Is there some return threshold which could guide one on knowing when to lay down MSD’s? I know Is there is some return formula for MSD’s but assume you have the below scenario would you do MAX MSD’s or pay the upfront or both. I am really trying to learn if i should be using the MSD route as a savings opportunity.
Assuming Pre-incentive selling price of 62K, Discount of 20% (wishful thinking), Rebates $3750, Base MF .00119, 60% Residual…what would you long term smart guys choose and why. I know its a roughly $1300 return on my dollars between MSD and no but straing 0 at signing would be $454 thoughts or if there is an guide to help me learn and decide point me that way.
7 msd $1204 drive off
Pre-tax Monthly Payment: $393
Monthly Payment with Tax: $417
Drive-Off: $1,204
MSD Payment (Refundable): $3,150
7 MSD’s 0 Drive off
Pre-tax Monthly Payment: $427
Monthly Payment with Tax: $454
Drive-Off: $0
MSD Payment (Refundable): $3,500
MSDs are always a good deal, imo. I always do max MSDs with zero drive off. Yes, theoretically you are financing the money you would have put down, but in your scenario take the 1204 divide by 36 and it’s 33.44, add that to the 417 you would have paid and you get 450-451, so you essentially save $3 per month by putting the 1204 down. Just keep it simple and always do max MSDs with zero DAS. It’s pointless if you don’t do the max MSDs if you have the money available, it’s an excellent return on your money. Also a benefit if the car gets totaled, the only downside I see is sometimes if you want to put your vehicle up for a lease swap sometimes people are hesitant to give the full MSD amount or they just want to haggle more.
On my latest BMW I put $7,700 in MSDs and it saves me $66 per month ($2,376) total savings. That’s a huge ROI.
Sorry, my pedantic nature has to ask but doesnt the total lease cost omit the return gained from the MSD (i.e lower payment x period)…Because in this case i would go with the 2159 + max MSD’s if i negate the return.
7 msd 1204 drive off
Pre-tax Monthly Payment: $393
Monthly Payment with Tax: $417
Drive-Off: $1,204
thanks this makes sense. I am innately cheap when it comes to relinquishing anything in my savings/investment accounts without knowing there is a tangible benefit.
Yup this i assumed but good to understand. I think i am ready to at least make a few calls to try and negotiate. I may wind up failing but that’s what the great brokers on here are for. I consider them my personal BCP plan .
I’ve also heard that the financing company will automatically deduct any excess wear and tear from the MSD you put down at the beginning of the lease. Have any of you had issues with this? Or is this more brand specific?
If I put an MSD to lower my rate on a BMW lease, how would that affect if I sold the car, i.e. Carmax, Carvana, etc. and not return it? Can I still get it that back? I’m closing a lease deal but I’m still trying to determine the best route. Details as follows:
You should always confirm that your buy out price doesn’t already have the MSD return factored in, but assuming not, the MSDs come back to you.
With that said, BMW leases tend to have artificially inflated RVs, so they tend to spend most of their lease life upsidedown. If you have a good deal on a BMW, transferring out of it rather than selling it usually is the easier path. In that case, you do not get your MSDs back and would need to get the person you’re transferring to to pay you the equivalent amount at transfer time (this generally complicates things).
I wouldn’t bother with MSDs if I was planning to transfer even with the old policy. Yah, the return is nice and the money savings is great, but you end up narrowing your potential transfer customer base so significantly because most aren’t going to be familiar enough with MSDs to be worth the hassle.
.