[Pimpsy]

I found a 2013 550i xDrive fully loaded (6K miles) that I would like to acquire, and I'm working out the various financing options with the dealer.

A lease is very advantageous to me as a business owner since I can write almost the entire lease off, but the lease numbers he provided just don't add up.

MSRP: $57,957
Selling Price: $57,457
Taxes: $2082.20
MF: 0.000170
Residual: $27,126
Term: 36 months
Monthly payment: $1,131.52

Aside from the money factor being maxed, I understand that CPO vehicles lease differently but these numbers just don't add up? The loan and select numbers make sense (which I won't bother posting here except on request), but I lose a very generous tax incentive by purchasing.

I am on the verge of closing this deal and any help would be super appreciated.

Thanks for reading,

Alan

[douggreglas]

That's a horrible deal. For that sort of lease payment, you can lease a brand new 550xi at sticker price. If you bargain the price down a bit off of sticker, your deal on a brand new one quickly gets much better than this.

The residual on this deal is 46.8%, which is what's killing it. It's around 60% on a new one.

[Pimpsy]

A new lease would be that much monthly, but ultimately it's still a more expensive purchase as the residual would be much higher. I do plan to keep the car (probably) so I have to consider total cost.

What I don't understand is when I add up the payments and the residual, it's a good deal more than the selling price. I thought the lease payments would be the selling price minus the residual, with taxes and financing (MF) then added to the payments?

[Sharbotcom]

Take a look at this formula on Edmunds http://www.edmunds.com/car-leasing/c...e-payment.html. Are you sure the MF is .000170 and not .00170? According to the formula an MF of .000170 is .408% (less than half of a percent). I'd expect a 4% lease rate on a CPO. In any case, if you use the formula shown on Edmunds and your percentage was about 4% then your payments work out to about $1,043.22 a month with taxes however it does not include any "administration" fees etc.

Bill

[Pimpsy]

Thanks for taking the time to work up those numbers. Yes, it is .001700 aka 4.08%.

You result is similar to mine, and there is a discrepancy of over $3K which seems like a great deal for administration fees. Is that usual?

[493263]

As Doug said, the residual is jacking up your monthly payment. Seriously, at $1131 a month, you might as well go for a new 2014-2015 to lease.

I don't believe the 2013 550xi will be that cheap in 3 years. It should be worth $30k+. That dealer is ripping you off.

You also didn't tell us what options and packages the vehicle has.

[Sharbotcom]

It seems high. I'd ask the salesperson to give you the breakdown. Lease payments have traditionally been a smoke and mirrors opportunity for the dealers to make more money.

[Pimpsy]

Included Packages

Executive Package

• Power Tailgate
• Comfort Access Keyless Entry
• Soft-Close Automatic Doors
• Ceramic Controls
• Head-Up Display
• Satellite Radio
• Premium Hi-Fi System
• BMW Apps
• Instrument Cluster w/Extended Contents
• Smartphone Integration

Dynamic Handling Package

• Adaptive Drive
• Dynamic Damper Control w/ZDH

M Sport Package

• Wheels: 19" x 8.5" Light Alloy

M Sport Package w/ZMP

• Dark Wood Trim
• M Steering Wheel
• Aerodynamic Kit
• Shadowline Exterior Trim
• Anthracite Headliner
• Tires: P245/40R19 AS Run-Flat

Luxury Seating Package

• Front Ventilated Seats
• Active Front Seats

Driver Assistance Package

• Active Blind Spot Detection
• Side & Top View Cameras

Cold Weather Package

• Heated Steering Wheel
• Heated Front Seats
• Heated Rear Seats
• Retractable Headlight Washers

Driver Assistance Plus

• Lane Departure Warning
• Speed Limit Info

I think it's a good deal at $58K. Single owner, 6K miles. MSRP was $82.5.

[Pimpsy]

Update: the additional cost appears to be something called a "rent payment", a concept with which I was not familiar.

After plotting out all of the numbers, I am just going to finance the car. Many thanks to everyone for the thoughtful replies.

That said, I am so excited! I think this is a very well optioned car for $57,457 and I can't wait to take possession.

