[m2for2]

Hey Everyone,

Does anyone know if I can make EXTRA principal payments on my M3 lease?

Just made my first payment yesterday, and I was wondering if I could say, perhaps pay another $2,000 extra next week to slightly lower my payments going forward.

My goal with this would be to reduce the overall interest I will end up paying over the 36 months of my lease.

Thanks and let me know if anyone had done this before.

[shadowredlev]

a lease takes the interest and splits it up through the lease, paying it off early does not reduce interest unfortunately

[Berzerker]

Originally Posted by m2for2

Hey Everyone,

Does anyone know if I can make EXTRA principal payments on my M3 lease?

Just made my first payment yesterday, and I was wondering if I could say, perhaps pay another $2,000 extra next week to slightly lower my payments going forward.

My goal with this would be to reduce the overall interest I will end up paying over the 36 months of my lease.

Thanks and let me know if anyone had done this before.

Not possible. Your interest over the life of the lease is calculated into your payments. All you're doing is paying off the full money you'd pay over 36 months early.

Not even putting a down payment at the beginning helps with this. That's why the recommendation is not to put any money down on a lease.

[m2for2]

Originally Posted by Berzerker

Not possible. Your interest over the life of the lease is calculated into your payments. All you're doing is paying off the full money you'd pay over 36 months early.

Not even putting a down payment at the beginning helps with this. That's why the recommendation is not to put any money down on a lease.

Doesn't putting down a larger down payment in the beginning reduce the buyout value? Essentially what I'm asking is: is putting down more $ upfront not reducing the partial "value" of the car you're renting from BMW?

[Zarrasis]

Originally Posted by m2for2

Doesn't putting down a larger down payment in the beginning reduce the buyout value? Essentially what I'm asking is: is putting down more $ upfront not reducing the partial "value" of the car you're renting from BMW?

Buyout price doesn’t change. You’re better off putting that money down as MSDs to reduce your Money Factor.

[kgelfen360]

Originally Posted by m2for2

Doesn't putting down a larger down payment in the beginning reduce the buyout value? Essentially what I'm asking is: is putting down more $ upfront not reducing the partial "value" of the car you're renting from BMW?

Would not reduce buyout value at all. It will lower u monthly payment but only because u paid it upfront which many will argue is very bad idea becuase at the end you pay the same amount but run risk of loosing all that money if something happens to vehicle (collision).
You are thinking of ur lease payment as loan with interest but it doesn’t work the same way in terms of interest. U interest doesn’t go down as u make more payments.

['Cane]

Originally Posted by m2for2

Doesn't putting down a larger down payment in the beginning reduce the buyout value? Essentially what I'm asking is: is putting down more $ upfront not reducing the partial "value" of the car you're renting from BMW?

No, money down only reduces the cap cost, and only lowers the monthly payment. And, as others said, there is no benefit to making extra payments or paying over the monthly payment. It’s not generally wise to put down a large down payment.

[m2for2]

Originally Posted by 'Cane

No, money down only reduces the cap cost, and only lowers the monthly payment. And, as others said, there is no benefit to making extra payments or paying over the monthly payment. It’s not generally wise to put down a large down payment.

Thanks for the info legend.

I swear that I haven't made a post where you haven't chimed in, hahaha.

[m2for2]

Originally Posted by Zarrasis

Buyout price doesn’t change. You’re better off putting that money down as MSDs to reduce your Money Factor.

What does MSD stand for?

[Ibiza]

Originally Posted by m2for2

What does MSD stand for?

Multiple Security Deposits. Allowed up to 7 deposits (each deposit is equal to your monthly payment) whereas each deposit reduces the MF by .00004 with a maximum of 7 security deposits and a .00028 rate reduction from the agreed upon MF.

[Berzerker]

Originally Posted by Zarrasis

Buyout price doesn’t change. You’re better off putting that money down as MSDs to reduce your Money Factor.

I think we've been through the math and even MSDs to reduce MF still isn't worth it. With interest rates where they are, keeping those MSDs in a HYSA would net you more money over the reduced money factor. You're only reducing your interest rate by ~0.1% with each MSD.

['Cane]

Originally Posted by m2for2

What does MSD stand for?

Originally Posted by Ibiza

Multiple Security Deposits. Allowed up to 7 deposits (each deposit is equal to your monthly payment) whereas each deposit reduces the MF by .00004 with a maximum of 7 security deposits and a .00028 rate reduction from the agreed upon MF.

They used to allow for 10 MSDs as well, but ended that in like 2013 or so. And in the days now with HYSAs paying 5+%, you’re probably better off stuffing it there instead and being able to access it if needed.

['Cane]

Originally Posted by m2for2

Thanks for the info legend.

I swear that I haven't made a post where you haven't chimed in, hahaha.

No legend, just a bored retiree that’s been around BMWs for 20 years. Happy to help, Bimmerpost is a great community.

[m2for2]

Originally Posted by Berzerker

Not possible. Your interest over the life of the lease is calculated into your payments. All you're doing is paying off the full money you'd pay over 36 months early.

Not even putting a down payment at the beginning helps with this. That's why the recommendation is not to put any money down on a lease.

Originally Posted by 'Cane

No legend, just a bored retiree that’s been around BMWs for 20 years. Happy to help, Bimmerpost is a great community.

Awesome community. I'm really banking on ICE Bimmerpost staying alive when everything switches to EVs.

In 2040 all the guys with g80s are going to be in need of a LOT of community knowledge pooling.

[Fugly M3]

If I remember correctly, you can make extra payments, they will just come off your remaining total due. Let's say you have a 36 month lease with payments at $1000 each. First month's payment is up front. So you have $35k in payments left. If you pay $2000 in advance, you'll have $33k to go over the same 35 months. Unless it's changed, you can then pay a little bit less for all the remaining months ($942.86 ish) or you can skip two payments because they won't be due. No matter what though, you'll be paying all of that remaining $33k.