Hi,

I'm going to be the proud new owner of a Mini Cooper soon (Week 25 production)!

Anyway, I've been working on the leasing details.

Can you guys let me know what you think of the numbers?

Mini Cooper MSRP $24200 - according to KBB
includes- convenience package, automatic transmission, sport seats, navigation, and automatic air

Purchase price is $23400.

Looking for a 36month 15k lease.
Residual quoted is 0.65
Doc+Bank Fee = $894
Total Cap Cost= $24294
Money Factor= 0.00256
Monthly Payments= $340.35 ($366.73 including CA sales tax)

Does this seem like a reasonable deal?

I've read a bit about the MSD offered through BMWFS, but not sure if it's available for Mini in CA. Supposedly that can do up to 0.00049 money factor reduction, which would take this monthly to $320.74 (not including tax).

Looking for help/suggestions as this is my first lease, and also first time buying a car!

Thanks!

btw, it's chili red with a white top

 

Unless you have your own business and get to write it off (or you can expense your mileage like I do - 50.5 cents/mile), then a lease is usually not a good way to go.

You are likely better off buying it via the MINI Select program - then you will be able to sell it and get much of your money back instead of giving it to them. I did this - on the 4 year Select (they will do 3 also). But 4 has a lower payment and I'm planning to sell it in 3 or so anyway. My monthly payment is $366 or so.

The other thing for you to consider is finding a 2007 w/ low mileage. This is very do-able. We did this for Amy (my girlfriend) in April and it worked out VERY well - 2007 MCS w/ premium package, cold package, auto trans, and 4200 miles for a mere $22,000. A great value. We got her a 6 year loan to keep the monthly payment down - about $400 or $410.

Then we sold her old 2005 MC - it had $11250 left on the Mini Select loan and we sold it for $15995. So, she paid her loan off and had nearly $5K to the good.

 

Can you let me know more about the Mini Select program? From what I understand, it's pretty much the same as a lease, where you pay monthly payments for 3-4 years, and then have the option of buying the Mini with a balloon payment at that time. How would you consider this different from a lease?

The way I compared a lease vs outright purchase was I calculated the opportunity cost of paying for the car outright.

I've set aside 80k for all my car expenses. Now suppose I purchase the Mini outright with cash, that would leave me with $58,073.69 ($80,000 - $23,400*7.75% tax). Now over three years at 6% return on investment, that would become $65,251.

Compared to a lease where the figures above give you a $4,400.73 yearly payments (including sales tax), at the end of the three years, my car fund would have $80,430.51 assuming also a 6% return on investment.

Now the difference between the two $80,430.51 - $58,073.69 = $22,356.82.

The residual value of the car at the end of the lease is only $15,730. So if I can sell the 3-yr Mini for more than $22,356.82, then buying outright with cash saves me money. But by going with the lease, I can transfer that depreciation risk (since I don't know how much for certain I can get for the car) to the bank. And, if I really could sell the car for $22,356.82 at that time, then I would purchase off the lease and sell it to the private party.

So I think leasing isn't always a bad idea for individuals. It really depends on your situation.

But I'm not sure how that Mini Select is really different from a lease.

Comments? Does that sound right?

 

I could be wrong, but with the MINI Select Program, I'm guessing that you have to pay sales tax on the entire vehicle price. With a lease, you only pay sales tax on the payments. If you decide to purchase the car at the end of the lease, then you pay tax on the purchase price at that time. If you decide to give the car back, then you don't. So if you don't expect to keep the car, a lease could end up being the better route to go.

 

With MINI Select, it's just exactly the same as buying a car but with a special finance package that provides a low monthly payment and a balloon payment at the end of the term (most people choose 3 or 4 years). 4 has lower payments naturally. Standard financing works the same but the monthly payment is much higher, since the entire loan is for 60 months (well - for a typical 5 year auto loan anyway, though her new one is 72 months).

