SV-

Hi all.

New guy here, looking to get rid of a 2013 335i Xdrive M Sport. The lease ends in July 2016, and I'm calculating the wife would reach 80000km in February 2016. We're currently cross-shopping the 340i, C450 and S4 but the C450 is the most interesting car.

Here's what's worrying me :

• Wife is doing more mileage than we expected/signed for. She's gonna go above the 80000km warranty limit 5 months before lease end, which is the main reason I wanna get rid of the car.
• Car was rear-ended on a red light (totally not her fault), she had 7000$ worth of damage which was repaired at our dealership's own bodyshop (inside the dealership, so you can't get more BMW-approved than that).
• While the car was parked someone backed into her rear passenger door and fender. Damage is minimal, you have to look closely to see it (especially that the car is white, and you don't see the body panel... there is still some paint left), but the door has a 1 foot straight line dent in it that goes into the fender (her winter rim is also damaged but that's a different story). We didn't repair this as it's almost not visible.
• Summer rear tires are worn out and would need to be changed next season (didn't change them because we're switching to winter tires now). They're the same tires we got with the car since new.

I'm worried the Merc dealership won't match the residual value and I'll be owing even more money when I trade it in.
I've been told it's better change the car before it approaches the 80000km mark (right now it's at 69000km) because it would hold its value better. How true is that? Should we hurry with the process?

It's the first time I'm gonna have to return a lease, let alone get rid early of a lease on a damaged car, so any advice is welcome!

Thanks.

P.S.: this is a Canadian car

willywonka

Hi! I once considered getting out of a lease early because I had one too many cars. I looked at a site called www.leasetrader.com. Basically you would be asking someone to take over the lease for you till the end of it. Given that you will have a mileage surplus, you will probably have to pay someone an incentive to take over your lease. (just make it less than the penalty). Someone may be willing to take over the lease and still come in under the accepted mileage, because s/he driving habits are different.

I just traded in my bmw 335i coupe early today to put against the C450.

SV-

Actually my plan was to get the MB dealership buy the BMW from BMW Finance (hoping its residual will be equal to its real value). The sales representative at MB told me they could do that... Anybody has experience with that?

I forgot to mention I do have excess wear and tear protection.

BlackjackM

I almost always trade in my lease before it's over. For instance, I just traded my wife's 2013 Acura in for a 2015 ML350. She was 10k miles over on her lease but that's not what matters in a trade in. What matters is what the payoff is on the car and what the trade in value is. Check KBB.com for a general idea of what the value is.

SV-

Isn't it more reliable to call BMW Finance Canada to get that number?

BlackjackM

BMW Finance will give you the payoff amount, but they will not give you a trade in value. The residual value at the end of the lease is not the same as the trade in value.

SV-

We have different terms in Canada vs US. Here's how I understand it :

Residual = after the lease ends (all 36 months of it) , stated in the lease contract
Trade-in = what the car is really worth at a certain point in time (how it will be evaluated by MB/Audi/anyone who wants to buy it)
Payoff (not sure about this) = what I still owe on the lease contract at a certain point in time (nb of months x monthly payment)????

My goal is to get MB to pay the trade in value + any early termination fees so I can get out of that lease and into a new one without being in the negative. I may have confused the words, but this is the general idea. Please correct me if I'm wrong, as this is the first time I'm doing this.

rbrylaw

I've certainly terminated a leased car before the lease end date, but I've never gotten out of it whole. Meaning, there's surely going to be some loss you'll have to absorb. How much you're willing to take on is up to you and how badly you want out of the lease. But be prepared for some negative equity.

This is why I actually hate leasing a car. I'm picking up 2 new MB's next week and I'm buying this time around. I don't want to be limited by miles and locked into something for a specific time frame. Not doing that anymore. No I'm not. I do get why leasing makes sense for someone who wants more car than they can afford to purchase, but you have to pay the piper one way or the other.

sadpanda

SV, how would would the km overage end up costing you?

Not sure how things work in Canada, but depending on how warranty extension mileages work, you might be better off buying the car. If you can give me some numbers, I can try to come up with a spreadsheet for you (unless you already have one) to calculate a bottom-line best cost outcome.

