Paying Lease Up Front

time88 · 01-31-2009, 02:20 PM

Does anyone have experience with paying their lease up front?

Is there any bargaining power behind paying your entire lease up front, so say if your lease $400/36 with 2500 down, just paying the entire 17900 at once?

Sal@AUTOcouture · 01-31-2009, 02:25 PM

you get an 80 point money factor deduction by doing pre-pay

ie: new 328xi has .00175 money factor...it will go to .00095

time88 · 01-31-2009, 02:36 PM

Thank you, I think that works out to a drop from 470 to 415 a month on a 328i, assuming no initial bargaining.

Are there any negatives to doing this besides the opportunity cost (interest gained) from letting that money sit in the bank or in another investment.

corpun · 01-31-2009, 03:00 PM

One-pay style leases have the same risk as putting down cap cost reduction. If the car is stolen or totalled, you stand a good chance of losing most or possibly all of your upfront investment. Gap coverage only pays the distance between the assessed value of the car when its totaled and what you owe on it still. It doesn't help you recoup any initial investment.

In a conventional lease where you've put nothing down, you're only out the payments you've made so far as long as you have gap insurance.

That being said, the prepayment (unlike cap cost reduction payments) does have a benefit in interest reduction, so it would essentially just be a small gamble. The chances of your car getting stolen or totaled are not that high.

time88 · 01-31-2009, 03:08 PM

Thanks for explaining that, it's certainly something to take into consideration.

chrissal1 · 01-31-2009, 11:24 PM

it's a $17,900 gamble. If something happens to the car, i would be shocked if you got your money back. I could be wrong though.

Sal@AUTOcouture · 02-01-2009, 10:26 AM

Quote:

Originally Posted by corpun

One-pay style leases have the same risk as putting down cap cost reduction. If the car is stolen or totalled, you stand a good chance of losing most or possibly all of your upfront investment. Gap coverage only pays the distance between the assessed value of the car when its totaled and what you owe on it still. It doesn't help you recoup any initial investment.

In a conventional lease where you've put nothing down, you're only out the payments you've made so far as long as you have gap insurance.

That being said, the prepayment (unlike cap cost reduction payments) does have a benefit in interest reduction, so it would essentially just be a small gamble. The chances of your car getting stolen or totaled are not that high.

Quote:

Originally Posted by chrissal1

it's a $17,900 gamble. If something happens to the car, i would be shocked if you got your money back. I could be wrong though.

Wrong.

BMW will put you into another car of equal value. You're not out your money.

jjlawyer · 02-03-2009, 11:11 AM

He means if your car is stolen or a total loss. BMW will not put you in a new car - they are not an insurance company. Your insurance will pay you fair market value at the time of the loss. How much is that new car worth one month after delivery? You could loose $10k just like that. Not a risk worth taking.

Paddy · 02-03-2009, 11:18 AM

AFAIK, the MF for a prepaid lease is NOT the advertised money factor, which is apparently a discounted value. The MF used is instead the base MF which is higher than the advertised MF.
I don't know the value off hand but try a search.

Prepaying is not the same as cap cost reduction, so you are covered in case of car being totalled.

MoreCowbell · 02-03-2009, 11:38 AM

I just started a lease last week and did not know this was an option.

Would certainly be interested in this...could I still do it?

01-31-2009, 02:20 PM	#1
time88 New Member 0 Rep 14 Posts Drives: None Join Date: Jan 2009 Location: OC, CA iTrader: (0)	Paying Lease Up Front Does anyone have experience with paying their lease up front? Is there any bargaining power behind paying your entire lease up front, so say if your lease $400/36 with 2500 down, just paying the entire 17900 at once?
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01-31-2009, 02:25 PM	#2
Sal@AUTOcouture 752 Rep 10,100 Posts Drives: E93 M3, E36 M3 Join Date: Feb 2007 Location: Sofla iTrader: (30)	you get an 80 point money factor deduction by doing pre-pay ie: new 328xi has .00175 money factor...it will go to .00095
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01-31-2009, 02:36 PM	#3
time88 New Member 0 Rep 14 Posts Drives: None Join Date: Jan 2009 Location: OC, CA iTrader: (0)	Thank you, I think that works out to a drop from 470 to 415 a month on a 328i, assuming no initial bargaining. Are there any negatives to doing this besides the opportunity cost (interest gained) from letting that money sit in the bank or in another investment.
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01-31-2009, 03:00 PM	#4
corpun Enlisted Member 0 Rep 35 Posts Drives: tl Join Date: Jan 2009 Location: Berkeley iTrader: (0)	One-pay style leases have the same risk as putting down cap cost reduction. If the car is stolen or totalled, you stand a good chance of losing most or possibly all of your upfront investment. Gap coverage only pays the distance between the assessed value of the car when its totaled and what you owe on it still. It doesn't help you recoup any initial investment. In a conventional lease where you've put nothing down, you're only out the payments you've made so far as long as you have gap insurance. That being said, the prepayment (unlike cap cost reduction payments) does have a benefit in interest reduction, so it would essentially just be a small gamble. The chances of your car getting stolen or totaled are not that high.
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01-31-2009, 03:08 PM	#5
time88 New Member 0 Rep 14 Posts Drives: None Join Date: Jan 2009 Location: OC, CA iTrader: (0)	Thanks for explaining that, it's certainly something to take into consideration.
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01-31-2009, 11:24 PM	#6
chrissal1 Second Lieutenant 24 Rep 263 Posts Drives: 340i Join Date: Jun 2005 Location: Austin, TX iTrader: (0)	it's a $17,900 gamble. If something happens to the car, i would be shocked if you got your money back. I could be wrong though.
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02-03-2009, 11:11 AM	#8
jjlawyer Private First Class 9 Rep 115 Posts Drives: 335i '07 6mt Join Date: Jan 2007 Location: Los Angeles iTrader: (0)	He means if your car is stolen or a total loss. BMW will not put you in a new car - they are not an insurance company. Your insurance will pay you fair market value at the time of the loss. How much is that new car worth one month after delivery? You could loose $10k just like that. Not a risk worth taking.
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02-03-2009, 11:18 AM	#9
Paddy Captain 75 Rep 664 Posts Drives: 18' M2, AW Join Date: Nov 2005 Location: San Diego iTrader: (1)	AFAIK, the MF for a prepaid lease is NOT the advertised money factor, which is apparently a discounted value. The MF used is instead the base MF which is higher than the advertised MF. I don't know the value off hand but try a search. Prepaying is not the same as cap cost reduction, so you are covered in case of car being totalled.
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02-03-2009, 11:38 AM	#10
MoreCowbell Lieutenant Colonel 548 Rep 1,702 Posts Drives: 24 i5M60 23 X740 23 Vette Z06 Join Date: Feb 2006 Location: Westchester, NY iTrader: (0)	I just started a lease last week and did not know this was an option. Would certainly be interested in this...could I still do it?
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