I monkeyed around with a couple different scenarios and the payments were around $15/mo apart. I think there’s some apples mixed in with the oranges here.
Nope. Not gonna happen. The MSRP’s can change but they both must be the same under both options.
it’s all much simpler in real life - “Finance manager needs some love, too”. That’s all, no one really bothers with mathematics, just the bottom line lol
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That’s very true. I can tell finance manager always adding several dollars per month as the love. But I rarely argue at that point…
True statement. I’m not going to bicker over a couple bucks/mo when I get to where I want to be. Guess I’m lucky to be in that position, but it’s not worth my time once they say “Deal.”
Finance manager can only get paid for that MF bump if the dealership is paid for it too.
Managers say that to clients. My GM said to me once that his finance guy (who was sitting next to him) would kill him when I brought up buy rate lol
So I guess some part of mark up on MF is a piece of finance manager’s pay package in some places.
@max_g - yes, that’s what I said, before seeing your post.
Right, and I understand that. That said, all this calculation, digging into what happened mumbo jumbo over 3 bucks a month isn’t worth my time. 10 bucks or more, then yeah, I’ll pipe up.
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So, I want to apologize for jumping into this discussion without having enough numbers to hash it all out properly. I am helping a friend buy a car and I don’t have access to all the numbers, as I’ve only been able to assist a bit here and there. I guided her on the dealer, MF, a couple phone conversations, and price, and she did the finishing with a little help from her brother and her brother’s connection at the dealership uncovered late in the process. She also got her last BMW at this dealer. She was originally going to pay $650/month all in for not even the exact car she wanted, and I helped her get to $599 for a car due into the dealer soon, which I think is a fair deal.
The form of the final deal was originally going to be (which was supposed to be $600/month I think):
$49,365 - MSRP (includes about $230 in accessories)
$41,999 - selling price (includes $1,500 loyalty, $1,000 lease cash)
MF: .00182
36/10 terms
tax zip: 20009
The deal as it stand now is:
$49,365 MSRP
-$8432 discount (includes $1,000 lease credit and $1,500 loyalty cash)
$40,934 selling price
MF: .00222
$0 down
36/10
zip 20009
$599 payment (inclusive taxes acq fee, registration, etc)
Again, I was just trying to get a little educated and ask a few questions for a friend, so I apologize for not having all the data at hand.
Again, there is a lot of data missing (e.g., sales tax rate, gross capcost, net capcost, residual, etc.). Not to mention the $600/month “you think”. Looks as though the discount associated with the marked up .00222 MF is $1,065 which is considerably more than the $650 discount in your earlier post.
Without accurate and detailed info, the two deals are impossible to analyze. However, based on what you’ve provided and some guesswork on my part, this is what I have…
As you can see, the payments are close but do not match. To get to your payments, the net (adjusted) capcost had to be adjusted so that the discount is reduced from 1,065 to 921.40…
I’m betting the residual is 50% as even a 1% change would produce a significantly lower or higher payment. So, the only thing that’s left to change is the adjusted cap. Still, something isn’t quite right.
Thanks for the analysis. The numbers are close. I have asked friend to send
Me both deals if she has. Also when I said “think” ref payment on the final deal, I am more sure than that. She told me
It was 599 or a few dollars less.
I am very interested to know why dealer made this last minute change. All of the posts here are interesting.
You would have to ask the dealer. All one could do is speculate.
Basically, it looks like the dealer shifted some front end profit to the back end. There could be a number of reasons why, even if the dealer netted less profit. I know of a dealer that was secretly doing that because they pay a smaller commission on the back end profit vs the front end profit - did it for a while. They got caught, there was a class action lawsuit, and they paid a bunch of salesmen on their lost commissions.
I’m sure the reasons here were more mundane and not illegal.
Ha, that’s exactly something a dealer would do. Dumb dumbs should have just structured the pay plans differently, not surprising though.
@MoneyTime:
Actually, this is interesting. I would like to know how close I am. If you’re in DC, I believe your sales tax rate is 5.75%. Based on that, I created the following options…
The base payment is approximately $567.37. Adding tax at 5.75% gives a monthly lease payment of $600.00. Note that the residual is 53%.
Actually I think the residual value for a bmw 430ix with a 36/10 lease is 57%. That’s set by bmw
And can’t be changed right?
Also in the payment is the 925 acquisition fee and the 499 doc fee and 111 for two years of Registration.
I think for dc car leasing, you pay 10% sales tax on Juat the amount of the car you are using.
That’s correct. The residual is set by BMW and is non-negotiable.
I think DC taxes the base payment streams. In other words, it collects tax on the base payment each month. So, based on what you told me, here is what I have…
The base payment is $545.45 plus 10% tax yields a monthly lease payment of $600. You’re better off selecting the marked-up MF with the higher discount. Looks like the additional discount is $950 which makes much more sense. Also, if, for any reason, you elect to terminate the lease early or exercise your buyout option at any time, your lease balance will be lower that the option with the lower MF. I assume your up front charges are the same for both options.
Hope this helps.
John
Very interesting. That looks like it. The first deal would have been $41,571 selling price, plus $925 acquisition fee, $111 registration, $499 doc fee = $43,106. A $600 payment w taxes at a .00182 MF.
So then the dealer increased the discount by $950 and increased the MF to .00222 to equal the same $600 payment. Some interesting answers were given above as to the dealer motivation to do that.