[sunone23]

My lease is up next month on my 2015 M235i and I'm thinking of buying it out. MSRP $52,325 (Cold Weather, Drivers Assistance, Premium, Tech, etc). Residual Buyout is $31,918.25. Car only has 16K miles on it. A few questions:

1. Is the buyout price fair or can I negotiate down? Dealer did not seem to indicate they would lower the price given the low miles.

2. My car has Manual Transmission, Estoril Blue w/Coral Red. I custom built it to my taste, and my general sense is that color combo plus manual transmission is not highly sought after. Do you think this is grounds for getting a lower buyout, given it may hard for dealer to resell?

3. Will different dealers offer different buyout prices and/or can I negotiate directly w/BMW? I know that the dealer doesn't own the car so not sure how to go about negotiations.

Thanks in advance!

[M235ForNow]

Originally Posted by sunone23

My lease is up next month on my 2015 M235i and I'm thinking of buying it out. MSRP $52,325 (Cold Weather, Drivers Assistance, Premium, Tech, etc). Residual Buyout is $31,918.25. Car only has 16K miles on it. A few questions:

1. Is the buyout price fair or can I negotiate down? Dealer did not seem to indicate they would lower the price given the low miles.

2. My car has Manual Transmission, Estoril Blue w/Coral Red. I custom built it to my taste, and my general sense is that color combo plus manual transmission is not highly sought after. Do you think this is grounds for getting a lower buyout, given it may hard for dealer to resell?

3. Will different dealers offer different buyout prices and/or can I negotiate directly w/BMW? I know that the dealer doesn't own the car so not sure how to go about negotiations.

Thanks in advance!

Huh. Mine's $56K, nothing down and residual of $31,500. So based on that I'd say that buyout looks high.

[sunone23]

Appreciate the feedback. Not sure how much residuals change year over year. When I was buying my car in summer of 2014, the money factor was .0013 and residuals were 58% @ 15000 miles, 60% @ 12000 miles, and 61% @ 10000 miles. At the time, I had a long commute and chose the 12K mileage option will resulted in the near $32K buyout.

Also, my understanding is that negotiating the buyout price is more based on current market conditions, meaning what is the value of a similar car on the used market today.

Thoughts from others on this?

Originally Posted by M235ForNow

Huh. Mine's $56K, nothing down and residual of $31,500. So based on that I'd say that buyout looks high.

[BEM-S4]

You cannot negotiate directly with BMWFS, your price is your price. All dealers can buy the car at current market pricing. Some may be willing to resell to you, but it's a little bit of a grey area on who will and will not help you at their discretion.

If you find a dealer willing to play ball you will need to pay them for a few hours of shop time for an inspection. They technically own the car briefly before selling to you so need to cover themselves from a legal perspective. For example your tires are crap and they sell the car to you without seeing it, you could theoretically go after them.

[p912guy]

Let me say up front, I have never leased a car, so I am out of my realm of expertise, but I did "stay at a Holiday Inn" the other night. It would make sense to me to estimate what the dealership would sell it or a similar car for if they put it on their lot and use that as a target price in negotiating. That said, I seem to recall reading somewhere BMW Financial somewhat insulates or insures the dealer on lease returns, so if the residual is more than the actual value to at the time of lease return, they will take the car off the dealer's hands and wholesale it either back to the dealer or to another reseller. If this is the case, the dealer may not have much financial incentive to sell it to you at much less than the agreed residual. I am sure others here are more versed in this process.

[M235ForNow]

Originally Posted by p912guy

Let me say up front, I have never leased a car, so I am out of my realm of expertise, but I did "stay at a Holiday Inn" the other night. It would make sense to me to estimate what the dealership would sell it or a similar car for if they put it on their lot and use that as a target price in negotiating. That said, I seem to recall reading somewhere BMW Financial somewhat insulates or insures the dealer on lease returns, so if the residual is more than the actual value to at the time of lease return, they will take the car off the dealer's hands and wholesale it either back to the dealer or to another reseller. If this is the case, the dealer may not have much financial incentive to sell it to you at much less than the agreed residual. I am sure others here are more versed in this process.

