BMWFS lease early pay off without taking ownership of the vehicle

Hey Hackr,
This could be uncommon but comment appreciated :grinning:

Interested in an investment property and my loan agent recommend to get rid of my recent lease for more loan amount.

To get rid of lease balance, from my understanding I can either payoff the lease or trade in the car but both options not fit my needs well since I need it for a while but do not plan to own for long term. Thus, I am thinking about paying the remaining balance in one payment without buying the car off.

This lease has $100k payoff and show $45k on credit report as the total remaining lease payment. The BMWFS representative said they can not covert a month to month lease to one payment after initiated but I can just pay monthly x remaining months in one payment.

I am thinking about this option to pay everything now since this would get $400k additional property loan at current low rate.

My loss from this lease would be

  1. About $1400 (based on 87mf/2.09% rate) interest already calculated at beginning but I am not taking benefit since paying in advance
  2. If the car totaled, I could potentially get nothing from my advanced payment or have long negotiation with BMWFS

Any other concern I am unaware?
Comment appreciated!

You can just transfer the lease, comes off credit, no negative equity, you loose MSDs (unless you get them back directly from transferee, and any downpayment you may have put down).

Depending on the FS paying off your obligation may not fulfill the lease. Specific bmw policy, I’m not familiar with. I know @Bostoncarconcierge had different experiences with ally and chase (iirc).

Thanks friend.
Transfer is pretty close to trade to dealership. I traded in lease to dealership a few times but usually when approaching maturity of a lease.
For this case, I prefer to keep the car until the end of lease term but paying monthly balance upfront

Transfer the lease to a family/close-friend member outside the household? That way, you keep the car and lower your Debt to Income ratio.

Then transfer it back after your deal is done.

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I can confirm that BMWFS will remove the lease obligation from your credit report if all payments are made in full in advance. I have done this a couple of times and within a month of doing so the account showed as closed. As an aside, Toyota financial services handled it the same way.

I do not believe this would be the case if you made payments in advance. Your account would show a credit balance all the way through the end of the lease term, and that would be money that would come back to you.

Great idea! :+1: The cost will be $500 or $1000 and lower than interest loss of paying in advance but this friend has to be under the same auto insurance plan or does not really matter? If I keep my auto insurance as is, any concern if the policy holder is not the leasee? Or it will be covered by VIN?

Once you paid full in advance, they will close the account on credit profile even if you still having the lease for remaining term?

BMWFS is relative reasonable to work with and that’s why we stay with them :grinning:

That doesn’t seem right that they would close out the account. What happens if you end up not returning the car at lease end?

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Absolutely yes. To be honest I was a little surprised by this as well. But BMWFS has done that on my end twice. I actually still have the two cars sitting in my driveway and they were paid off over a year ago.

Honestly I don’t know. But as far as my credit report is concerned, neither of these two cars are on it as an active account. They are both marked as fully satisfied and closed In the same manner as other leases are on cars that I have long since returned.

If the car totaled at 24th month of the lease, still get 12 remaining payment back?
That would be even better

Two of these cars I still have, which two…

If you were to have made those 12 remaining payments in advance, yes. They will show as “Unearned Amount” on your account.

That said you should call BMWFS and confirm this directly.

Here’s an example of some advance payments on a BMWFS payoff statement showing as “Unearned”.

Since BMWFS only put remaining lease amount as debt instead of whole payoff, it make sense to close the account if zero outstanding balance. If lease not returned they can probably reopen the account and bill residual amount as debt and track thru GPS module they placed in car😜

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Do the accounts on BMWFS show as closed too? Can you still transfer those paid-off cars? And did they return your MSDs? Or could it just be that your credit reports show as the accounts as closed, but the actual accounts aren’t closed yet?

Correct, when you first open the lease if you check your credit report the debt reported is simply the sum of your lease payments. If it was a $170k M8 Comp converible with $200 a month payments on a 36 mo lease because of a $30,000 down payment, the debt obligation would report as $7200.

Believe the account only closed on credit report but you still have all function thru BMWFS account

BMWFS retains the account as open on their end so that it is still serviceable, you can still talk with them about the account, etc. I can confirm that a car in this state is also eligible for lease transfer as well. I actually have my BMW i3 in this assumable state with BMWFS right now, but I honestly don’t even want to bother with transferring it out. I’m just going to return it to the dealer early and take my mileage credit.

MSDs (if applicable) are not returned until the car is physically returned.

To any outside entity looking at your financial state of affairs, the car will not show up as a debt obligation. I am certainly not an expert in forensic credit difging, but anything that I can see on my report makes no distinction between a paid off car that I have returned and a paid off car that I haven’t with BMWFS. As mentioned above, the same thing appears through with Toyota Financial Services. I do not believe this is true with all leasing companies however.