Topic: Is this a good lease takeover?

[Railton]

Mrs. Railton was looking on Kijiji today for lease take overs for Kate.
She showed me this one, a BMW X30i with nice blue paint and leather. I thinks that's all for options other than tint.
https://www.kijiji.ca/v-cars-trucks/city-of-toronto/2018-bmw-x3-lease-takeover-465-56-month/1507596722?undefined
The finance details are attached.
The guy has $15k into it which drops his payment down to $465 or so. The residual looks high to me though at $28583
I went on BMW Canada this afternoon and plugged in the same numbers on a new x30i and the residual is down to $22637.
Does this seem like a good deal, I have no idea about FGC's?
Railton

[ktm525]

residual will only matter if you plan to buy it out.?

[Railton]

residual will only matter if you plan to buy it out.?

Exactly - would $28583 a good price for a 4 year old BMW X30i down the road?
My thoughts are that it would be high.
Railton

[Ex-airbalancer]

Do you think this thing is worth $40,000 with taxes 
I new CX-5 would be better deal

[BWII]

So you love your daughter...yet you're looking at an FGC?  WTF...secretly hoping for more weekend/private time with the missus eh?  "Sorry...I can't come home (tears, sobbing), that FGC won't stay running"...darn (snaps fingers  )

[Hannibalsmith]

Lease deal aside, I always cringe at the thought of buying a basically new BMW for kid's first car. I understand the urge, but...

FYI a new corolla will lease out for $200 - $300 / month.

[Hannibalsmith]

Lease deal aside, I always cringe at the thought of buying a basically new BMW for kid's first car. I understand the urge, but...

FYI a new corolla will lease out for $200 - $300 / month.

This is true. But if she’s grounded and has the discipline to be at the top of her class And go into medical school it’s a bit different IMO.

But yeah something like a CX-5 or a forester or something would be less “pretentious” if you subscribe to that.

She's not in medical school yet...

Getting a new car would be awesome enough, the BMW will be pretentious anyway you look at it

[JohnnyMac]

The lease payment seems reasonable but the guy out seems a little high.

Like others I kind so struggle with the idea of getting a child such a nice vehicle.  But it's not my kid and if you can afford to do so why not I guess.

If it was me I'd likely get her a nice non luxury SUV and safe that extra money for a future gift for the kid, maybe a nice little sum to help with a down payment for their first house.

[Railton]

Ahhhemm...Mrs. Railton was just looking.
FWIW, I also don't think it a prudent idea...and I think his residual is too high..but I thought I would ask the members.
Before this it was suggested to look into US stuff again even though I told her it did not make any sense given the exchange. The only benefit being a larger pool of vehicles.
Happy Wife, happy life.
Railton
PS. Happy Father's Day all you Dad's out there.

[Hannibalsmith]

Ahhhemm...Mrs. Railton was just looking.
FWIW, I also don't think it a prudent idea...and I think his residual is too high..but I thought I would ask the members.
Before this it was suggested to look into US stuff again even though I told her it did not make any sense given the exchange. The only benefit being a larger pool of vehicles.
Happy Wife, happy life.
Railton
PS. Happy Father's Day all you Dad's out there.

Yes you’re absolutely right and apologies, I momentarily forgot one of the golden rules!

[Dante]

IMO this is a very good deal for a very nice vehicle....

This package is about $58K MSRP new (without freight and PDI) so the residual is  about right IMO.

[Railton]

IMO this is a very good deal for a very nice vehicle....

This package is about $58K MSRP new (without freight and PDI) so the residual is  about right IMO.

I went to the BMW site yesterday and plugged in the same SUV, numbers and options though and I got and the residual is down to $22637. I guess it was the interest rate difference?
Railton

[HeliDriver]

Isn’t the residual a fairly arbitrary number that BMW is free to make up?

If they want to juice sales, just up the residual to lower the monthly payments. Maybe that’s what BMW did back in 2018.

Maybe they got burned having to take back too many vehicles with inflated residuals, so aren’t playing the same game today?

[ktm525]

Isn’t the residual a fairly arbitrary number that BMW is free to make up?

If they want to juice sales, just up the residual to lower the monthly payments. Maybe that’s what BMW did back in 2018.

Maybe they got burned having to take back too many vehicles with inflated residuals, so aren’t playing the same game today?

The whole residual game is interesting. Back in the 2000s it bit people in the ass. Volvo would set a high residual to keep payments low. Ford credit actually went out and bought residual insurance in the case that the residuals were over estimated. This residual insurance was packaged up and sold to retail mom & pop investors as some sort of income instrument. Very similar to the CDO debacle that brought down wall street (temporarily lol) in 2008.

Anyhow I leased my Volvo with a balloon payment lease. When the lease period was up the residual was 7-8k too high. However I was not allowed to buy it at a lower residual. It had to be traded in and appraised by Ford Credit. It was then sold to the dealer who sold it back to me as a CPO. I never took my plates off  . The difference between the estimated residual and the actual trade in value was then claimed on insurance. My residual on paper was something like $37k. I bought it back for $29 IIRC.

Yeah kid in school? Do what you want but I would buy something cheap and safe and invest the rest.

[OliverD]

Seems like a great lease deal but I wouldn’t bother keeping it at the end of the lease.

[Railton]

Isn’t the residual a fairly arbitrary number that BMW is free to make up?

If they want to juice sales, just up the residual to lower the monthly payments. Maybe that’s what BMW did back in 2018.

Maybe they got burned having to take back too many vehicles with inflated residuals, so aren’t playing the same game today?

