On the hunt for a good deal on a 2024 Volvo v60 Polestar I got turned off by both my local dealer and another in the region’s tactics. I then thought I had finally found a no-nonsense dealer I liked who straight up both offered a very good 8% discount off of MSRP and helped me find the Volvo ABA $2k discount to stack with its $7500 lease promo. Summing all of the above, that’s about 20% off of MSRP. Then this romance began to sour.
When I asked them to shift the acquisition fee from capitalized to cash, the residual went down and best I can tell, the MF went up within the same day. Then I became a Super Supporter and ran Rate Findr and found that even the better of their two MFs is much higher than what Rate Findr predicts. I’m planning on insisting on Rate Findr’s MF and residual % or walking.
Is it reasonable for me to accuse them of trying to sneak some profit back in through non-standard MF and residuals? Or can they legitimately claim most dealers use non-standard MFs and the ones in Rate Findr (and Volvo’s website) are unrealistic?
I’m inclined to keep working with them while negotiating in a savvy way. I’m thinking almost all dealers try to trick customers, so no need to run away from this one. Or would you run away?
Trying to argue with them back and forth over how they structure their money factors is a waste of time. It really is of no consequence if they mark up the money factor, if there is a commensurate discount.
Set your target deal based on buy rate money factor and negotiate to that price. If they can get to your price with a larger discount and a marked up money factor, more power to them.
The biggest issue here isn’t that they’re marking up the money factor, it’s that you’re wasting time with a dealer’s offer. Asking them how much they want you to pay will only set you up for a deal that makes them happy.
My naive mistake was negotiating the net capitalized cost when I should have told them what upfront cash and monthly payment I wanted. Lesson learned.
My original question in the post is still relevant though. I want to tell them I interpreted their proposed net capitalized cost based on Volvo’s standard MF. Is that reasonable, or isn’t there really a standard MF in the wild?
Lots of dealer do buy rate. Lots mark up the money factor.
I wouldn’t bother with trying to explain to them how you interpreted their offer or debate over justifications. Just say “If you can do it at x price, I’ll come take delivery in an hour”.
All lessors have what is called a base rate and pretty much all lessors allow dealers to mark up the rate for additional profit. A high credit score makes you eligible for the base rate, not entitled to the base rate. That’s why arguably the most prevalent strategy on here is to @mllcb42 said, just said x monthly / y das and you know what it should be b/c you calculated the numbers based on the base rate.
For future reference, the only way the rv changes is if the term changes from say, 36 months / 10K miles to 36 months / 12k miles for example.
Regarding the residual, all for 12k leases, for this car Rate Findr says 58%, the first proposal I got from them said 58%, and the latest said 56%. Interestingly, their first proposal said “Plan: 12,000 mi 2%” and the second one said “Plan: 12,000 mi 0%”.
I understand it is common to mark up the base MF, but is it also common to tweak the base residual %?
My leasing a new car coincides with my retiring, so it is really hard to estimate how many miles I’ll drive. I think leasing still makes sense, both because I feel like the industry is changing so rapidly right now, and because of the $7500 EV lease bonus right now. The car I am replacing (although it still works) is an Audi with 24.5 years and 311,000 miles on it, so an average of 12,694/year. That was never consistent commuting, just a mix of short & long trips.
My plan has been to do a 12k/ 36 month lease so as to not overbuy miles, but the 15k/36 month lease is also very tempting so as to fully enjoy my fancy new car without mileage limit anxiety and to reduce the cost per mile by 17% if I really drive all 15k/yr.
At $0.25 per excess mile, the breakeven point is 13,750 miles per year.
I don’t think it is likely I will purchase this car, nor am I confident my next car after it will be a Volvo.
If I realize mid-lease I want more miles, is it common to be able to buy them at any better rate than the $0.25/mile overage rate?
They can’t tweak the residual. If they’re giving a different residual, they either are quoting a different amount of miles per year or using a different bank that has a different residual.
In this particular case, since it’s a Volvo, wouldn’t VCFS be the only lessor a dealer could use?
@clarinetist Obviously you are exploring leasing however given your history of keeping a European car in working order for 24.5 years, one the best value propositions may be a CPO Volvo coupled with a warranty. Just something to think about.
Before going down this road you need to define whether you picked the right strategy for the right car. Is the best strategy here to buy new, lease, lease-and-immediately-buy-out or buy used?
This is only one half of the ingredients of a good lease. What’s the RV and MF?
Thanks to all who posted. Can’t believe how clueless I was earlier in this process. I began planning to buy in cash and slipped into the world of leasing without knowing what I was doing.
This is pretty close to a recent proposal of theirs: Calculator
Same dealer has a 2024 CPO with 12k on it, but says they can’t get its price nearly as low as the new 2024 in the calculator given the $7500 EV lease incentive on it. So it would make more sense to lease and immediately buy it out. There also don’t seem to be any non-CPO 2023+ used cars out there.
I had convinced myself leasing might be a good idea given how fast tech is changing with EVs in the next 3 years, but given that I have the savings to purchase outright, I’m probably better off doing a lease-and-immediate-buy-out. Total cost of leasing will be $36,437, while net cap cost is $61,273. So if in 36 months I want to sell it, won’t selling for anything more than the delta of those (about $25k), plus what I could earn on the $60k after inflation in a safe investment (abiut $5k) be savings over having leased? MSRP of $73645 * 58% residual = $42,714, so the residual would need to be awfully wrong for me to not be able to get more than $30k, right? Plus I have the option of keeping it longer if I choose to, or doing lots of miles. Now I’m liking it that they inflated the base MF probably to help subsidize a bigger discount off of MSRP.
