Quote:
Originally Posted by bloozemanAZ
I'm considering doing a 3-year lease on my ordered 2020 M850i landing in early December. I've never have leased before so new territory but have read up and understand all of the variables, etc. The one thing that perplexes me is at seems the residual value is set against the MSRP vs the actual negotiated price. Is that truly the case?
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Leasing amounts to paying the perceived depreciation of the car while it is in your possession for a fixed term and number of miles.
There are only has 3 fundamental components:
Sale Price - MSRP is set by BMW - negotiable from the dealer invoice up, the lower the better for you.
Residual Value of MSRP - in % and set by BMW FS based on duration and allotted mileage - non negotiable, the higher, the better.
Money Factor - set by BMW FS - dealers are free to mark up, check to prevent if you don't want them, base MF is good, lowered MF with multiple security deposits (up to 7 with BMW) is best.
Prepaying the entire amount of the lease agreement lowers it further but it's a bad idea for several reasons.
On cheap leases/ monthly structures/ MSRP, you can elect to mark up the MF a tad to wave the acquisition (also called inception) fee.
Lease term and how many miles is up to you.
BMW FS figures favor the standard 36 months term in most cases.
If the residual value is "R" ; R = MSRP x Residual (%)
The Capital cost (sales price) is "C"
Money Factor is "MF"
Down payment is "D"
Lease term is "N" ; number of months (eg 36 months)
Monthly depreciation fee "MD" = (C-D-R)/N
Monthly lease fee "ML" = MF * ([C-D]+R)
Then the monthly lease payment= MD +ML + tax
Then there are things like sales tax due on rebates and incentives in states like CA and some other details.
Check Edmunds forums for dealer invoice, current MF and residual figures or simply ask your Sales Advisor and recoup the info to confirm.