Yes - you do pay taxes w/ MINI Select - BUT it is part of the total loan and so is also part of the same monthly payment - so the $366 for me includes everything - car and taxes, registration, doc fee, etc. And this is a 2008 MCS. Yes - like always you are paying for them month-by-month, not upfront in one big payment, which you would only do if you bought the car outright in cash. So, MINI Select is similar to a lease from a monthly payment standpoint in terms of costs and what it includes.

Here's the primary difference between a lease and the MINI Select. The latter - you OWN the car. So, if there's any danger of mileage allowances etc, that's no worry (except in terms of pure value). It's possible that maintenance works differently w/ a lease but I have no idea and so let's just say that's all the same.

So, let's take what we did with Amy's 2005 MC. Her original purchase price with everything was around 19,700 or so. Her MINI Select monthly payment was around $309 and she sold the car after 3.5 years for $16000. Yet the remainder on the loan was $11,250.

If this had been a lease and she gave the car back to them, the dealer would not give her a check for the difference between the buyout and the actual market value of the car. The dealer would keep that money and make it when they sold it (or re-leased it). So that's the POSSIBLE benefit of the MINI Select program vs. a Lease. And this is not for everyone or all situations though. I'm merely saying that it might be worth his consideration - that's all.

For my situation it works out very well - I expense my mileage. So, let's say that I drive 1000 miles per month on business - my car costs me around $161/month instead of $666 or so (payment + gas + insurance). I would break even around 1350 miles/month.

I wasn't comparing at all a lease vs. buying the car outright. Just a lease vs. buying the car using MINI Select financing. And yes - it's similar in some ways to a lease - the monthly payment is nice and low. But the car is truly yours - see the above for my rationales.

My other thought is that your numbers for your investments are subject to taxes. And we should stay away from those details because then we could be assuming gosh knows what as to performance, long-term vs. short-term capital gains, etc etc. I'm merely saying that the numbers might be different.

Anyway I hope that this might be helpful to you - or at least gives you one more reason to drink heavily.

 

Yeah this is totally helpful.

Can I ask what money factor and residual you were offered for your 2008 MCS? Also what was the purchase price?

If I can get something close to that, then I'd strongly consider that instead of a lease!

 

looks right to me.

 

Sure you can ask. Nothing about MINI is a secret :-) Just make sure you MA gives me half his commission :-)

So I bought a new 2008 MCS 5-6 weeks ago using MINI Select, 4 year. The car was $24000 plus 7% NJ tax. My finance percentage is 6.5% (or really close to it anyway - I I am off on this a bit there wouldn't be much difference in monthly payments). My deposit was $1000, and so that was taken off the top. The dealer WILL do a new order with $500 down though but this didn't concern me.

I was more interested in the extras I negotiated (the best part is the ipod adapter - this thing is great - you can control your ipod from your multifunction steering wheel). It's not perfect - I can't seem to search by artist just by lists but it's still great. Or maybe I just haven't figured out how to use it properly.

Ok - so you might ask ... why didn't I do a 2007 low mileage sweet deal like we did for Amy? That's a super good question and I'm glad you asked. :-) I'm just too darn tall to have a MCS w/ sunroof as a daily driver - and nearly every 07/08 mcs has the premium package. On top of that I wanted a 6-speed w/ lds so I needed a custom order.

Please be aware of one thing - with the higher gas prices the demand for MINIs has gone from high to super really high. So, they may be less flexible to negotiate now than they were a few months ago. My local dealer has 6 MINIs on the lot - NONE OF THEM are for sale - they are strictly taking orders and all the "dealer lot" cars for the next 2 months are already sold and have yet to arrive from their sea voyage.

However, the used car market is still considered VERY soft and if you can find a 2007 MCS w/ low miles (NOT at a MINI dealer), then you can do very well, especially if you can travel a bit to get it. We found hers on cars.com - 90 miles away on Long Island. Totally worth the trip - the seafood in Brooklyn is awesome. Correction - AWESOME! Mussels, Scungili .... mmmmm ...

 

What's the residual on your Mini Select? How much would the balloon payment be?

