[Stooges2]
Congrats! However the previous calculator you posted with the same numbers has an effective monthly of ~$827. Am I missing something?
I don’t know how to quote another post so i just copy/pasted. sorry about that.
i looked back at the calculator i posted, here is what the difference was:
someone on leasehackr said in California each MSD is worth 0.0004, there was no way to reflect that on the calculator, so instead of 7x MSD, i did 5x, which is somewhat close to the total discount (0.00006 vs 0.00004 = 0.0003 vs 0.00028). when i went to the finance office, they told me the discount per MSD was 0.0006, and i did the max 7x MSD so the effective MF ended up being, i think 0.00028, i hope this helps.
[mjr_kong]
So this 0.00004 vs 0.0006 is not a real thing then ? Did your lease end up showing 0.0006 per MSD ?
Huh? it is a real thing. if you put down 1x monthly payment (MSD, rounded up to 50s and 100s), your MF goes down by 0.00006. so let’s say your MF is 0.0005 the current base rate, then, if your monthly payment at that rate is, say $745, then round it up to $750, this is your MSD. so if you put down the maximum allowed, which is 7x, i.e. $5,250, then your rate would be 0.0005 - (0.00006*7)= 0.00008. in my case, the MF they offered was 0.0007 (they added 0.0002 markup, which i agreed to), so my effective rate was 0.0007 - 0.00042 = 0.00028, which in annaul term is x2600 = 0.728% which is close to nothing.
I was asking if 0.00004 reduction per MSD was real for iX, or if it was same 0.00006 as all other BMW programs. You mentioned 0.00004 as well as another thread. Sounds like it is 0.00006 for iX, right ?
@hechon I tried to replicate your deal here. The only way I could do it is to reduce the miles to 7,500/year (which raises the RV to 55%). Then I added in a $785 down payment to get the total due at signing to $2,400.
I’m still amazed at the .0006 MF, it doesn’t seem realistic that BMW FS would be subsidizing interest rates that much. But if they do then with MSDs interest goes virtually to zero.
yes i read some place that for California, it was 0.00004 but the finance manager looked up something and printed out that it indeed is 0.00006. i mean, i told him i read some place that it was 4 and he looked up and told me it looked like it is 6. i didn’t argue. i just said, that’s great.
How much negative equity does BMFS allow someone to slam in there? Eg as a % of MSRP or some fixed $ limit.
There has to be a cap to the amount of extra capitalized cost the lease can absorb while still conforming with their implied debt against the leased product while still keeping the MF the same.
IMO if I were in underwriting, anyone rolling negative wouldn’t qualify for tier 1 since losses are going to come from this type of borrower first.
I reached back out to the dealer who gave me the offer I shared earlier. Only adjustments that apparently needed to be made were to drop the MF down to .0005 and remove the “ceramic” charge for $995. I asked if they could do that, then they responded saying “we were able to reduce the MF to .0005 and my manager was willing to remove the ceramic charge.” But the updated offer was worse overall as they reduced the pre-incentive discount. I asked and the dealer said they could no longer honor the 12% discount they were previously offering. And this is a dealer I’ve purchased from before.
This is actually a really interesting point. At the buy rate, maxing out the MSDs is financially optimal. But it only takes a slight bump in MF by the finance guys for it to swing back to one-pay being the optimal (if you assume the risk free rate, account for your nominal tax rate, can buy a basket of treasuries to immunize the cash out flows, and have the available cash).
Would the finance guys still make money if they bumped from .0005 to .0007 and then someone with the means swooped in and executed a one-pay at .0000 MF?
Also, regardless if you use the term “burying negative equity,” you are correct. A lease at .0005 MF is far superior to a lease at .0025 MF. The catch is that you’d must be able to afford an ~$1,000+ monthly payment to effect this trade. Anyone who does this deserves deal of the month!
Anybody having much luck on these iX leases? The two dealers here with the most inventory keep going with the common “you have to come in for the best deal” tactic. Haven’t been able to get close to target.
