Hi all,
I haven’t done a MSD deal in a while. I have a few questions about current BMW MSDs
For simplicity sake, if a person cap’d everything on a deal (acq fee, doc fee, registration/title, sales tax, etc.), is one allowed to include cap cost reduction $ (down payment and rebates) BEFORE landing at the initial monthly payment, and THEN pay a multiple of that amount rounded to the nearest $50 for each security deposit up to a max of 7 MSDs?
If the answer to #1 is yes, then is the current BMW reduction 0.00006 per security deposit for a max of 0.00042?
If the answer to 1+2 are both yes, then does one drop the MF the max amount and then refigure the new monthly payment at the lower MF rate?
MSDs are based on the monthly after tax, after MSDs. It is whatever the monthly is if you cap everything or not. If the payment is $495 after tax and whatever you decide to cap, it’s rounded up to $500, and the MSDs are $3,500 for the maximum amount.
It is 0.0006 per MSD. The MF cannot be below 0.00005, so you have to bump the MF on some (i4s and iX xDr50) cars this month.
Run the lease calculations all the through to get the monthly payment (cap whatever, cap cost reduce whatever) amount first without MSDs… to get the monthly payment… using your example $495.
Then you round that number to nearest $50, so with your example $500.
If you did the max of 7, you’d exchange the $3500 to “buy” the MF down 0.00042
Then at that point, rerun the lease calculations, but with the new, lower MF and get a new monthly payment that is less than $495 from your example.
With all due respect, screw the calculator. What matters most is understanding the math, not how to punch buttons on a calculator. Airline pilots are good at pressing buttons. Most of them couldn’t compute a geodesic curve or compute density altitude, ground speed manually if their life depended on it. Calculators, technology, etc. make people brain lazy and clueless. Kudos to those that strive to understand the math!
Is there a situation in which, during flight, given the decision time and limit of human ability, that their life could actually depend on these abilities?
Yup! They lose their ability to communicate and navigate electronically over the Atlantic or Pacific Ocean in marginal weather with sufficient fuel to reach their destination and alternate. They have plenty of time to chart their course using lat-long coordinates of their present position and destination as well as make airspeed and groundspeed calcs. My laptop contained flight planning data and flight algorithms that I created specific for each aircraft that I flew. I spent quite a bit of time flight planning (my favorite thing to do). I knew exactly what I had to do if my engine quit, or oil pressure dropped as soon as I became airborne with x feet of usable runway remaining. Or, what if my engine(s) quit at 800 ft. AGL. Can I turn around and land on the departure runway with reported winds from 260 degrees at 15 knots gusting to 19 knots? What is my optimal flap setting and airspeed/groundspeed? All calculated before departure. Lots of cowboy yahoos out there that just want to take off and go with little planning. That’s how accidents happen.
Failure to plan or accurately make needed calculations before or during flight can end in a disaster. Preparedness and a cool head in aviation means everything.
Your analogy as a pilot comparing large, commercial jet flight prep to lease prep with “do it yourself” math vs. the LHer Calc is very interesting.
I understand what you are saying as a former professional pilot, but your level of preparedness is likely in the .1% (not 1%) of all commercial (large aircraft) civil aviation pilots. Likewise, it would be comforting to passengers to know that you are not a “cowboy yahoo” and to hear that you understand the difference between a pitot tube and single or double flare tubing.
However, the number of accidents vs. total flight hours of aircraft being flown by professional pilots with far less advance prep than you were engaging in when actively flying show that the odds of being in a crash with the “cowboy yahoo” when compared with you in the cockpit would be statistically irrelevant in light of modern aircraft, avionics and redundancies.
So it really is not an apt analogy to car leasing and the likelihood of a mistake by not being prepared or using the “wrong” math. In auto leasing, it is likely safe to say that a solid 70-90% of all non-fleet or commercial leases are the equivalent of a flight mishap in favor of the dealer as opposed to the customer, where in commercial flight you have 99.999% of flights being successful in favor of the passenger/crew vs. a mishap on the ground, taxiing, in the air or during takeoff/landing.
I am not discounting pre-flight preparedness or being prepared while airborne, but the leasing situation is a far different scenario in general.
Your “cool head” statement does apply across the board as a pilot and that trait can often be the difference maker - just like in a successful auto lease scenario. In your flight scenario, everyone is counting on the pilot having a cool head. In the auto leasing scenario, the dealer is counting on the customer not having a cool head and making a poor decision in the dealer’s favor.
Good stats here on how safe modern commercial flight is now and how much safer it has become over the last 60 years.
Awesome presentation! I wasn’t trying to compare or draw analogies between car leasing and flight ops. I’m merely saying that having an in depth understanding of the math involved whether it be leasing, aviation, medical imaging, construction, gambling, etc. will always give one a leg up. Decision-making in any of these fields often involves analytical tools. a good understanding of these tools will usually pay dividend in terms of making good decisions that may avoid financial disasters or prevent loss of life.
I agree that the probability of on-board equipment failures resulting in fatalities is very small. BUT it can happen which is why I believe that pilots should be much better prepared in math/physics. Too many business and history majors populating flight decks. I’ve held that believe when I started to fly at age 15. Some of the DEI carriers (AA/UAL/Delta?) eliminated the degree requirement. In 2016, I believe it was the UAL CEO that said, “We have too many white guys” Apparently, their hiring practices changed from merit to identity! Talk about compromising safety… YIKES!
Anyone able to confirm if you (A) run everything without MSDs to find the payment (and thus cost of one security deposit) vs. (B) stating the # of deposits you want to do, adjusting the MF 0.00006/deposit out of the gate, and then finding the payment (and cost of each deposit after) like Ashleigh said above? I’m guessing Ashleigh is correct which does make things a bit better for the MSD purchaser.
I just honestly couldn’t remember. My last MSD deal was back when they each got you 0.00007 reductions. I know BMWFS has changed its rules since pre-Covid to now.
I do agree about the math though. The math doesn’t lie on a lease… if you know the math, then you can catch the traps/trickery. I have a lease calculator on my phone and I also use the LHer Calc (I think it’s great)… just like proving the calculator out.
Thanks for the discussion and for being a part of such a fantastic website.
