# Factory Demo Lease Qs



## jbailey895 (Dec 5, 2009)

I was reading the threads on Factory Demos as an option, I noticed Greg Poland's Pacific BMW seems to have a large quantity of these. My understanding is, for lease computation, you still get to use MSRP, and the residuals are the same, its really only the extra mileage you have to contend with, correct?

For instance, if a demo has 10k miles on it, and they offer it at a $6k discount, but then you have to factor in .20x10k, or $2k mileage penalty, but you still get $4k off the cost of the lease, with the supported residual as if it were a new car. This sounds pretty good.

One potential downside I see is the factory warranty, if the car starts with 10k, and you do a 3 yr, 45k lease, you're outside the factory warranty before the lease ends (passing the 50k warranty to 55k). If I can keep the miles in check and do a 3/36k lease, that would keep it under 50k and under warranty even when starting with 10k miles on the car at lease inception

Are there any other downsides I'm not considering? Seems like if the discount is applied to the cost of the lease, this should make a $60k more affordable than a $50k car over the life of the lease, because the residual isn't affected, right?

Thanks for any thoughts, just trying to play out the scenarios.

cheers,
Joel


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## miamiboyca (Jun 19, 2012)

I can't help with demos, as I have never gotten one but...I don't believe there is a mileage penalty. Your mileage starts when you get it, with whatever it has so 36k and it has 4k - you turn in at 40k but not sure.

One thing to keep in mind is that you can purchase mileage for .16 before lease end. Also BMW often does pull ahead programs that allow you to get out of your lease 3-6 month early and you have the entire mileage available.

For example I have 35k miles on a 36k mile lease right now w/6 months remaining. I would be over but since I am turning my car in with pull ahead, no mileage penalty.


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## mwm1166 (Jul 16, 2013)

I don't believe you can use build out credits or Un4gettabke drive coupons on those cars either.


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## ard (Jul 1, 2009)

If you need 45k, run the numbers on a 30 or 36k lease and then buying the extra miles. It can actually be cheaper in the end based on the residuals they use for higher mileage...

Id plan on a lease return at 49,999.


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## idworkin (Sep 6, 2005)

jbailey895 said:


> I was reading the threads on Factory Demos as an option, I noticed Greg Poland's Pacific BMW seems to have a large quantity of these. My understanding is, for lease computation, you still get to use MSRP, and the residuals are the same, its really only the extra mileage you have to contend with, correct?
> 
> For instance, if a demo has 10k miles on it, and they offer it at a $6k discount, but then you have to factor in .20x10k, or $2k mileage penalty, but you still get $4k off the cost of the lease, with the supported residual as if it were a new car. This sounds pretty good.
> 
> ...


Your calculations are almost right. You do multiply $0.20 for the miles, but that comes off of the residual, not the price of the car. I believe BMW give 500 miles 'for free' - so if the demo has 2000 miles on it, you would multiply 1500 miles x $0.20, for a total of $300. So, if the residual is $55,300 ordinarily, the residual in this example would be $55,000. Generally the loyalty-type rebates don't apply, not sure about things like build-out credits.

The demo's can be a great deal of you can find one with relatively low miles.


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## [email protected] BMW (Aug 2, 2010)

Demos always lease out cheaper than a new car...on a 5 series the difference is around $100 a month...if you are flexible on options you can get a nice deal...I have a $74k 535 for $3xx a month 24m 10k with msd's. Granted that's an employee hookup.. I did a 550 demo for a fester for just under $500 a month. I have lots of inventory and we are very motivated in May...we have HUGE NUMBERS. To hit.

Hey OP......I think I know who YOU ARE ....LOL


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## carprep (Mar 2, 2012)

Hey Greg.....

I was checking out those demos on your website and was wondering....do all those come from the east coast? I might be a little concerned about a car that came from there with the fact that it may have been driven on some salted roads. Are those considered CPOs or new with miles and what is the warranty on them? I will be looking for a new company car when my Hyundai lease expires in October, so I'll be hitting you up then.


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## [email protected] BMW (Aug 2, 2010)

We buy from all over us....I would not worry about that especially if it's a lease. Cars all carry new car. Warranty.


