I am preparing to set up negotiations for a new vehicle within the next four weeks, and after spending time here (as well as on Edmunds) I am in need of a bit of advice as I set up my pro forma run.
My partner and I are located in NorCal, looking at leasing either a VW Golf Alltrack or BMW X1. Given that neither BMWFS or VW Finance offer MSD programs, we were considering buying down our lease payment with a higher cap cost reduction payment (on the order of $6k). I’d appreciate any constructive guidance on the wisdom of our thought process. I’ve owned MINI, VW, and Audi, and we are leaning BMW, mainly because that cap cost reduction, coupled with current MF rates, allow us to pay south of $200/mo for a fully loaded X1 vs. going the VW route.
I would pay msds and the rest at cap reduction. Msds have been discussed at length here. However south of 200 maybe if you pay tax and fees on top of your downpayment of 6000.
I would suggest reading the basics again. Any money you put down is lost if the car is stolen or totalled. That is why it is recommended NOT to put down any money beyond the basics.
@JamesBond thanks. Read the basics, looking for advice on a workaround. As articulated elsewhere on the forum, BMWFS no longer offers an MSD program, nor does VW. Were that not the case, I would structure our offer with MSDs. Given present circumstances, I am trying to figure out how to approach deal structure. I’d rather not put our cash in a down payment, but am curious as to whether a larger (single) security deposit would have any effect at all with respect to MF reduction. Or am I just a day late and dollar short?
Put your 6k in a savings account, use it to pay off the higher monthly payment each month. No risk other than paying a bit more in interest. [Or lease a model with interest rate near 0, so interest isn’t an issue].
It’s only a maybe that you might lose some/all of your down payment if the car is stolen or totaled, not a certainty. If the insurance company deems the car is worth what the payoff would have been without a down payment, then there is no loss to the lessee, as he gets his share of the equity back. Not a high probability really, but a potential risk.
If the lease has GAP insurance built-in (a potentially big benefit), then it makes sense not to put any money down. The loss of some/all of the down payment is avoided, as well as responsibility for any negative equity.
If I’m not mistaken, BMW’s MF is the same for all their products and not that special at 0.00166, right? Or do they subvent the rate on X1s, I don’t know. You could find out on edmunds.com if you haven’t already, or I’m sure it’s been discussed somewhere here for July. VWs rates are all over the place, I think.
If you can bring down BMW payment to < $200, I’ve got to believe you can do the same with VW.
Try calling James Stanford at Concord BMW (I’ve found him great to work with) or James Jamous at VW San Francisco. He generates screaming deals.
Why would you even consider buying down your monthly lease payment? What’s the difference between a $200/mth payment and a $366/mth payment on the same vehicle other than you forking over $6,000 on the front end of the deal for the sole purpose of making your payment appear to only be $200??
Put the $6k in a savings account and pay the $366/mth.
Now if you are paying $6,000 as MSD’s to lower your money factor then that is a whole different ballgame and something you should do without hesitation.
Thanks KD6-3.7. Been digesting all of the information provided. Going to be reaching out to dealers in the next two weeks, after August info comes out. I’m East Bay-based, and did my preliminary reconnaissance at Weatherford and VW of Oakland. Will reach out to both folks you mentioned as well!
Mostly psychological. Some people think long term and want lower payments when thinking about possible job loss or some other unexpected expenses in the future while having enough cash to put down today. Sure, they can put this cash away for that, but they may not trust themselves to keep it stashed away for 3 years.
Thanks for the counsel. To clarify, you’re suggesting that I start negotiations by proposing 0 down, and working up from there, correct? Preparing my spreadsheets this weekend before reaching out to dealers. Will keep folks updated on my progress (or lack thereof).
Entirely psychological, in my case. With a bit of concern about cash management over the next few years. I’d prefer to run with an MSD based deal, but can’t get over my past experiences with Audi and Mercedes. Thanks for the counsel and kind words Ursus!
Not psychological in my case. I have $15k that I need to write off from my taxes this year and I was just going to put that as down payment on a lease, I had no idea I’d basically loose that if my car was totaled or stolen after 3 months, for example. I don’t have any other options in this case? I read on Audi’s brochure saying GAP insurance would not apply to leased cars? I want to have the $15k expensed this year and keep my monthly payments low toward the rest of the lease.
This is the last deal I’ve been working on:
Audi SQ5 2018 MSRP $62,735, dealer price $54,481, $15k down, 10k miles, 24 months x $199.43/month (w/ CA tax). I’d greatly appreciate any insight, thanks in advance!
As stated above you will lose the 15k if your car gets totaled. If you have 15k to spare look at a possibility of doing a one pay lease for 2 years. Mercedes allows one pay lease.
