[THE JEDI]

Can somebody explain a lease to me... I know you put down money and you owe a payment every month for an agreed upon period 3 yrs or more, now my question is if that agreed upon amount in lease payments is like 25,000 is that the amount you get financed for. Am I making sense

[HFW003]

You get finance for the total cost of the vehicle less any money you put in, if anything.

Where I live and in my circumstances there are tax benefits in leasing so I don't put any funds into the deal.

[dday]

With a lease you are paying for the amount of value the car loses while you have it. For example: if a car costs $50k and is forecasted to be worth $30k in 3 years your lease would be financing the $20k drop. You do not have to put money down, I never have. Leases are good for people who drive less than 12k miles per year and like to change cars frequently

[CarFan]

It would be more precise to say that a Lease allows you to pay only for the portion of the car you use. Like a rental -- you pay a fee for the time you're using it. As for the amount you're actually paying, it must be negotiated. It isn't simply you will use 50% of the car's value over three years and thus pay half of the msrp over 36 months. This forum is replete with examples of lease deals both good and bad. There are lots of tips about how to lease successfully and before taking the plunge at least read and understand the posts by those who recommend against leasing altogether.

[335BOY]

Originally Posted by CarFan

It would be more precise to say that a Lease allows you to pay only for the portion of the car you use. Like a rental -- you pay a fee for the time you're using it. As for the amount you're actually paying, it must be negotiated. It isn't simply you will use 50% of the car's value over three years and thus pay half of the msrp over 36 months. This forum is replete with examples of lease deals both good and bad. There are lots of tips about how to lease successfully and before taking the plunge at least read and understand the posts by those who recommend against leasing altogether.

I've leased for years and this is a great explanation.

[carzaddict]

on top of only paying for the value of the car during those 3 years.....a benefit is you dont have to worry about resale value.

lets say you get into a horrible accident and the car is not totaled but now you're forced to sell it less than the $30k it should be worth.....if you lease, you dont have to worry about that.

Also, lets say you wanted to get a car that was a ridiculous purple color that you really like.....good luck trying to find a buyer who wants it! with a lease you dont have to worry about it...you just return the car.

[Cyberdemon]

Also the money you put "down" needs to be clarified and understood before you sign the lease.

There are:
-Fees (dealer, document, MACO (Advertising) etc)
-Security deposits (Search the forum for MSD's if they are available in your state)
-Taxes (which can be paid up front in a lump sum or financed over the lease)
-Lastly is "cap" (Capitalized) cost reduction (the down payment) - which is any cash you put down on top of this to lower your monthly payment. In general, BMW calculates all of its promotional lease rates with a rather large cap cost reduction. A rarely advertised detail is that if you put $5,000 down on your new lease (to get that juicy $300/month payment) if you drive off the lot and get the car totaled in on coming traffic, that money is immediately lost. So if you plan on putting a large sum of money down, consider keeping that money in the bank account and taking it out monthly to add to your bill rather than risk losing it.

[335BOY]

Assuming 3 yr lease your costs are fixed as vehicle will be under warranty the entire time you have it.

[THE JEDI]

COOOOL, thanks fellow Bimmer heads

[newoldbeemer]

One thing I don't understand about leases is, what exactly happens if you need to get out of the lease and don't have much time. For instance, you are on a visa and you get laid off, you can't stay in the country long enough to find a good buyer.
For that reason alone (fear of layoffs / uncertainty), I've seen some of my friends avoid leases.

Can anyone shed some light on this aspect? Will the dealer buy it back at kbb tradein value at the current month?

[tturedraider]

As far as the financing goes a lease is nothing more than a balloon note, except you can return the car at the end rather than make the balloon payment. The Capitalized Cost is the amount financed. The lease residual is the balloon amount. The Money Factor multiplied by 2,400 is the interest rate (e.g. MF .0013 x 2,400 = 3.12%). Put those numbers into a balloon note calculator and you will get the payment (not including monthly taxes if that is how your state works.)

[tturedraider]

Originally Posted by newoldbeemer

One thing I don't understand about leases is, what exactly happens if you need to get out of the lease and don't have much time. For instance, you are on a visa and you get laid off, you can't stay in the country long enough to find a good buyer.
For that reason alone (fear of layoffs / uncertainty), I've seen some of my friends avoid leases.

Can anyone shed some light on this aspect? Will the dealer buy it back at kbb tradein value at the current month?

Yes and no. You are responsible for fulfilling the terms of the lease. If you cannot find someone to assume the lease you are responsible for paying off the lease at the time you turn it in. Now by paying off the lease you own the car outright. So, the primary option most people would take is to sell the car to someone, an individual or a dealer. Most would choose to "trade-in"/sell the car to a dealer. Presumably a BMW dealer, but not necessarily. This would limit the amount of upfront cash you would have to come up with. The dealer would buy the car for roughly wholesale/auction/trade-in value (the same amount they'd give if you were trading it for a new car) and they would pay that amount to BMWFS. Then you would be responsible for the difference between that amount and the lease payoff amount at the time. Let's say the lease payoff at the time was $40,000 and the amount the dealer was willing to pay for the car was $33,000. You would be responsible for paying $7,000 cash to BMWFS to complete the transaction.

BMWFS will not finance a lease beyond the expiration of a visa for reasons similar to this scenario.

[THE JEDI]

Well I won't be leasing but thanks gents for the info I'd rather purchase and NFCU gives great rates on car loans for customers with good credit. But thank you guys.

[carzaddict]

i have a question about the tax portion.

i paid my taxes upfront...if i get into an accident the moment I leave the dealership....do i lose all that tax money?

also, I registered my car in NY but just moved to NJ and will be registering it there...someone was saying that the tax gets adjusted on your monthly payment, but since i paid the tax upfront...do I get a refund of the difference?

[tturedraider]

Originally Posted by carzaddict

i have a question about the tax portion.

i paid my taxes upfront...if i get into an accident the moment I leave the dealership....do i lose all that tax money?

also, I registered my car in NY but just moved to NJ and will be registering it there...someone was saying that the tax gets adjusted on your monthly payment, but since i paid the tax upfront...do I get a refund of the difference?

Can't answer the second question. First question, insurance pays/reimburses taxes based on the value of the car at the time of loss.