Lease buyout negotiation

inthemiddle · 05-13-2010, 10:59 AM

Question.....

I'm over my miles by quite a bit.... Need to deal with the end of the lease.... Probably will end up buying the car out, but as we know the residuals are a bit high.... I know they can be negotiated down though....

Question is...if i want to buy it out.... Do i have to tell them the mileage and do they have to see the car ??

If they ask what my mileage is, and I'm over by 5-10k.... Then who's advantage is that ? Mine cause they would be less likely to want it back and harder to selll to someone else ? Or theirs cause they know they'd get $$$ from me upon return of the lease...

Also... If i do NOT want to deal with CPO.... And I buy it out.... What effect do mods have, do they have to see it, etc.... ?

I've seen many threads on returns, but none addressing these two issues...

Thanks

02themax · 05-13-2010, 12:19 PM

Yes they will want to see the kms. It'll be to your advantage cause they don't want to sell a car with higher mileage, they will probably offer you a lower int rate to finance it - like 0.9% or something. The catch is you have to have it CPO'd to get that interest rate I believe, if not then the rate goes up to like 4.9% or something non CPO'd.

sam2428 · 05-13-2010, 12:39 PM

So in essence, you should lease a vehicle and go over your miles to benefit from it? lol

for some reason that doesnt add up to me. I dont have any experience with this in particular, but i would assume your buy out price is going to be higher because of the miles as opposed to if you had stayed within limit. But that is just a guess...can anyone confirm? I'm actually curious (even though I financed my car)

noro · 05-13-2010, 01:25 PM

Pentalty for over-miles is .20 cents (US), which is higher than the actual depreciacion each mile has. They are more likely to want to take the car back and have you pay for the penalty.

As for the residual, BMWFS allows very little wiggle room for the price of the car. In my case the best offer they had is to allow me get the car at the pre-set residual 1 month before the lease was due and they would waive the last payment. IMO that's not a discount, I walked away.

inthemiddle · 05-13-2010, 02:51 PM

Quote:

Originally Posted by sam2428

So in essence, you should lease a vehicle and go over your miles to benefit from it? lol

for some reason that doesnt add up to me. I dont have any experience with this in particular, but i would assume your buy out price is going to be higher because of the miles as opposed to if you had stayed within limit. But that is just a guess...can anyone confirm? I'm actually curious (even though I financed my car)

Well the buyout can't be higher than the contract. Just trying to figure out if I lost any negotiating power ?

Seems like it could go either way. Curious if there is anyone out there that went over and still got a better buyout

Chriztofor · 05-13-2010, 04:41 PM

I believe you can buy miles from BMW in advance for 16 cents per mile. I think you have to purchase it 6 months before the lease us up. Check BMW website or your lease docs

PaulBailey@ltbmw · 05-13-2010, 04:52 PM

Their benefit. They know you'll have to pay either way.

jopa489 · 05-13-2010, 05:22 PM

Quote:

Originally Posted by Takashi

You might make a bit of $$ by doing a private sale and then give the $ you owe back to BMW FS and keep the change. If the car is still under warranty, this route might be better for you.

If you take the car back to BMW FS they are most likely going to charge you for extra miles.

Agreed with this. I think it's to their benefit more than it is yours.

Are you thinking about leasing/buying another BMW? If so, try to work with them. They will very often forgive a good amount of miles (and even roll the remainder into your new contract) if you buy/lease a new one. How much are you over exactly?

And it's $0.17/mi (vs. $0.20) if you buy them in advance.

sonorous · 05-14-2010, 07:40 AM

It is counterintuitive at first but from my perspective, having gone through it recently, the benefit is to the consumer. The lease is closed end type with a contracted residual value. This is your first price protection. If the car is worth more than the residual, because lets say you have low miles, you can by it at the lower contract residual price directly from BMWFS. If the car is worth less, you have other options. You can of course walk away or if you really like the car you can go to a dealer and buy it at a lower price if the value is lower. The dealer can buy the car from BMWFS at its auction value and then resell it to you. As part of this transaction, you can choose to CPO the car for an additional cost but it gets you a 100k warranty and lower interest rate. The price is lower because the true market value is lower.

So for me, I leased my car at about 6% off MSRP. I used it for 3 years and was over mileage by 3-4k. I then purchased the car for about 14% under contract residual. Yes I paid interest as part of the lease but the MF was good and if I bought the car the first time I would not have been able to take advantage of that second 14% negotiation. It made financial sense for me.

Orient330iNYC · 05-14-2010, 08:58 AM

there's a wrinkle to this.

if you buy the car directly from bmwfs for the contracted residual, there is no mileage penalty.

if you have the dealer buy the car out at current market value from bmw fs and cpo it, bmw fs will charge the mileage penalty.

sonorous · 05-14-2010, 09:38 AM

Quote:

Originally Posted by Orient330iNYC

there's a wrinkle to this.

if you buy the car directly from bmwfs for the contracted residual, there is no mileage penalty.

if you have the dealer buy the car out at current market value from bmw fs and cpo it, bmw fs will charge the mileage penalty.

