G70 Lease Comparisons and Discussion (USA)

Electrode

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I don't think the explanation is quite correct. While there are some market/financing influence, the money factor is chosen more for strategic reasons in regards to the best way to get people to lease. Many times the RV is inflated as a way to subsidize the lease or the MF is extremely low, this is done to get people a lower payment or just appear that they are with such a low MF. Many times lease cash is also used as an enticement. In general there is no correlation between the movement of RV and the movement of MF.

There is no principal when it comes to leasing. You pay a rent charge based on the depreciation amount and residual amount. If you would want to purchase the car at the end of the lease then you would pay the residual amount.
Who actually owns the car at the end of the lease? I understand how lease cash can reduce the dollar amount of depreciation, but how do they inflate the residual value and who eats this loss at the end? I thought the RV was set.
I thought I had some idea of how leasing worked, but will have to research it further.
 
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TurtleBoy

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Who actually owns the car at the end of the lease? I understand how lease cash can reduce the dollar amount of depreciation, but how do they inflate the residual value and who eats this loss at the end? I thought the RV was set.
I thought I had some idea of how leasing worked, but will have to research it further.
The finance company always owns the car, you are basically renting from them. The lease cash reduces the cap cost for the car. You will often see at the end of a model year the lease cash is greatly increased to reduce inventory. It is better for them to get rid of the vehicle at a low/no profit then have old ones around the lot.

There is no loss, they generally account for that in the profit margin. We are going to put banks aside since they are rarely involved in the leasing we are discussing since it is done by the financial arm of the manufacture. There are a number of ways they can account for things but usually when you lease the financial services department/company of the manufacture buys the car from the dealer. They own the car and then you pay to use it by paying a rent charge for the depreciation and the residual value.

The RV is just a number they make up using many factors, future value, sales goals, profit consideration, etc. There are no hard and fast rules for setting the RV or the money factor. They aren't in the business to lose money so they set the numbers in order to make a profit, whether that be by charges during a lease or value of the vehicle as a buyout/CPO after the lease.

There are a bunch of articles out there on leasing and how payments are calculated, here are a couple to check out.

https://cars.usnews.com/cars-trucks/how-does-leasing-a-car-work

Calculate Your Own Car Lease Payment | Edmunds
 

Electrode

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OH; I see. The manufacturer or it's subsidiary owns the car throughout. That gives them leeway to artificially set the residual to whatever they want. I thought the residual really WAS the residual value or at least, the best guess. Thanks for the info!
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COToad

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And for the 3.3T RWD we got the same numbers. LOL at Edmunds I ask exactly after you and got the answer just behind you with the same numbers for both 3.3T AWD and RWD which BTW didn't change compared to January.
I suppose I can just ask on Edmunds myself next time and post, LOL. Thanks for both answering. I assume that the conquest cash is still available too.
 

HyperM3

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There is no loss, they generally account for that in the profit margin.
Not necessarily true. BMWs are inflated so much on the RV that they are not worth buying out when the leases are up. Dealerships are miserable that they have to buy a certain percent of them from BMWFS because they just sit on the lot with inflated prices or they send them to auction to take the hit. A few years ago, Maserati basically gave away Giblis on leases. Well, there are 300 of them sitting in the parking lot of Manheim auction in NJ because they arent worth crap. Just saying, when the RV is low, you have a better chance of being able to trade or sell your car better.
 

COToad

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Not necessarily true. BMWs are inflated so much on the RV that they are not worth buying out when the leases are up. Dealerships are miserable that they have to buy a certain percent of them from BMWFS because they just sit on the lot with inflated prices or they send them to auction to take the hit. A few years ago, Maserati basically gave away Giblis on leases. Well, there are 300 of them sitting in the parking lot of Manheim auction in NJ because they arent worth crap. Just saying, when the RV is low, you have a better chance of being able to trade or sell your car better.
Dealerships do not have to buy them at full residual, the dealership I worked for made lots of money selling off lease CPO vehicles.
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HyperM3

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Dealerships do not have to buy them at full residual, the dealership I worked for made lots of money selling off lease CPO vehicles.
They still have to buy them higher than what they are actually worth. Either way, Im interested to see what the actual resale values will be of these G70s in a few years will be. I havent really researched, but I dont see G80 or G90's making it to any "worst depreciation" lists.
 

COToad

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They still have to buy them higher than what they are actually worth. Either way, Im interested to see what the actual resale values will be of these G70s in a few years will be. I havent really researched, but I dont see G80 or G90's making it to any "worst depreciation" lists.
Then they put a CPO on it for very little and mark it up. In the end, it is mostly about keeping the car coming back in for service anyway, that's where a dealership makes most of its money. A car with 3-4 yr/36-50k warranty and maintenance, all paid by the manufacturer, then returns to the dealership for most of its maintenance and warranty service as a CPO as well for for another couple of years.
 
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