Along with the "residual" which is the value of the car at lease end, the other primary concern is the "Money Factor". The Money Factor is in essence the interest rate. Someone stated above that the Money Factor for the countryman is .00225. To convert that and know what that translates to, just multiply that number by 2400. .00225x2400 is 5.4%.

 

A lease is determined by several factors.

There is a loyalty discount on a mini lease reducing MF to .0018. The residual value is 62%. Therefore, on a $25,950 Cooper S, the amount you are depreciating is $9,690 and $9,690 is:

1- the only amount the MF is applied to (and NOT THE PRICE OF THE WHOLE CAR) and is equal to 38% of the car's MSRP)
2-Sales tax is applied to the monthly lease payment in most, but not all, states
3-This means with 8.75

The MF is only applied to the depreciating part of the MSRP, which on most minis is 38%. Therefore, on a $25,950 Cooper S, you are financing $9,690. With a loyalty discount on the .0021 MF making the MF .0018, your payment with 8.75 sales tax should be about $260/month.










5

 

Residual value is based on lease term and miles per year. You state neither.

Are you sure about .0018 MF rate? No one has stated that before for Countryman, even those that have previously leased a MINI. The MF is lower for other MINI models, Countryman is higher. To which are you referring?

 

Most leases are calculated using the following formula:

((CC + (MSRP * RP)) * MF) + ((CC - (MSRP * RP)) /N) = PMT

MSRP = Manufactures Suggested Retail Price plus any extras that can be residualize
CC = Capitalized Cost (aka Selling Price of the Car)
RP = Residual Percentage
MF = Money Factor
N = Term of the Lease in Months
PMT = Base Lease Payment

If your state taxes the lease payment, then multiply the base payment by your tax rate and add that to the base payment:
PMT *(1 + TR) = Total Payment

TR = Tax Rate expressed as a decimal, example 8.75% tax rate would be .0875 expressed as a decimal

The money Factor is applied not only to the depreciation, SP – Residual, but also to the selling price of the car.

The other problem is your $260.00 a month payment. If depreciation is $9,861.00 and you need to pay that off in 36 months (a residual of 62% appears to be for 36 months and 10k miles per year) would equate to $273.92 a month and you still need to add the use fee.

For your example:
MSRP = $25,950.00
RP = 62% (residual amount would be $16,089.00)
Depreciation = $9,861.00
MF = .0018
N = 36 months
TR = 8.75%
PMT = use fee of $75.67 + depreciation of $273.92 = $349.59 base lease payment
With tax the total payment would be $380.18 ($349.59 * 1.0875)

 

Okay, but that means I'm paying an effective interest rate on 162% of the MSRP of the car...what is the justification for that? As far as the $260 I was ballparking whatthe payment was. I have been offered a lease from mini for $383/mo

And what's the robber baron Acquisition Fee at $925+\-? On $25,000 cars? For $100,000 cars don't have a fee that high. Thanks for your reply.

 

Don't know how you came to that conclusion... Leasing is just math. Do the math and understand the numbers. Because leasing is mysterious to many, dealers are able to get away with more. If you know the numbers and the formulas, your calculations and the dealers will jibe to the penny.

All leases have an acquisition fee. Yes, $925 is as high as I have ever seen on any lease. However, the dealer cost is $725 and you can try to negotiate this down to their cost. And if you have top tier credit, and only if, MINI Financial will waive the acquisition fee in exchange for an adder of .00035 to the base money factor. For me on a 36mos lease, the adder (plus tax) totalled less than $925 so it made sense to do it. Read this whole thread for more details on leasing.

 

I don’t understand what you mean by the 162% of MSRP. How are you coming up with that number? The calculated interest rate for the example would be 4.34%, which I would think is an excellent rate.

 

I offer two explanations below... one in words, and one in numbers depending on which one makes more sense for you. I know that I usually think more in numbers, but everyone is different.