The whole residual game is interesting. Back in the 2000s it bit people in the ass. Volvo would set a high residual to keep payments low. Ford credit actually went out and bought residual insurance in the case that the residuals were over estimated. This residual insurance was packaged up and sold to retail mom & pop investors as some sort of income instrument. Very similar to the CDO debacle that brought down wall street (temporarily lol) in 2008.

Anyhow I leased my Volvo with a balloon payment lease. When the lease period was up the residual was 7-8k too high. However I was not allowed to buy it at a lower residual. It had to be traded in and appraised by Ford Credit. It was then sold to the dealer who sold it back to me as a CPO. I never took my plates off  . The difference between the estimated residual and the actual trade in value was then claimed on insurance. My residual on paper was something like $37k. I bought it back for $29 IIRC.

Interesting, I didn't know there was that much negotiating room on the residual at turn in time.
Railton

[Hannibalsmith]

Isn’t the residual a fairly arbitrary number that BMW is free to make up?

If they want to juice sales, just up the residual to lower the monthly payments. Maybe that’s what BMW did back in 2018.

Maybe they got burned having to take back too many vehicles with inflated residuals, so aren’t playing the same game today?

The whole residual game is interesting. Back in the 2000s it bit people in the ass. Volvo would set a high residual to keep payments low. Ford credit actually went out and bought residual insurance in the case that the residuals were over estimated. This residual insurance was packaged up and sold to retail mom & pop investors as some sort of income instrument. Very similar to the CDO debacle that brought down wall street (temporarily lol) in 2008.

Anyhow I leased my Volvo with a balloon payment lease. When the lease period was up the residual was 7-8k too high. However I was not allowed to buy it at a lower residual. It had to be traded in and appraised by Ford Credit. It was then sold to the dealer who sold it back to me as a CPO. I never took my plates off  . The difference between the estimated residual and the actual trade in value was then claimed on insurance. My residual on paper was something like $37k. I bought it back for $29 IIRC.

Interesting, I didn't know there was that much negotiating room on the residual at turn in time.
Railton

There isn't. That was an outlier and ~20 years ago.

[Hannibalsmith]

IMO this is a very good deal for a very nice vehicle....

This package is about $58K MSRP new (without freight and PDI) so the residual is  about right IMO.

I went to the BMW site yesterday and plugged in the same SUV, numbers and options though and I got and the residual is down to $22637. I guess it was the interest rate difference?
Railton

Actually, when I look at these numbers, they are not dissimilar to the what I paid for my 335. I leased for 4 years and my residual was ~$23,000. Price I paid was $55K but my interest rate was high at 4.9% (that's what you get for custom ordering a car).

Anyway, the market value of my car was higher than the residual when I bought it out. Not sure this really helps much here.

[OliverD]

Isn’t the residual a fairly arbitrary number that BMW is free to make up?

If they want to juice sales, just up the residual to lower the monthly payments. Maybe that’s what BMW did back in 2018.

Maybe they got burned having to take back too many vehicles with inflated residuals, so aren’t playing the same game today?

The whole residual game is interesting. Back in the 2000s it bit people in the ass. Volvo would set a high residual to keep payments low. Ford credit actually went out and bought residual insurance in the case that the residuals were over estimated. This residual insurance was packaged up and sold to retail mom & pop investors as some sort of income instrument. Very similar to the CDO debacle that brought down wall street (temporarily lol) in 2008.

Anyhow I leased my Volvo with a balloon payment lease. When the lease period was up the residual was 7-8k too high. However I was not allowed to buy it at a lower residual. It had to be traded in and appraised by Ford Credit. It was then sold to the dealer who sold it back to me as a CPO. I never took my plates off  . The difference between the estimated residual and the actual trade in value was then claimed on insurance. My residual on paper was something like $37k. I bought it back for $29 IIRC.

Interesting, I didn't know there was that much negotiating room on the residual at turn in time.
Railton

There isn't. That was an outlier and ~20 years ago.

I believe that these days some leasing companies don't even allow you to purchase a vehicle after you turn it in, to avoid exactly this scenario.

[ktm525]

Isn’t the residual a fairly arbitrary number that BMW is free to make up?

If they want to juice sales, just up the residual to lower the monthly payments. Maybe that’s what BMW did back in 2018.

Maybe they got burned having to take back too many vehicles with inflated residuals, so aren’t playing the same game today?

The whole residual game is interesting. Back in the 2000s it bit people in the ass. Volvo would set a high residual to keep payments low. Ford credit actually went out and bought residual insurance in the case that the residuals were over estimated. This residual insurance was packaged up and sold to retail mom & pop investors as some sort of income instrument. Very similar to the CDO debacle that brought down wall street (temporarily lol) in 2008.

Anyhow I leased my Volvo with a balloon payment lease. When the lease period was up the residual was 7-8k too high. However I was not allowed to buy it at a lower residual. It had to be traded in and appraised by Ford Credit. It was then sold to the dealer who sold it back to me as a CPO. I never took my plates off  . The difference between the estimated residual and the actual trade in value was then claimed on insurance. My residual on paper was something like $37k. I bought it back for $29 IIRC.

Interesting, I didn't know there was that much negotiating room on the residual at turn in time.
Railton

There isn't. That was an outlier and ~20 years ago.

I believe that these days some leasing companies don't even allow you to purchase a vehicle after you turn it in, to avoid exactly this scenario.

The step in between is the dealer negotiated buying the vehicle from the lease company as opposed to shipping the car to a centralized wholesale auction. I believe this still happens to this day if the residuals are out to lunch.

So ownership went: Lease Company (me leasing) > Dealer > Me.

* oh and it was 10 years ago , I am not that old.