First-e320

It works like this. BMW wants the remaining payments on the lease plus the residual value. You can calculate this from your lease documents.

The trade-in value will be black book not retail (plus whatever you can negotiate with the Mercedes dealer). Retail looks to be about $42,000 - you can look up Canada Blackbook value on the web.

So your cost to get out of your lease will be: Remaining Payments PLUS (residual value) x HST LESS (trade-in value) X HST

BMW and Mercedes give high residuals (hence the great lease payments), so you will likely be upside down. The C Class does not have too much profit in Canada (I think the forums said the discounts negotiated are below $2400 or so), so there is only so much of the loss that the dealer will be willing to take on. The dealer may likely roll that negative equity into the new lease, so watch out for that (you will still end up paying the loss, just over time with some extra interest).

mvw

I got rid of my BMW lease through Mercedes - just had them buy it out. If you owe money on it that works to your advantage because you don't have to pay tax on the portion of the car value purchased by the dealer (so if your buyout is 30k after taxes the dealer can pay 30k less 13% (for Ontario)).

They will only pay what it is worth, however. They may not care about existing damage that much - I've never had a problem trading in cars with dings and scrapes - but the accident record will kill the resale value. Cars with a clean accident history sell for much more.

It certainly isn't a bad idea to call BMW FS and ask them for a quote on the current buyout and then to go to Mercedes and ask them what they would give you for the car. Would give you an idea of what your potential downside is if you make the change.

mvw

Yeah, I just did that with Mercedes Midtown earlier this month. They will look to immediately flip the car to another party or unload it in a wholesale auction, so will be in a position to give you a price pretty quickly. They then handle everything with BMW FS - you just have to tell your bank to stop letting BMW take money from you.

mvw

Agree with this, though I've always thought the "payoff" is called a "buyout" - as in you are buying out your lease at a price quoted by BMW FS based on financed amount, residual, interest rate and monthlies.

So you negotiate a drive away price of 60k, the residual may be 25k, but if you call them 6 months in or 40 months in and ask them for the current buyout, they will email you the amount you would have to pay to buyout the car between that day and the day your next payment is made.

mvw

Incidentally, they often won't give you black book if they don't see anything in their wholesale auction systems of recent sales that show a similar value. I've gotten lucky in the past, but I've also seen the Canadian black book not do a very good job at hitting values, probably because our market is so much thinner than it is in the US.

First step is to call BMW FS with your VIN and get them to email you the current buyout (which will break out taxes). The number net of taxes and security deposit is your magic number. If you can get more than that from the dealer, he is cutting you a cheque instead of the other way around.

Then might as well black book it to see whether the buyout is even in the range of possible when you approach a dealer to trade it in - if it isn't, you need to do some math on what it would cost you at the end of the lease to see whether that might make it worth your while (e.g., if you are 2k underwater with the trade-in but would owe 3k at lease termination for damage and mileage, then might as well trade it in) and then go to a dealer and haggle for the best deal they will give you. If it isn't good enough, then keep the car you have...

mvw

Incidentally, if you can deduct a portion of the car's value from taxes because you use it for business, rolling this extra amount into a lease may not be a bad idea. Yeah you pay it, but with a promotional interest rate and tax deduction for vehicle expenses it may end up better than pulling that money out of investments or putting it on a line. Also, if you have gap coverage and the car gets totaled, that extra loan is effectively forgiven.

As for the 450, I got it for about 5 - 5.5% below (so between 3k and 3500k off). forget the specific amount but there is definitely some room to play if you push them.

SV-

Thanks everyone for your input, I appreciate it. I'll call BMWFS tomorrow to get that number. I read my lease contract and early termination fees aren't there... can BMWFS give me those numbers?

I'm not sure I understand what black book has to do with this. My goal is to get the dealer to match the buyout/payoff that BMWFS gives me, am I right? Whether this is over or under black book, how is it relevant to me?

janusgrimnitz

In Toronto I used something similar to leasetrader.. I paid the new leaser like $2K to take over the lease.. but was very easy

mvw

There are no early termination fees (for you). Having said that, BMW will charge a dealer admin fees to buy out someone's car, which is between 700-800. If you hold firm they will eat the cost and not everyone knows about it.

