Beemer update

Have been driving X3 for a week!!

Here are the first impressions...

Positives:
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1) Panoramic moon-roof (I love it!)
2) Excellent accelaration (compared to Camry and Scion!)
3) Handles curves very well (especially on the route I am taking to work via curvy coldwater canyon. I dont have as much back pain as I used to have)
4) Fairly roomy interior
5) Safety features (airbags, stability and traction control, adaptive Xenon lights)
6) Free maintenance for 4 years/50,000 miles (that was the deal-maker for me over a Lexus)

Negatives:
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1) Poor gas mileage. Only 16 mph in streets and 23 in highways. Actually I am getting only around 14 so far in streets with lots of stoppings. Well, I drive mostly in West LA and Hollywood :(.
2) More expensive premium unleaded gas.

Auto lease (BMW) negotiation tips

Before you start shopping for a auto lease do the following homework...

1) Check the manufacturer website to see if they offer any special leases... For BMW, check the following web site for lease specials...

http://www.bmwusa.com/vehicles/leaseoffers

2) Based on the information given for a specific model, especially the lease terms for a particular vehicle, try to glean as much information as possible. You can pretty much get the Cap cost, residual value (for a particular mileage), term of the lease and the monthly payment from the fine print of the advertisement. In this the only missing piece is the money factor. You can use Excel solver to find that out.

3) Based on the information you glean from special offer, work out roughly the monthly payments for your specific car (with all the options and accessories). You can build your own BMW and price it with options in BMW's web site. Do some sensitivity analysis by entering different values for each of the parameter (cap cost, residual, moneyfactor etc). Set yourselves a target range for the monthly payments that is comfortable to you.

4) When you visit a dealer you have two ways of starting your negotiation. Either you can show off your lease calculation expertise right from the beginning by asking all the tough questions about each of the lease parameters or play dumb and just negotiate the monthly payments from the get go. I tried both in different dealerships and usually the latter method works better. Just tell them that you did some math and you got a far lower number than the number they first give you.

5) Show signs that you are willing to increase your counter-offer a little bit. Also tell them that you are a motivated buyer and will sign a lease if the amount is agreeable.

Good luck!!

For more information on auto leasing, check the following web site...
http://www.leaseguide.com/

Auto leasing fundas

Leasing cars, especially luxury ones, can be more cost effective than buying provided one knows how leasing works and negotiates a better deal.

This is how leasing works...

Here are some terms:

MSRP: Sticker price
Cap Cost: Lease price (price of the car after negotiations. This can be negotiated up from the dealer invoice price or down from the MSRP)
Adjusted Cap Cost: Lease price - (downpayment + trade in value, if applicable)
Residual Value: Value of the car at the end of the lease. This is usually provided by the manufacturer based on the number of miles driven per year. For BMW X3, the residual is 78% of MSRP for 2 years and 68% for 3 years for 10K miles per year. For 15K miles for 3 years, the residual is 65%.
Term of the lease: Number of months.
MoneyFactor: This is a slightly tricky concept. Its is actually the interest rate that the leasing company charges you for financing. However, it is not represented in percentage (%). It is usually represented in decimals (for e.g., .0025 or .0030 etc). To convert it to an APR, multiply it with 2400. It is always 2400 irrespective of the term of the lease.

Here is the formula:

Monthly payment = Depreciation cost + Finance Cost

where
Depreciation cost = (adjusted cap cost - residual value)/term of the lease
Finance Cost=(adjusted cap cost + residual value) * money factor

The finance cost formula is actually derived from the area of a trapezoid. For more information check this web page...

Lease Money Factor

Local Sales tax is added to the monthy lease payment to get the overall monthly payments.

Apart from the monthly payments, there is also upfront payment when you sign the lease. This includes the downpayment (also called Cap cost reduction), 1st month payment, security deposit, vehicle registration and licence fee, acquisition fee etc.

My first Beemer

They dont say this for no reason... "Once you get a BMW, you are stuck with it for the rest of your life".

I guess I am hooked...