I am helping a friend with a 2024 i4 M50 lease deal. Plan is to buy it out after ~ 6-months to take advantage of $7,500 rebate. MF is currently at 0.00280 which I believe is marked up from 0.00240. Discount is only 4.7% which I know is average at best.
Everything else looked good to me but I was hoping for another set of eyes. Anything else we should be doing? Shortening term, lower mileage, wave bank fee for 0.0005 markup?
TIA!
You can buy after 4 payments without screwing the dealer on the rate markup chargeback, 5 if you want to play it safe, 4.7% isn’t bad if you plan to buy-out, remember only a few months ago these cars were MSRP only, so the market now has to slowly adjust to the deluge of them that BMW dropped on the dealer network. I would push for 6/7+ in CA and let them markup the rate.
Thank you sir, very good info on the number of payments! Does everything else look right? Is this essentially a $0 DAS with the $7,500 rebate covering everything?
I have a calc for the i4 M50 on my deal sheet, plug in the numbers and give it a check if you’d like!
Is this an order or a stock car?
We’re doing 8% off in NorCal with base MF.
Thank you!!!
It’s an order car. I definitely appreciate the offer but my friend had a very specific car and doesn’t want to change. They started working with the dealer before pricing started to improve.
No worries! Just figured I’d offer.
Yup. Confirmed all the calculations. Your upfront fees are covered by the difference between the 7500 rebate and the 4962.40 cap reduction or what amounts to 2537.60.
EDIT: corrected cap reduction.
I’m trying to determine the approximate buyout after 6 months of lease payments. Here is my calculator:
| 6 Lease Payments | $7,273.14 |
|---|---|
| Remaining Depreciation | $22,500.00 |
| Residual Value | $38,655.45 |
| Tax on Dep + Res | $5,045.32 |
| Purchase Fee | $300.00 |
| Total | $73,773.91 |
Does that look accurate?
Nope. In fact, 73,773.91 is impossible. Your adjusted cap is much less than 73,773.91. You can’t owe more than your adj. cap unless you miss payments. I need to see you lease contract, especially the section that describes how the adjusted lease balance is calculated (PM me if you like). Some fund providers use straight line depreciation, others use the constant yield method to compute depreciation while a few use a hybrid of the two… whichever one yields the higher adjusted lease balance at the point of purchase (CCAP does this). Most fund providers use the constant yield (actuarial) method. I don’t know what BMW does.
After making 6 payments, the constant yield method gives 63,322.49 or 63,678.53 depending upon the language in your contract. You’ll need to add your PO fee plus any applicable taxes and admin fees to the applicable adjusted lease balance.
It’s very hard to determine this accurately, boiled down simply your buyout at any time is residual value plus remaining payments minus remaining interest. My guess is around 62k for what your buyout will be after making 6 months of regular payments.
Obviously you have an amazing mathematic resource here in @delta737h, but this can be murky.
Net/net there is a large benefit in leasing to buyout on the i4 in states where the tax is only paid monthly, but trying to figure out your to-the-penny buyout ahead can be tough.
Thanks @IAC_Scott for your kind words. And, yes, you’re absolutely correct! Calculating lease payoffs can be very tricky (one has to pay close attention to the language in the contract). Luckily, I’ve been able to nail early payoffs every time given the 7 or 8 times that I’ve done it for others. There was a problem with 5th 3rd bank many years ago. They were showing $83 more (if my memory serves me correctly) than what I calculated. After speaking with someone in their consumer retail leasing department, they agreed with my calculation. I was very lucky to speak with someone that knew what they were doing.
BMWFS has always been able to give me a payoff schedule at inception so I can plan it out.
Regarding the MF, since your friend is planning on buying it out I would offer to trade a higher MF for a higher discount. Don’t go crazy with it, but the dealer can make up the difference of the discount on a rebate for a higher rate.
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