So I’m working with a Mercedes Benz Dealer (not in New York state) and we’ve been going back and forth about MF. I told them this is the only thing holding up the deal.
So let’s say they agree to my MF of .00084. Would they be pissed if after that I spring the fact that I want to do 10 MSDs and effectively lower my MF to .00014? Like is that a slimy move on my part not to be up front about my intention to use MSDs?
Also I take it they could refuse to apply to MSDs?
That drop in interest rate achieved by the MSDs doesn’t come out of the dealers pocket right? It comes from corporate? So theoretically it has zero impact on the commission or profit of the sales guy, finance guy, etc at that individual dealership correct?
I think deal can do anything they want, but you don’t have to do the deal with them tho. For MSD, I have personal experienced with an Infiniti dealer who has never done it. It could be they don’t know how to do it or they don’t have the proper infrastructure setup for it, whatever. They just won’t do it even after selling price and terms were already agree upon. In my case, MSD represent a $50+ a month, so I said “no thanks” and walked out of there.
i agree with 28firefigthter…a lot of them do not know about MSD’s. I’ve had better luck with BMW dealers but other brands most sales managers have no clue of them or how they work.
But most of the people on here are probably the 1%.
Thanks for the input everyone. No I’m not in New York, sorry that wasn’t very clear.
I can just see the dealer being like oh my God we met all your demands and now you want even more off the money factor?! I guess if it doesn’t affect the dealers profit then they truly shouldn’t care.
Also I heard that there is a bottom limit to how low the mf can go. Like could they go to. 00014 with msd?
When I leased my MB, the F&I guy said he had been at that dealership for about 3 or 4 years and had only done a handful of deals using MSDs. I was negotiating with another dealer and when I mentioned MSDs the sales guy said I could only use 6 and that he talked to their finance guy who said it was not a good idea to use them at all. I think you need to get a dealer that is comfortable with processing the MSDs and most sales people have no clue what they are all about.
Yeah I had a dealership manager brag about how long he has been in the business and then talked about how MSDs aren’t worthwhile. People just don’t calculate out the rate of return. Where else can you get 10%+ pretty much risk free return.
Not only that, but the return is tax free. If one has the money to “lend” to the lender and gets 10% back on it, that’s generally a lot better than getting 1% from one’s bank and paying income tax on it.
If a dealer says they can only do 6 MSDs, it’s probably because doing a 7th would drive the effective MF to less than 0.00001 (or maybe 0.00000 if a lender can write a lease at 0, which I doubt). They can only reduce the buy rate with the MSDs, not the markup, if any. If a dealer was doing a deal with a 0.00010 buy rate, then they could probably only take one deposit.
Edit - never mind. I ran a few on my own and figured it out. My corporate finance brain is still having a hard time making the connection between essentially cost avoidance and IRR. Maybe i need to stare at it longer.
on the system and out of fear of looking dumb in front of client, will run away from it.