# Is a 3 year lease ever better than a 2 year lease?



## Bart001 (Apr 9, 2005)

Andrew*Debbie said:


> Initially that strikes me as odd. You'd think they would try and sell the 2 year. Lower payments means they can try to sell you a more expensive car. They get a chance at selling you another BMW in 2 years.
> 
> More money for the CA and a happier customer too.
> 
> ...


The incentive seems to be on the 2-yr leases with the residuals! BMW subsidizes them to ensure that they have a good pool of late model cpo cars to offer. They do better selling a 2 yr old cpo with 30k than a 3 yr old with 45k. And certainly the dealership would rather sell me 3 cars in 6 years than 2. I have no idea why a dealer would push a 3-yr over a 2-yr other than not having really thought it thru for the customer.


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## SystemR (May 31, 2006)

NetSpySD said:


> The average lease is 10-12k miles per year. This comes to 20-24k miles.
> 
> Performance tires will last close to 30k if you don't drive crazy. If you do drive crazy, figure at least one set for a 2 year lease and 2 sets for a 3 year lease.
> 
> BMW does not require you to have new tires, just that a certain amount of tread is left.


you must have some super strong performance tires. you need to return them with 4/32", at 17K miles already 1 of my tires it at 3/32" and another at 4/32"


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## NetSpySD (Dec 28, 2007)

SystemR said:


> you must have some super strong performance tires. you need to return them with 4/32", at 17K miles already 1 of my tires it at 3/32" and another at 4/32"


Yes I do. The Bridgestone 19" OEM run flat on my 6 arelast approx. 35-40k miles.

My previous 3 series cars always ate tires at a faster rate.Usually 15-20k miles.


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## hunterz4 (Nov 9, 2005)

Bart001 said:


> The incentive seems to be on the 2-yr leases with the residuals! BMW subsidizes them to ensure that they have a good pool of late model cpo cars to offer. They do better selling a 2 yr old cpo with 30k than a 3 yr old with 45k. And certainly the dealership would rather sell me 3 cars in 6 years than 2. I have no idea why a dealer would push a 3-yr over a 2-yr other than not having really thought it thru for the customer.


That all makes sense. When you say subsidizes you mean through higher residuals, right? With the X5 I just leased I was talking to one dealer and negotiating with them over MF. Found another dealer who came through with a two year lease at a lower MF- had a couple of 07 X5s left at on the lot to clear out before the first of the year. When I asked about maybe buying the car after two years the SA said it would be be more beneficial to turn in my leased X and buy a CPO.


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## Bart001 (Apr 9, 2005)

hunterz4 said:


> That all makes sense. When you say subsidizes you mean through higher residuals, right?


Yes, I'm referring to residuals that appear to be greater than what the open market would appear to bear with respect to a used car purchase, coupled with very attractive interest rates.

It would make NO sense for me to buy my current car at the end of its lease. I could get a cpo with fewer miles for less money.


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## SteveinBelAir (Dec 28, 2005)

A two year lease makes less sense in states that require tax assesed on the full negotiated price (like MD, TX, IL, VA, WV etc) since you will be paying full tax every two years (assuming you re-lease).


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## travel4B (Dec 1, 2005)

As discussed earlier in this thread that's only true if you don't factor in CCA rebates and tire replacement. I don't know how Maryland does it now but where Virginia really sticks it to you is if you decide to keep the car at the end of the lease. You have to pay tax AGAIN on the residual value having just finished paying tax on the original value. It also irks me that BMW FS doesn't reduce your monthly lease payment if you need to extend your lease for a few months, even though a good chunk of the lease payment is taxes.



SteveinBelAir said:


> A two year lease makes less sense in states that require tax assesed on the full negotiated price (like MD, TX, IL, VA, WV etc) since you will be paying full tax every two years (assuming you re-lease).


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## bennett64 (Mar 9, 2006)

I arranged an ED lease yesterday. 1000 over ED invoice and am debating between 2 and 3 year. I'm pretty up to speed on the leasing process. Have used the calculator here. But here's what I don't understand. A 2 year lease with a residual of 74% versus a 3 year lease with a residual of 64%, and the 2 year is cheaper per month. Seems like the depreciation is 13% per year on the 24 month, and 12% on the 36, but the 24 is cheaper monthly, both at the dealer and the calculator. Same money factor .00210. What am I missing?


