Residuals on a lease, affected by down payments? Hmm

Ask the Hackrs
1

Hi. I am working with a dealership who I do not think is that bright.

First thing is that they sent me a quote for the wrong car (blazer instead of blazer EV). I called them out on it and they had to call GM to confirm I was correct because they didn’t even realize it.

The residual is 66% on a 2024 RS trim for a 3/12k lease. The MSRP is 54,595. They had 34,854 for the residual. I told them the math doesn’t math, and they insisted the residual depends on a down payment and fees

I am pretty sure they are wrong, but I want to be sure and ask here before I send an offer letter and correct all their mistakes. I’m shooting for a 15% dealer discount from MSRP due to it being a demo car with a ton of miles on it already.

They also decided to increase the money factor too, should be a fun offer letter.

2

RV = 66$ x 54595 = 36072.70. However, b/c it’s a demo car, the RV will be adjusted for the “ton of miles”.

That is pure BS. The RV is set by the fund provider, not the dealer, for a given term and annual mileage usage e.g., 36/12K). RV adjustments are made per the fund provider’s guidelines.

WHAT??? If you feel the need to correct their mistakes, you shouldn’t be favoring a bunch of idiots with your business. They don’t deserve it! Time to move on from this dealer. You’re allowing them to control the deal. You must take control. Here’s how…

Suggest you do your homework and research a competitive sell price in your local market and vet all relevant data (money factor buy rate if you qualify, RV factor, doc fee, acq fee, etc.). You’re an LH super supporter so you have access to the MF buy rate.

Craft a one-page lease proposal (example below- the round peg, round hole won’t work) and email it to the sales manager (SM), not a floor salesperson as they’re often Mickey D order takers and lack knowledge. Call the SM first. When the SM sees your professional-looking lease proposal, it will speak volumes about you. They know it’s time to put away their toys and gameboards and, put on their big boy pants. They will also know that they can’t bullshit you. Check this out…

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All numbers must be accurate otherwise, you’ll lose credibility. Negotiate via phone/email. Once an agreement is reached, ask the dealer for a review copy of the lease agreement and all contract addenda BEFORE you go to the dealer and sign. Moreover, it’s helpful to know the terms and conditions of the lease contract such as early termination liability criteria and purchase option criteria as well as lease amortization methodology and excess wear/tear criteria. If all is as agreed, tell the SM that you’ll come in to sign asap. You don’t want any surprises or dealer excuses like …. Oh, we made a mistake. That’s unacceptable and shouldn’t be tolerated.

If the dealer isn’t transparent or is uncooperative or showing signs of incompetence, WALK AWAY AND MOVE ON!

Leasing is time-consuming and requires a good deal of study and attention to detail. If you don’t have the time to commit, perhaps your best alternative is a good broker. There are some outstanding brokers on this website. However, if you’re willing to commit your time and resources, be sure to always control the deal. That can only be achieved with education which breeds confidence and increases the likelihood of success. Be nice but firm and very business-like.

??? Let me know.

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3

Thanks for the reply. I am going to send a letter similar to yours, I just need to call them and speak to someone that is not the dumb sales person (he has off today anyway) to get accurate tax rate and their dealer fees. I sent a similar letter when I leased my last car too and it worked out great.

How can I find out the real residual due to it being a demo car, call GM financial and ask? I also want to get an accurate odometer reading instead of what they have, which is from the last service interval that was back in November.

I won’t be correcting their mistakes, just providing correct info in the lease deal I want and they can take it or leave it.

4

You might want to try another Chevrolet dealer five miles down the road. Seems like these rocket surgeons have a good chance of filing a deal that doesn’t fund.

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5

You could try. However, they’ll probably tell you to contact your dealer. The dealer must disclose it in your lease agreement. If it is wrong, then GMF will not fund the lease.

The dealer must provide you with an odometer statement that both you and they must sign. It’s law.

Also, you should ask whether the warranty has started to run. If the start date was 6 months ago, then you have 30 months of warranty coverage remaining on a 36-month warranty. There may be other warranties impacted as well. This will impact the sell price.

Finally, you should know your sales tax rate and do your very best to collect and vet all data before you even contact the dealer (except for the residual … which you need to obtain from the dealer). Not sure how GMF makes residual adjustments for mileage. It could be a % reduction like 2% or a fixed dollar amount.

