Calculating BMW Loaner Residual

Ask the Hackrs
41

What is inventoried, what date I shall look on Carfax for ?

42

If the car was purchased and placed in the dealerships possession before that date. Example: Vehicle was purchased from auction 11/15/2018 received in dealer inventory 11/28/2018. Not sure if that would show up in Carfax.

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43

Thank you for your informative comments.
Is this in Carfax

Listed as a manufacturer vehicle
Vehicle sold at auction

before 12/1 a sign that this would qualify as a lease candidate ? What is manufacturer vehicle ?

44

Iā€™d recommend simply calling the dealership, no one can know what the actual dates are except them

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45

Yes this is true - as a broker I sell a lots of BMW demos and most often the ones under 5000 miles have the better lease. The discount has to be so huge for it to make up for miles over 5000 and typically you donā€™t get there. Also sometimes you can beat a demo price on a brand new car if the programs are not all good and the dealer is willing to go very deep. In LA area a couple of dealers are at times more so below the market so they can beat demo deals of other dealers!

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46

A real eye opener, thanks.

47

This is for cars under 5000 miles on them ā€“
I spoke to the finance person at a BMW dealer today and he told me that any lease has to account for any miles over 500 in the lease numbers.

But another dealer didnā€™t consider the miles on the loaner and didnā€™t adjust the RV. It is very confusing.

Also, this might be a dumb question but what is the multiplier value (A * miles, what is A ?) that is used to reduce the RV ?

Thanks.

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48

Heā€™s wrong. And to answer your question, itā€™s $0.25 per mile

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49

Thanks. And who is wrong ? Dealer 1 or 2 ?

50

Sounds like both. Residual takes a hit at 5k miles

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51

$.25 per mile above 500 miles, so (A-500)*$0.25

Mercedes and others are different

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52

Thanks @max_g for that clarification.

One more question, is it the discretion of the dealer to make that residual adjustment or mandated by BMWFS ?

Because, I got couple of quotes, and some dealers didnā€™t do the adjustment, but they did mark up the Selling Price. Will BMWFS reject the quote if the residual adjustment is not made ?

53

They will probably reject the contract

54

Iā€™ve been reading this thread and trying to find the answer. Can you tell me if the dealer is playing me? Iā€™ve been quoted 59% residual on 10K miles per year lease on a retired loaner with only 4,000 farts. Shouldnā€™t the residual be 67%? The dealer is saying no because its a retired loaner the residual is 59%.

55

24 or 36 months?

56

24 months is the term

57

Oh, residual starts declining after 500 miles?

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58

Yes. Calculate the mileage charge with the formula above. Divide by 1% of MSRP. Deduct the % amount from the appropriate RV depending on car, trim and lease length. Play with the calculator for lease length, while changing the RV in 3% steps, to find a sweet spot. Take into account potential tire expense and maintenance expense (if applicable due to the age of the loaner).

59

Mileage penalty @ 500+, which would reduce the residual. Youā€™re thinking of the 6% hit at 5k and 8% at 7500. The miles would adjust accordingly in addition to the % deduction there too. You also lose all incentives at 5k+

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60

Ah, thatā€™s right. Thanks for keeping me straight!

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