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      05-09-2014, 07:57 PM   #1
SweetDeeVI
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Multiple Security Deposit Program Questions

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For any of you that have leased and taken advantage of the MSD program, has it been worth it? Would you do it again?
Anything that you would advise that I consider before laying down the cash?

Sorry if this has been discussed elsewhere. I couldn't find any threads on the topic.
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      05-09-2014, 08:04 PM   #2
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From what I understand, it serves as essentially a very nice investment with a guaranteed return close to or around double-digit percentages. If you can afford to park the cash away for a few years, there's really no reason not to do it, because there's zero risk involved and a fair amount of upside.
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      05-09-2014, 08:11 PM   #3
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Search the forum it has been discussed quite a bit especially in the pricing thread. Short answer: if you can tie up the capital do it. I won't bore you with time value of money and IRR lectures, but it's a great guaranteed return tax free. Only downside is if you need to have someone take over lease they need to pay you bc BMW will reimburse them not you.
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      05-09-2014, 08:14 PM   #4
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Quote:
Originally Posted by BEM-S4 View Post
Search the forum it has been discussed quite a bit especially in the pricing thread. Short answer: if you can tie up the capital do it. I won't bore you with time value of money and IRR lectures, but it's a great guaranteed return tax free. Only downside is if you need to have someone take over lease they need to pay you bc BMW will reimburse them not you.
Thanks...couldn't find full threads on the subject...just the occasional comments on discussions that kinda went off topic. Just thought it might be helpful for other Noobs as well.

Good point on the lease transfer thought though. I would never have thought to ask that.
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      05-09-2014, 08:21 PM   #5
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Quote:
Originally Posted by ERod1020
Quote:
Originally Posted by BEM-S4 View Post
Search the forum it has been discussed quite a bit especially in the pricing thread. Short answer: if you can tie up the capital do it. I won't bore you with time value of money and IRR lectures, but it's a great guaranteed return tax free. Only downside is if you need to have someone take over lease they need to pay you bc BMW will reimburse them not you.
Thanks...couldn't find full threads on the subject...just the occasional comments on discussions that kinda went off topic. Just thought it might be helpful for other Noobs as well.

Good point on the lease transfer thought though. I would never have thought to ask that.
VERY rough numbers, $4K in MSD will save you $1K over 36 month lease, again that $1K "return" is actually less spending as opposed to investment income so it's tax free. If you destroy car day one you get your $ back. Don't put anything towards cap cost reduction.
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      05-10-2014, 12:11 AM   #6
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I have no idea what you guys are talking about. Is this an option that is better then BMW select? I figured out that BMW select is even better than leasing because it is likely the value of this car will be greater then the balloon payment or even at a four year buyout and then you simply sell the car at the end of the five-year BMW select or even earlier at the four-year mark and still make a little profit or breakeven, the benefit being that the select payments were quite a bit lower than lease. Can someone comment on this MSD thing not knowing what it is at all, versus BMW select versus lease. I think a lot of folks can benefit from this thread, from this information.
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      05-11-2014, 08:23 AM   #7
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Quote:
Originally Posted by MmmTwo35 View Post
I have no idea what you guys are talking about. Is this an option that is better then BMW select? I figured out that BMW select is even better than leasing because it is likely the value of this car will be greater then the balloon payment or even at a four year buyout and then you simply sell the car at the end of the five-year BMW select or even earlier at the four-year mark and still make a little profit or breakeven, the benefit being that the select payments were quite a bit lower than lease. Can someone comment on this MSD thing not knowing what it is at all, versus BMW select versus lease. I think a lot of folks can benefit from this thread, from this information.
Hmm... That's not entirely accurate. Generally speaking, a 3 year lease will have a lower total cost of ownership than any 3 year financing program, especially with BMW which keeps their lease interest rates fairly close to the financing interest rates.

You are comparing a 5 year balloon loan payment to a 3 year lease payment and calling it "better" by looking at loan payment alone and assuming that translates to total cost of ownership. This is not accurate nor is it a fair comparison. You also give up a lot by going the balloon payment route:

You own the car, so you are paying 100% of your sales tax up front.
You lose all depreciation protection that a lease gives you. You can't walk away from the balloon payment at the end of the day.
You are ignoring that a BMW lease residual is generally artificially inflated. This means that you likely could not sell your car for what a lease residual is after three years. The difference would come out of your pocket.
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      05-11-2014, 09:29 AM   #8
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You guys are missing the point. The owners choice program is basically some financial hocus pocus that BMW uses in states that don't charge monthly use tax. It takes advantage of a loophole to get the payments more in-line with how a typical lease would work.
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