Maybe I got lucky but this was not the case for me. I was over mileage and did not pay any penalty.

Firefly6 · 05-14-2010, 09:42 AM

Not much wiggle room - but the dealer might work with you in getting into a new bmw.

kgb1637 · 05-14-2010, 09:48 AM

It is pretty much a combination of what everyone has been saying. If all you want to do is return the car, then you will pay the mileage penalty and be done with the car. If you want to purchase, the MOST you can pay is what your contract residual, if you tell them you'd like to get in a new one, they will be much more forgiving on penalties.

FrankiE90 · 05-14-2010, 01:26 PM

why if u were over 20k miles maybe 28k.
think about that scenario.
that's 4-5k$ at .17
do you buy the extra miles early or buy out and negotiate for lower.

HPIA4v2 · 05-14-2010, 01:51 PM

Quote:

Originally Posted by Orient330iNYC

there's a wrinkle to this.

if you buy the car directly from bmwfs for the contracted residual, there is no mileage penalty.

if you have the dealer buy the car out at current market value from bmw fs and cpo it, bmw fs will charge the mileage penalty.

IMHO, this one makes sense as far as all parties involved (BMWFS, dealer and leasor).

The argument that doesn't make sense to me,
The car is over mileage but I am buying so don't charge me for over-mileage (after all I am buying it), so BMWFS says OK. Then on the back end you say but the car is over mileage I want residual reduction.
If BMWFS says yes to both, I am leasing and running it over mileage cause the math/logic doesn't add up.

inthemiddle · 05-15-2010, 01:01 AM

Thanks everyone.... I'm not saying that because the mileage is high, I should pay less, just was curious if that would somehow work against me in trying to negotiate a lower buyout...

Reason for a lower buyout is simply that the residual is significantly higher than market value....

And yea, i know i can't end up paying more than the residual, regardless of mileage, Just curious if they would be less willing to want it back..... Vs wanting it back to force me to pay milage Anyway. Interesting thoughts. I appreciate the feedback.....

