# Refundable Security Deposit?



## simmsima (Mar 6, 2012)

Hi,

I'm looking into leasing a 3 series. Dealers in NJ and CT have told me about this program where if I pay the refundable security deposit upfront (~$3k), then I can save $35/mo off my monthly lease. They also said this was banned in NY. The whole thing sounds very shady to me, but I've heard it from multiple authorized BMW dealers and is appealing if legitimate. Can anyone please advise whether this is a good idea? 

I fear that once they have my money, it'll be harder to get it back at the end. I was also considering the excess wear/tear protection for $750 which covers up to $5k of damages, so I thought this may make it more likely to get my full security deposit back. Thanks in advance.

Best,
Mike


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## BMWofBloomfield (Nov 7, 2008)

Hello Mike and welcome to Bimmerfest. The reason why NY dealers can not offer the multiple security deposit program is because of NY state laws. This has prompted BMW FS to set the maximum allowed total security deposit to $749 there. There isn't anything shady about it. Security deposits are disclosed on the contract, which means you'll get them back at lease end without muss or fuss. Just has to be done outside of NY. 

In exchange for you "lending" BMW FS a few thousand dollars, they agree to lower your lease interest rate over the term of your lease contract. Think of it as something like a CD you'd get from a bank. The effective rate of interest on your money that you save is A LOT higher than what you can get guaranteed on your own somewhere though ($3,000 or so investment and $30+/mo interest savings=9+%!), so it make GREAT sense to do.

With respect to excess wear & tear, it is insurance like any other. Depending on the usage, where you leave the car during the day/night and how many drivers operate it, it could make sense. Some people are charged close to $2K everytime they bring a lease back because of the condition of their vehicle, so it makes total sense for them. Others however, are charged $0 to under $500 so it makes little sense for them. Every situation is different.


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## simmsima (Mar 6, 2012)

That's very helpful, thanks. Do you know what happens to the security deposit in the case of the car being stolen/totaled? Would I get it back?

Thanks,
Mike


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## NASA43 (Jul 19, 2003)

BMWFS is very prompt with returning the security deposits. I typically get my check within 2 weeks of returning the leased car. I have returned 3 BMWs in the past 5 years and never had to pay anything at the end. I have also leased a Grand Cherokee and Lexus RX 330 years ago and paid nothing upon lease return. As long as you reasonably care for your cars, you will easily pass inspection. The one area they do usually check is the tire tread depth. But all they require is 1/8", which really isn't alot. Obviously you can't return it with a 12" dent in the door or the hood but door dings, small scratches, paint chips, etc... are considered normal wear and tear. My experience has been the finance guy at the dealership is the inspector and if you are about to lease another car from them, they will cut you even more slack.

Only you know how you care for your cars, but personally I would never purchase excess wear and tear insurance. In fact, I pass on all the extras the Finance Mgr offers.

One of my funniest car buying experiences was going with my Mom to purchase her a Honda Civic. The salesman talked on and on about how reliable Honda's are. That was his chief selling point. Then when we get to the Finance Mgr, he starts hard selling the extended warranty. Why do I need to pay thousands of dollars for an extended warranty if this car is so damn reliable?


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## 01Byte (Jun 22, 2003)

simmsima said:


> That's very helpful, thanks. Do you know what happens to the security deposit in the case of the car being stolen/totaled? Would I get it back?
> 
> Thanks,
> Mike


Yes


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## The BoatMan (Apr 2, 2002)

There is a thread in the sticky section detailing the program. When searching look for MSD (multiple security deposits). This is the better way to go than a large cap reduction because the money is returned in case of a total loss. 

It does make sense at times for a small cap reduction because the security deposit amount is rounded up to the next multiple of 50 (i.e your payment is 452, each security deposit would be 500, make a small cap reduction to bring your payment under 450). 

The details are discussed in the many threads regarding MSD. Good luck


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## simmsima (Mar 6, 2012)

thanks again for all the help and welcoming me to the bmw forum. just put a deposit on a 328xi, pick up at the end of the month. space gray ext / black leather interior


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