Questions on Structuring Leases - Cadillac

Ask the Hackrs
1

Update: EV Concierge confirmed today on the phone that these incentives are meant to be Cap Cost Reductions. The dealership is not using them in this way, they are using as Working Cash (i.e. similar to a down payment). The EV Concierge was opening a ticket for me. I also reached out to the General Manager of the dealership as well as the parent company of the dealership.

Thank you to everyone who jumped in here to help me understand what was going on. I really do appreciate it.

Edit: including the one pay document I received from them. Perhaps I am completely misreading how they are applying the incentives.
LeaseTerms.pdf (243.5 KB)

Hi,

I’ve been working with a dealer on a Lyriq for a 24-month lease. We agreed on a one-pay price and then I submitted my credit application, pay stub, registration, etc. They then came back and said they gave me the Employee incentive of $2,500 instead of the Suppliers F&F incentive of $1k. They provided new numbers and they were quite a bit off from what I had come up with on Leasehackr.

Here is how they are calculating the lease: They are using the Loaner Cash, Conquest Cash, and Supplier Incentive as a ‘rebate’ instead of as a cap cost reduction. What that means is they calculate the lease and then after they get the price then apply the rebate as cash down payment.

Example of their calculation: (edit - these are not real numbers, I made up numbers to just get the point across of how they are structuring a lease)

  • $70k MSRP
  • $65K Selling Price
  • Lease is calculated at $65k selling price
  • $20k lease payments over 2 years
  • $6,500 rebates
  • $14,500 due by me for one payment

Instead of how I think it should be calculated.

  • $70k MSRP
  • $65k Selling Price
  • $6,500 rebates
  • $58,500 Cap Cost
  • Lease is now calculated off of $58,500 price

Looking at the dealer’s lease worksheet, it shows the rebate as a separate line item rather than reducing the adjusted cap cost. Their adjusted cap cost is actually higher than the initial cap cost, which means fees were added rather than incentives subtracted.

They even had their local GM rep there who they said they checked with, and he confirmed that it’s a down payment, not cap cost reduction.

Am I completely off base here or are they applying these incentives wrong?

Thanks!

*I know the answer will be to go to another dealer and I will if I need to, but this car has everything that I’m looking for in the color combo.

Note: I found this document here on LeaseHackr and plan on calling the number at the top to see what they say.
24-40BL-41.pdf (23.4 KB)

2

Applying the incentives as a cap cost reduction will save you a little bit of money on rent charge on a one pay. Would need to knownthe money factor to determine how much.

3

$605 effective for a Lyric should be a hard pass

4

Anyone see deals on the Escalade IQ yet?

5

It ends up being over a $3k difference on a 24 month lease by applying the incentives as a ‘down payment’ instead of a cap cost reduction.

6

I ran numbers for the Optiq and they offered to apply $7500 to the first half of the lease, bringing the monthly to $499.

It was $52000 - 4000 trade - 2000 down - 2000 conquest, and after payment would start at $499, and go to $525. I think. They only walked me through it on the screen. Really loved the car, but I am waiting for the R2. I need more of an off roader for hiking and kayaking.

7

Agreed! Sorry, those numbers were just made up for simplicity.
With the Conquest, Loaner, and Supplier F&F ($6,500 total) applied as a ‘rebate’ which for them means down payment, the monthly payment on a Lux 2 with msrp of $74.2k is $508 per month ($12,200 not including registration in Seattle, WA).
If we apply it as a cap cost reduction, it would be $411 a month ($9,800 total one pay)

8

Just got off the phone with the sale manager, he said they use CDK software and what I am trying to do is impossible. He said Conquest, Loaner, etc only come off as a downpayment

9

That doesn’t add up. There’s something else going on with your calculations.

Youre talking about $125/mo extra rent charge for a ~$6000 difference in adjusted cap cost. That would require a money factor of around .0208 to result in an increase of $3000.

10

Gah - it’s been a long day. I’ll correct. Thanks for calling this out. One thing I didn’t mention is they didn’t want to give a one-pay discount on MF either.

it’s $2,569 difference.

Here is my lease hacker calculator. Maybe I am doing something wrong?

11

The issue isnt how they’re structuring the lease with the cap cost. That’s only making a difference of about $160 over the lease.

12

If this is true my first response would have been not my problem. You did a hard pull on my credit you need to make it work.

14

What am I missing then? What am I doing wrong with the Leasehackr calculator vs what they are showing? I must be missing something or doing something wrong.

15

Quick playing around gets me pretty close making the incentives taxed, adding a .0004 mf mark up so the final mf matches what they have listed and adding in reg fees.

16

Thanks for checking. I’m in Washington, so those incentives aren’t taxed. Moving to untaxed lowers the amount by $670

17

The upfront taxes on their breakdown suggests otherwise

18

Those are the taxes on the combined monthly payments.

$632.69 * 24 = $15184.56
Sales tax = 10.65%
Total Sales Tax = $1,617
That is how the dealer explained it me. Not sure why it doesn’t match up 100% though.

$6,500 cash incentives if they were taxed would be $692.25

Btw - Thank you for taking a look at this. I appreciate it.

If you look at the worksheet, they entered as ‘rebates’ which then flows over into working cash. They aren’t using it as Cap Cost Reduction.

19

But WA assess the tax each month, not upfront, no?

20

I’m doing a one-pay

21

Ah, sorry, forgot that you were doing that.