I have once leased a BMW and then bought it back as a CPO from the dealer. It's definitely an "up to the dealer" kind of thing. The wholesale of the car is presumably less than the quoted residual. And the cost of the CPO is also negotiable. So what one does is try to determine the actual worth of the car based on comparable listings/KBB/Edmunds/etc. And then assess how good a shape it's in (better shape -> less need for dealer to fix it up and so less need to charge for that work). And then just start the bargaining process.

My general rule of thumb, based on my own historical experience, is that I can get a pre-owned car (CPO or not) from a dealer at 12% below what they've listed it for. Yes, it all depends, etc, etc, but 12% has been my experience.

[Lucky13]

I bought my 2014 M235 off lease in May with 10,500 miles on it. The dealer would only quote residual plus CPO. I was not interested in adding $1,500 to $2,000 to residual for CPO when I only drive 3,500 miles a year with little chance of any mechanical issues. I've owned 16 BMW's and never had a major mechanical issue. That being said, my local dealer is off my list for any future purchases because of their lack of working with me after being an extremely loyal customer. I think my residual was $30,400 on a $48,500 sticker.

[BEM-S4]

Originally Posted by Lucky13

I bought my 2014 M235 off lease in May with 10,500 miles on it. The dealer would only quote residual plus CPO. I was not interested in adding $1,500 to $2,000 to residual for CPO when I only drive 3,500 miles a year with little chance of any mechanical issues. I've owned 16 BMW's and never had a major mechanical issue. That being said, my local dealer is off my list for any future purchases because of their lack of working with me after being an extremely loyal customer. I think my residual was $30,400 on a $48,500 sticker.

It's a bit of an issue for some dealers bc you're basically partnering with them to screw BMW out of money. Say your car wholesale was $25k. By dealer buying there and sellling to you BMW loses $5k. A middle ground is some dealers won't do that but will get you the car CPO at your agreed upon residual. It's all dependent on how "fast and loose" they run their shop.

On the upside you underpaid for your lease in that example so don't really come out worse for the wear. Although your residual is calculated on MSRP so if you got 10% off price and buy out, assuming your residual was 60% you only really net yourself 4% saving when it's all said and done.

[sunone23]

Really great conversation thus far! What I've understood from this thread:

1. If I want to buyout my car at the pre-negotiated residual price, I can do that straight through BMWNA and send them a check. No need to involve a dealership or even physically go to a dealership, right?

2. The finance guy at my dealership is asking me to come in to buy-out the car. It sounds like he's doing that so that they can buy it wholesale, then resell to me at residual plus adding CPO/maintenance warranty if I went that route. Dealer makes money, I get nothing from this transaction except hassle.

3. Current market price for a comparable 2015 model w/similar specs and mileage start at ~$33K and all the way up closer to $40K for CPOs. My residual of $32K sounds reasonable, right?

I plan to call my dealer and essentially say that I am going to buyout the car directly from BMWNA unless he can offer me some sort of incentive to go through the dealership.

Thoughts on this approach?

Thanks!

[BEM-S4]

Are you financing? One additional thing to keep in mind if you CPO then include the maintenance as well, the maintenance plan gets the rate on your note down a full point. You should also consider gap insurance through BMW.

[shovell242]

If you only have 16k miles on your car then your buyout price is at a huge advantage. Your residual was set the moment you started your lease with the idea that you would be returning it with around 30k miles (if you had 10k annual limit). CPO prices for that mileage are probably in the high 30's.

[sunone23]

Not planning on financing, going to purchase outright. Good to know though, thanks!

Originally Posted by BEM-S4

Are you financing? One additional thing to keep in mind if you CPO then include the maintenance as well, the maintenance plan gets the rate on your note down a full point. You should also consider gap insurance through BMW.

[BEM-S4]

Originally Posted by sunone23

Not planning on financing, going to purchase outright. Good to know though, thanks!

You might want to at least consider it. I was going to pay cash for GF's 3-series a few weeks ago but the money was really cheap from BMW. I don't have the papers with me but I want to say 1.4% on a 5 year note. We will keep the car 3 years til the warranty runs lit then sell it.