At first glance, yes, it is being charged on 162%. But remember that to convert a MF to interest rate, you multiply by 24 and not 12. Or in other words, instead of dividing your annual interest rate by 12 to get the monthly rate, you have divided it by 24 to get the money factor. In essence, you are paying interest that is calculated on the average amount financed during the lease. On day 1 of the lease, you have financed the full cap cost. On the last day of the lease, your balance is the residual.

On a lease, there is a fixed amount in each payment that is interest and "principal" (a.k.a. depreciation). This differs from a traditional amortized car loan, where the amount of your payment that goes towards principal and interest varies every month.In order to have a fixed amount of interest in each payment, they average out the amount financed over the term and charge interest on that number.


What does it look like in numbers?

Let's say your interest rate is 0.06 (6%)

Let's say your cap cost is $30,000 and your residual is $20,000 (for simplicity)-- over the term, you are paying down the $30,000 amount financed to a final balance of $20,000. The average amount financed is therefore $25,000.

If you divide by 12 (to convert annual rate to monthly rate), you get 0.005. Multiply this rate by $25,000 = $125/month of interest

Now let's do it the way the lease formula does it:

Money Factor = 0.06 divided by 24 = 0.00250

($30,000 + $20,000) = $50,000 * 0.00250 = $125/month of interest

 

I am looking into leasing now, and am getting what seems to be WAY out of whack numbers in my quote. For a 36 month lease, with $1K deposit and a selling price of $31,300: they are quoting:

15K miles per year: 615.13
20K miles per year: 671.75

The residual value is 59% (I assume based on the 15K).

Trying to get the money factor based on this. Using a leasing calculator, the money factor seems super high. These numbers seem huge to me.

Trying to determine whether, if I plan to drive the car to the end of the warranty period, for example, and use traditional financing, will I get enough in trade to just buy a new MINI in 2014 if I choose to do so. Which comes out better?

 

Just ask your dealer to provide you with the lease data: capitalized cost, lease term, residual value and money factor. They have to tell you as all details are disclosed on the lease agreement. This is just math.

Your payment seems high based on Sell price but you did not note if sales tax is included in your payment and what the tax rate is.

I can say that my payment on a 10k miles per year lease @ 36mos on a $37k+ car with $0 cap reduction is less than your 15k payment and includes 9% sales tax. Based on that, sounds like you may not be getting the buy rate. Rates can be obtained from Edmunds forums. My advice is understand the lease equation and ask specific questions. What is the money factor? Is that the buy rate? Why not?

 

I'm doing a 48 month 15K miles per year lease for $470 per month. (We signed the lease documents on January 15th) Since our Credit was good they bumped us up from 12K miles to 15K miles with no additional charge. I had to bring 1700 to the table. I used a company called D&M Leasing here in Dallas. (Mini was dragging their feet and wasn't sure what sort of terms they could offer since the car was so new) My Countryman had a $27750 sales price. Just made my first payment today.

 

My sales price was 33,700. 10K a year and it's $530 a month. With just license+reg+first month. ($1100)

 

Polojankins - your comment that they bumped you from 12K to 15K with no additional charge should make you uncomfortable. In a lease, the annual mileage and lease term determine the residual value which is set by the finance company not the dealer. If they "gave" you 15K miles per year the residual value changes and so does the payment. More likely is that they marked up the money factor not knowing your credit and then your credit score qualified you for lower rate and they chose to extend that to you, or some of it. So rather than simply giving you a lower monthly payment, they shifted your lease terms to higher annual mileage resulting in same monthly payment. I'm fairly certain that they gained more profit in this transaction too.

There is no free lunch - especially at a car dealer.

I've leased many, many cars and helped many others to do so as well. Leasing seems complicated but it is not. However, there are more places in a lease for a dealer to hide profits and you need to know where to look.

 

I'm glad to see people posting their lease information here, it will be helpful for others, but not unless you post the pertinent information on your lease. The payment is actually the least important detail because it is the other factors the compute the payment.

