Long story short, I am wet behind the ears on leasing vehicles. I was told that I was leasing at a good price, but talking to other i3 forum members it seems that this might not be true. It is hard to get a good comparison. 2017 fully loaded BMW i3 REX My drive off was $2500. My monthly is $510. My area is Bronx, NY (8.875%). And I received a $7500 tax credit, and (supposedly) a $1,500 USAA discount, though I don’t see it documented in the lease paperwork.
I am using this as a learning experience.
Did I do anything wrong on this lease? If I did, where should I look to improve next time?
How you did on the lease really depends on only a few variables – what you ended up paying for the car, the residual value used to calculate depreciation, the amount of additional fees charged by the dealer, and the interest rate (or Money Factor) you pay to finance the vehicle.
With $2500 down, that $510 number seems high. To reverse engineer things – from the residual it appears the MSRP was $56,895 – if so, the $52,465 seems like a decent discount. The fees I don’t really know, but you are having to add back in the entire sales tax (I don’t know if that is correct in NYS – this varies by state. In my state, you only pay sales tax on the actual monthly payment, so you’re not paying tax on the residual value, which is a considerable savings). Some dealers apparently work the whole sales tax into the equation even though you don’t really owe it… something to check on.
The bigger issue I see is the ‘rent charge,’ which is too high based on what BMW finance rates are. I would expect this to be about $1000 lower, based on a Money Factor of .00134. It would appear your dealer marked up the interest rate. This is a way for the dealer to give you a bigger ‘discount’ but to essentially take that discount back by making money on the interest charge. That $1000 over 36 months is $27/month.
Sales tax is calculated on $52,465 and added back in to be distributed over the 36 months (+$2245.75). That is the exact MSRP on the vehicle. $56,895. @willwar14
I am definitely enjoying the car. It’s not breaking the bank or anything. I am just treating this opportunity as a learning experience. I am sure that I made some mistakes here and there, and I just wanted some help to figure them out so that I am better prepared for my next lease.
MF probably has been marked up. Could have pushed for a bigger discount too probably but its a 2017 so not sure how much you could push them. The USAA rebate is included in the 2500 rebate probably below the 7500 credit. Does NYS offer a credit too?
For the record, I understand that people recommend against putting cash down, since in the case that the car is stolen or totaled, you don’t get that money back. So, although putting no cash down will raise the payment, by doing so you are shifting the risk onto the leasing company. (Although, you may need to check for gap insurance on the vehicle, since the amount owed is increased w/o the money down.)
One thing for future BMW leases is to consider ‘buying down’ the money factor. With BMW, you can reduce the MF by .00007 for a deposit of 1 month’s payment, and you can do up to 7 of them. This is a refundable deposit. It appears the implicit interest rate is around 12% - 14% on this deposit, so well worth it (and that is, of course, an after-tax return). Makes more sense to do the MSD’s with your cash rather than putting money down, since you’re earning 12% and paying 3 - 4% by applying the cash to MSD’s rather than putting it down against the actual lease.
Also, per this experience, scrutinize the Money Factor (or reverse engineer it if need be) to see if you’re paying too high a rate.
It’s always good to want to learn from one’s experiences, but many of the things you’ll need to know for your next lease will only be known in Dec 2019, such as:
Typical discounts before rebates
Which rebates (if any) you qualify for and how many are stackable
What the MF is, and whether it is being marked up
What the LAF is, and whether it is being marked up
Etc.
Than you could have asked for bigger discount. If sales price includes 1500 rebate than. But you have 2500 rebates additional as well included. What is that
If you want to learn, the best way is to read this completely http://leasehackr.com/blog/2016/4/17/how-to-calculate-lease-payments-by-hand and then help other people out on this forum do the math. In 3 years, the numbers will change but the fundamentals should be the same. After doing hundreds of calcs until your next lease, you can work as a F&I Manager at a dealer!
I calculated the MF (Rent charge/36*[Cap + Residual]) and it is 0.00157. So right off the bat, they marked up the MF for you.
You did not put down MSD. So if you knew then, what you know now, you would have asked for the correct MF, put down MSD and I think this would have saved you at least 2k in rent charges ie 50 a month.
Also there is no mention of any 1.5k USAA discount, so they pulled a fast one on you as well there.
It’s not breaking the bank or anything. I am just treating this opportunity as a learning experience. I am sure that I made some mistakes here and there, and I just wanted some help to figure them out so that I am better prepared for my next lease.