BMW Lease Takeover Questions - Penalty Charge?

[TDA]

Is there a way I can calculate how much the penalty charge is for breaking a lease of a BMW leased through BMWFS? Or is there a typical ballpark of penalty charge?

I know the current monthly payment, the term, the buyout value at the end of lease, the original downpayment. Just not sure how to calc the potential penalty.

Reason is that I'm in the first stages of considering a Lease Takeover and I want to know what I'm getting myself into. Ie, what if later down the road I need to get out of my lease also.

[max_boost]

Not sure what you mean by penalty charge. I don't think you can just abandon the car? :dunno:

But if you were to find someone to take over your lease, it costs $400 for the paper work but this was the price 3 years ago. Better call one of their business managers to find out for sure.

[TDA]

Ok, I am considering taking over someone else's lease. Edited first post as I realize I failed at the english.

I just want to understand the person who wants to get out of their lease, why offer incentives to take over. Because in order to break the lease, there is a significant penalty charge, correct?

Same as breaking a closed mortgage early, can be huge penalty charges.

[benyl]

No there isn't.

You pay out the principal that is left on the car.

BMW leases are different than most. Interest is calculated every month. So if you are buying out a lease early, just get the balance of what is owed and pay that. The owner can call BMW Finance and get this number. Or they can call their dealer and they will get the number from BMW finance.

[TDA]

Sounds like then most BMW leasers don't need to get someone to take over their BMW lease. Only situation I can think of if they're upside down if their residual/payout is too high and they think they can't sell the car for that much.

[max_boost]

People get out of their lease for a lot of reasons, lose their job, can't afford the payments, want a different car, etc.

It is also easier to sell a car this way too. Find a buyer who likes the terms of your contract, you pay the $500 lease take over fee and that's it. Keep an eye out, sometimes sellers are so desperate, they will even pay you anywhere from $1-3K+ to take over their car!

[TDA]

Edited my post again. I don't know whats wrong with me today. Starting signs of dyslexia?

If its so easy to get out of a BMW lease simply pay it off and be done rather than go through the pain of hunting to find someone to take over the lease.

[benyl]

A big reason people lease is because they can't afford the car in the first place.

[max_boost]

Originally posted by TDA
Edited my post again. I don't know whats wrong with me today. Starting signs of dyslexia?

If its so easy to get out of a BMW lease simply pay it off and be done rather than go through the pain of hunting to find someone to take over the lease.

Yeah your first post really doesn't make any sense. Anyway, can't always buyout the car and sell it unless if you want to lose money that way.

Think about it.

You lease a brand new BMW that cost $65K, you make six $1500 payments and now you owe about $56K on the loan, chances are, the car isn't worth $56K, maybe $50K or even less in the land of lowballs. You buy out the car and lose at least $6K. Or you can pay $500, have someone take over your lease, and that's it. Even if you have to offer an incentive of $1-2K, you still come out ahead.

Get it?

It's just an example. Most people unless they have access to cheap credit aren't going to take a loan from the bank at a higher rate than what BMW finance is offering.

Leasing is attractive because you just jump into payments. Which is why when leasing, don't be shy to get the BEST deal possible, the most dollars off or buy at a time when the lease rates are lowest. Because when you go to find someone to take over your lease, they'll compare the numbers, as long as what you have is better than what the current deal is, someone will take over your lease.

[max_boost]

Originally posted by benyl
A big reason people lease is because they can't afford the car in the first place.

I prefer to look at it as managing my payments better. $900 lease payment is better than a $1700 finance payment haha

[benyl]

Originally posted by max_boost


I prefer to look at it as managing my payments better. $900 lease payment is better than a $1700 finance payment haha

I am not talking about payments, I am talking about buying the car outright.

[Redlyne_mr2]

The new individual taking over the lease applies for credit with BMW fin, you pay the lease transfer fee, the lease is transfered into their name and they make the payments.

[TorqueDog]

Originally posted by benyl
A big reason people lease is because they can't afford the car in the first place.
Originally posted by benyl
I am not talking about payments, I am talking about buying the car outright. An ignorant point of view, IMO. If I could borrow the money through BMW FS for a lower interest rate than the potential rate of return if I were to invest the money somewhere, why wouldn't I? That's just being money-smart.

BMW FS special interest rate offers are here (http://www.bmw.ca/ca/en/insights/special_offers/special_offers.html). You don't think you couldn't make a rate of return better than 1.9-2.9%?

[Danny Meehan]

The penalty will be paid by the new owner who will have to put up with the local BMW service

[TDA]

Originally posted by max_boost


Yeah your first post really doesn't make any sense. Anyway, can't always buyout the car and sell it unless if you want to lose money that way.

Think about it.

You lease a brand new BMW that cost $65K, you make six $1500 payments and now you owe about $56K on the loan, chances are, the car isn't worth $56K, maybe $50K or even less in the land of lowballs. You buy out the car and lose at least $6K. Or you can pay $500, have someone take over your lease, and that's it. Even if you have to offer an incentive of $1-2K, you still come out ahead.

Get it?

It's just an example. Most people unless they have access to cheap credit aren't going to take a loan from the bank at a higher rate than what BMW finance is offering.

Leasing is attractive because you just jump into payments. Which is why when leasing, don't be shy to get the BEST deal possible, the most dollars off or buy at a time when the lease rates are lowest. Because when you go to find someone to take over your lease, they'll compare the numbers, as long as what you have is better than what the current deal is, someone will take over your lease.

Got it. Thanks.