Lessor: MINI Financial or a third party bank?
Countryman model leased (base, S, All4)?
What month did you sign the lease? (lease rates vary as model year progresses)
Lease term?
Miles per year allowance?
Residual value percentage?
Money Factor?
Acquisition Fee?
Security Deposit?
Negotiated price of car (excluding any trade-ins or cap reductions)?
Cap Cost Reductions (down payment - not including inception costs)?
Monthly payment (excluding any sales tax which varies by state)

It is all these bits of data that will enable others to extract the best lease deal from their dealer. If anyone wants an assist with a lease, please feel free to PM me.

 

Just remember that no matter how cool your MA is or how much of a relationship you have with him this is a business for them. Most of them will not hesitate to throw you under the bus if you are unaware and it makes them more money.

 

How much would be the Gap insurance? Better to do it at the time of lease or do it through your existing company? Your thoughts? Thx!

 

Gap insurance is in the MINI FS lease.

 

Thanks for reply Midnight Blue!

 

For all the lease experts out there, when you lease (or leased CM) do you put any money down?

It seems it's better not to put any money down for unforeseen event, but even a small down payment seem to reduce the monthly payment (overall finance charge) quite a bit.

Any thoughts? Thanks.

 

My $0.02...

Putting money down on a lease is counter to the point of doing a lease in the first place. One of the benefits of leasing is cash preservation. You are turning the car in at the end of the lease. You do not have an asset (unless you get lucky at the end of the lease and the value of your low mileage pristine car exceeds the residual value - not common especially with these fairly high residuals) so why put cold hard cash down against the cap cost?

Do the math and see how your cap reduction affects monthly payment. Multiply monthly savings by total term for total lease savings. If total lease savings is more than your cap reduction AND more than you can earn on it otherwise, then it makes some sense. Just remember that if you total your car, any down payment is lost forever and can not be recovered.

 

Thanks again for your 2 cents Midnight Blue! With the opinions you shared, my excel spreadsheet will dictate whether I put anything down or not!

BTW, some information I got from MINI (for February I suppose) for Countryman S

MF 0.0019 // tier 1 (740+)
MF 0.0021 // tier 2
Bank Acquisition Fee $925 OR addition of 0.00035 to MF (Definitely worth it)
15k miles residual 59%
12k miles residual 61%

 

Glad I could heklp.

I've got a leasing spreadsheet I've been using (and updating) for years now. Saved my A** a number of times. Deals must match to the penny or something is amiss.

Looks like February MF is down considerably from January while residuals are holding. My Jan lease for 36mos @ 10K miles per year was buy rate MF of .00225 and residual of 62%.

Yes, the acquisition fee waiver of .00035 is absolutely worth it and I did same. My MA never heard of it, nor did the sales manager. I had to insist that they check with main finance guy. Glad I was persistent.

 

I had written this up for another forum member, perhaps it is valuable for others as well...

Leasing is all math. While you should understand the leasing equation, the variables are really what are key.

Capitalized Cost - the actual negotiated sales price of your car (net of any discounts but not including any reductions due to trades or down payments)

Term - length of lease in number of months

Annual mileage - allowable miles per year. Note that lease term and annual mileage directly impact residual value.

Residual value - expressed as a percentage. Calculated from full MSRP, not from capitalized cost. Represents value of the car at the end of the lease (what you would pay to buy the car at lease end).

Money Factor - expressed as a decimal (eg. 00190). This is the finance rate. Multiply by 24 to get equivalent APR.

Acquisition Fee - lender service charge for initiating a lease.

Security Deposit - usually equal to one months payment rounded to next $50. Refundable at lease expiration if there are no damage or over mileage claims.

Process

Negotiate price. Very first thing is to negotiate the price of the car. The lower the better. This is between you and the dealer and should have already been agreed upon when you place your deposit. Don't give a deposit until you've agreed upon a sales price.

