In an earlier post, we briefly discussed the Multiple Security Deposit (MSD) program and mentioned that taking advantage of it is a great idea.

One Security Deposit (SD) is defined as the monthly payment rounded up to the next $50 (so if a leasing plan requires monthly payment of $812 per month including taxes, the SD value is $850). If the customer is making MSD, BMW Financial Services (BMWFS) reduces the Money Factor by 0.00007 per security deposit, up to a maximum of 0.00049. This is probably one of the best risk free investment one can make, as it returns around 8-9% per year on the total amount of the security deposit. 

 

Let's go through the Math to compute the rate of return on the MSD using Excel:

 

Let's consider the purchase of a loaded 2012 135i Coupe.

Initial Money Factor: 0.0024

The monthly payment including taxes is $781 (please see the Excel screenshot for the other parameters)

With MSD:

Number of Additional Security Deposits: 7

Effective Money Factor: 0.00191 ( = 0.0024 - 7 * 0.00007 )

The monthly payment including taxes becomes $742 

So making a security deposit of $5,250 (7 SD of $750) generates a saving of $39.13 every month, which represents $1,408.53 over the 36-month term of the lease! It is a return of 26.83% over the 3 years, which if annualized is 8.94% per year! This is better than many risky assets available on the financial markets. Furthermore, it is a tax-free investment since it is not a source of revenue but a lowered expense.

See how the same Excel spreadsheet looks like with your own numbers using the configurator on BmwConfig.com!



The finance tab in the online configurator let you estimate your monhtly payment and compare whether you should lease or finance your new BMW.

It is usually not a good idea to reduce the capital cost on a lease, as any down payment made on the vehicle might be forfeited if the vehicle is for example totaled. A better idea is to take advantage of the Multiple Security Deposits (MSD) program. One Security Deposit (SD) is defined as the monthly payment rounded up to the next $50 (so if a leasing plan requires monhtly payment of $812 per month including taxes, the SD value is $850). If the customer is making MSD, BMW Financial Services (BMWFS) reduces the Money Factor by 0.00007 per security deposit, up to a maximum of 0.00049, which is probably one of the best risk free investment one can make, as it returns around 8-9% per year on the total amount the MSD represent. (We'll make another post in the near future to look into the savings in more details)

The calculator on BmwConfig is one of the few that take the MSD into account while computing the monthly payment:



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