# What happens to my vehicle when returned from lease?



## Zman (Oct 31, 2002)

Jon - Can you explain what occurs when a car is returned at lease end that's been financed through BMWNA? I believe it can be returned to any dealer. Does the dealer have the option of buying it from BMWNA and reselling? I have trouble believing they would be required to buy at the residual if the residual is higher than market. Can they purchase for less? 
Thanks 
Zman


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## Jon Shafer (Dec 15, 2001)

Zman said:


> *Jon - Can you explain what occurs when a car is returned at lease end that's been financed through BMWNA? I believe it can be returned to any dealer. Does the dealer have the option of buying it from BMWNA and reselling? I have trouble believing they would be required to buy at the residual if the residual is higher than market. Can they purchase for less?
> Thanks
> Zman *


Here's the deal:

There is a program called "The Full Circle Purchase Program",
whereby the originating dealer obligates themselves to 
purchase their maturing leases. In exchange for their 
committment to buying them all, they are able to get
them for the "Fair Market Value", based on actual Manheim
Market Report Auction figures (as opposed to the contractual
residual value). Most dealers are participating in this program.
They are allowed so many "bogeys" - vehicles that they
can elect to "pass" on (given specification, mileage, condition,
...etc.). If the leased vehicle is "turned in" to another dealer,
based on customer convenience or whatever, the originating
dealer is off the hook for that particular vehicle.

**As a BMWFS customer, any lessee has the option of
returning their leased vehicle to any authorized BMW Center.


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## Zman (Oct 31, 2002)

To follow up on your (appreciated) reply - if it is turned in to a different dealer, does tthat dealer also have the option of buying at auction price or is it tagged at residual?


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## Zman (Oct 31, 2002)

*Question - BMW doesn't value my car at residual but at a much lower figure, true?*

Jon - I recently spoke with FS and got some quoted residuals if car is re-leased for an additional year. The residual after one more year was almost 30 percent below the stated residual at the end of the current 3 yr lease (which ends soon). There's no way any 3 year old vehicle will depreciate 30 percent in a year. So my conclusion is that BMW values the car at wholesale/auction, which apparently is several thousand less than the contracted residual. Does this analysis seem correct?


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## Jon Shafer (Dec 15, 2001)

Zman said:


> *To follow up on your (appreciated) reply - if it is turned in to a different dealer, does tthat dealer also have the option of buying at auction price or is it tagged at residual? *


The dealer has the *option* of buying it @ Fair Market
if they are a FCPP dealer, otherwise they can buy it
for the residual, or send it back...


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## Jon Shafer (Dec 15, 2001)

*Re: Question - BMW doesn't value my car at residual but at a much lower figure, true?*



Zman said:


> *Jon - I recently spoke with FS and got some quoted residuals if car is re-leased for an additional year. The residual after one more year was almost 30 percent below the stated residual at the end of the current 3 yr lease (which ends soon). There's no way any 3 year old vehicle will depreciate 30 percent in a year. So my conclusion is that BMW values the car at wholesale/auction, which apparently is several thousand less than the contracted residual. Does this analysis seem correct? *


The stated residual at the end of the current 3 yr lease
ending soon is the problem... Your car is not worth that
as a wholesale piece. Hence the "Fair Market Value"
described above.


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## Jon Shafer (Dec 15, 2001)

Zman,

Your original residual value was "supported" (inflated)
vis-a-vis the might marketing machinery of BMWNA...

At maturity, there are no more "sales support"
funds available, therefore any extension is going
to reflect actual cash value, not some hypothetical
imaginary figure used to market it 
(as it was as a new vehicle).


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## Zman (Oct 31, 2002)

*Is there a fixed cost to attach CPO to a vehicle?*

I know the vehicles have to meet some norm (tire wear, brakes, etc). But after that's been done, is there a fixed amount BMW assesses to attach the CPO label?
Thanks


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## Zman (Oct 31, 2002)

*so when a FCPP dealer states that they have to buy*

at the stated residual they're, hmmm, what's the word? How about "mis-stating the facts?"


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## Jon Shafer (Dec 15, 2001)

*Re: Is there a fixed cost to attach CPO to a vehicle?*



Zman said:


> *I know the vehicles have to meet some norm (tire wear, brakes, etc). But after that's been done, is there a fixed amount BMW assesses to attach the CPO label?
> Thanks *


Yes, barring undetermined reconditioning expenses,
there is a fixed amount charged by BMWNA for CPO.
The exact amount varies by model...


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## Jon Shafer (Dec 15, 2001)

*Re: so when a FCPP dealer states that they have to buy*



Zman said:


> *at the stated residual they're, hmmm, what's the word? How about "mis-stating the facts?" *


Who knows, maybe they're not a FCPP dealer??
:dunno:

You can't really blame them for wanting to
earn some profit from the sale of a vehicle,
even if it involves merely the transfer of
ownership from lessor to lessee.

The guy who usually does this (F&I Manager)
has to put a fair amount of time and effort into
the transaction, and deserves to be paid for it.

Your contractual residual is what was agreed
would be your purchase price, providing
you elected to do so.

I'm not here to play the Devil's advocate, though.

They shouldn't be ashamed to admit that they want
to earn a profit from the sale. It is, after all, _reasonable_...


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## Zman (Oct 31, 2002)

*I certainly agree, making money IS reasonable.*

But stating something that's patently false, even after I have made it rather apparent that I have some idea of what's going on, is what I find annoying/bothersome/troubling/whatever. Just doesn't lead to a sense of "I can TRUST these guys" - more one of "I'd better watch these guys every step of the way." Doesn't engender a nice sense of loyalty, motivate me to recommend to others, etc.

PS - Although it's certainly possible they're not part of the Circle program, the likelihood of that being the case is pretty small. They're one of the biggest used/CPO dealers in the area.


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## Jon Shafer (Dec 15, 2001)

I don't even need to guess your geographical location....

I did see it in your member profile, but this is all consistent
with what I have always heard...

:-/


You didn't hear that from me!


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