[550Reasons]

lol damn a bit more and lease a 14 M5

[Pimpsy]

Originally Posted by 550Reasons

lol damn a bit more and lease a 14 M5

I test drove an M5 and while I was attracted to the idea of owning one, I didn't feel like it was a good fit. My wife will often drive this car to work, and I prefer her to have AWD in the winter here in NJ.

Also, if one is going to lease a new car every 3 years of course it is beneficial for the residuals to be high as it lowers the lease cost. But, if one wants to buy a car yet not lose the significant tax advantage of leasing, it is better to have the residual very low in order to transfer the bulk of the purchase price to the lease payments. (A few years ago it was not uncommon to see 100K mile leases for this reason.) As a business owner I can easily write off at least 75% of the lease payments, which in effect puts more than 25% of the total lease cost back into my pocket. A big savings!

[ezmaass]

Originally Posted by AlanM

Included Packages

Executive Package

• Power Tailgate
• Comfort Access Keyless Entry
• Soft-Close Automatic Doors
• Ceramic Controls
• Head-Up Display
• Satellite Radio
• Premium Hi-Fi System
• BMW Apps
• Instrument Cluster w/Extended Contents
• Smartphone Integration

Dynamic Handling Package

• Adaptive Drive
• Dynamic Damper Control w/ZDH

M Sport Package

• Wheels: 19" x 8.5" Light Alloy

M Sport Package w/ZMP

• Dark Wood Trim
• M Steering Wheel
• Aerodynamic Kit
• Shadowline Exterior Trim
• Anthracite Headliner
• Tires: P245/40R19 AS Run-Flat

Luxury Seating Package

• Front Ventilated Seats
• Active Front Seats

Driver Assistance Package

• Active Blind Spot Detection
• Side & Top View Cameras

Cold Weather Package

• Heated Steering Wheel
• Heated Front Seats
• Heated Rear Seats
• Retractable Headlight Washers

Driver Assistance Plus

• Lane Departure Warning
• Speed Limit Info

I think it's a good deal at $58K. Single owner, 6K miles. MSRP was $82.5.

Let's put it this way, I bought my 550xi brand new with an MSRP of ~$86k (higher and better equipped than this car you're looking at)... and the dealer was offering a lease in the high $900's with nothing down. This is a major rip-off at over $1,100/mo on a 2-year old 550xi no less. RUN don't walk from this dealer.

Option out what you want brand-new and shop it around. Just call 3 - 4 dealers with exactly what you want and have them price out their best deal. I promise you'll have much better options on a new 2015.

[Pimpsy]

It's a terrible lease deal, but I already knew that. I was attempting to deconstruct the terms so I could call the dealer out on exactly where the extra charges were coming from and maybe get the price down to a reasonable number as I prefer to lease if the numbers are right.

Also, I'd love to buy a 2015 550i xDrive fully loaded but as you say it's $90K+. This one has virtually every option (including each that I care about most) is basically brand new, and only costs $57,457, so I think I am just going to buy it.

[zer0cool]

That lease payment makes no sense... Your monthly payments will be lower if you buy it instead... so why lease...

2013 550's are pre LCI... I don't think it's a good buy... The pre LCI vs LCI 550is perform quite differently and have quite different gas efficiency.

You can probably lease fairly well equipped new 550i in the mid 700's, maybe not right now, but deals come up pretty frequently...

[Gilgorm]

I think you made the right decision to buy instead of lease. Your lease deal is horrible.

I ran across this problem in the 90s with a MB. I leased a new MB for 3 years then thought about re-leasing it for an additional 2 years since the car was in excellent shape with no problems. I was expecting a good deal but instead was presented with a lease from the twilight zone. The interest rate was high, the residual was low and the payments were going up significantly for a 3 year old used car. I did what you are doing and bought the car for less than a new lease. I paid cash and used another car as my business car.
Manufacturers want to sell/lease 'new' cars. They offer low rates, high residuals and for that the first leasee gets the best deal (relatively speaking). The manufacturer gets a steady stream of high-priced low-mileage used cars to then preferably re-sell, rather than re-lease to the public. High mileage no-warranty cars are most often wholesaled into the secondary used car market.