MSD vs Cash Down

Pauleebe · 06-18-2013, 09:23 AM

If I am trading in a car, that is typically counted as cash down on a lease, correct? Can that initial trade in/cash down be netted against any dealer fees, ect, and then the excess used as MSDs?

What lowers my monthly payment more, MSDs or cash down, if in the same amoutn (from the trade in)?

R12ax7 · 06-18-2013, 09:31 AM

Yes, trading in a car is the same as cash down (whatever $ they give you being the amount of cash). That can go against your initial fees, first month's payment, other costs.

MSDs work differently. They reduce the money factor - essentially the interest rate you are paying - by a set amount for each security deposit up to a maximum of 6 (i think 6 is the limit and i believe each one reduces the money factor by .00016). So with each security deposit you put down your monthly payment is reduced. At the end of your lease you get all of those security deposits back, with no interest. Essentially you can look at that lump sum and see what kind of interest you would get on that money over 3 years and compare that to the savings per month on your lease.

Cash down payment (or trade-in) works differently in that you dont get that money back and it comes off the top. This money is lost if you total your car or put it up on lease trader, however, it has a bigger impact on the monthly payment.

an extra $1000 down will reduce your payment by ~$20/month. The same $1000 is MSDs (so that would be around 2 security deposits i believe) will reduce your payment in the single digits.

ravennole · 06-18-2013, 10:19 AM

I did 7 msd's and lowered my lease by about 40 a month. If your going to put the car down I would use both and get a very low payment or just msd's and then get that cash back at the end of the lease

Pauleebe · 06-18-2013, 10:36 AM

Ok so it seems like cash down is definitely a better means of lowering the monthly payment. I don't see myself being in a totaled vehicle situation, but this is of a concern. I will likely stick with keeping it as cash down, but will make that decision at delivery.

Taxable fees include the 725 for acquisition and 200 for documentation. Non-taxable fees seem to be 150 for MA for registration, ect. Are these fees capitalized? No, if they come out of the trade in/cash down, correct? (Not sure how they could be capitalized over the lease term if they are paid up front ... just confirming)

06-18-2013, 09:23 AM	#1
Pauleebe Colonel 380 Rep 2,290 Posts Drives: Inbetween BMW's. Join Date: May 2013 Location: Washington, DC iTrader: (0)	MSD vs Cash Down If I am trading in a car, that is typically counted as cash down on a lease, correct? Can that initial trade in/cash down be netted against any dealer fees, ect, and then the excess used as MSDs? What lowers my monthly payment more, MSDs or cash down, if in the same amoutn (from the trade in)?
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06-18-2013, 09:31 AM	#2
R12ax7 Major 120 Rep 1,053 Posts Drives: 2021 340xi Join Date: Mar 2008 Location: Philly iTrader: (3) Garage List 2011 328i [0.00]	Yes, trading in a car is the same as cash down (whatever $ they give you being the amount of cash). That can go against your initial fees, first month's payment, other costs. MSDs work differently. They reduce the money factor - essentially the interest rate you are paying - by a set amount for each security deposit up to a maximum of 6 (i think 6 is the limit and i believe each one reduces the money factor by .00016). So with each security deposit you put down your monthly payment is reduced. At the end of your lease you get all of those security deposits back, with no interest. Essentially you can look at that lump sum and see what kind of interest you would get on that money over 3 years and compare that to the savings per month on your lease. Cash down payment (or trade-in) works differently in that you dont get that money back and it comes off the top. This money is lost if you total your car or put it up on lease trader, however, it has a bigger impact on the monthly payment. an extra $1000 down will reduce your payment by ~$20/month. The same $1000 is MSDs (so that would be around 2 security deposits i believe) will reduce your payment in the single digits. __________________ Current: 2021 340xi Retired: 2018 330xi \| 2016 340i 6MT \| 2013 335i 6MT \| 2011 328i 6MT (N52) \| 2008 335xi (N54)
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06-18-2013, 10:19 AM	#3
ravennole Private 2 Rep 87 Posts Drives: 2001 325 ci coupe Join Date: May 2013 Location: United States iTrader: (0)	I did 7 msd's and lowered my lease by about 40 a month. If your going to put the car down I would use both and get a very low payment or just msd's and then get that cash back at the end of the lease
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06-18-2013, 10:36 AM	#4
Pauleebe Colonel 380 Rep 2,290 Posts Drives: Inbetween BMW's. Join Date: May 2013 Location: Washington, DC iTrader: (0)	Ok so it seems like cash down is definitely a better means of lowering the monthly payment. I don't see myself being in a totaled vehicle situation, but this is of a concern. I will likely stick with keeping it as cash down, but will make that decision at delivery. Taxable fees include the 725 for acquisition and 200 for documentation. Non-taxable fees seem to be 150 for MA for registration, ect. Are these fees capitalized? No, if they come out of the trade in/cash down, correct? (Not sure how they could be capitalized over the lease term if they are paid up front ... just confirming)
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