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## jbailey895 (Dec 5, 2009)

Haha, hey Greg, yep, its me, Joel, just looking at options for the next round. You guys at Pacific seem to have more Factory Demos than any other dealer, by far. I just haven't figured out the exact math for leasing the demos. If the miles on the car reduce the residual, then higher-mile'd demos are less of a good deal? I should be OK for a 12k lease, but haven't run the #s yet. Considering a 535d, 428 F33 or GC. Do UDE and Drive for USA credits not apply for demos? Or then again, there's always ED. . .


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## [email protected] BMW (Aug 2, 2010)

High mile can work..depends on what we can bought it for. You have to be very flexible overall and drive the payment more than the color and options...it a used car so what it is...is what it is... Mine a $74 green 535... No my 1sr choice by far but for a $3xx payment I could care less. We have a 6 month pull ahead now..so maybe I can work you a deal in May. Send me a direct email is you see anything on our site you may consider.


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## flaggrad00 (Jun 21, 2011)

I was able to buy my miles on my demo lease at .15 a mile and yes bmw does have 500 miles free. Most of the coupons are not eligible and neither is any build out cash etc. for leasing a demo. Not sure about college grad though if that applies to you.


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## jbailey895 (Dec 5, 2009)

Ha, Greg if you can get a me a deal like yours I'll be up tomorrow ;-) With all the incentives near the end of the year, it becomes less of a tease and you can build what you want, but it definitely is an opportunity to buy more car for less $.


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## gregpoland (Dec 22, 2006)

sorry buddy... i'm not giving my employee secrets away.!. however I'll make you a sweet 'Fest deal on and demo we have in stock.. hit me up, gotta move some serious metal this month.


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## [email protected] BMW (Aug 2, 2010)

oops...wrong login ....
sorry buddy... i'm not giving my employee secrets away.!. however I'll make you a sweet 'Fest deal on and demo we have in stock.. hit me up, gotta move some serious metal this mont


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## jbailey895 (Dec 5, 2009)

Looks like its too early to see a 4 GC demo, I saw one yesterday and wow, they look much better in person than in pics. May have to hold out for one of those, but Greg I may come up for the Drive for USA next week and check out some rides. . . Thanks for the info.


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## PennSt8 (Sep 4, 2014)

Not to thread jack, but thanks again Greg for helping my buddy out with the 5 Series this weekend. Painless process and on top of that he's loving it!


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## ae86pwr (Sep 2, 2004)

Greg set my co-worker up with a fully loaded 328i demo few months ago. 
She had the same concern with the car going over the warranty mileage. 

Greg solved the problem by putting her into a 30m program instead of 36m. Cheers for Greg Poland


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## carprep (Mar 2, 2012)

So, am I correct in assuming that these demos are not considered CPOs with the extended warranty?


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## [email protected] BMW (Aug 2, 2010)

SOME HAVE Young cpo..


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## carprep (Mar 2, 2012)

[email protected] BMW said:


> SOME HAVE Young cpo..


What is young cpo?

......and the others are just the remaining of the original warranty? Can an extended warranty be purchased?


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## xxdemo (Oct 16, 2014)

I was looking into leasing one of the factory demos out there. 

Quick question is as far as I know, BMW ended free maintenance transfers on used vehicles starting from 2015 models. Is this an exception for factory demos?


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## [email protected] BMW (Aug 2, 2010)

demos get balance of full warranty and maintenance


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## xxdemo (Oct 16, 2014)

Wow...Thanks for the fast response Greg!!!


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## mclaren (Jan 5, 2005)

There are BMW dealer only auctions where dealers can buy so called brass hat cars, these are leasable vehicles that have been driven by BMW employees for a while. It was mentioned earlier $3xx leases on expensive cars, hey I know a guy with a $1xx lease on a car with a 62k window. These cars are a great deal for a customer and a GREAT deal for the dealership. A used car sales manager I know said he would buy 100s of them if they would let him. The way an employee can get an extremely low lease is if the residual is high and the cap cost is extremely low compared to the MSRP because the monthly depreciation is calculated by dividing the difference in these 2 numbers by the number of months. So if a dealer could buy a car for 75% of the window and the residual on a 2 year lease was 75% for 10k miles then the monthly depreciation would be a circle !


