I sold cars for about a year, a few years ago. So I had a fairly in depth knowledge of the car buying process. Selling Nissan in a lower income area, although I did sell a GTR, did not lend itself to working too many lease deals, so I really only knew the basics about leasing. My wife and I leased a 2015 Toyota Highlander and we did ok consider I had no knowledge of the MSD hack. Next year the lease is due back and it is my turn to pick the vehicle. I was dead set on working a deal on a new Ram 2500 diesel or picking up a pre owned one. Until I found this site.
Is it wrong for me to feel that leasing while using the MSD hack, and perpetually rolling that money into new MSD leases is the smarter way to go? Or am I perceiving this the wrong way. Our other vehicle is a paid off 2013 Altima with 45k miles and will be around for probably another 8-10 years, so we will only have one payment for that amount of time.
Only some brands allow MSDs (mostly the luxury ones & Toyota) and most people that lease cars associate it as a tool for people with low credit (to buy down the interest rate).
MSDs (specially on the higher payments) usually equate to 10-11% guaranteed returns (for example, if a $3,000 MSD saves you $25/mo). So unless you can find that kind of guaranteed return for zero effort, MSDs are the right way to go.
MSDs are a great way to decrease the cost of leasing and it makes sense to do them if you can afford to and for as long as that lender offers them. But on some models you can get a better MF by using a 3rd party lender (credit unions or US Bank) and not need to tie up so much cash. Ally might also be an option but their business model is different where they often use very high RVs and very high rates to get to a similar monthly payment) Any model that is non-subvented by the captive (if the best MF is around 0.00190-0.00220) will be the ones to see if a credit union or US Bank has similar lease payment without requiring MSDs to buy down the rate.
MSDs aren’t advertised and there is minimal dealer education so few consumers outside of these types of forums are even aware of their existence. I set RVs at a large captive for many years and had no idea we offered them.
When you say you can get a better MF on some models by going through credit unions or US Bank, is this ever an actual realistic scenario? I just can’t see a deal like that being worthwhile, because I’m assuming the model would not have an artificially high RV.
Correct me if I’m wrong, but doesn’t a manufacturer require you to finance through them if you’re to get the incentivized lease terms?
It is almost never worth going through a third party lender vs the captive leasing company. Not only would you not get some incentives such as rebates but also there might be higher fees involved with returning the vehicle such as higher disposition fees, more stringent lease return inspections that will require you to make repairs where a captive lender such as BMW is more lenient and also might forgive some over milage if you were to lease a new car etc. Unless it’s some kind of exotic car where the savings are substantial, don’t bother with a third party lender. There are always exceptions to the rule but i would say 90% of the time, you’re better off going with the captive leasing company.
@LisaLease Yes, there are many models where this is a realistic scenario. There are roughly 100 different models right now that captives aren’t heavily supporting (artificially high RV, low MF or both) that have allowed 3rd party lenders to compete on the monthly payment. The bulk of these models are non-luxury SUVs and trucks with a few exceptions (Q7, most Land Rovers and most Porsches). Most cars are out of bounds for the 3rd party lenders because the natural demand for cars is weak right now so manufacturers and the captives have to artificially raise the RV and buy down the rates to lease them.
Each lender sets their own RV and MF but the captives will often share some of the risk on the RV support and share the cost of the rate buy down. The captives will often have exclusive cash incentives in their leases as well.
@305Hackr I agree with you when leasing most luxury vehicles. The captives have to bend over backwards to retain those customers so they are willing to forgive a lot in order to roll the customer into another lease. There are a few luxury brands that aren’t in this same category in which case the 3rd party lenders work well.
I can’t speak for US Bank and Ally’s policies but the credit unions I work with are in a unique boat. GAP and $1k of wear and tear coverage is included. The fees (acquisition and disposition/termination) are in line with the captives. No early term fee on top of the normal termination fee. The turn in process is very simple and because of the $1k of wear and tear coverage, it is very rare that you will have to pay anything outside of a mileage penalty.
@RVguy i’ve heard nothing but horror stories with third party lenders and them being very picky about wear and tear items. I’m not sure about the $1k wear and tear you are talking about, maybe that’s specific to the credit union you are dealing with, I have never heard of it but def interesting if that was the case and worth exploring.
To be honest, 99% of car salesmen have no idea what is going on let alone what a residual or money factor is.
The managers want the sales people to be dumb or else they’ll give the cars away and/make to much money…
Recently I called a dealership about the Asian conquest and the guy had no idea what that was and didn’t even know what a lease was for that matter.
It’s frustrating going to a dealer now because the salesmen are clueless and the managers think they’re something special and just play games when in reality the sales manager is just someone who wasn’t good at sales LOL.
I did 3 car deals in 3 days at the same dealership and each day was there at least 5 hours on what were EASY deals. I already did all the math, they just needed to agree and sign the papers. Ultimately it always came back to my “correct” numbers.
It appears that there are a lot of vehicles in our comfortable payment range of $500-$600/month. I have no idea where to even start. Is the maintenance on the German’s something that needs to be taken into account or do they have packages or free scheduled maintenance like Toyota?
This is true. When I first came on as a salesman they really wanted us to not know much about the financial process. Luckily my best friend and his family are career car sales people and had me tuned up in no time. We did get the monthly incentive sheets and were expected to know them and we had prices on all of our used cars. Selling cars felt more like being an order taker most times.
How about starting with a vehicle that you actually like. That should narrow it some. With a name like Big Hemi, I imagine you would not be interested in a lexus or BMW hybrid.
@BigHemi45 BMW has free maintenance for the original leasee (used to cover brakes but that recently changed). Mercedes charges a lot for what’s basically an overpriced oil change. Def something worth considering.
I would have no qualms about driving a BMW, Merc, Lexus or Volvo. I have some brand loyalty but I have more loyalty to my money. I owned 3 Hemi’s in a row but I like F1 more than NASCAR these days if that analogy makes sense.
Apparently the dealer messed something up and had to pay a 1900 dollar payment towards the car so I’m almost even on the value of the jeep vs the payoff. Only like 2k off. I was gonna get out of it with the Asian free money (family has Nissan) but the dealer was so incompetent we ran out of time lol.
@305Hackr I have heard horror stories too. The company I work for partners with several credit unions around the country so our program is the same with all of them. Each credit union sets their own MF they can be profitable with and since their cost of funds are so low (compared to captives and the banks) these well below the standard and even moderately subvented rates with the other guys. The credit unions we work with now have MFs for the top credit tier anywhere from 0.00082 to 0.00160 so depending on if someone lives in an area that qualifies them for a low MF credit union, they can automatically save quite a bit even with heavy incentives on the captive side.
Correct. Ended Friday… was working a deal for my friend which should have barely taken any time… By the time the deal was done the dealer was closed and i couldnt do my deal . Oh well … For now just wait until something i like has some good incentive… We should be seeing some new deals here soon in the next few days hopefully. . Luckily the Jeep keep their value so I will only need the incentive to eat a couple grand which isnt too bad…