[sunone23]

Definitely will. I thought my guy quoted a rate of 3.5%, but will double check. Can I do that through BMWNA or only through a dealership?

Originally Posted by BEM-S4

You might want to at least consider it. I was going to pay cash for GF's 3-series a few weeks ago but the money was really cheap from BMW. I don't have the papers with me but I want to say 1.4% on a 5 year note. We will keep the car 3 years til the warranty runs lit then sell it.

[sunone23]

Agreed, that's been my sense too. Thanks for confirming!

Originally Posted by shovell242

If you only have 16k miles on your car then your buyout price is at a huge advantage. Your residual was set the moment you started your lease with the idea that you would be returning it with around 30k miles (if you had 10k annual limit). CPO prices for that mileage are probably in the high 30's.

[BEM-S4]

Originally Posted by sunone23

Definitely will. I thought my guy quoted a rate of 3.5%, but will double check. Can I do that through BMWNA or only through a dealership?

Sales manager at dealer is the best person to ask. That may have been the rate if you didn't CPO. At least on a CPO 3 series with top tier credit it as 2.49 and if you do the maintenance too it was 1.49. Assuming you do a brake job you end up coming out ahead.

Personally I just like the no surprises aspect of that approach. Car I bought had a few more miles than you but not a ton. So it comes out to 3 full years and over 80k miles where you know exactly what it's going to cost.

[sunone23]

Quote on interest rate from dealer if I get CPO warranty: 1.9% - 24 months, 2.9% - 60 months, 3.9% - 72 months.

Cost for CPO warranty is $2,195. They are not cutting me any deal on the residual.

I'm not convinced I want to pay an extra $2200 for CPO given the low mileage. I hear the peace of mind argument, but I'm will to take the risk.

At this point, still leaning on buying out directly from BMWNA. Need to decide before the end of the week.

Thoughts?

Originally Posted by BEM-S4

Sales manager at dealer is the best person to ask. That may have been the rate if you didn't CPO. At least on a CPO 3 series with top tier credit it as 2.49 and if you do the maintenance too it was 1.49. Assuming you do a brake job you end up coming out ahead.

Personally I just like the no surprises aspect of that approach. Car I bought had a few more miles than you but not a ton. So it comes out to 3 full years and over 80k miles where you know exactly what it's going to cost.

[BEM-S4]

Originally Posted by sunone23

Quote on interest rate from dealer if I get CPO warranty: 1.9% - 24 months, 2.9% - 60 months, 3.9% - 72 months.

Cost for CPO warranty is $2,195. They are not cutting me any deal on the residual.

I'm not convinced I want to pay an extra $2200 for CPO given the low mileage. I hear the peace of mind argument, but I'm will to take the risk.

At this point, still leaning on buying out directly from BMWNA. Need to decide before the end of the week.

Thoughts?

CPO and maintenance are two different things. It's the maintenance that will improve whatever the base CPO rate is.

[bryan_G01]

always better to use someone elses money than your own for a depreciating item. 3.9% is still very low, I would go that route. Even if you are upside down when going to sell it, the difference is still much less than if you put all the money upfront out of pocket.

[CAMOETO]

Originally Posted by sunone23

Quote on interest rate from dealer if I get CPO warranty: 1.9% - 24 months, 2.9% - 60 months, 3.9% - 72 months.

Cost for CPO warranty is $2,195. They are not cutting me any deal on the residual.

I'm not convinced I want to pay an extra $2200 for CPO given the low mileage. I hear the peace of mind argument, but I'm will to take the risk.

At this point, still leaning on buying out directly from BMWNA. Need to decide before the end of the week.

Thoughts?

Try a different dealer and expand your search radius if you can't find one that wants to work with you. I would think you should at least be able to find one that can throw in CPO for no extra cost into the deal if you buy from them. There are plenty of people on these forums that have had success in buying below the residual value and/or getting their cars CPOd for no extra charge. Use the argument that making $1-$2k for the given dealer is better than making $0.