BMW I5: Trade in a vehicle towards a lease?

Ask the Hackrs
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1

Hello,
I’m looking to lease a new BMW I5 and will be trading my truck in towards it. I’m thinking I should get about 17k in equity to reduce the payment. Is it normal trade a vehicle in towards a lease?

2

Put that $17k in your pocket and invest it elsewhere. Paying down payment for a lease is not wise.Why? Read more here

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3

Sell your truck separately to the highest bidder.

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4

With rates where they are, reducing the lease financed amount might make sense some times. But if you were going to do that you would want to do a one pay lease. That way, for most automakers, if the car is totaled or stolen you don’t lose your down payment.

As a side note, there can be tax benefits of trading your car in in some states. But you don’t have to worry about that consideration in Virginia cause Virginia taxes equity from your trade in.

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5

MSD or one-pay would be a better use than CCR.

Or keep the $17k in the bank to buy out the car.

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6

What’s MSD and CCR stand for?

7

Multiple security deposit and cash conversion ratio.

8

Capitalized (“Cap”) Cost Reduction.

Colloquially known as down payment

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9

Put equity into MSDs.

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10

Do you think that’ll really make a big difference in the payment? And, whenever I get rid of the car, do I always get that money back? Regardless of how I get rid of it? i.e., trade it in, just return it, or buy it out?

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Yes, depends on the condition of the car if you get it back, and to the last 3 yes.

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12

Thank you. If I put the trade into MSDs, that won’t reduce the cap cost so my tax bill would be higher, right?

13

Is there a way to calculate how the MSDs affect the monthly payment?

14

Correct.

For BMW each of the 7 possible MSDs reduces MF by 0.00006. If you take a car you find at a dealer, and input your rebates in the calculator - sourcing MF and RV from RateFindr, take a look at the discount and see what discount you’d need.

I’ve seen very high initial discounts on the i5. Speak to @IAC_Scott and he might be able to hook you up as he’s close to you.

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15

Virginia taxes the selling price; it doesn’t matter what your cap cost or payment is.

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16

Oh YIKES! That could be real painful.

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It is very painful - there’s a reason many VA ppl don’t lease or their payments are significantly higher - plus correct me if ur wrong but ur FS will still bill you for that prop tax.

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18

Well thankfully I’m 100% w/ the VA and my spouse is active duty so we don’t have to pay the luxury tax the City of Alexandria charges.

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Are you planning to buy out the I5? Getting into a cycle where you keep paying sales tax on the full value of the vehicle every 3 years, that’s pretty painful.

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20

Can you say your domicile is somewhere else? I don’t know many military folks in NoVa with Virginia tags on their cars. For some reason they are all from Florida :rofl:

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