MF bump for Bigger Discount?

Ask the Hackrs
1

This is a general question I’ve had for a bit now and I’m looking for some feedback. In a situation where you are looking to sell a lease before the term is up, does it make sense to work a deal for a larger discount at the expense of them marking up the MF?

Correct me if I am wrong, but my thinking is that a deeper discount puts you at a better chance of positive equity but at the monthly expense of paying back more interest. So, if you end the contract early by selling the vehicle the remaining interest you owe on the “loan” isn’t paid by you and your cost of ownership is lower than if you took base MF and the discount they are willing to provide.

2

If the final lease numbers come out equal, I think it’s better to have a deeper discount with marked up MF vs lower discount and base MF.

You can buy it out for less or sell with more equity/less negative equity.

@spockvr6 brought this to light over the past few months. Again, if the numbers are the same in the end, take the bigger discount.

3

Yes, if you get a commensurate discount, mark that mf as high as it’ll go.

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4

Yeah I’d take it any day which is what I did once. Matter of fact I’m facing the exact scenario right now again. Dealer A and B has offered equivalent deals but B is max MF with deeper discount, meanwhile A is at base MF but local and has the build I want. Trying to get A to do the same lol since I’m considering selling the lease. Not all dealers want to do it tho, not an expert on this but I guess it depends how they calculate their gross and what their focus is, but I figure it won’t hurt to ask. Maybe industry folks can answer this better.

5

I brought this up 18 months ago and you said dealers wouldn’t go for it :thinking:

Did something change?

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6

It seems unlikely that they will go for it. I’m having trouble getting any to entertain the idea. They know how they make and lose money but like @FuzzyIBJ said its probably dependent on how they operate.

7

Yeah finding one to cooperate is tough! I ended up working with one who was willing to max mf in exchange for a $750 extra discount. Must have still worked out for them somehow :man_shrugging:

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8

  1. anyone who uses search, gets a like

  2. F&I chargebacks happen, many dealerships F&I departments have reserves to cover them

My opinion has always been:

  • pre-msrp discount / incentives / buy-rate MF lets you calculate the floor (how cheap could this lease be).
  • if we can agree on those numbers (or close enough), I don’t care how the sausage is made :man_shrugging:t2:

Sometimes the dealership wants the revenue to hit a certain department, or for someone to max out a commission. IDGAF as long as I’ve done the math to verify it makes sense.

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9

Nothing has changed… the issue still is how do you get the dealer to agree to it. If you can make it happen, by all means.

In practice, the real way it makes a difference is if you get a quote with a marked up mf, to focus on driving the sales price down rather than driving the mf down.

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