02-19-2015, 04:53 PM | #45 | |
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02-19-2015, 07:28 PM | #46 |
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Apologies if this is the wrong thread, but I thought I saw somewhere that there's a max the dealer can mark up the MF. I know they're allowed to mark up the acquisition fee by $200 to $995, but what about the MF? Is there a limit other than what they convince someone to pay?
I ask because a friend of mine got royally screwed by one of our local dealers, and being inexperienced, I could have easily fallen into a similar trap. Thankfully I spoke to some other friends and then found this forum. The dealer didn't disclose his MF, but by reverse calculating from his lease agreement, it appears as though his base rate was .00329 and his 7x MSD bought him down to .0028. His overall rent charge is essentially tripled from what it should be. This was of course on a fully optioned MSRP car as well :/ Needless to say, after hearing about my significantly better deal via an out of state dealer, he went back to the dealer and was able to get a lease unwind and a much better, although still outrageous deal. He's also contacted BMW directly to express his displeasure, so we'll see how that goes. |
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02-19-2015, 08:30 PM | #47 | |
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02-19-2015, 08:35 PM | #48 | |
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Yes there is a cap on the MF markup. Currently BMW allows a dealer to mark up lease rates up to 0.0004 MF markup is a hidden profit center for many dealerships. Thankfully we have access to the base number. There are circumstances where paying a higher MF is tolerable (huge discount on price of the car, lots of reduced price/free aftermarket parts, etc), but the general rule is try to always pay the base rate. |
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02-19-2015, 09:11 PM | #49 |
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Hmm, so either my math is off, or the dealer did something not allowed by BMW? As I said, I calculated the MF out as .0028 after max MSD, .00329 before. Which is an increase of significantly more than .0004 above buy rate. Am I incorrect in my calculations?
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02-19-2015, 09:36 PM | #50 | |
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Could be your friend's credit is trash and had to pay a marked up MF. The base rate everyone quotes is for tier 1 credit only. I doubt the dealer could make a mistake that big and have no one catch it. It's well above any recent base rate. |
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02-19-2015, 10:04 PM | #51 |
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Deal was Black Friday. Obviously the Black Friday rebate the dealer discussed, as well as loyalty cash he should have been due (I'm not sure if there was loyalty cash at the time, but he had purchased his previous 335 from the same dealer ~4 years ago) don't appear to figure into his lease deal at all - pocketed by the dealer I'm assuming.
I don't know his credit score, but based on what I know of his financial situation, it's inconceivable to me that he'd be under 850. He paid for his 335 in cash, but decided to try leasing to get a new car more frequently. This experience may have soured him, although at least my getting a good deal allowed him to renegotiate 3 weeks after signing his leasing agreement and bring his payments down to $1200 a month. The dealership may have made a hell of a profit off of this transaction, but they also essentially blackballed themselves from a good number of people in our friend and professional networks. He spent a good 30 minutes on the phone with a tier 2 case manager at BMWNA who was not pleased with the story. |
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02-19-2015, 10:14 PM | #52 | |
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I feel for your friend. BMWNA should do everything they can to penalize that dealer. Those are the type of greedy deals that cause BMW to lose customers, not just that dealer. Glad you and your friend now know the truth and you were able to avoid that type of piece of trash deal. |
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02-20-2015, 06:38 AM | #53 |
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I'm wondering if he should contact BMW FS as well. As I said, if there's no reason for me to suspect he wouldn't be tier 1, and our calculations are correct, then the dealer more than doubled the MF. If BMW FS is only supposed to let the dealer add on .0004, than I wonder how this passed through them. He should probably ask how the deal was allowed on their end.
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02-20-2015, 08:51 AM | #54 | |
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02-21-2015, 07:55 AM | #55 |
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I've never leased before and have always financed my cars but I'm started to look towards doing leases instead since I get a new car every couple of years and don't put many miles on them. It seems I would be a better fit for leasing than financing as I won't be losing out on so much money with each new vehicle this way.
My question to you guys is, I'm currently financing my C400 and have approx. $5,000 in "equity" on it (maybe more, maybe less depending upon current values) so what happens to that "equity" if I were to trade it in and do a lease? Can that be applied to MSDs so that I can get that money back at the end of the lease? Or does it only go into cap cost reduction?
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02-21-2015, 08:01 AM | #56 |
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Well, it is your money. I'm sure they'd try and get you for cost cap, that's what they would ideally want if they've got you leveraged in. You should be able to apply that towards whatever you want. Really, you could say that you don't want that $5000 to go towards anything and that you'd like a check.
Consider getting a carmax offer for shits and giggles. See what they'll offer. I've used it to my advantage to get more for my trade.
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02-21-2015, 11:33 AM | #57 | |
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02-21-2015, 07:06 PM | #58 |
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Very interesting thread. Let me add the lease calculation here. This is the formula that dealers use to calculate the lease payment:
If the residual value is "R" ; R = MSRP x Residual (%) The Capital cost (sales price) is "C" Money Factor is "MF" Down payment is "D" Lease term is "N" ; number of months (ie 36 or 39) Monthly depreciation fee "MD" = (C-D-R)/N Monthly lease fee "ML" = MF * (C-D+R) Then the monthly lease payment= MD +ML + tax Drive off : The upfront money including all other fees ( bank fee , acquisition fee, license fee, etc) + first month payment For example. MSRP =100k Capital cost (sales price after 10k discount) = 90k MF = 0.0013 Residual = 60% = 60k lease term = 36 months Down payment = 0 other fees = 2K tax = 8% MD = 30k/36 = 833.3 ML = 195 tax = %8 * (833.3 + 195) =82.2 monthly lease payment = 833.3 + 195 + 82.2 = 1110.5 Drive off = 2000 +1110.5 = 3110.5 Note: according to tax, this calculation is based on CA tax which is tax on lease cost. some states calculate the tax based on whole capital cost.
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02-21-2015, 08:38 PM | #59 |
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02-21-2015, 10:23 PM | #60 |
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This is very helpful, thanks for taking the time to break down the calcs. I have never leased before, and have been scanning through various lease threads to make sense of the different variables...and you posted this easy calculation just in time. Between OP and your calculation breakdown, this should become a sticky. I am picking my car up on Tuesday, and given the 63% residual and .0013ish MF, I am leaning towards a 36 month lease.
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02-22-2015, 07:54 AM | #61 | ||
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02-22-2015, 02:19 PM | #62 |
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Hey guys I am currently working on getting and f80. Can you let me know if this is a good deal?
F80 m3 Msrp = $70,900 39 months 12k annual miles $3000 total out of pocket (covers all fees, first month payment, and everything in between) $735 a month |
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02-22-2015, 02:26 PM | #63 | |
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If I had to guess from the month payment, it looks like a good deal. |
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02-22-2015, 02:48 PM | #64 |
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02-22-2015, 05:58 PM | #66 | |
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Anyways here is a bit of an update: Went to the local dealer who had allocations for a much sooner production. Dealer said that they will match the deal I had negotiated with the OOS dealer. Said they'd keep my out of pocket and monthly payment the same but with a much much earlier production date. Is there anything I should really watch out for? I assume that since my out of pocket is the same (same rebates/incentives) Id be spending the same amount at either dealer and my monthly stays the same which is nice. |
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