132 MF (3.17% APR), but dealers can markup that rate for additional profit. There are also ways to lower the MF rate by putting down a refundable security deposit.

I’d at the very least insist on the base rate of .00132 and tell the dealer you have excellent credit.

I do not think Property Tax is included in the pricing. Tax is calculated by the county based on value of the vehicle as determined by the method of valuation used by the county.

I did find out the money factor in the quote is 0.00195. Is that too high?

Yes! A money factor of .00195 equates to 4.68% APR. The dealer is marking it up heavily.