05-13-2010, 10:59 AM	#1
inthemiddle Lieutenant 37 Rep 471 Posts Drives: 335i Join Date: Jul 2007 Location: Bay Area iTrader: (2)	Lease buyout negotiation - mileage ??? Question..... I'm over my miles by quite a bit.... Need to deal with the end of the lease.... Probably will end up buying the car out, but as we know the residuals are a bit high.... I know they can be negotiated down though.... Question is...if i want to buy it out.... Do i have to tell them the mileage and do they have to see the car ?? If they ask what my mileage is, and I'm over by 5-10k.... Then who's advantage is that ? Mine cause they would be less likely to want it back and harder to selll to someone else ? Or theirs cause they know they'd get $$$ from me upon return of the lease... Also... If i do NOT want to deal with CPO.... And I buy it out.... What effect do mods have, do they have to see it, etc.... ? I've seen many threads on returns, but none addressing these two issues... Thanks
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05-13-2010, 12:19 PM	#2
02themax Captain 28 Rep 946 Posts Drives: E90 335i Join Date: Apr 2008 Location: Calgary, AB iTrader: (6)	Yes they will want to see the kms. It'll be to your advantage cause they don't want to sell a car with higher mileage, they will probably offer you a lower int rate to finance it - like 0.9% or something. The catch is you have to have it CPO'd to get that interest rate I believe, if not then the rate goes up to like 4.9% or something non CPO'd. __________________ E90 335i Sport Package - Logic 7 Sound w/ipod - Bluetooth - Comfort Access - PDC - 19" M3 Reps 275/30 235/35 - Blacklines - 10mil spacers rear, 5mil spacers front - BMW Alarm
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05-13-2010, 12:39 PM	#3
sam2428 Second Lieutenant 22 Rep 247 Posts Drives: 2008 335i Coupe - Alpine White Join Date: Feb 2010 Location: Houston, TX iTrader: (0)	So in essence, you should lease a vehicle and go over your miles to benefit from it? lol for some reason that doesnt add up to me. I dont have any experience with this in particular, but i would assume your buy out price is going to be higher because of the miles as opposed to if you had stayed within limit. But that is just a guess...can anyone confirm? I'm actually curious (even though I financed my car)
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05-13-2010, 01:25 PM	#4
noro Colonel 90 Rep 2,707 Posts Drives: '91 M3, '04 E46 ZHP, '72 2002 Join Date: Aug 2006 Location: Boston iTrader: (0)	Pentalty for over-miles is .20 cents (US), which is higher than the actual depreciacion each mile has. They are more likely to want to take the car back and have you pay for the penalty. As for the residual, BMWFS allows very little wiggle room for the price of the car. In my case the best offer they had is to allow me get the car at the pre-set residual 1 month before the lease was due and they would waive the last payment. IMO that's not a discount, I walked away. __________________ zhpregistry.net - ZHP stats and free classifieds.
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05-13-2010, 04:41 PM	#6
Chriztofor Colonel 103 Rep 2,783 Posts Drives: '06 325i and '13 X5 Join Date: Feb 2010 Location: Chicago Burbs iTrader: (1)	I believe you can buy miles from BMW in advance for 16 cents per mile. I think you have to purchase it 6 months before the lease us up. Check BMW website or your lease docs
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05-13-2010, 04:52 PM	#7
PaulBailey@ltbmw General 663 Rep 26,878 Posts Drives: 2-325 330 2-335 2-Z4 2-135 X5d Join Date: Mar 2007 Location: Huntington Beach, CA iTrader: (34) Garage List 2008 BMW 335i E90 [7.00] 2011 BMW 335i E92 [7.96]	Their benefit. They know you'll have to pay either way.
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05-14-2010, 07:40 AM	#9
sonorous Private First Class 14 Rep 124 Posts Drives: E90 335i Join Date: Mar 2007 Location: NY iTrader: (2)	It is counterintuitive at first but from my perspective, having gone through it recently, the benefit is to the consumer. The lease is closed end type with a contracted residual value. This is your first price protection. If the car is worth more than the residual, because lets say you have low miles, you can by it at the lower contract residual price directly from BMWFS. If the car is worth less, you have other options. You can of course walk away or if you really like the car you can go to a dealer and buy it at a lower price if the value is lower. The dealer can buy the car from BMWFS at its auction value and then resell it to you. As part of this transaction, you can choose to CPO the car for an additional cost but it gets you a 100k warranty and lower interest rate. The price is lower because the true market value is lower. So for me, I leased my car at about 6% off MSRP. I used it for 3 years and was over mileage by 3-4k. I then purchased the car for about 14% under contract residual. Yes I paid interest as part of the lease but the MF was good and if I bought the car the first time I would not have been able to take advantage of that second 14% negotiation. It made financial sense for me.
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05-14-2010, 08:58 AM	#10
Orient330iNYC Brigadier General 1469 Rep 3,552 Posts Drives: 2023 X7 40i Join Date: Apr 2007 Location: Wall St iTrader: (2)	there's a wrinkle to this. if you buy the car directly from bmwfs for the contracted residual, there is no mileage penalty. if you have the dealer buy the car out at current market value from bmw fs and cpo it, bmw fs will charge the mileage penalty. __________________ Present: 2023 G07 40i ZDH/ZDU/ZMP/ZMQ/2NH/ZPK/ZPP/ZRC/300/3AC Past: 2013 335i 6MT ZMM/ZDH/ZTP/3AG/494/508 Past: 2016 F34 335i xDrive ZCW/ZDA/ZDH/ZTP/ZMP/2V5/5DL Past: 2019 G01 M40i ZDA/2VF/ZPP/ZPX/688/3AC
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05-14-2010, 09:42 AM	#12
Firefly6 Lieutenant 12 Rep 412 Posts Drives: 2018 330i Xdrive Join Date: Aug 2007 Location: New Jersey iTrader: (2)	Not much wiggle room - but the dealer might work with you in getting into a new bmw.
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05-14-2010, 09:48 AM	#13
kgb1637 Lieutenant Colonel 21 Rep 1,519 Posts Drives: RS5 Join Date: Sep 2008 Location: Baltimore, MD iTrader: (0)	It is pretty much a combination of what everyone has been saying. If all you want to do is return the car, then you will pay the mileage penalty and be done with the car. If you want to purchase, the MOST you can pay is what your contract residual, if you tell them you'd like to get in a new one, they will be much more forgiving on penalties. __________________ Retired - '08 E90 335i Sparkling Graphite/Gray Dakota Leather, ZSP, ZCW, ZPP, Navi, ipod, Sat
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05-14-2010, 01:26 PM	#14
FrankiE90 Major General 654 Rep 8,801 Posts Drives: Krooked Sk8board Join Date: Feb 2008 Location: Pasadena, Ca iTrader: (11)	why if u were over 20k miles maybe 28k. think about that scenario. that's 4-5k$ at .17 do you buy the extra miles early or buy out and negotiate for lower. __________________ FrankiE90 AKA:.[The TANK] *CLICK THE SIG E90s (been gone but not forgotten) • KW clubsports • • • • • • • • • • 18" BBS GT4 // Build E30 (pending) + E46 M3 Wagon ESTORIL Blue
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05-15-2010, 01:01 AM	#16
inthemiddle Lieutenant 37 Rep 471 Posts Drives: 335i Join Date: Jul 2007 Location: Bay Area iTrader: (2)	Thanks everyone.... I'm not saying that because the mileage is high, I should pay less, just was curious if that would somehow work against me in trying to negotiate a lower buyout... Reason for a lower buyout is simply that the residual is significantly higher than market value.... And yea, i know i can't end up paying more than the residual, regardless of mileage, Just curious if they would be less willing to want it back..... Vs wanting it back to force me to pay milage Anyway. Interesting thoughts. I appreciate the feedback.....
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