Does money down on a lease even make sense?

vindicator · 03-13-2009, 06:16 PM

The more I think about it...The more I think NO. That money, as small as it maybe, could be collecting interest, etc. Plus, if you get into trouble you have extra money laying around.

OneBad335XI · 03-13-2009, 06:18 PM

All it does is lower your payment, I guess its just buyers choice?

vindicator · 03-13-2009, 06:23 PM

You're right. Most people do put monthly payments down. It makes us feel better when we see a lower monthly payment. Its all mental..

MCMLXXXIX · 03-13-2009, 09:30 PM

put $0 down payment on my lease

shocka1212 · 03-13-2009, 09:42 PM

Quote:

Originally Posted by MCMLXXXIX

put $0 down payment on my lease

and how much are you paying?

MCMLXXXIX · 03-13-2009, 09:46 PM

Quote:

Originally Posted by shocka1212

and how much are you paying?

~$700 a month

on my last lease, put 2500 down. nothing this time

vindicator · 03-13-2009, 10:36 PM

Quote:

Originally Posted by MCMLXXXIX

put $0 down payment on my lease

What was your reasoning for $0 this time?

SoCalTech · 03-13-2009, 10:47 PM

If I'm not mistaken, there's still interest built into the lease payment. If you put money down, you will be spending less on interest.

chrisE92 · 03-13-2009, 10:57 PM

If I could do it again, I'd rather take that down payment and put it right in the bank, letting it collect interest. Then every month, I'd draw a little from that account to help make the payments.

Phil G. · 03-14-2009, 08:31 AM

Quote:

Originally Posted by OneBad335XI

All it does is lower your payment, I guess its just buyers choice?

It is just that. If you can afford the monthly payment with zero down, and you feel OK with that fee, it is best to lease with no money down. We put $1500 down on our last lease - had the cash and getting the lease to $500/month felt better. It is just buyer's choice.

Paddy · 03-14-2009, 11:07 AM

2 cases where it makes sense...

1. Peace of mind, to reduce the monthly from $600 range to $500 range, for example.
2. Putting a small amount down to reduce the monthly for MSD. MSD are rounded up to next $50, so if your monthly is $601, your MSD's will cost $650 each. A small down payment would reduce your MSD's to $600.

Any down payment "may" be at risk if your car is totalled, other than that risk there is no downside to making a down payment.

Putting money down will reduce the amount you are financing and thus reduce the total interest you will pay over the life of the lease.

If you can guarantee a better savings rate (after tax) on the down payment value than the equivalent lease rate, then you may be better off not putting the money down. This is admittedly a rare case, but for a while there 08' lease specials were going for almost 0% MF with 2 MSD's.

A couple 2-3K down is no biggie, anything more should be considered carefully.

dannygenio · 03-14-2009, 01:44 PM

lol 2500 on savings make 3.88$ a month ....with 1.84% interest

Why you guys driving a beamer

Phil G. · 03-14-2009, 03:08 PM

Quote:

Originally Posted by dannygenio

lol 2500 on savings make 3.88$ a month ....with 1.84% interest

Why you guys driving a beamer

Why are we trying to save a few bucks? Because we're smart enough to know that if we do that, we'll be able to afford one. By the way, a "Beamer" is a motorcycle, A "Bimmer" is a car. Just thought you might want to know for future reference!

Houman21 · 03-15-2009, 04:40 AM

Save the downpayment - put it into gap insurance - what do you guys think?

vindicator · 03-15-2009, 08:02 AM

Quote:

Originally Posted by dannygenio

lol 2500 on savings make 3.88$ a month ....with 1.84% interest

Why you guys driving a beamer

Money is money. I could easily buy the car cash. But I like my cash where it is. Also, did you guys hear anything about not being able to use Creidt Cards on down payments?

NinetyEight740 · 03-15-2009, 10:37 AM

none whatsoever...

Paddy · 03-15-2009, 11:38 AM

Quote:

Originally Posted by Houman21

Save the downpayment - put it into gap insurance - what do you guys think?

BMW leases already have gap insurance built in. Depending on your particular circumstances you may or may not recover any down payment.

Gap covers you for diminished value of the vehicle. Say BMW states residual value at lease end is 30K but because of a major accident (and some frame damage), to which the insurance company does not total the car but repairs instead, leaving your vehicle worth 10K at lease end. Gap covers you/BMWFS for the 20K loss of value (gap) on the vehicle.

If you put 10k down on a 50K vehicle and the car was totalled, depending on current car values the insurance company might declare the value of the vehicle at time of accident as $35K, that money will go to BMWFS first and you will probably get little/none of your down payment back.

As far as I understand it. Correct me if I'm wrong anyone

Houman21 · 03-15-2009, 01:37 PM

Quote:

Originally Posted by Paddy

BMW leases already have gap insurance built in. Depending on your particular circumstances you may or may not recover any down payment.

Gap covers you for diminished value of the vehicle. Say BMW states residual value at lease end is 30K but because of a major accident (and some frame damage), to which the insurance company does not total the car but repairs instead, leaving your vehicle worth 10K at lease end. Gap covers you/BMWFS for the 20K loss of value (gap) on the vehicle.

If you put 10k down on a 50K vehicle and the car was totalled, depending on current car values the insurance company might declare the value of the vehicle at time of accident as $35K, that money will go to BMWFS first and you will probably get little/none of your down payment back.

As far as I understand it. Correct me if I'm wrong anyone

Good to know - Thanks Paddy

darkcloud · 03-15-2009, 01:38 PM

Quote:

Originally Posted by vindicator

Also, did you guys hear anything about not being able to use Creidt Cards on down payments?

I think this may all be dependent on the particular dealer. I paid all my upfront costs with my Amex. Although that was back in 2006.

