# 36 vs 39 month lease & help please



## seandunaway (Nov 11, 2002)

Hey Jon, I've posted this in the general forum and someone suggested that I put it here. I greatly appreciate your expertise in this area.
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It seems kinda tricky you can get a much lower payment by just going for 3 months more on a lease. Is this any kind of scheme by the dealer? Are they making more money with this? 

I'm about to sign for my Jet Black 2003 325Ci PP/SP/HK/Xeons with 20% tints all around and floor mats included. 

The final price is $34969.50. 39 months at $566.79 or 36 months at $601.18. Both require security deposit of $600 and first month's payment to drive off. These are final figures and include tax and whatnot. 

For the 39 month he has me at a residual of 59% and .0025 money factor. The 36 month is 60% residual. 

I asked about a quote if I pre-paid my lease and he came back with 60% residual and a .0235 money factor! I thought if you pre-paid you didn't pay a % for financing, which leads me to believe my dealer is money hungry and getting me in several spots. 

Is this a reasonable deal or should I negotiate more with my dealer? Any help will greatly be appreciated! This is a big purchase for me. Thanks! 

- Sean


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## Jon Shafer (Dec 15, 2001)

Sean,

"Split-term" leases are an effective tool or means of obtaining 
a lower lease payment... Recall past discussions on leasing;
leasing is nothing more than depreciation + rent.
The 39 month term in many instances uses the same
(or just barely lower) residual value than a 36 month lease. 
Consequently, you have less monthly depreciation, and a lower payment! 

There is no extra profit or benefit to the dealer for doing this!
(Lessors stagger their maturites though!)


Btw, a "prepay" lease should have exactly the same residual value as a conventional lease...


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