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## jkjjpc (Sep 6, 2005)

bennett64 said:


> I arranged an ED lease yesterday. 1000 over ED invoice and am debating between 2 and 3 year. I'm pretty up to speed on the leasing process. Have used the calculator here. But here's what I don't understand. A 2 year lease with a residual of 74% versus a 3 year lease with a residual of 64%, and the 2 year is cheaper per month. Seems like the depreciation is 13% per year on the 24 month, and 12% on the 36, but the 24 is cheaper monthly, both at the dealer and the calculator. Same money factor .00210. What am I missing?


Remember that the depreciation that you pay monthly in the lease is the difference between the selling price (also called the capitalized cost) and the residual, NOT the difference between MSRP and the residual value. With ED pricing at $1000 over invoice your selling price is probably about 88% of MSRP (see my post early above for my specific example). So, for each year of a 2 year lease you are paying the difference between the selling price of about 88% and the residual of 74%, or about 7% per year. When you do the 3 year lease it becomes 88% minus 64%, or about 8% per year.

In most cases I've found that for ED or leases that have an a very high residual for the 2 year program, 2 year is less per month than 3. But as my post earlier notes, for the X5 that we have ordered the 3 year is actually cheaper per month. It all depends on the average depreciation per year.

John


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## Blue1 (Nov 17, 2006)

A mate of mine just puchased a 335i with the sames specs as mine. MF the same but I am doing ED and he got his locally. My lease was cheaper for 2 years and his was cheaper for 3 years. It came down to the Cap cost of the car. If I took out the ED advantage then a 3 year lease would have been the way to go. Not taking into account the tire replacement and BMWCCA credit. Download a spread sheet and play with the #'s. Once you start plugging in the tire cost and BMWCCA advantage you can teally see the true costs for the different leases. I also like the idea of going to Europe every 2 years to get a new car.


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## bennett64 (Mar 9, 2006)

jkjjpc said:


> Remember that the depreciation that you pay monthly in the lease is the difference between the selling price (also called the capitalized cost) and the residual, NOT the difference between MSRP and the residual value. With ED pricing at $1000 over invoice your selling price is probably about 88% of MSRP (see my post early above for my specific example). So, for each year of a 2 year lease you are paying the difference between the selling price of about 88% and the residual of 74%, or about 7% per year. When you do the 3 year lease it becomes 88% minus 64%, or about 8% per year.
> 
> In most cases I've found that for ED or leases that have an a very high residual for the 2 year program, 2 year is less per month than 3. But as my post earlier notes, for the X5 that we have ordered the 3 year is actually cheaper per month. It all depends on the average depreciation per year.
> 
> John


That explains it. Of course. Thank you.


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## ValBkc (Jan 2, 2008)

Hello everyone. 
Happy New Year 
My name is Val.
I'm from Russia. Currently I work in New York City as a Bartender.
I've never worked as a salesperson before, but I have lots of passion for cars and I would like to get into this business.
I want to start my career in a BMW car dealership.
So I just want to ask if there is any special knowledge I need to have to get started.
What kind of personality should i have to deal effectively with the customers?
What is a main criteria on the interview?
What is the most complicated part of the business?
Any advise would be appreciated.


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## cozia83 (Dec 24, 2007)

ValBkc said:


> What kind of personality should i have to deal effectively with the customers?


As a customer who had very negative experiences in Virginia and has finally found someone I can work with in Ohio, I would like to pass along this advice, from my point of view:

-Be on the customer's side. Work with him to get him the best deal possible.
-Don't make promises and then break them, and don't LIE. Yes, I know that as a car dealer you get paid on commission, but you'll get repeat business and referrals if you treat people honestly and openly.
-Even if they're not the most informed customers, teach them: tell them about the Multiple Security Deposits on the lease to lower the money factor.
-Finally, don't agree to a deal and then mark up every other number possible.

But I think this is a little off the topic of the OP...


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