How to deal with this situation? Lexus MF Markup

Hello LH guys,

I was negotiating the deal for RX 350 ( as if I was purchasing as cash ) and got the decent price in the current circumstances. I then asked them to run the quote for lease payment based on the negotiated sell price. Here is the issue, they are marking up MF. I even asked them about money factor, and they gave me the actual number which was posted on Edmunds, but whatever they are running calculation, it is still mark up MF. I asked them to use the maximum MSD, and they would use 7 MSD, because if they use 8 MSD, then money factor will be negative number. I did use LH calculator, and comparing their numbers, it is running $80 per month extra. How to deal with this situation? Since last few days, Toyota announced the shortage, this has caused the price increase in the market. I had two other dealers at cheaper price, they even raised their quote now. Wouldn’t buzz to their 2 weeks old quote now. In fact, one of the dealers even wouldnt buzz to his 2 days old quote now.

In FL, Lexus RX 350 money factor is equal to 1.46% APR. Any tips to deal with this and have them to give me the base MF.

Thank you!

You either ask for additional money off to offset the increase in MF, ask for base MF with no additional discount, or take the deal as-is. To be frank though, in this market, you have no leverage. If they don’t want to budge, you can’t force them to. Only option is to look elsewhere and hope for the best.

Can you show us their lease worksheet vs your calculations? More often than not, the discrepancy is caused by user-error.

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Here you go:

Thank you!

According to LH calculator, with 7 MSD, it should be $543 a month. I asked them to use 7 MSDs, and their figure $625 a month. So $82 off.

Thank you!

You need the lease worksheet - not the Autonation dealer teaser sheet. There are more fees or rent charge in that teaser sheet somewhere

Double check on your residual, MF and if based on Tier 1 credit

Maybe ask for your OTD price for straight up purchase (to get more data if not willing to share the lease worksheet)

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I did check the residual and they also printed the residual value. I didnt ask them if it was tier 1 credit. Should I discuss all these options in the finance office or before? The one that I want, it is expected to arrive in a week or so.

I already got the OTD for the cash purchase, and it came around $45,749 with new tag. Based on OTD figures, and whatever data they shared with me, it looks like that they do have marked up MF.

Thank you!

Your OTD does seem to match up with the MSRP discount - check your MSRP is the MSRP and does not include any dealer sticker adders for your lease. Critical in FL to always get the OTD price to match all fees and FL dealer BS.

Your OTD does seem to match… 6% FL tax + $25 tax adder (6.5% only on first $5000 then 6% on balance)+$799 dealer fee and $600-700 tag and registration (more BS dealer fees but in FL the dealers do what they want and tease with higher MSRP discount)

So something is going on with the lease worksheet, MF or other lease adders. It’s the great Florida mystery to keep working

Your MSRP discount for the OTD deal actually looks pretty solid in this market

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This is what happens when you negotiate a deal with ambiguous terms.

Either negotiate monthly/das only and don’t care at all what they do with the mf or specify every single number. If you leave things ambiguous, this is what happens. You and the dealer aren’t negotiating the same deal.

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If the equivalent percentage is 1.46% that is a money factor of .00061
Now are you saying that .00061 is the marked up MF or the one they are supposed to offer you? Cause there is no way there can be a $80 payment difference there.

@Ryan_Squillace - What I am saying that they are charging alot more than official money factor ( as per edmunds 0.0061 ). I think they might charging me MF 0.00164 ( equal to 3.94% APR ). Even though they verbally said that it is 0.0061

Here is the calculator that you can see: CALCULATOR | LEASEHACKR

Thank you!

You need to ask them for the detailed lease worksheet. The discount in your calculation includes lease cash, which I think is $1750, and should be separated out and treated as a taxed incentive.

I will ask them for detailed worksheet. Discount is $5008 ( Dealer Discount: $3508 + $1500 Lease Cash ).

Should I ask for detailed worksheet now? or when I am in their finance office? As this RX350 is currently in-transit for at least a week or so.

Thank you!

After reading so many posts on LH, I thought that our approach shouldn’t be for monthly payment but rather purchase price.

Why would you goto the dealership if exact, final numbers haven’t been agreed to?

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Getting the OTD number is good. And I always like to start with that… As noted above, this gives you the out the door price straight up with no trade in or lease complications. Let the dealer play games with all the numbers on the contract lines with their bolded dealer and comical “electronic registration” fees… And line up your loan at a credit union or your favorite bank.

For the lease. Now you need the monthly payment with $0 DAS other than first payment. Assuming you are T1 credit. If that is off $80 a month then there is ~$3000 of disconnect somewhere for you to reconcile. You need the actual lease worksheet.

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Where on LH did you read you should negotiate as if you’re purchasing the car? And then switch to lease?

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You are right. I should ask for the detailed sheet now and save my time in dealership. Honestly I may make straight forward cash purchase for this RX and skip all unwanted leasing fees. I have purchased two Toyota cars in last few months and both were cash purchases, as I didnt want to fool around with their high MF. Lexus was interesting case due to low money factor, plus using MSD, it was almost free interest, so I was looking leasing option for Lexus.

Thank you - will ask for the detailed lease sheet to that rep.

@xenhacker - thank you - just sent him a text message to request the lease worksheet. If the lease terms dont work then I may do cash purchase.

You should always use comparable purchase prices to establish your target deal, but when it comes time to negotiate with the dealer, in my opinion, you have two viable options:

  1. Give them a monthly/das amount that was informed by your target price. They can do whatever they want with the mf, with add ons, etc. If they get to your target price, none of it matters. This way you’re negotiating on a controlled output from the leasing equation.

  2. Break down everything. This way you’re negotiating on a controlled input into the leasing equation.

What you shouldn’t ever do is negotiate some of the variables while leaving others undefined. The moment you focus on selling price without also tying down the mf, fees, etc, you cease to be negotiating the same deal. You assume buy rate, they assume max mark up, etc and you’re negotiating deals that are thousands of dollars apart.