No downpayment btw. Just security deposit, tax, title and 1st month

I went to look at the IS at the time. Lexus tried to throw a $6,900 downpayment at me when talking numbers. I gave the guy a "ha, yeaaaa no" and I promptly left.

Paddy · 03-16-2009, 10:15 AM

Quote:

Originally Posted by darkcloud

I think this may all be dependent on the particular dealer. I paid all my upfront costs with my Amex. Although that was back in 2006.

No downpayment btw. Just security deposit, tax, title and 1st month

I went to look at the IS at the time. Lexus tried to throw a $6,900 downpayment at me when talking numbers. I gave the guy a "ha, yeaaaa no" and I promptly left.

Typically all those BMW specials where you see $399/month lease or similar, involve a hefty (>4K) down payment. Even the ones advertised on BMWUSA website assume a similar down payment.

MyE92 · 03-16-2009, 10:30 AM

Can someone explain how the no down payment/multiple security deposits work? I know there are some people out there who didnt put a down payment, but they did multiple security deposits instead.

TENCHI · 03-16-2009, 10:52 AM

I never put money down on a lease except for the sec deposit and fees

03-13-2009, 06:16 PM	#1
vindicator balllllllllin 20 Rep 173 Posts Drives: 2009 335i xDrive Join Date: Jun 2008 Location: MI iTrader: (0)	Does money down on a lease even make sense? The more I think about it...The more I think NO. That money, as small as it maybe, could be collecting interest, etc. Plus, if you get into trouble you have extra money laying around. __________________
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03-13-2009, 06:18 PM	#2
OneBad335XI Private First Class 9 Rep 168 Posts Drives: 2009 Nissan GTR Prem. Join Date: Jan 2009 Location: Chicago iTrader: (2)	All it does is lower your payment, I guess its just buyers choice?
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03-13-2009, 06:23 PM	#3
vindicator balllllllllin 20 Rep 173 Posts Drives: 2009 335i xDrive Join Date: Jun 2008 Location: MI iTrader: (0)	You're right. Most people do put monthly payments down. It makes us feel better when we see a lower monthly payment. Its all mental.. __________________
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03-13-2009, 09:30 PM	#4
MCMLXXXIX wat 238 Rep 3,406 Posts Drives: a gr3at whit3 5hark Join Date: Oct 2008 Location: Oct 2008 iTrader: (0)	put $0 down payment on my lease __________________ 2012 Toyota Highlander SE - PAST - 2008 e92 335i, 2006 e90 325i
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03-13-2009, 10:47 PM	#8
SoCalTech Captain 24 Rep 648 Posts Drives: Not a BMW yet... Join Date: Oct 2008 Location: Redondo Beach, Ca iTrader: (0)	If I'm not mistaken, there's still interest built into the lease payment. If you put money down, you will be spending less on interest.
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03-13-2009, 10:57 PM	#9
chrisE92 Brigadier General 245 Rep 4,494 Posts Drives: Monaco Blue E92 Join Date: Sep 2007 Location: LA to HB iTrader: (21)	If I could do it again, I'd rather take that down payment and put it right in the bank, letting it collect interest. Then every month, I'd draw a little from that account to help make the payments. __________________ photos
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03-14-2009, 11:07 AM	#11
Paddy Captain 74 Rep 664 Posts Drives: 18' M2, AW Join Date: Nov 2005 Location: San Diego iTrader: (1)	2 cases where it makes sense... 1. Peace of mind, to reduce the monthly from $600 range to $500 range, for example. 2. Putting a small amount down to reduce the monthly for MSD. MSD are rounded up to next $50, so if your monthly is $601, your MSD's will cost $650 each. A small down payment would reduce your MSD's to $600. Any down payment "may" be at risk if your car is totalled, other than that risk there is no downside to making a down payment. Putting money down will reduce the amount you are financing and thus reduce the total interest you will pay over the life of the lease. If you can guarantee a better savings rate (after tax) on the down payment value than the equivalent lease rate, then you may be better off not putting the money down. This is admittedly a rare case, but for a while there 08' lease specials were going for almost 0% MF with 2 MSD's. A couple 2-3K down is no biggie, anything more should be considered carefully.
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03-14-2009, 01:44 PM	#12
dannygenio Banned 6 Rep 567 Posts Drives: 2008 E92 Flaming Red Join Date: Feb 2009 Location: Philly iTrader: (0)	lol 2500 on savings make 3.88$ a month ....with 1.84% interest Why you guys driving a beamer
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03-15-2009, 04:40 AM	#14
Houman21 Captain 30 Rep 949 Posts Drives: Nothin right now Join Date: Jul 2005 Location: L.A. iTrader: (0)	Save the downpayment - put it into gap insurance - what do you guys think? __________________ 2008 e92 335i Step \| Is Gone - It was fun but not meant to be \| M3 - Cancelled \| 135 Ordered
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03-15-2009, 10:37 AM	#16
NinetyEight740 Major General 231 Rep 5,691 Posts Drives: 2 - 2013 535i msport Join Date: Nov 2008 Location: Orange County California iTrader: (2) Garage List 2010 E91 [0.00]	none whatsoever...
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03-16-2009, 10:30 AM	#21
MyE92 El Presidente 278 Rep 6,962 Posts Drives: your mom wild. Join Date: May 2007 Location: NJ iTrader: (24)	Can someone explain how the no down payment/multiple security deposits work? I know there are some people out there who didnt put a down payment, but they did multiple security deposits instead.
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03-16-2009, 10:52 AM	#22
TENCHI Lieutenant 53 Rep 552 Posts Drives: '19 G12, '17 E300 Join Date: Feb 2006 Location: Seattle iTrader: (0)	I never put money down on a lease except for the sec deposit and fees __________________
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