While shopping yesterday, ran into an interesting negotiating tactic by a dealer in South Florida. I DID NOT SIGN.
MSRP for 2023 EQB 250 was $58,075.00. Off that price they reduced by a $500.00 MB Electrify credit, and a proposed discount of $5500.00. So, their proposed price was $52,075, plus tax, title, etc.
At the bottom of the sheet, they showed a payment of $3,990.00 cash down, and $699.00/mo (48 mo 12k).
I asked where the $7500.00 credit was. He said it was reflected in then monthly price. I asked where and he responded that they calculated the lease amount and then divided $7,500.00 by 48 and reduced the monthly amount by that. I said that’s not the way it works - the $7,500.00 comes off the sale price - to which he said that it never works that way. He then started throwing out other leasing terms to try and confuse the situation further.
I knew there was some problem with this, and was disgusted by the audacity. In the moment, I couldn’t figure out why this was so bad. Once I thought about it later, I determined that by doing it this way, the Dealer gets to collect the MF on the $7,500.00 for 4 years. At 6.48%, thats an extra $486.00/year to the dealer for 4 years - so it turns the $7500.00 into $5556.00. It was a shitty deal either way, but this way made it so much worse.
There is no way to take it “off the monthly payment” as you explained above. Rebates are either applied as cap cost reduction, used towards drive-off amounts or a combination of both. These affect the monthly payments.
The guy you spoke to doesn’t understand the math or how to explain it. He’s just a bot who punches numbers on his keyboard and let the software do the rest.
Dealer has no control over an OEM rebate like the $7,500.
There are probably a dozen different ways that the dealer can apply mfr incentives and credits. They lose money in one area, but make up for it in another. Do some research, find a target payment, and work towards that.
Its simple. Most salesman dont know the math behind how payments work and many would rather make up an answer when they dont know the answer than to admit they don’t know. I guarantee what you think is happening here isnt happening.
This, of course, should all be a moot point, because you shouldnt be talking numbers with a dealer without having a target price established before hand and you should be negotiating towards that deal anyway.
The $5500 discount was an offer they presented. The $7500.00 was on top of that amount; however, he didn’t reflect it in the estimated “balance due.” Instead, it was later just subtracted pro-rata from the 48 payments.
I am, quite obviously, not an expert like many others on this forum. One of the responders to this thread indicated that there was nothing going on here that wasn’t on the up and up. I didn’t go with this deal, and bought a different car, but the manner of deducting the $7500 credit struck me as odd, which is why I posted on this Ask the Hackers section. I posted their worksheet above.
My point was that if they are calculating the lease payment based upon a price of $52,075, plus tax, etc (MSRP, less the discount but not the incentive), and then AFTER that subtracting the $7500 credit, it seemed to me that they were getting interest on the $7500.00, which, over 4 years, would total $1,944.00.
Theyre not deducting it in the manner you think they’re deducting it.
It doesnt show up in the breakdown on the left side of your worksheet because thats the “purchase option” breakdown and the incentive in question doesn’t apply to purchases.
