Californians, Lease A BMW i3 For About $130/Month, $0 Down (Yes, Really)
Lease program valid through November 30, 2015.
Source: bmwusa.com
We admit this title sounds almost too click-baity. But bear with us for a second. We swear it's true.
No, you're not going to walk into the dealer and ask for a $130 per month deal—because the dealer doesn't know it's possible. Rather, you should request online quotes from dealers to first establish the selling price of the vehicle. Then, once you've decided on a dealer, apply clever strategies and targeted incentives to bring the lease payment down.
Let's go over the factors that make this deal possible for certain individuals.
1. Selling Price
According to our analysis of recent transaction data, it's entirely possible to get 12 to 15 percent off MSRP, before lease incentives, on a 2015 BMW i3 in the metro areas of California. Your exact selling price would depend on a number of factors, such as the dealer's inventory size, as well as others that are unbeknownst to you and me. In any case, the best thing to do is to shop around for quotes via email.
Let's be more conservative and assume a 13 percent discount off MSRP. (There's a dealer on a popular car buying site promising that amount). Let's assume a 2015 BMW i3 with the optional Range Extender and an MSRP of $51,545 and a target selling price of $44,750.
2. Know Your Incentives
The following incentives are available to nearly all California residents:
| General Incentives | |
|---|---|
| BMW Lease Cash | $7,500 |
| BMW Build Out Cash | $1,000 |
| California Vehicle Rebate Program (CVRP) | $2,500 |
The first incentive is massive because, as an electric car, the i3 qualifies for a $7,500 Federal Tax Credit. On a lease, the federal tax credit goes to BMW Financial Services, who then passes on the savings to you in the form of Lease Cash.
The second incentive ($1,000) is BMW's standard Build Out Cash to help clear out existing inventories of 2015 models
The third incentive ($2,500) is actually a mail-in rebate offered by the State of California. You can choose to front the $2,500 with a capitalized cost reduction (a.k.a., "down payment") and then receive the rebate about a month later. It requires a minimum lease term of 30 months.
Added up, these three incentives total $11,000. Assuming a sales price of $44,750 (plus the unavoidable $925 BMW acquisition fee), these incentives lower the capitalized cost down to $34,675.
3. Choose The Best Lease Program
BMW Financial Services offers 24, 30, and 36 month lease programs. Here are their respective residual values (assuming 10,000 miles per year) and the depreciation expense that would occur under each program. Again, we're assuming an MSRP of $51,545, a selling price of $44,750, an acquisition fee of $925, and all general incentives applied.
| Depreciation Expense | |||
|---|---|---|---|
| Months | Residual % | Monthly Depreciation | Monthly Depreciation after CVRP |
| 24 | 63% | $196 | $196 |
| 30 | 59% | $225 | $142 |
| 36 | 53% | $274 | $204 |
Without the CVRP, the 24-month term is cheapest, and that's probably why BMW advertises the 24-month lease as their "Special Offer". However, the 30-month lease comes out ahead when you factor in the CVRP, which cannot be applied on a 24-month lease. Go for the 30-month lease if you want the deal.
4. Use Multiple Security Deposits To Buy Down The Money Factor
In addition to paying for depreciation, you'll also pay a finance charge, since you're essentially borrowing an amount equal to the price of the car. Fortunately, you can minimize the finance charge by using multiple security deposits.
| Finance Charge | ||
|---|---|---|
| Security Deposits | Money Factor | Monthly Finance Charge |
| 0 | .00131 (3.14% APR) | $85 |
| 7 (maximum) | .00082 (1.97% APR) | $53 |
Every security deposit you place lowers the money factor (basically, the interest rate). BMW Financial Services allows a maximum of 7 security deposits. Unlike a down payment, you get your security deposit back at the end of the lease.
5. Putting It All Together
In our example, monthly depreciation is $142 under the 30-month lease program. The monthly finance charge is $53 after seven security deposits. Add the two together, and you've got the total lease payment: $195 per month.
6. But, Wait, There's More!
$195 per month is pretty epic for a car that costs over $50,000. But we promised you $130 per month. To get there, you'll have to qualify for certain targeted incentives:
| Targeted Incentives | |
|---|---|
| BMW Ultimate Driving Allowance | $1,000 |
| BMW College Graduate Incentive | $1,000 |
We've written about the Ultimate Driving Allowance here. It requires you to attend a free BMW driving event (such a hardship, I know). The College Graduate Incentive requires you to be a recent grad—within the past 12 months or the next 4 months. (This author happens to qualify for both incentives.)
When stacked, these two incentives lower the capitalized cost by $2,000 to $32,675. The end result? A lease payment of $127 per month with $0 down (well, you'll front the $2,500 mail-in rebate so it's net $0 down).
7. Taxes And Fees
Here's what you should expect when all is said and done. We've added in Los Angeles County sales tax (9%), license/registration, and fees.
| Total Drive-Off | |
|---|---|
| First month's payment (after 9% tax) | $138 |
| DMV license/registration | $400 |
| Dealer document fee ($80 max. in CA) | $80 |
| Capitalized cost reduction | $2,500* |
| Sales tax on incentives and capitalized cost reduction | $1,170 |
| 7 security deposits @ $150 each | $1,050** |
| TOTAL DUE AT SIGNING | $5,338 |
*You get this back through a $2,500 mail-in CVRP rebate.
**You get this back at lease-end, less $350 disposition fee.
8. Your Mileage May Vary
Your exact lease payment will vary depending on the MSRP of the car (i3 starts at $43,395 and goes to $55,895 with all the options), selling price, annual mileage, and whether you qualify for targeted incentives.
Use our calculator below to customize your lease.
Update (November 11, 2015): The 2015 i3 also qualifies for a BMW CCA rebate. If you've been a BMW CCA member for at least a year, you get $500 for the range-extended REx and $1,000 for the pure-electric BEV. That's effectively another $30/month saved right there. Thanks eneka from Slickdeals for the tip!
Update 2 (November 12, 2015): Southern California BMW Centers are holding an event similar to the Ultimate Driving Experience through the end of next week. If you missed out last time, here's your chance to score a $1,000 credit towards a lease or purchase.