[benyl]

Originally posted by TorqueDog
An ignorant point of view, IMO. If I could borrow the money through BMW FS for a lower interest rate than the potential rate of return if I were to invest the money somewhere, why wouldn't I? That's just being money-smart.

Ignorant?

It has nothing to do with interest rates. There are plenty of BMW douches driving BMWs with 8% lease rates.

The OP asked why BMW lease transfer people don't simply buy it out and then try to sell it. I am telling him that they don't have the cash to buy it out first.

How is that ignorant?

Another reason is that people are payment motivated. If they can take over a payment, rather than forking over $40-$50K for the buyout, they would rather do that. Why break the lease if some wants the payments?

[max_boost]

Ahhh got lost in translation, you have to be more clear Benyl, this is Beyond man. hahahaha

[TDA]

Is there ever an Lease option (doesnt have to be BMW specific) of paying a penalty and the dealer/leasing company takes back the car out of your hands? Ie, if one doesnt want to sell it on their own. I would imagine this is a more typical situation than having 50k sitting around scratching its ass.

[max_boost]

No you can not do that.

[max_boost]

Ok the penalty is whatever the difference between buyout and what the dealer gives you on trade.

You owe $50k, dealer offers you $42', penalty is $8k using your terminology but same shit as selling at a loss etc. Again, you have to be stupid, find someone to take over your lease!

[max_boost]

I'm posting from my phone, or are you asking about when the lease ends? When it ends, you just give the car back. Leasing is renting.

[Danny Meehan]

The simplest way to end your lease is to return the leased car to a dealership before lease expiration date. However, you remain obligated to the financial responsibilties of the lease.

[Redlyne_mr2]

Originally posted by Danny Meehan
The simplest way to end your lease is to return the leased car to a dealership before lease expiration date. However, you remain obligated to the financial responsibilties of the lease.
but then you really haven't ended the lease if you do this you've basically just abandoned it.

[TDA]

Originally posted by max_boost
I'm posting from my phone, or are you asking about when the lease ends? When it ends, you just give the car back. Leasing is renting.

Nope, I'm asking about in the middle of the lease.

If Leasing is renting, then I one should be able to bust out early, with a penalty fee?

Ok, I did some google searching in more detail:
http://www.easyrelease.ca/lease-termination.htm

Makes more sense now. I was reading pages like:
http://www.autotraderleaseguide.com/lease-guide/auto-trader-car-lease/401/terminating-car-lease-01.php

Which implies that one can get rid of the car back to the dealer but pay lots of $$.

I was thinking it was similar to renting a place. Say I sign a 1 year lease, but I bust out in the middle. Technically I am responsible for the entire lease but a deal can be made to pay a chunk to mutually discharge a lease. I was thinking along this lines; The finance company takes a chunk of change, takes the car back and its theirs to resell or do what they want with it.

Thanks for all the help!

[TorqueDog]

Originally posted by max_boost
Ahhh got lost in translation, you have to be more clear Benyl, this is Beyond man. hahahaha This. My bad, Benyl.

[benyl]

Originally posted by TDA


Nope, I'm asking about in the middle of the lease.

If Leasing is renting, then I one should be able to bust out early, with a penalty fee?

Ok, I did some google searching in more detail:
http://www.easyrelease.ca/lease-termination.htm

Makes more sense now. I was reading pages like:
http://www.autotraderleaseguide.com/lease-guide/auto-trader-car-lease/401/terminating-car-lease-01.php

Which implies that one can get rid of the car back to the dealer but pay lots of $$.

I was thinking it was similar to renting a place. Say I sign a 1 year lease, but I bust out in the middle. Technically I am responsible for the entire lease but a deal can be made to pay a chunk to mutually discharge a lease. I was thinking along this lines; The finance company takes a chunk of change, takes the car back and its theirs to resell or do what they want with it.

Thanks for all the help!

Everything is determined by how the lease is structured. Each lease can be different. Most leases force you to pay out all the payments including the interest for the term.

So, if you lease a $50K car and the interest over 3 years is $5K and the buyout is $25K, you have to make payments of $833.33 for 36 months. With most leases, to break out of this at say month 18, you have to pay the remaining 18 payments of $833 plus the residual. You might as well keep the car, cause you are paying for it anyway.

BMWs leases are a little different. You only have to pay out the balance which saves you the interest on the last half of the lease term (18 months of interest on the remaining amount). You can then take the car and sell it (likely for a loss).

[benyl]

Originally posted by TorqueDog
This. My bad, Benyl.

Sorry guys, actually busy at work... haha, can't concentrate on Beyond!

[bignerd]

I am pretty sure a ways back my parents turned in a lease early to the dealership and I thought you are still allowed to do this although the penalty is big. My parents were having financial difficulty (no the car was not reposessed) so not sure if that made a difference although this was like 20 years ago so they could of changed their rules.

It would be similar to breaking your mortgage agreement early-you would be charged a percentage for however many months you had remaining. Sometimes it is so high it is not worth it to turn the car back in.

[Redlyne_mr2]

Originally posted by bignerd
I am pretty sure a ways back my parents turned in a lease early to the dealership and I thought you are still allowed to do this although the penalty is big. My parents were having financial difficulty (no the car was not reposessed) so not sure if that made a difference although this was like 20 years ago so they could of changed their rules.

It would be similar to breaking your mortgage agreement early-you would be charged a percentage for however many months you had remaining. Sometimes it is so high it is not worth it to turn the car back in.
Yah today there isn't anything available like that. You are responsible for X amount of payments and you have to satisfy those payments. The only way out of a lease is to transfer it into someone elses name or sell it for at least as much of the buyout.