Quote:
Originally Posted by LagunaSecaBlue
Some manufacturers will allow you to pay multiple security deposits to buy down the interest rate on your lease. Most leases will require you to pay a security deposit at inception. If a MSD program is available, you pay more than one security deposit. Each additional security deposit will lower your interest rate by a certain amount. That lower interest rate will result in a lower monthly payment. You can calculate an implied rate of return by comparing the monthly savings against the initial "capital outlay" (the additional security deposits). For example, if you pay 6 security deposits at $600 each ($3600 capital outlay), and your new monthly payment is lower by $30 per month compared to your original payment without the 6 MSD, your yearly savings is $360. Applied against the initial capital outlay of $3600, your implied rate of return based on the yearly savings of $360 is 10% - TAX FREE and GUARENTEED. At the end of the lease, you get your $3600 back.
BMW program allows 7 MSD, each one reducing the money factor by 7 basis points.
If you are in the market to lease a car, this is something that's worth looking into, as the dealer probably won't tell you about this. You just need to ask your SA/CA.
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Thank you for the info!
This is a totally new concept to me and something that I've never heard of before. I've leased 4 different BMWs in the last 3 years, is this not something that the dealers usually inform customers of?