Brother, my recommendation to you is that if you don't know what's in the deal then stop. Stop until you understand where your money is going. $38,000 for your used car isn't pocket change, where did it go?
Originally Posted by PhilT3
holy crap... this is a lot of math! I would have to devote a substantial amount of time to this to really understand it.
Kudos to you all who do!
Can someone tell me if this deal "looks" okay?
I placed an order last week with a dealer to start production on an X5. Leasing.
But my gut tells me I could have gotten a better deal. I went with my wife. She is not a negotiator and just wants me to get what I want.
So, we paid them the whole down payment as the deposit to start the order.
As built = $62,745.
10k miles / year
$810 / month (includes 9% PA tax)
$3200 out of pocket
Info on my trade in:
2010 Jeep SRT8, 13k miles. 9 out of 10 condition. I owe $34,400 on it. (At first offer the CA had them giving me $36 on the paper. In talking with a neighbor in the business, I expected around $38k)
So I really don't know how much they are giving me for my trade. I negotiated from the per month and down payment.
Does this deal look alright with the info I provided?
Should I stop payment on the check and shop?
I don't know how I feel about doing that as I "made a deal" and shook the salesman hand. I am in sales myself and sell value... so would not appreciate one of my customer's pulling a deal after we agreed.
Thanks for your input.
Stop until you know exactly how a lease works. If you can't define Cap Cost, Cap Cost Reduction, Money Factor, Residual, Depreciation, Lease Origination Fee, rate lock, etc., you really need to stop and do a bit of study. It sounds hard but it really isn't, the language is just a bit arcane. Leases are great, I've done many of them but many people don't have a clue how they work. Do a search on Bimmerfest, there's a ton of information that'll pay gold in the end!
Also, not trying to criticise you but you started this deal completely backwards. You never, ever negotiate from a monthly payment. Always find out the MSRP, Invoice and sales record of the car first so you can figure out what type of sales price you should be shooting for. (Also, negotiate the price of the new car first and get that set, only then worry about your trade in). Then check on what sort of incentives are available and how the incentives work. For instance, some are basically cash directly to the buyer while others go to the dealer. If it comes to you, you can use it however you want, cap cost reduction or fees for instance and makes no difference in how much profit the dealer makes. Dealer incentives do the opposite. They apply as discounts to the price of the vehicle or are even hidden. These affect the dealer's profit and should enter into your calculations. There are also the "tricks of the trade" such as the MSD program and, like someone else mentioned, paying a bit of a CCR to reduce the total MSD $$$. These can have a big impact on your monthly payments.
Once you've gotten that information you're only half way there. There are many ways that CAs can do mischief in a lease. Say you tell him you're only willing to spend say, $810 per month. You just gave him a license to jack up the money factor, fees, and yes, even the price of the car to give you an $810 per month payment when you could have gotten the car for much less per month. Give him a monthly payment and you're virtually guaranteeing that you'll pay at least that amount. I'm not saying your guy did this but I can't tell from the information you've provided and you can't either.
That's why I say stop and figure it all out. If the CA is honest (and most are) he'll be more than willing to hold up the order until you're satisfied (and, BTW, deposits are fully refundable in most states so you're not stuck and can walk away). If a CA did not take the time to explain the whole deal to you then he has no right to expect you to go through with it even if you did make a deposit and shook hands.
If you can give us the MSRP, Invoice, and rest of the information I listed above, we can give you an idea about whether or not your deal is reasonable but that's not possible from the information you've provided.
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Last edited by Mace14; 02-16-2012 at 10:21 PM.