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!