Im trying to figure out which part do i really need to work my haggling skill into since things like MF, Acquisition fee, MSD, i can simply follow a set guideline based off of Edmunds or KBB and i can call them out on those markups and the rebates/incentives i can find online also and ask for them, misc fees probably don’t make up that much in the finalized OTD pricing.
Im guess the sale price is where most of the negotiating happens but how you guys start with the negotiation since most dealerships will present the same MSRP just with different packages so it would be hard to do apple-apple comparisons through having spent countless times going thru many different dealers for the same car model with the exact same specs. i guess my question is is there a simpler way/guideline i can find out how much negotiating room i have for the sale price
You got it right. Go on NADAguides, cargurus, truecar (worst) to get a sense of where your target is. Aim lower of course. Just remember how the dealer makes money.
Hello There:
This is a generic copy + paste answer to your question about how I can get a better deal.
SELL PRICE SELL PRICE SELL PRICE.
Remember that dealers make money based on the following. (Sell price + Incentives + Holdback (look it up for each car sold the dealer gets around 2% MSRP) + Volume Discount (secret ask someone on the inside)) - (INVOICE). Check out the wiki for sites on what other people have paid including NADAguides. Again, that’s (Sell price + Incentives + Holdback + Volume Discount) - (INVOICE)= Profit.
For dealer holdback numbers: https://www.edmunds.com/car-buying/dealer-holdback/29
#Which sites do you use to do research? (Updated 08/10/17 Alt Lease Calc) [Library]
INCENTIVES
These are programs made by corporate to give to dealers so they have more room to discount cars. Autobytel has lists for each make and model. However, make sure you are eligible before barging into the dealer demanding the moon. DO not let the dealer factor this into the sell price discount. They get reimbursed for incentives.
MONEY FACTOR
This is the bank’s profit, or in other words, interest. Go to edmunds (again info on wiki) to find the BASE MF for your vehicle. Dealers will sometimes mark up the interest and pocket the difference. This is where Edmunds comes in. Don’t get got.
MSDs.
Many carmakers allow REFUNDABLE MSD (multiple security deposits) to lower your MF aka interest. MSDs are simply monthly payments paid up at the beginning of the lease and refunded at the end of the lease. No questions asked even if the car is totaled (assuming insurance pays off the rest of the lease).
Fees
Look up the lease acquisition fee for your brand and other user’s average standard doc fees. Acquistions fees may be marked up so for example: MB’s base acquisition fee is $795. Many dealers mark this up to $1095 which you then have to call them out on.
In terms of doc fees, for example NJ is usually ~$499 and Florida can get up to ~$1000. Remember doc fees are sometimes the finance manager’s cut so they can be negotiable. However, lease acquisition costs are usually not, but why not ask?
i know we should always aim for base MF, but how often do dealers actually give in on the base MF or how close to the base MF is considered acceptable? i’ve heard numerous times from my local dealers that’s how they keep their lights on, and telling them you want base MF will get them upset as they see you as trying to take advantage of them.
Base MF is what that auto manufacturer sets as their standard anything higher and you as the consumer are getting ripped off.
Honestly I hope I get such a good deal the lights get turned off lol
There are 2 rates at play here. The buy rate and contract rate.
Lenders set the buy rate which is the lowest rate they are willing to buy the “paper” (loan) at for a specific customer on a specific vehicle. These buy rates are established for each customer based on a number of different factors. The model they are buying, LTV (loan to value), credit scores and many lenders also factor a number of different metrics into their proprietary scorecard. Many also use auto decisioning for the bulk of credit apps so they can speed up the process and fund the deal quickly if they can use an algorithm to accurately assess your credit worthiness. US Bank has several LTV groups that have different buy rates. So to get the best rate on a US Bank lease, make sure your LTV is below 95%. Most get down this low with incentives but some cars they are leasing have no incentive support from the manufacturer so you’d need to put 5% down (of MSRP) to get their best rate.
The lenders will often allow dealers to mark the rate up (usually up to 1-2% apr above the buy rate) as the contract rate and make some additional profit. Some lenders pay out a specific % of the loan amount (net capitalized cost) for specific rate increases (in 0.00015-0.00020 increments) while other lenders split the difference in rate profit with the dealer. These splits are anywhere from 55/45 up to 80/20 with the dealer getting the largest split. This is the additional interest income between the buy rate and the contract rate and assumes the lease will go full term. Dealers usually have to wait 1-3 months before this “reserve” is paid out to make sure the customer makes their first payment(s).
If you do your homework and find out the buy rate for the lender the dealer is using with your credit tier and model somehow (here or edmunds or other forums) then you can make sure you are paying the lowest interest possible.
If there are multiple lenders leasing the model you are shopping then you are looking at the monthly payment comparison first. Just be aware that each lender is setting RV/MF combos to get to specific payments so while one lender might charge less interest than another, if their payments are close that means you will be paying for more depreciation than the other. So you’ll most likely have a stronger equity position at the end of term.
Leasing can be a very profitable business for lenders but carries a fair amount of risk. They design their lease programs (RVs, rates and dealer pay structures) to try and beat the competitors on ultimate payment to the customer but also to find the balance between low payments and dealer profits so the dealers will use them for their leases. Most captives are setting MFs and RVs so aggressively that 3rd party lenders (Credit Unions, Ally, US Bank, etc.) aren’t able to compete on monthly payment. The non captives can get creative with the dealer payouts and MF/RV combos to essentially buy their way into the lease market on specific brands and models.
Instead of starting a new thread, I figured I would ask my question here since it is relevant to the topic.
If you have a target discount off MSRP that you are after, how do prefer to go about getting a dealer to that number? Say you want 12% off MSRP before incentives… do you try to gradually work the dealer up to that number through a series of back and forth negotiations or do you just hit him with the number right from the start.
Will I scare off a dealer by asking for too much too soon? They usually start with no discount and just incentives in their initial quote and I have been coming back at them with my target % plus incentives right off the bat.
I realize it’s a numbers game and most of the dealers won’t play ball but you hope that one will bite. Just wondering about the approach.
if you know the numbers, just make an offer and let them accept or reject.
when they say that’s not possible, show them your leasehackr calculator printout (or similar)
and go from there. Many will say to do this over email but that isn’t always possible.
Also market supply/demand will always play a role…GL
I came across this post from @Ursus. It was relevant to my question in this thread so I figured I’d drop it here for anyone else looking. I’m going to try this approach with a few dealers and see if I can piece together a deal gradually. I think it scares them off when I hit them with all my target numbers at once.