Long story short - I thought I had negotiated a good deal and a transparent one then got in a time crunch by the time they accepted and assumed without keeping everyone late after hours on holiday that the numbers were what we agreed to. Looking at paperwork now, after our trip I can’t figure out what happened or if it’s better or worse.
Why would dealer put money (random numbers I can’t explain) in the Cap Cost Reduction?
I gave them a price I was willing to pay for a demo. MSRP $83230, I agreed to pay $65200 (just shy of 5000 miles). I told them no money down but would pay all fees and taxes (so as not to roll into payment) up front. They were buying my car and I said those fees/taxes could either come out of what they were giving me or I’d cut a check separately. Never got an answer before had to hustle in a get it done. Had agreed on the 54% residual and .00074 MF. Seems simple right.
They write up paperwork with their original ask of 68200 (not agreed upon 65200), add taxes and a bs key fee to come to a gross cap cost of $70115.52 (I’m in Ohio don’t takes get paid at signing anyhow?) I specifically wasn’t rolling anything in. Nor paying a down payment.
Next they have a random number in for a cap cost reduction. When asked they say it’s my $3882 and a $539.86 rebate (total cap cost reduction $4421.86). We never discussed a rebate.
Where is the $3000 difference between what they had asked and what I offered and they agreed to (in writing) - it’s now in the “how amount due at signing will be paid” column as a “rebate and non-cash credit” along with my contribution of $3882 (which was news to me and I have no clue where that number came from). The amount due at sign is $6882 so those two numbers pay for it. What I can’t figure out is what happened to that $539.86 rebate? And why such a shell game with the numbers if it’s all equal (I’m guessing it’s not). Fees I agreed to pay along with tax are $1095 acquisition fee, $250 doc fee and $108.50 title fee. I didn’t negotiate those because I thought I was getting a fair price. Now the added $40.40 cap cost reduction tax when I had no plans to make a “down payment” in the first place. It’s super hard to follow and I’m pretty sure that $539 is put in as a cap cost reduction but it’s not paid for by them in amount due at sign but I can’t figure it out.
Any time something that should be clear and was negotiated pretty well down to the details, is this hard to figure out, it seems shady and it’s bad for business.
If anyone can explain why this was done or where I’m missing the $ lmk. It’s giving me a headache and I hate loose ends and not being able to figure it out. I have pages of calculations and I’m still not getting it.
Nothing sounds too alarming, just moving some numbers around. If you want to post a copy of your lease agreement with personal info blacked out could probably give you better feedback
Thx, I posted docs. Not alarming as much as just odd. If it’s as straightforward as no money down, pay for fees up front with known residual cost/residual/money factor it shouldn’t be difficult. What’s the point of not honoring the agreed upon price and instead putting in various cap cost reductions (down payments) not agreed to? There must be a reason.
If you include the $3k rebate they sold you the vehicle at the price you asked for. The numbers put under cap cost reduction are not random. The $3,882 was the equity from your trade in, the $3k is from a rebate. The $3k rebate was used to get to your sales price. The $3,882 was used to lower your cap cost, which includes your taxes, fees, etc that you wanted to pay upfront. You could of got a check from the dealer for the equity and rolled the taxes and fees as another option.
$3k rebate breakdown
$2,460.14 was use to apply to 1st payment, title fee, tax on cap cost reduction, acq fee, and doc fee. You see $539.86 because that’s the remaining balance and was applied to cap cost reduction. $3,882.00 trade equity covers remaining cap cost reduction.
Dealers don’t get to pick if an incentive is taxed or not. If it’s a customer rebate/incentive, some states require them to be taxed. If it’s dealer cash (which they don’t have to pass onto a customer), they can pass it onto a customer via a lower sales price, if they choose.
Why do I need a cap cost reduction? I didn’t agree to any of that. The dealer put that in without any discussion. That’s why I’m confused particularly about the $3882 which is arbitrary. Yes, I could have and probably should have taken that out all together and just written a check. So, the payments are higher as they are based on a slightly higher number, and I have added taxes on cap cost. There is no way this was to my advantage.
The deal was to be $65200 period. No buying it down to get there.
I agreed to pay either by check or out of trade equity - the taxes and fees so they were not wrapped into payment. I also thought in Ohio taxes are paid up front anyhow. Never was there discussion about cap cost reduction/down payment. Payment amount wasn’t hashed out - just price of vehicle first, then I said I’d want the number for my trade that the Infiniti dealer has given me (was appraised at last service). No down, fees agreed to as listed above.
Not sure the difference is large but I want to understand why it was done this way and how much it really is. If it’s not to their advantage I would think they would have written it as agreed.
By using your trade equity to pay down the sales price instead of the rebate it saved you more on Cap cost reduction tax on rebates. Only $539.86 of the $3k rebate gets taxed.
Thanks, I think I get that. Just don’t get that we did not at any time talk incentives just price. Original (very simplified and not like the actual paperwork shown) lease write up given via email after they accepted my offer and they answered my questions about money factor and residual, showed purchase price of $65200 and also no mention of rebates. Just tax, acq fee and doc fee.
I think this is where they marked up the sale price of the car. You had positive equity of $3,882 which would have been enough to cover the taxes and fees with you getting the extra credit for $539 (probably little more).
You didn’t get the full $3k rebate (which you probably didn’t know existed) as that $3k was applied towards tax & Fees 1st as mention by @Jflores14 and they used your trade in as additional CAP reduction.
So they marked up the sell price up by $3k to $68,200.
I would say it is your fault for not negotiating a sales price before any incentives. It is common for dealerships to advertise sales prices including all incentives/rebates.
Or they could have written it up as 65200 with no rebate, just the agreed upon price and there would be no cap reduction taxes at all. Right? That’s my point here - why the cap reduction at all. No rebate was discussed. They agreed to price in writing. Am I missing the point? I might be getting to OCD about this but it’s not nearly as clear as I think it should be. If I’m wrong I’ll happily admit it but seems there must be a reason for the changes.
A 3k rebate was used. It being discussed towards the sales price was on you to negotiate with the dealer beforehand. Them using a rebate to get to your sales price is not bad practice. Dealers and customers want all available incentives/rebates to be applied on all deals.