 

Sorry - I forget what the balloon would be at 4 years - since I'm planning to sell in 3 and honestly all that paperwork is in my glove box downstairs :-)

I do know that it will be a bunch less than the market value of the car :-) Well - if I can be so bold as to assume that MINI will command a premium at that time anyway. Let's say around $14500 or so.

 

Thanks for the reply. I am definitely learning more

I've read a little more about the Mini Select and I don't see how it offers more options than a regular lease. For example, at the end of term for a Mini Select, you must either purchase with balloon payment, or refinance. You can also sell the car as you're intending on doing, but you take on the risk of actually owning the car. For example, if you total your car during these 3 years you plan on driving it, you would owe the entire amount of the Mini right? Is there a gap-insurance equivalent for the Mini Select?

If the residual values are similar to a lease, why wouldn't you simply purchase the lease at term end and sell it to a private seller if you are able to get a higher market value? Wouldn't this accomplish a similar goal?

So with the Mini Select, you get the ownership aspect of the car along with low lease-like monthly payments. But you take upon the risk of ownership, along with the risk that the Mini may depreciate more than calculated (e.g., oil costs over $20 a gallon and demand for non-electric cars drops - i know unlikely but just example). It really just sounds like a lease to me, but without the option of turning in the car at the end of term.

Am I missing something?

 

Thanks for the reply. I am definitely learning more

Not if you're listening to me - I don't know crap - just ask my ex-wife. But I do SOUND pretty good don't I? Anyway, I do not have all the answers - just my meager and mis-informed opinion.

I've read a little more about the Mini Select and I don't see how it offers more options than a regular lease. For example, at the end of term for a Mini Select, you must either purchase with balloon payment, or refinance.

But I don't need to wait for the end of my loan. I can sell my car anytime I want. In my case, I've got a 4 year loan and am planning to sell around 3 years into it. This way, the car is well within it's 4 year / 50,000 warranty - and prospective buyers can be confident that if there are any wacky issues that they are totally covered by MINI (and I theoretically maximize my value and have no time pressure on me at all when I want to sell. Technically, I DO lose the remainder of my 4-year NJ registration though :-)

You can also sell the car as you're intending on doing, but you take on the risk of actually owning the car. For example, if you total your car during these 3 years you plan on driving it, you would owe the entire amount of the Mini right? Is there a gap-insurance equivalent for the Mini Select?

GAP insurance is always an option. I can even buy a used car from John Q. Smith and buy independent 3rd party GAP. Though I didn't want it. I've got excellent full coverage (have to - it's financed - same as a lease) so the only thing that I don't have is GAP and since the value of MINI is so good and I'm a safe driver so I'm not worried about it. GAP Insurance is a calculated risk anyway (and the markup on it is typically 100%) so I'll pass.

I'm no expert on leases but it's my understanding that one can't just walk away from it without some penalties (which I assume might be strict?). Can one buy their lease anytime?

If the residual values are similar to a lease, why wouldn't you simply purchase the lease at term end and sell it to a private seller if you are able to get a higher market value? Wouldn't this accomplish a similar goal?

Would I have to wait for the lease to come to term, then buy it and then sell it? I don't want to wait for the end - my warranty would be up, and that would be less for me to "sell" to a buyer. Would I have to buy it from them and then sell it afterward? That seems like a pain. I can sell mine now, without waiting for anything and without coordinating w/ BMW. During sale, my current loan is simply paid off. I do know that leases usually have a mileage clause - and perhaps other one's that I am not aware of. I'm not a big fan of clauses - Santa's an exception.

So with the Mini Select, you get the ownership aspect of the car along with low lease-like monthly payments. But you take upon the risk of ownership, along with the risk that the Mini may depreciate more than calculated (e.g., oil costs over $20 a gallon and demand for non-electric cars drops - i know unlikely but just example). It really just sounds like a lease to me, but without the option of turning in the car at the end of term.

Are you trying to use FUD on me (fear, uncertainty, doubt)? I'm in sales, you know - it won't work. I'm also immune to arguments based on common sense or logic.

