[moneymike713]

I know that leaving msds lowers your money factor but is it worth it for me to come out of pocket $5400 or keep that in my account gaining interest?

[drbimmer97]

if you're leasing, try to put the least money down

[Orient330iNYC]

Originally Posted by moneymike713

I know that leaving msds lowers your money factor but is it worth it for me to come out of pocket $5400 or keep that in my account gaining interest?

you need to figure out whats the return....

in my case 8 security deposits saved me 1300 over the term of the lease...
how much interest would the same amount get in a savings account

[extmtnbkr]

I may be wrong, but I don't think the general rule of multiple security deposits lowering your money factor is inapplicable in NY.

[moneymike713]

^I am buying in NJ.

[raleedy]

The general rule stated up above, not to put money down if you don't have to, applies most strongly to capital cost reduction. That's because you never recover that money. Multiple security deposits, on the other hand, are a kind of investment. If $4,000 up front saves $1,300 on a 36-month lease, remember that the $1,300 is after-tax dollars. And you get your $4K back at the end of the lease. If your highest income tax rate is, say, 40%, that's a pre-tax return of $2,167,almost 55% over 3 years, or almost 19% per year. If you can find a savings account that will give you that kind of return, please let me know the name of the bank!

[Mace]

Originally Posted by raleedy

The general rule stated up above, not to put money down if you don't have to, applies most strongly to capital cost reduction. That's because you never recover that money. Multiple security deposits, on the other hand, are a kind of investment. If $4,000 up front saves $1,300 on a 36-month lease, remember that the $1,300 is after-tax dollars. And you get your $4K back at the end of the lease. If your highest income tax rate is, say, 40%, that's a pre-tax return of $2,167,almost 55% over 3 years, or almost 19% per year. If you can find a savings account that will give you that kind of return, please let me know the name of the bank!

I don't think you've got the numbers quite right. First, if you do a cap cost reduction the money isn't lost and you do get it back in the form of reduced monthly payments over the life of the lease and $4k in CCR nets you a bigger savings in monthly payments than the same amount in MSD. HOWEVER, the risk is if you total your car. Say you put $4k down in CCR, drive off the lot and get smacked by the semi delivering the next load of 3-series and it's totalled. The insurance company will pay for the car but all of it goes to BMWFS, you won't be getting your $4k back, it's gone, "POOF!". Say now that you put $4k into MSD and the same thing happens...well BMWFS returns the MSD to you after your insurance company pays them. The bottom line is that MSD is the smart way to go if you have the extra cash up front.

As far as the tax implications are concerned...well pre or post-tax dollars isn't the point. It's all post-tax dollars unless you're talking about putting the money into a tax-deferred account in which case you won't see it for a long time. For most of us MSD actually works out to about a 6 or 7 percent return per year by doing MSD on a 3-year lease but you would save more by doing CCR...assuming you don't total the car. These numbers would all vary according to your lease agreement so you should do the numbers to know for sure. Overall MSD is a no-risk investment with decent return while CCR is high-risk with a slightly better return. I recommend MSD.

Also, for extmtnbkr...the MSD is a BMWFS program, it doesn't matter if you're in NY or elsewhere. Your MF is lowered by .00007 per extra security deposit up to a total of .00049 for all seven.

[raleedy]

Yes, I didn't say it right regarding the Cap Cost Reduction -- of course it reduces the monthly lease payment. But pre-tax vs. post-tax matters if you are a consumer who leases and you are comparing the effect of MSD's with leaving that money where it generates taxable income.

[!Xoible]

as little money as possible. no point of MSD unless u have a psycho issue where ur monthly HAS to be a certain amount

[Orient330iNYC]

Originally Posted by mantis

as little money as possible. no point of MSD unless u have a psycho issue where ur monthly HAS to be a certain amount

wrong... MSDs reduce the interest rate BMWFS charges on the lease, and you get the money back at the end.

i put 4K down. at the end of the lease i get the 4K back, plus saved 1300 in interest

[Orient330iNYC]

Originally Posted by Mace

As far as the tax implications are concerned...well pre or post-tax dollars isn't the point. It's all post-tax dollars unless you're talking about putting the money into a tax-deferred account in which case you won't see it for a long time. For most of us MSD actually works out to about a 6 or 7 percent return per year by doing MSD on a 3-year lease but you would save more by doing CCR...assuming you don't total the car. These numbers would all vary according to your lease agreement so you should do the numbers to know for sure. Overall MSD is a no-risk investment with decent return while CCR is high-risk with a slightly better return. I recommend MSD.

Also, for extmtnbkr...the MSD is a BMWFS program, it doesn't matter if you're in NY or elsewhere. Your MF is lowered by .00007 per extra security deposit up to a total of .00049 for all seven.

MSD program is illegal for NYS dealers.

[Mace]

Originally Posted by Orient330iNYC

MSD program is illegal for NYS dealers.

I've never heard that, if so I stand corrected. I wonder what the basis is for prohibiting it...too good of a deal for the buyer?

[Evil335i]

how much are the security deposit anyone? 500?

[raleedy]

500 each

[Mace]

Originally Posted by Evil335i

how much are the security deposit anyone? 500?

It's your payment rounded up to the next $50 increment. For instance, a payment of $558 would require a $600 security deposit. Each MSD would also be $600.

[Evil335i]

Originally Posted by Mace

It's your payment rounded up to the next $50 increment. For instance, a payment of $558 would require a $600 security deposit. Each MSD would also be $600.

ohhh thanks