Select key lease terms. Determine your desired lease term (months) and annual mileage requirement. I only like to lease cars for no longer than their warranty. 36 months is generally a good lease term. From time to time lenders will offers special deals (lower money factors) on specific lease terms in which case that may make them more attractive. As for mileage, it is expensive to go over your allowable miles. How many do you need? If more than 15K, leasing may not be such a good idea for you. If you think you will drive 12K mikes per year, that is would you should select. Not fun to have to monitor or limit your driving, so select what is appropriate.

Residual value is set by the lender, MINI Financial Services in most cases. You can not negotiate this and dealers have to use the actual number - they can not fudge this and make any profit on it. Lease term, annual mileage and the number of months into the model year when you lease will effect residual value. The further in to the model year, the lower the residual. Remember this - the higher the residual, the lower your monthly payment. You want the residual to be as high as possible. BUT understand that you should have NO intention of buying the car at the end of the lease. A lessee friendly residual will not be a buyer friendly residual. Your mindset should be that you are turning the car in at the end of lease.

Money Factor is also set by the lender. The "buy rate" is the actual rate supplied by the lender with no additional markups by the dealer. If you have top tier credit rating, INSIST on the buy rate. If you do not have top tier credit, you will not quallify for the buy rate. Also know that dealers are allowed by law to markup the buy rate to a certain extent. I always let the dealer know right up front that my expectation is receive the buy rate. I walk away from any dealer that wants to add a markup on financing. before heading to the dealer, you need to find out what the current buy rate and residuals are. Go to the forums on Edmunds.com. Find the MINI forum, then look for the leasing thread. Create a post asking for current buy rate money factor and residual value for the specific make/model (Countryman, S, All4 etc) and for the lease terms and annual miles you want. The moderator "Car_man" will respond failry soon but look at other posts as the info you seek may already be posted. My January lease for an All4 for 36mos @ 10K miles per year was a residual of 62% and buy rate money factor of .00225.

Acquisition Fee - the fee from MFS is a whopping $925. The highest I have ever heard of. You can pay this in cash or roll it in to your lease, but then you are paying fairly high interest on it. Here's the trick... The dealer cost is $725 on this and you can try to get them to discount the fee by $200 so there is no markup. It never hurts to ask. The other and perhaps even more important thing to know is that customers with top tier credit can get the $925 fee WAIVED in exchange for an adder of .00035 to the money factor. For me, with the terms of my lease, the .00035 adder over 36 months PLUS the additional sales tax (9%) in PA, came out to $837 over the life of the lease so it made perfect sense to pay the adder and waive the $925 fee. Many dealers do not know that this option is available. You will need to ask and then push back when they say they never heard of it. It is legit. But you must have top credit.

Security deposit - you have to pay this unless you are a current MFS lease customer. Used to be you could easily get it waived by asking the dealer to call the finance company and requesting a waiver. If you had good credit they would waive the deposit requirement. Not true anymore unless you are a current MINI FS customer.

So in summary:

1. Negotiate the lowest price for your car
2. Get the facts on current buy rate and residual and make sure dealers writes it up that way.
3. Get the acquisition fee waiver
4. The rest is just math.

Lastly, I almost NEVER put down a "capitalized cost reduction" (like a down payment) on a lease. IMO, down payments are for purchases, not for leasing. You can put money down to lower your payment but that flys in the face of why you are leasing in the first place. Plus if you total your car, any capitalized cost reduction you paid is non-recoverable.

I've been leasing cars since the late '80s and know the game. Leasing can seem so mysterious to newbies when in reality is it just simple math, but you need to know the ratholes. Hope someone finds this helpful.

 

thanks for that essay. I have never leased a car and it was like a mystery, just like raising kids :-)

 

Awesome. Thanks for the post and your previous posts as it helped me greatly to get my first lease. With no marketing support, Countryman is not a cheap lease, but all makes sense magically when you 'desire' one.

Following site also explain things in more detail on top of MidNight blue's cliffnotes! www.leaseguide.com