[330 CSi]

I can generally math good.

However, I want to see if any of the folks here have thoughts about the pluses and minuses of two variables: MSD's and Single Payment Leases.

What are the downsides of single payment leases?

What is the breakeven math on an MSD in terms of interest rates?

Appreciate anyone can share their insights.

Thanks.

[exxxviii]

So, it is simple future value of money calculation. You cannot really generalize it, because you need to know the exact dollar and interest amounts to compare.

Just to an excel FV calculation based on the payments against the MSD at your expected return rate (if you saved or invested the unused cash) versus the FV of the one-pay at the rate of return you would expect on that money. The latter is easy, but it would probably take me a few minutes to think through the correct formula for the payment-based one.

So, the key inputs are:

• One pay cash amount
• Payment amount
• MSD amount
• Expected rate of return if you saved or invested

[javapro]

Use the leasehackr calculator and see how much money you save with these different variable.

https://leasehackr.com/calculator?ma...sult_mode=true

[f82fanatic]

Originally Posted by javapro

Use the leasehackr calculator and see how much money you save with these different variable.

https://leasehackr.com/calculator?ma...sult_mode=true

This is the way

[smithf80]

What you have to consider is how much money you save doing MSD's vs how much money you outlay for that compared to how much money you save on one-pay vs how much you outlay for that. I believe MSD's gives you 65-70% of the benefit of the MSD's, but with usually only 20-30% of the cash outlay. I can do the math on it, but I am a bit tied up now.

I have generally advised my customers that unless they just have so much money sitting around that they can't do anything better with, the MSD's make more sense than the one pay. MSD's are a very good ROI for what is essentially a guaranteed return, unless you lose a key or something similar that they deduct from your MSD return payment.

[javapro]

Originally Posted by smithf80

What you have to consider is how much money you save doing MSD's vs how much money you outlay for that compared to how much money you save on one-pay vs how much you outlay for that. I believe MSD's gives you 65-70% of the benefit of the MSD's, but with usually only 20-30% of the cash outlay. I can do the math on it, but I am a bit tied up now.

I have generally advised my customers that unless they just have so much money sitting around that they can't do anything better with, the MSD's make more sense than the one pay. MSD's are a very good ROI for what is essentially a guaranteed return, unless you lose a key or something similar that they deduct from your MSD return payment.

I completely agree. Here are some numbers.

7 MSDs lower your MF by around 1% (0.00006*7*2400) which seems like a pretty low return on investment. However, you really need to calculate how much that 1% lower interest rate on your lease will save over your 36 months lease. For my personal situation I calculated about $2,124 in savings with $5,950 in 7 MSDs (1 MSD is your monthly payment rounded up to the closest $50 and BMW requires 7 MSDs as far as I know). That's a 36% return on investment (2,124/5,950*100) over 3 years, i. e. 12% a year, which I think is pretty good given 5-6% current interest rates.

One pay lease will save me around $1,388 over 7 MSDs, however, I would have to pay slightly over $28K upfront which is around 5% return on investment (1,388/28,000*100) over 3 years, i. e. 1.67% per year, which is not that great. Also, I don't like giving all the money to BMW upfront for a lease since I would have get it (or some portion of it) from them in case something happens to the car during the lease which may or may not be that simple. I know that with MSDs I also give them some money upfront but it's a much smaller amount and it will be effectively earning 12% interest.

I hope this helps.

[330 CSi]

All very helpful responses. Thank you.

[Hodog16]

I did MSDs and did not even entertain a one pay lease. The MSD's came out of the equity from selling my outgoing daily driver.

Part of the appeal of the iX lease to me was only having to make monthly payments and not coming up with a big single payment on the vehicle. Plus as javapro points out if something happens to the car it's easier to skip payments that don't need to be made versus recovering money from BMW.

[exxxviii]

Originally Posted by 330 CSi

I can generally math good.

However, I want to see if any of the folks here have thoughts about the pluses and minuses of two variables: MSD's and Single Payment Leases.

What are the downsides of single payment leases?

What is the breakeven math on an MSD in terms of interest rates?

This thread was making me curious, so I did the math and compared the present values of the two cash flow scenarios. The two are nearly identical, so One Pay really only works when the base interest rate is much higher and the discount is higher. Since the base interest rate is only 2.66%, there is not much room to discount One Pay enough to matter.

Here's the example math of a $100K car with a 20% discount off MSRP for a 36 month lease and 53% residual:

• Interest Rate with MSD discount = 1.66%
• Lease Payment = $844
• Total cost of lease = $30,389 (sum of all payments)
• MSD = $7,000
• Savings/investment rate of return = 5%
• Lease Present Value = -$29,255

One Pay Lease:

• Interest Rate with One Pay discount = 0.98%
• One Pay Amount = $29,054
• One Pay Lease Present Value = -$29,054

I probably jacked up the math a little, but this is directionally correct. The two are so similar that One Pay does not gain you much more than the convenience of never making a payment.

[VirtualGuitars]

Originally Posted by 330 CSi

I can generally math good.

You might be great at math, but you could brush up on your writing skills. Sorry, I am just messing with you and couldn’t help myself as a self-diagnosed grammar, spelling, and punctuation nazzi.

[330 CSi]

Originally Posted by VirtualGuitars

You might be great at math, but you could brush up on your writing skills. Sorry, I am just messing with you and couldn’t help myself as a self-diagnosed grammar, spelling, and punctuation nazzi.

[tjohnson]

I just completed the lease of my 2024 iX50 ($99,985) about a month ago... here is very simple breakdown of the one-pay vs monthly pay lease:

Putting $1,000 down + trade equity = $970/mo including sales tax comes to $34,950 total out of pocket

One pay including trade equity = $32,302 total out of pocket

Wasn't worth the $2,648 savings over 3 years for me.