This is my first question and if these questions are already answered, please point me to the thread. Appreciate the help and the awesome platform that this forum provides.
I’ve noticed that some of the deals include “Multiple Security Discounts” or MSDs as they call it. I’ve noticed some deals posted in the marketplace that included this. My question has 2 parts:
How do dealers see these MSDs as beneficial enough to reduce money factor or APR? I know that MSDs are refundable and that would prevent the lessee from jumping ship. I am more interested in the relationship between the number/amount of MSD and the reduction of money factor or APR.
How do I know that the dealer would reduce APR if MSDs are brought up if we are interested in pursuing a particular car that they have?
To add to jeisen’s comment, Mazda and Audi take MSDs too. If you use the Calculator, you see the individual MF reduction each deposit has, with the pre MSD money factor being the input, MSDs being a modifier, and a post MSD money factor as a result which is displayed.
MSDs can be seen as a reduction in the money factor on a lease, it’s very quantifiable (by nature of money factor reduction) and very easy to identify via payment, das, etc. We can easily calculate money factor, compare it to the bottom / best / ‘base’ rate, if we have the other variables, ie, selling cost (contract), msrp (Monroney sticker + contract), incentives/residual value (forum,edmunds,com our source for incentives and residual value info), and mileage for residual value adjustment (from you or dealer if a service loaner, etc).
This was a new concept for me too recently. I suspect that this method was initially used by folks with less than stellar credit histories, to get the interest rates to a more reasonable level. But anyone can take advantage. it is a good ROI if you can spare the cash to keep locked up for 3 years or so.
Not exactly the right thread, but you just put MSDs in and a 1750 cost cap reduction (downpayment) - if all your other #s are correct, the MSD figure will line up automatically - by rolling you’re getting money back and then immediately redeploying it, so there’s nothing too stressful you need to worry about.
You might already be aware of this, but typically you have to front the MSDs for the 2nd vehicle before you have received the MSD reimbursement for the 1st vehicle you are turning in/selling. The reimbursement arrives 2-6 weeks (depending on car manufacturer) after the financials on the 1st vehicle have closed.
