Rent Charge 6614?!

[spdandpwr]

Hi all,

Just got back from the dealer to see that my "rent charge" is listed as 6,614.00. For context the Depreciation and Amortized amounts add up to 30,924.31. Is there any recourse here? I have paperwork that was signed that says my money factor was locked in at .00152...in my haste to get in the car, I didn't see that the Rent Charge was so high.

Thanks

[boss2k]

What the heck is rent charge?

[spdandpwr]

I'm not sure, my guess is that it's a charge for the financing of the vehicle. Since there's a separate charge for taxes in the amount of 49 dollars

[sharkfighter]

Originally Posted by boss2k

What the heck is rent charge?

Yes it's your finance charge plug your numbers into a lease calculator, if your msrp is near $80k I'd bet you have the base mf rate.

[spdandpwr]

So I figured it out (p.s. this is why I don't do leases). The dealer shafted me on the money factor by doing a nice little bait and switch. I was quoted at .00152, only to get .0019 or so (per my calculations).

[Ibiza]

Originally Posted by spdandpwr

So I figured it out (p.s. this is why I don't do leases). The dealer shafted me on the money factor by doing a nice little bait and switch. I was quoted at .00152, only to get .0019 or so (per my calculations).

The a way to defeat this, just go into the new car sales office when your numbers are 'plugged'. I did it yesterday for my PCD X5M, new sales manager was off yesterday who I ordered from so his associates had to prepare the paper work (wanted to Dec 2017 incentives and departed for Italy and flying. Back into GSP for the PCD next week. I told them what the price was ($1,000 under dealship coast), $4,000 in rebates and buy MF of 0.00152. I was told you have to be a really good customer to buy MF. Anyway, I was assisting putting the numbers into centernet for my deal. Also, helped that this was 5th BMW over six years from this center. My 'assigned' CA was clueless about the whole process- he gets the token PIA credit.

[spdandpwr]

Called the dealer -- they're going to write a check for the difference

[Nikolas]

Originally Posted by spdandpwr

Called the dealer -- they're going to write a check for the difference

That's pretty rare! Good job!

[Clark_Kent]

Originally Posted by spdandpwr

Called the dealer -- they're going to write a check for the difference

I would expect nothing less since you signed documents locking you into the base MF. Glad you got it sorted without incident.

[spdandpwr]

Yea, that beings said, the "interest" on a lease makes no sense. You're better off financing the car for 6 years. You'll get a lower interest and net almost the same on payment. I'm running the numbers now...almost wish I went for the finance.

[Clark_Kent]

Originally Posted by spdandpwr

Yea, that beings said, the "interest" on a lease makes no sense. You're better off financing the car for 6 years. You'll get a lower interest and net almost the same on payment. I'm running the numbers now...almost wish I went for the finance.

This thread will get interesting once the lease czars catch wind of this statement.

All jokes aside, feel free to share your detailed analysis. I'd be interested in seeing it.

[aerostar]

I was unhappy that I leased my 235i at first but now I'm in a M3 so there's that.

But yeah, I essentially threw away 400 a month for 33 months. Lol

[Draper]

Originally Posted by spdandpwr

Yea, that beings said, the "interest" on a lease makes no sense. You're better off financing the car for 6 years. You'll get a lower interest and net almost the same on payment. I'm running the numbers now...almost wish I went for the finance.

The lease vs buy argument has many facets which I won't go into here, but in either case you're paying interest on $80k no matter what.

FWIW, a .00152 MF equates to about a 3.648% APR, while BMW's current finance rates are 3.89%.

[Clark_Kent]

Originally Posted by Draper

The lease vs buy argument has many facets which I won't go into here, but in either case you're paying interest on $80k no matter what.

FWIW, a .00152 MF equates to about a 3.648% APR, while BMW's current finance rates are 3.89%.

BMWFS was also offering 0% for 60 months and 1.9% for 72 months using the demo car loophole. I'm not sure if these special financing offers have carried forward for 2018.