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## mclaren (Jan 5, 2005)

The corollary to the above is that because a customer has no idea what the dealer paid for his "demo" they got a great deal on a lease and the dealer made 10k. Everybody is so happy, especially the salesman.


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## [email protected] BMW (Aug 2, 2010)

here's my opinion.....AS LONG AS IT A GREAT PAYMENT FOR THAT SPECIFIC CAR... what the dealer makes in profit is irrelevant in my opinion. For example.. KEY WORD " EXAMPLE.." if I said I can get you a $78k 550 for $1,500 drive off and $490 a month INCLUDING TAX for 24m and 12k a year.. would you care if I'm making a $8,000 profit?.. no, because you know is the payment is so low it's nuts.... !


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## miamiboyca (Jun 19, 2012)

[email protected] BMW said:


> here's my opinion.....AS LONG AS IT A GREAT PAYMENT FOR THAT SPECIFIC CAR... what the dealer makes in profit is irrelevant in my opinion. For example.. KEY WORD " EXAMPLE.." if I said I can get you a $78k 550 for $1,500 drive off and $490 a month INCLUDING TAX for 24m and 12k a year.. would you care if I'm making a $8,000 profit?.. no, because you you know is the payment is so low it's nuts.... !


Amen to that... Everybody has too eat!


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## mclaren (Jan 5, 2005)

[email protected] BMW said:


> here's my opinion.....AS LONG AS IT A GREAT PAYMENT FOR THAT SPECIFIC CAR... what the dealer makes in profit is irrelevant in my opinion. For example.. KEY WORD " EXAMPLE.." if I said I can get you a $78k 550 for $1,500 drive off and $490 a month INCLUDING TAX for 24m and 12k a year.. would you care if I'm making a $8,000 profit?.. no, because you know is the payment is so low it's nuts.... !


I said everybody was happy.


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## Ninong (May 20, 2014)

mclaren said:


> The corollary to the above is that because a customer has no idea what the dealer paid for his "demo" they got a great deal on a lease and the dealer made 10k. Everybody is so happy, especially the salesman.


The point you were making is that the customer has no way of knowing what the dealer paid for any particular brass hat at auction. True! Some of them have very low miles and some of them are very loaded with options. Some of them are better deals than others for the dealer, especially if not many other dealers were bidding on that particular car because maybe they already had too many in that color combo.

Maybe you should have said, "everybody is so happy, especially the salesman, and also the customer who got a great deal."


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## xolinlevh (Dec 20, 2010)

[email protected] BMW said:


> here's my opinion.....AS LONG AS IT A GREAT PAYMENT FOR THAT SPECIFIC CAR... what the dealer makes in profit is irrelevant in my opinion. For example.. KEY WORD " EXAMPLE.." if I said I can get you a $78k 550 for $1,500 drive off and $490 a month INCLUDING TAX for 24m and 12k a year.. would you care if I'm making a $8,000 profit?.. no, because you know is the payment is so low it's nuts.... !


If my new job lines up over the next couple weeks thats exactly the kinda lease I want!


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## enig44 (May 2, 2012)

Looking at a exec driven 535 with 4k miles on it here in NJ to lease. Sticker is 68,640. I know I have seen some postings where getting 1500 under invoice on a new 2015 535 excluding incentives is doable. What kind of cap cost should I be shooting for. 11k off ? I have UDE credit to use as well but bummed that this won't qualify for cca rebate.


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## jblackburn (Feb 9, 2002)

I'm thinking 11k would be pretty optimistic. Looking through the stock at Pacific I would think 9-10k would be doable. Here is one very similar (-10k):

http://www.pacificbmw.com/used/BMW/...-angeles-01bfa7300a0e0a6b1ecb65cca6a5cf48.htm


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## enig44 (May 2, 2012)

Thanks so much, very good point of reference. They are advertising at 10k off so maybe with my 1k UDE credit I can get to 11k.