BlackjackM

Because say the payoff (or buyout) is $28k but the car is only worth $22k to the trade in market, you would be looking at a substantial loss. The black book will let you know what you can expect the dealer to offer you. If you can get the dealer to match the buyout then that would be the perfect scenario but it rarely works out that way.

mvw

Yeah, black book is not directly relevant but can be a guide as to what you could expect from the dealer.

Having said that, in this case I'm not sure it will be of much help. Black book often seems optimistic (I have seen retail offers for used cars by dealers (i.e., pre-haggling prices) that were well within the "trade-in value" on black book, which obviously means that the dealer paid a lot less for the car than that. Plus, blackbook does not ask about accidents while that's going to be a big factor in the wholesale value of the car.

Dealers don't look at Black Book. They look at Adesa and similar vehicle wholesale auction platforms to assess the value of the car they expect to get when they unload the car. Unfortunately, as consumers we don't have access to that information.

SV-

I haven't called BMWFS but I thought about the following scenario if I decided to wait until the end of lease :

1) I'll probably be 6000 km over the lease limit, which translates into a 900CAD penalty... not that bad.
2) What worries me more is that warranty ends at 80000km, which is 4 months before returning it. This is the main reason why I wanted to get rid of the lease. Maybe I'll be lucky enough not to have any problems during those 4 months
3) My rear summer tires are worn out and need to be changed. I can either fork out 1000CAD to change them and bring the car back with new tires, or install them very late (late april) at spring time and survive 2 months on them (until early july to bring the car back). I would then return the car to BMW and hope my excess wear and tear coverage would save my a$$. Or else I'd pay that 1000 CAD.
4) I can also hope the excess wear and tear coverage would cover the damage to the right door/fender. Or else I'd have to absorb the repairs...
5) The BMW dealer would absorb the decreased value of the car since it's been in an accident. This is a big plus of bringing it back to them instead of selling it to MB.

Since MB would be buying my lease and the car has a reported accident, I'm sure value will take a hit and I'll be upside down no matter how much the MB dealer tries to be nice with me (I'm thinking at least a couple thousands)...

So instead of that I could survive with the BMW until the end of lease and maybe save me a couple thousand dollars (even if I have to pay excess mileage and maybe worn out tires) on negative equity.

What do you all think?

mvw

All of that makes sense. Also, forget when your lease is up but Mercedes could introduce some additional incentives as the model year progresses (they and BMW both seem to start in with a 1k factory incentive in the late spring, but may not show up on the 450.

The question really is how badly do you want to get a new car. If all of this is money driven, I agree it sounds like you would be better off keeping what you have (unless you think you could get much better monthly payments on the 450 than you currently have on the 335, such that the incremental cost of getting out of that lease is covered by those savings (which is probably unlikely unless your lease rate with BMW is in the 5-6% range)

Lego

Corporate owned Canada MB dealer bought my leased MINI out right and gave me a deal on my C300. I would have to pay probably over $2,000 to MINI/BMW if I returned the car due to various wear and tear.

jdag

Early lease termination can play into your favor under the right circumstances, but it is fairly rare. Because residual values are set fairly high buy the luxury brands, the chances of not being upside-down are lowered.

It sounds as if you have a number of factors going against you, namely high mileage, poor tire condition, and accident(s). Not matter how small an accident, it is on the car's record.

I actually ended a lease on an Acura MDX this past week, trading in for a C300. The MDX had an average number of miles and had not been in any accidents. The tires were in good shape (although that was not overly important).

The most important consideration was that the residual was relatively low on the MDX. Further, like you, I was going to be over the contracted miles once the lease was scheduled to end in March 2016. So getting out of the lease now assured that I would not pay for milage later. Also, the MDX needed brake work I would have had to do sometime soon.

The payoff as of this past week was ~$26,200, and I was able to get ~$28k in trade. If I waited until March, I would have turned the car in and had to pay ~$1,000 for overage. So, the net of the early transaction was a positive $2,800 or so.

Lastly, it will be important to determine the tax laws in your country and state. Here, if I bought the car myself I would have had to pay tax. But the dealer did not in this transaction.

radarguy

Some other things to consider.

1. In the US you can pay for extra miles prior to turn-in and they are usually cheaper.
   
2. if your winter tires are RFTs drive them until July and turn them in.