[MIKEYMIKE]

I am thinking about leasing the E90 soon. BMW is very interesting with their leasing programs, because the shorter you keep the longer, the cheaper the payments. Usually with other car manufacturers, the opposite is true.

I realize why BMW does this...because of their high residual value and free maintenance, they want the car back so they can re-sell it.

The the positive to 24 month lease is cheaper payments, and you get a new car faster. But wouldn't the negative be you lose your down payment so you have to start all over again on your next car?

I am extremely confused about this, and any input you guys could put into this matter would greatly be appreciated.

[cdheaven]

i did a 24 month lease. i put 500 dollars down on the car. i did this for two reasons. 1. like you said, higher residular so the payments were lower on the 24 then the 36 and
2. i want a 5 series and couldnt justify it/afford it yet. but i feel that in 2 years i will be able.
i would put very little down, and do the lease that gives you the smaller payments.

[YV1]

The longer the lease the smaller the entire cost of the lease. In other words, if you lease for 24 month the total cost of the lease will be about $7800 per year, if you lease for 36 it would be about $ 6800 per year.

my 24 month lease was less then 36 month

[MIKEYMIKE]

According to BMWUSA....

Regardless of downpayment.........

The 24 monthly payment is always less than the 36 monthly.

[YV1]

The longer the lease the smaller the entire cost because you will divide all the fees by more months. You have to pay origination and drop fees, destination charge, etc. If you only lease for 24 month the cost of all these fess will be the same as 36 month but you will have the car for a shorter period of time.

[MIKEYMIKE]

I see...Make's sense.

[SteveMD]

It also depends on where you live. Some states only require tax on the portion of the car that you lease. Some states like MD require the full taxes on the negotiated price of the car. This would kill you on a 24mo lease.

[MIKEYMIKE]

I'm in Los Angeles, California. I believe here you're just paying taxes on the monthly payment.

[dmoran23]

Originally Posted by esteller

The longer the lease the smaller the entire cost because you will divide all the fees by more months. You have to pay origination and drop fees, destination charge, etc. If you only lease for 24 month the cost of all these fess will be the same as 36 month but you will have the car for a shorter period of time.

Yes, but since you have the car for a shorter period of time the residual value will be higher making your lease payment lower.

[Paddy]

Originally Posted by MIKEYMIKE

According to BMWUSA....

Regardless of downpayment.........

The 24 monthly payment is always less than the 36 monthly.

Depending what you are saying, this may be true...
You will always pay less over the 2 year period (TOTAL) than you would over the 3 Year Period (TOTAL)...

HOWEVER your monthly payment on a 2 year lease is always HIGHER than the monthly on a 3 Year lease (assuming there is no special MF or Residual for 2 year leases, which there is none that I am aware of for 330i BMW). If you keep doing 2 year leases then you are on AVERAGE paying much more than you would be paying on a 3 year lease....

Here are two examples...(values from bimmerfest forum)
Case 1: 330i 3Yr/12K Residual 64% MF .00195
Case 2: 330i 2Yr/12K Residual 71% MF .00195

(assuming MSRP $37,075 and Gross cap Cost $35,885)

NOTE: NO SALES TAX INCLUDED IN BELOW CALCS...

Case 1:
Total Depreciation $12,157
Rent Cost: $4,184
Total Cost for 3 yrs: $16,341
Per Month: 16,341/36=$453

Case 2:
Total Depreciation: $9,561
Rent Cost: $2,911
Total Cost for 2 Yrs: $12,473
Per Month: 12,473/24=$520

2 Year Lease costs approximately $70 more per month over a 3 year lease.

Over 6 years (3x2yr or 2x3year) total costs would be roughly...
12,473*3 = $37,419 for 3 2-year leases
vs.
16,341*2= $32,682 for 2 3-Year Leases

2 Year leasing cycles would cost you approximately $5,000 more over that period.

BMW's lose greatest amount of value over the first 2 years.
100%-71%=29%=~15%/Year.
In the third year it loses 71%-64%=7%

So if you lease in 2 year cycles you are not getting the real benefit of residual value which occurs in the third year.

Put another way.. the numbers above..
$12,473 for 2 years
$16,341 for 3 years...

The first two years are costing you $6,237/Year
The third year is costing you only $3,868 (16,341-12,473)

The 3rd Year is the cheapest year to own a car.

After the 3rd year the residual/MF's become unattractive (depending on the model).

In short the sweet spot (at least for 330i's) is 3 years

EDIT:P.S
I ran the same MSRP/Agreed price for a 325i sedan and it looks like BMW has incredibly good residual for 325i 2Yr lease. 76% for 2Yr/12K. This is a really good residual, the money factor is a little higher than the 330i, but the payment of a 2 year lease works out about $10 cheaper than a 3 year lease. Not a huge saving, but interesting none the less.

It works out that a 325i sedan built for the MSRP/Negotiated price shown above would be ~$481/mo (before tax) on a 2 year lease. However a 330i, for the same MSRP/Negotiated price would cost $453/month for a 3year lease.
The debate about which of those a better deal could go on forever and is most likely subject to personal preferences!!! There's about 5K in difference between the invoice of a 325 and a 330. You could get a lot of nice options on a 325i for 5K.

[YV1]

Paddy: great job. It is 100 % clear why 36 is better than 24.

[Robert A]

There is an exception to all this, and that is with European Delivery. The ED discount will nearly always make the 24 month lease cheaper than the 36 month lease.

Originally Posted by esteller

Paddy: great job. It is 100 % clear why 36 is better than 24.

[Paddy]

Originally Posted by Robert A

There is an exception to all this, and that is with European Delivery. The ED discount will nearly always make the 24 month lease cheaper than the 36 month lease.

Not sure if I agree, ED gives you lower cap cost in the form of
1. Reduced invoice price (and therefore reduced sales price)
2. No MACO
3. No Training Fees

However the MF is always marked up, I don't know the exact value, but it is the same mark up regardless of model. The MSRP, Base MF and Residuals are the same for ED vs non-ED.

Therefore the same logic/calculations as I used above applies and it depends on the residual/MF whether a 2 year lease monthly is less than a 3 year lease monthly.

For a 330i ED, a 3 year lease would be still cheaper than a 2-year.
For a 325i ED, the 2-year would slightly beat out the 3-Year.

Of course a 2year ED will always be cheaper than a 3Year NON-ED if that's what you were originally alluding to.

For ED you also need to factor in the cost of travel, I'd say about $2K is about average. Sure you get to take a vacation in Europe and drive your new car around, but you also throw away one months lease payment while the car is in transit. It's really 2 months but BMW pays for the second month. That increases your monthly effective monthly by 400/23=$17 (assuming $400/month lease).

I think ED is an excellent program if you can afford the time.