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## xxdemo (Oct 16, 2014)

You can't use UDE credit or incentives for factory Demo's. This is only for new cars. 
The Factory Demos get new car financing/lease rates (less mileage residual @$.20/mile) + balance of warranty & maintenance.


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## thegandalf (Sep 8, 2012)

Do most dealerships carry Demos? Is this a constant inventory or it could be that at some point in the year a certain dealership suddenly has a few?


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## Ninong (May 20, 2014)

thegandalf said:


> Do most dealerships carry Demos? Is this a constant inventory or it could be that at some point in the year a certain dealership suddenly has a few?


Virtually all dealerships have dealership demos, some more than others. In addition, most dealerships have service loaners.

Some dealerships may buy "factory demos," aka "brass hats." A brass hat is a car driven by a BMW of North America employee and then offered for sale to BMW dealers via a competitive bidding process. There is a regular flow of these factory cars available because BMW usually doesn't want their employees putting too many miles on them before turning them in and switching to another one. Some dealers may be more active in buying brass hats than others. Some may even shy away from them altogether. One thing about brass hats, if that's what you're looking for, and that's that the prices can vary because you can't predict how the bidding will go. Naturally every dealer who bids on them hopes that he will get every car he bid on, assuming he's happy with the prices he offered, and disappointed if he gets very few or maybe even none.

From time-to-time BMW may have special event cars (e.g., The San Francisco Marathon, certain PGA events, etc.) that become available to dealers. Same deal as brass hats but usually with very low miles on them.

All of the above usually qualify for the same lease and finance rates as new cars but with lease residuals adjusted for miles on the odometer over 500. If the dealer keeps them in stock too long, they might end up not being qualified for new car rates but by that time they have been written down anyway. For example, some dealers might still have 2014 models but they no longer receive support. No, I have no clue why a dealer would keep a 2014 in stock that long but some of them do. Maybe they intend to open a car museum?


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## miamiboyca (Jun 19, 2012)

thegandalf said:


> Do most dealerships carry Demos? Is this a constant inventory or it could be that at some point in the year a certain dealership suddenly has a few?


Hit up Adrian in Atlanta :thumbup:


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## visi107 (Mar 20, 2013)

Do u guys know the best way to contact him. I used this address [email protected] which is in the site sponsors page but haven't gotten a reply back.


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## thegandalf (Sep 8, 2012)

I still have about 11 months on my current lease, so I am onoy starting to look at my options. First call once it is time is to Adrian (got my current 3 from him). I usually try to male sure to have my mind set up in a couple of options before I reach out to ensure we have a smooth process (and so that he doesnt have to deal with my pre-new car obsession, my wife tells me I can be very annoying 

visi, all I can say is that Adrian is pretty busy (the price he pays for his goods results?), so I if you can give him a little time or send hima reminder. You do have the right email address, he get back to me on a question I had for him the other day.


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## miamiboyca (Jun 19, 2012)

Also hit up greg poland. You will spend more to ship it but he might have exactly what you want


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## [email protected] BMW (Aug 2, 2010)

+1


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## visi107 (Mar 20, 2013)

[email protected] BMW said:


> +1


Greg, I send you a PM. thanks


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## ae86pwr (Sep 2, 2004)

/\ Greg checks e-mails much faster than PM. [email protected]


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## emPoWaH (Dec 26, 2002)

Anyone know if the residual discount on demo cars is still $.20/mile? Or is it now $.30/mile?

Thanks!


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## emPoWaH (Dec 26, 2002)

Anyone know if the residual discount on demo cars is still $.20/mile? Or is it now $.30/mile?

Thanks!


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## Canhouter (Oct 29, 2013)

First 500 miles free and rest at 20 cents/mile


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## DSTJ99 (Nov 21, 2012)

Canhouter said:


> First 500 miles free and rest at 20 cents/mile


My dealer is telling me $.30 per mile reduction to residual over 500 is he marking it up?


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## [email protected] BMW (Aug 2, 2010)

.20 on most. Models...x6,6,7 are .25


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