It's all about the benjamins...(m) (archive)

OK, actually it's all about the residual value. Even when BMW FS is not running a subsidized lease "deal" (like the one that just ended this past week on the X5), you will get a more favorable residual from BMW than you will from an outside bank. A manufacturer's captive financing company will nearly always do this.
I just wanted to point out that whatever BMW calculates for you, that estimate is probably a bit high. The web site presumes that you will have a capitalized cost equal to MSRP, which is ridiculous. You should not pay one penny more than if you were purchasing the car outright - the dealership certainly gets the money just the same.
If you want to do your own lease calculations, here's how:
1. Take the estimated selling price (Capitalized Cost) and multiply it by the residual percentage. (You won't find residuals on web sites but if you call a dealer they may tell you what it is - I think the X5 is currently 62% for "standard" terms. This is your Lease End Value (LEV).
2. Subtract the LEV from the Cap Cost and divide this amount by the lease term (36). This is your monthly depreciation charge. Put that in a column.
3. ADD the LEV and the Cap Cost. Now, multiply the total by your money factor. If you do not know the money factor, you can guesstimate it by taking prevailing nominal interest rates for car loans and dividing by 2400. Hence, a 7.0% APR corresponds to a money factor of 0.003125. This is your monthly finance charge. As you can see, it is noncompound interest assessed on the average of the selling price and LEV. Stack this figure below your depreciation charge above.
4. Add the depreciation charge and monthly finance charge. Take this subtotal and multiply it by the automobile sales tax rate for your state. (Yes, you are paying sales tax on interest payments.) This step will work in most states, but some states have greedier politicians who will make you pay sales tax on the full selling price. Such states suck, by the way.
5. Add your subtotals: depreciation, finance and tax. In my experience, you will arrive at a very close estimate of the actual amount you will pay. There are some things I have left out - miscellaneous fees should be added to your cap cost, and if you're paying a down payment, reduce your cap cost by that amount. (Cap Cost Reduction.) BMW will hit you with a $550 Acquisition fee, which sucks.
Good luck!

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