1). I am planning to lease through Mercedes-Benz Financial Services (MBFS) and not through 3rd party bank (Chase, BofA, etc.)
2). Edmund said MF is 0.00130 and residual is 54% in CA
EDIT: I have excellent credit, so I qualify for Tier 1.
3). I applied for the lease MBFS website and got approved. Approval sent by MBFS to dealer ABC
At the dealership, the dealer said MF is 0.00180 (higher APR) and residual is 50% (lower), different than what Edmund said.
My thought is that if I apply through the manufacturer own financial services (e.g. MBFS), the MF and residual is set by MBFS and the dealer cannot change it.
The dealer can mark up the mf, but they cannot change the residual. Is this a loaner you’re looking at? In that case, depending on mileage, the residual would be lowered
Some dealers don’t bump it, some sometimes bump it, some always bump it. Either negotiate buy rate or an extra discount equivalent to the mf bump or find a new dealer.
Some dealers would rather show more profit in the finance department vs. the sales department, and vice versa.
When I was negotiating on a Cayenne in May, my target deal was 10% off at base MF, which came to $950/mo with standard DAS. Found a dealer that agreed to the deal; When he sent me the deal sheet he was actually discouting the car 12% and marking up the MF a bit.
I couldn’t care less how the dealer wants to make their money as long as the payment and DAS is on point.
Since money Factor is the only one that dealer can mark up for leasing, I would like to play around with LH calculator and get a range of expected total payment.
Example: if Audi MF is 0.00040 but dealers mark this up two to three times, then I know the real world MF will be 0.00080 or 0.0012
You can of course use the calculator to see how much a marked up MF affects the deal, however it’s not beneficial at all to go about your search with the mindset that the real world MF is whatever the max markup could be on any given make.
Research deals on here as well as broker listings. Get the base MF and RV and any incentives from Edmunds. The use the calculator to put together your target deal at base MF, based on your research.
Then you know what the real world good deal is that you want. If your target deal is $600/mo with $2k DAS, then in the end that is all that matters, not what MF the dealer is charging or if they have it marked up or not.
Just like the programs change month to month, this can too. Without the September finance programs notice from AFS to dealerships (the stuff Edmunds doesn’t have), we’re speculating. And some dealerships have caps even if the captive doesn’t.
For Tier 1, for any MF below the base rate, 0.001 or 2.4% is probably the most markup you’ll see. If there is a special lease rate, sometimes the captive will cap the markup.
For Tier 1 using a base MF, it can literally be usury minus a quarter point. E.g. if base MF is .00255 / 6.12% and the usury law is your state is 16.9%, there is roughly 10 points of possible markup (.00416).
Just to play around, I got the Sep MF and RV (no incentives), actual DMV fees from DMV website, no discount at all and used the LH Calculator to get the number.
Then I compared this to what the dealer advertised and their monthly payment is much higher than what I calculated. Looks like the MF is marked a lot.
But hey, if the Dealer is still willing to give the exact payment I want based on the original calculations, I guess it all come down the same?
EDIT: wrong link given. Anyway, I just uploaded the details.
