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.