6

Your strategy needs to be scalable: making offers to 10+ or even 20+ dealers to get a deal especially in an environment where so many sellers think there will be pandemic levels of inventory shortage again while ignoring demand uncertainty from job loss and portfolio losses.

You can’t get bogged down talking to anyone let alone explicitly or implicitly educating them. Post your calc here if you haven’t already showing what your offer will be. Once the forum says that’s correct then make offers for $ DAS and $ monthly. Keep it simple. No LH links or screenshots.

7

If I recall correctly you adjust the residual value of the car by 25 cents per mile on a GM loaner, or you lose the miles that were already put on the car. Sounds like this car had almost 5,000 miles on it already?

8

They have around 6200 listed on whatever, but I need a current amount. Maybe it is current though.

9

I could be wrong but I don’t think GM demos/loaners over 5,000 miles are even leaseable.

10

They open in 30 min, I will ask the financial manager and see whats up with it along with the residual

11

I kind of figured out the numbers since they have the whole breakdown online I can use, and there is a residual difference due to it being a demo (63.84% down from 66%). I am shooting for 15% and seeing what will happen. I expect them to come back saying 15% is too much, but that will be fine. They basically have two RS demo’s which is a unicorn in itself. Basing the 15% on the wear and tear of the car with tires, battery degradation and its basically 6000 miles which is half a year of miles on the lease term that is already used. Another dealership a few horus away has 4000 off (without even haggling yet) with no miles on the car. I also have a $3000 tax incentive for my state if its a 3-year lease. My plan is under 200 a month with all the discounts/incentives.

12

Here is my letter:

Stock#: XXXXXX Vin#: XXXXXXXXX The MSRP is listed at $54,595 with no discount.

Your quote to me has the residual of 66% (listed as $34,854) and the money factor is 0.00145. If you’d be willing to base a 36 month/ 12k lease off of a cap cost of $46,406 (MSRP - 15%) (prior to any incentives) with no money down, the base money factor of 0.00045, and the 66% residual of $34,854 since it is a demo, then I will drive out there as soon as possible to sign the paperwork. Incentives right now are a retired courtesy transportation vehicle discount of $3,000, Costco executive discount of $1,250, a conquest private offer of $1,500, plus an additional $500 from being a first responder, but what I’m after is a cap cost reduction before these incentives are applied, not after. However you get there is up to you (whether cap cost or money factor reduction) but it needs to come out of your end, not mine. From my understanding, the car has been at the dealership for quite a long time as a demonstration vehicle and has gained almost 6000 miles. There is a lot of wear and tear on the car, the tires, and battery degradation over that time. The 2024 models have been released for well over a year and the 2025 models are present at dealerships. The value of a 2024 RS eAWD with 6000 miles is already at $40,000. Your vehicle will most likely go to auction if it does not sell.

I would like to pay all the fees/taxes rolled into the monthly lease, assume Tier 1 credit. By my rough math this would put my payment after tax at roughly $254 per month with no drive off fee. Thank you and have a great day! Looking forward to dealing with you!

13

why not go to a different dealership?

1 Like
14

I have almost never found it productive to try to educate dealership sales people as part of a negotiation. The courtesy car ccr is discretionary cash for the dealer, not a rebate, so you should factor that into your expectations around the discount they can offer.

Make sure that your goals for discounts are in line with what you can compare from other deals that have been shared here or what brokers are offering. If you are confident that your numbers are correct, all you really need to negotiate is getting to the price you want. That is the grind…finding a willing dealer, not trying to help a stubborn one ‘see the light’.

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15

There are only 4 of those cars in my state, two are demo cars.

16

I would be much more straightforward and to the point. There’s no point in trying to sell a salesperson. Country hardball. Here it is, hit it. They already know about the mileage and wear and tear on the demo. It’s possible that they think they can get someone to bite on a finance deal for a meager discount or they just don’t care.

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17

Way too long.

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18

any suggestions on what to cut?

19

That is way too long winded and will just get thrown in the trash.

If you’re confident in your numbers then just tell the dealer you will be there today to sign if they can get to $254/mo with $0 DAS (based on X term, Y tax rate, Z incentives). Nothing more.

It’s a complete waste of time to get into the weeds with the sales rep about all that other stuff or what will happen to the car if it doesn’t sell etc. etc.

1 Like
20

ok, i will shorten it up and make it tighter.