[Draper]

Originally Posted by Clark_Kent

BMWFS was also offering 0% for 60 months and 1.9% for 72 months using the demo car loophole. I'm not sure if these special financing offers have carried forward for 2018.

If you can snag a promo like that it can make purchasing a little more appealing, but you also have to remember in most states you'll be on the hook for an extra ~$50k worth of sales tax.

[spdandpwr]

Originally Posted by Draper

If you can snag a promo like that it can make purchasing a little more appealing, but you also have to remember in most states you'll be on the hook for an extra ~$50k worth of sales tax.

Ah, forgot about the sales tax equation. That said, on finance, you can leverage the "equity" towards a tax credit so in essence you can go on and not have to pay as much in sales taxes.

Tomato / Tomato at the end of it all. It is nice to be able to give BMW two middle fingers when the car is ready for return in 3 years.

[drkeng]

this reminded me to schedule a payment to BMWUSA.
thanks!

just one more.

[GrussGott]

Originally Posted by spdandpwr

Tomato / Tomato at the end of it all. It is nice to be able to give BMW two middle fingers when the car is ready for return in 3 years.

I'm a lease czar, and you nailed it: a lease puts the economic risk on BMWFS, without eliminating your option to buy/loan. So if your car loses value due to accident, markets, whatever, you've already locked in your "buyer" at the pre-loss price and if you still want to buy it, then they must "sell" it to you for the pre-locked price.

Mercedes-Benz and Porsche charge high lease rates because they don't want to eat the risk like BMW does ...

So for me, if someone is offering to take risk off your plate for nothing, the polite thing to do is let them.


But it is a much trickier financial contract that's widely misunderstood and also used to dupe morons - thus my advice is, if you can't/won't read a lease contract, NEVER do a lease because chances are you got screwed ... and the funny thing is, having done at least 20 across three brands and 10+ dealerships I've never had a single contract that

(a.) The dealership finance department understood, and
(b.) Wasn't chock full of errors.

So if you did a lease and didn't read it all and tie all the numbers - it's probably wrong.

[keylime503]

Originally Posted by Draper

The lease vs buy argument has many facets which I won't go into here, but in either case you're paying interest on $80k no matter what.

FWIW, a .00152 MF equates to about a 3.648% APR, while BMW's current finance rates are 3.89%.

On a lease aren't you only paying interest on sale price - residual? So on a 60% residual and an 80k car (assume $0 discount) you're only paying interest on $32k, right?

[Draper]

Originally Posted by keylime503

On a lease aren't you only paying interest on sale price - residual? So on a 60% residual and an 80k car (assume $0 discount) you're only paying interest on $32k, right?

Technically you pay interest on the cap cost + residual, but if you set your lease up the right way this will be the same as the sale price.

Think of it this way. BMWFS is loaning you $80k to buy a car, with an agreement to purchase the car from you after 3 years.

[spdandpwr]

Originally Posted by Draper

Technically you pay interest on the cap cost + residual, but if you set your lease up the right way this will be the same as the sale price.

Think of it this way. BMWFS is loaning you $80k to buy a car, with an agreement to purchase the car from you after 3 years.

What do you mean? I'm rephrasing below to be sure I'm understanding...

You pay interest on the Net Cap Cost (or Adjusted Cap Cost), which is the total price of the vehicle minus any rebates, discounts, and downpayment AND the Residual, which is how much the car is worth at the end of the lease.

Therefore, if your Adjusted Cap Cost is $72,000 ($80k MSRP minus $8k in rebates and dealer discount), then you add that to the residual $45 (ballpark number) and multiply it by your Money Factor: .00152. That will get you your monthly Rent Charge (in essence the cost to finance the vehicle).

[SakhirM4]

Originally Posted by Draper

The lease vs buy argument has many facets which I won't go into here, but in either case you're paying interest on $80k no matter what.

FWIW, a .00152 MF equates to about a 3.648% APR, while BMW's current finance rates are 3.89%.

That's only if you finance. I paid cash and had no interest to pay.