Well, if gas keeps going up my $ per mile for expensing it will too :-) Sure I can't turn the car in but I can sell it anytime. I'm really not sure that the same is true for a lease - I doubt that it would be but I'm not sure.

You are correct - if the depreciation on the MINI changes dramatically then my model doesn't work anymore. I'd like to think that this won't happen so quickly that I won't have time to see it coming and sell (but the car is so darn much fun that I doubt that I would).

Am I missing something?

Perhaps I am. That's just my story and I'm sticking to it. I would have to think that my equity with MINI Select will be advantageous, with my "do whatever" flexibility.

 

I'm pretty sure that a lease can be bought out at any time if you want to sell the car.....also, to the OP, they marked up the money factor from .00219 (base rate) if you aren't aware. They may have also marked up the acquisition fee to $825....though it could be $625 with a $269 processing fee, or $825 (marked up $200) with a $69 processing fee. Either way, that's $269 more than the base acquisition fee from BMWFS and about a full percent higher on the interest rate. Makes a ~$20-30/month difference on your payment.

 

I've read a little more about the Mini Select and I don't see how it offers more options than a regular lease. For example, at the end of term for a Mini Select, you must either purchase with balloon payment, or refinance.

But I don't need to wait for the end of my loan. I can sell my car anytime I want. In my case, I've got a 4 year loan and am planning to sell around 3 years into it. This way, the car is well within it's 4 year / 50,000 warranty - and prospective buyers can be confident that if there are any wacky issues that they are totally covered by MINI


MM - You can buy a car out of a lease at any time. The residual value for mini select is the same as a lease. gap insurance is automatically included with a lease. MINI residuals are actually quite high. You may have a tough time selling it for the residual. The bonus for select is there are no mileage caps.



I'm no expert on leases but it's my understanding that one can't just walk away from it without some penalties (which I assume might be strict?). Can one buy their lease anytime?

MM - you'd have to make the rest of the lease payments. could be lump sum. you can't walk away from a car loan either can you?

If the residual values are similar to a lease, why wouldn't you simply purchase the lease at term end and sell it to a private seller if you are able to get a higher market value? Wouldn't this accomplish a similar goal?

Would I have to wait for the lease to come to term, then buy it and then sell it?

MM - you don't have to wait for the end of a lease to sell it. Just call up the lease company and ask for a payoff - exactly as if you had financed it to own.


So with the Mini Select, you get the ownership aspect of the car along with low lease-like monthly payments. But you take upon the risk of ownership, along with the risk that the Mini may depreciate more than calculated (e.g., oil costs over $20 a gallon and demand for non-electric cars drops - i know unlikely but just example). It really just sounds like a lease to me, but without the option of turning in the car at the end of term.
Am I missing something?

MM - no you aren't. you are exactly correct. except the 'risk of ownership' - what risk? you are buying the car to own on a select or retail finance.



Perhaps I am. That's just my story and I'm sticking to it. I would have to think that my equity with MINI Select will be advantageous, with my "do whatever" flexibility.

MM - selects flexibilty is in the no mileage limit category. I wouldn't recommend a select plan for most people - how many are going to be able to come up with the balloon and how many will have to refinance the balloon - paying through the nose on interest due to a "8 year loan". Select interest rates are also higher than a lease or retail interest rates.

With a lease you are protected from higher depreciation than expected and you never have to worry about trade in value which is always much less than market value. You always are paying lower payments, you always have a fresh car completely under warranty. If market value is higher than your residual/payoff at any point you can pay it off and sell it.

Leases aren't the devil that people who have never leased think they are.

 

Hum, how can I negotiate the base rate down? Are you able to get the base rate? The Mini is already ordered with deposit (CC). Shouldn't be a problem as my credit score is about 795. Suggestions? 20-30 dollar a month difference is pretty significant in my books.

 

Another question, since I've already placed an order through my dealer, and if they won't get me the best rates possible. Can I negotiate through another dealer just for the lease? In other words, will other dealers even spend their time on the lease if you've purchased from a different dealer?