Do BMW Financial Services ever negotiate the residual value of an M5 at the end of a lease? I have never leased a car so I don't know, but someone told me that it sometimes happens on other brand's leases?
Most companies will do it if you are expressing interest in purchasing the vehicle. Don't think of it as negotiating the residual value of a new vehicle however, think of it as negotiating the price of a used car.
The difference? All the costs associated with selling a used a car!
After the dealer gets the car back from you BMW pays to send the car through auction, including the auction fees themselves, cleaning the vehicle, repairing any damage, etc. As a consequence, if you buy the car from them they avoid those costs.
Your best bet, however, is to understand the current Mannheim auction prices first - if the cars are going for more than your residual at auction then forget about it. If they are going for less than your residual you should try to negotiate a price slightly above auction price. You save money and they avoid the hassle of prep and conditioning. The down side is that used M5's sell quickly and generally for a pretty good profit, so how close you can come to auction price will vary.
Talk to your dealer. Assuming your lease is through BMWFS, at lease end, the original selling dealer can purchase your lease turn in for what BMWNA determines is wholesale value. When my 1998 528 lease was up, my local dealer sold it to me for that value plus $1,000 plus his cost for certifying as a CPO car(approx $800). This total price was less than the residual and I had a certified CPO car.
I did it again with my 2001 540 when the lease ended in October 2004. I spoke to the dealer and he was willing to do the same thing again. Approximately 60 days prior to the lease turn in date, your dealer should have the wholesale number from BMW. Add $1,000 plus his cost to CPO and then compare this number to the residual / purchase option to see if you really want to do the deal.
According to my dealer, this is a fair deal. He makes $1,000 and gets credit from BMW for selling a CPO car. From what I've been told, the only dealer who has the option to purchase the lease turn in at this "wholesale" price is the original selling dealer. If that dealer doesn't exercise this option, it goes to the BMW dealer option.
Fortunately, my dealer didn't feel the need to gouge me on the CPO price. In addition to his cost on the CPO, you'll need to be ready to pay for any work that needs to be done to bring the car into compliance with BMW CPO requirements.
Both times, I ended up with a low mileage CPO car for less than the residual buyout on the BMWNA lease deal. Good luck!
This does assume that you lease a brand new car. Seems like there is a lot of leasing of used cars going on nowadays. I like the idea - seems like there are all winners in your scenario.
This does assume that you lease a brand new car. Seems like there is a lot of leasing of used cars going on nowadays. I like the idea - seems like there are all winners in your scenario.
Sorry, I'm not quite sure what you mean. I did lease both cars when new, however, when I purchased them at lease end, the purchase of the used car was the only transaction. I didn't lease another new car at the same time.
Sorry, I'm not quite sure what you mean. I did lease both cars when new, however, when I purchased them at lease end, the purchase of the used car was the only transaction. I didn't lease another new car at the same time.
Sorry - my bad. I meant to say that you leased the cars new, then bought them at end of lease. I meant that a decent amount of cars are leased today that are not brand new going into the lease. Sorry.
Dont talk to the dealer! He has ZERO interest in your buying the car for cheap. Hell, he may negotiate a 5k break and tell you "all I could get was $1500 off". Seriously.
Talk to BMWFS, or the leasing company.
Have all your facts lined up: Price, market values, what dealers are listing the car for (take 10k off those for lease end purchase, ie 10k under dealer is what the car will sell at auction)
A car sold at auction costs the leasing company to prep it, get it to auction, pay a commission...
Look at it from their point of view- If they can make $100 more selling it to you then taking it back, they will.
You also need a 'story'... "Gee, I really like the car but I can buy my car used for $x, and the lease is $y more- what can we do? I may just buy one for less with less miles that I've been looking at..."
Whatever you do, don't be anxious and seem ambivalent.
Sounds like a very reasonable approach - thank you!
Quote:
Originally Posted by ard
Dont talk to the dealer! He has ZERO interest in your buying the car for cheap. Hell, he may negotiate a 5k break and tell you "all I could get was $1500 off". Seriously.
Talk to BMWFS, or the leasing company.
Have all your facts lined up: Price, market values, what dealers are listing the car for (take 10k off those for lease end purchase, ie 10k under dealer is what the car will sell at auction)
A car sold at auction costs the leasing company to prep it, get it to auction, pay a commission...
Look at it from their point of view- If they can make $100 more selling it to you then taking it back, they will.
You also need a 'story'... "Gee, I really like the car but I can buy my car used for $x, and the lease is $y more- what can we do? I may just buy one for less with less miles that I've been looking at..."
Whatever you do, don't be anxious and seem ambivalent.
Dont talk to the dealer! He has ZERO interest in your buying the car for cheap. Hell, he may negotiate a 5k break and tell you "all I could get was $1500 off". Seriously.
Talk to BMWFS, or the leasing company.
Have all your facts lined up: Price, market values, what dealers are listing the car for (take 10k off those for lease end purchase, ie 10k under dealer is what the car will sell at auction)
A car sold at auction costs the leasing company to prep it, get it to auction, pay a commission...
Look at it from their point of view- If they can make $100 more selling it to you then taking it back, they will.
You also need a 'story'... "Gee, I really like the car but I can buy my car used for $x, and the lease is $y more- what can we do? I may just buy one for less with less miles that I've been looking at..."
Whatever you do, don't be anxious and seem ambivalent.
A
I respectfully have to disagree with the first part of Ard's answer. First, BMWFS has absolutely no interest in negotiating with you. They have their process and they stick to it. You want it, you pay the residual stated in your contract. Other leasing companies may be different, however, I've never met anyone who has gotten BMWFS to budge on a residual by dealing directly with them.
Second, ask the dealer to show you the wholesale printout from BMW. This printout is BMW's estimate of the wholesale value of the car. As I said, the original selling dealer gets this about 60 days prior to your lease termination date. If he won't show you that or says he doesn't have it; walk. By the way, if the dealer also quotes the retail cost ($2,400+ or whatever current retail is) to CPO and says this is his cost; walk.
With that said, I wholeheartedly agree with Ard's suggestion that you be fully informed on the market, including auction values. Make sure you have real facts and not general comments like "10k under dealer is what the car will sell at auction". Values vary by the car, condition and market. Some cars are much further below the residual than others (looked at auction values on a used 2006 M Roadster lately?), As I pointed out, only with this info can you determine if it makes sense to make the same deal I did.
I also agree with Ard's strategy to be nonchalant about the transaction. I made it clear to the dealer I had no problem turning in the car and walking away. If he senses you really want to keep the car, I bet it won't work out quite so easily.
As I said, I've done this twice and also gotten several nice e-mails from other guys who followed this advice when I posted it on another forum. It may not always work out, but with BMW's high lease residuals, each time I did this the wholesale number from BMWNA was several thousand below the residual buyout. Even with the $1,000 profit to the dealer plus the CPO cost, it was well below just paying the residual and having a car without the extended warranty.
I also forgot to mention that although I was ready to pay cash, the dealer offered 1.9% CPO financing through BMWFS when I went to sign the paperwork to purchase the car. Before anyone jumps on with the "there, the dealer made even more money on you" comments, who cares? He got another few bucks from BWMFS. I got to keep my money in an account earning far more than 1.9%. It's always a good deal when everyone feels like they got what they wanted, right?
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