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  #1  
Old 09-09-2009, 09:53 PM
LOGIC 3 LOGIC 3 is offline
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First time lesser questions

I recently posted the following questions in another forum and was hoping I could get some additional help here:

The hunt for this new vehicle has taken a turn for the better but I am still apprehensive. As the old saying goes, "If it is too good to be true, then it probably is!". Here is the deal that I received that I am considering:

2010 535ix (demo car) with Premium Pkg, Access Control and NAV
It's a demo car with 7k miles on it
$57,875 MSRP
$50,279 Sales Price
$32,930 Residual (56.9%)
.00217 MF
3yr lease, 12k miles
$599/mth
Due at signing, $599 1st mth, $600 security dep, $925 Aq. Fee, $2,100 cap reduce, $190 State/doc fees, $47 plate/title

On the plus side, based on my research the car is $3,000 under dealer invoice at this sales price. Also the monthly payment is nice.

On the negative side is that the MF is higher from .00165 to .00217. I was told that the higher MF is due to the fact that the car is being purchased by a non-profit, so BMWFS MF for non-profits is different. They marked up the Aq. fee $200. And the residual is lowered from 60% to 56.9%.

So I would like the forums feedback. Is it true that MF's are higher when a company or non-profit finances through BMW vs. an individual? BMWFS has already approved the app, but a personal guarantor was on the app along with the non-profit, so what does it matter? I think I'm being feed a line on that one. Since it has 7,000 miles, am I getting a reasonable price. Should it be more? Was the residual lowered to much? I would love to know the formula that is used when figuring out depreciation of a new car that has miles.

My novice observation from all my research tells me that they are trying to WOW me with a great deal by selling it under invoice by 3k, but then making it up on the back end via the higher MF, lower residual and marked up acquisition fee.

What do you guys/gals think? Should I take the deal and be happy or tell them thanks, but I need a little more? I am really trying to avoid any buyer's remorse.

I am also now considering during multiple security deposits vs. cap cost reduction. Will BMWFS allow that? Are their negatives to multiple security deposits?

Last edited by LOGIC 3; 09-10-2009 at 05:24 AM. Reason: I think I was being too long winded
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  #2  
Old 09-10-2009, 05:32 AM
davidc1 davidc1 is offline
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I don't understand the non-profit vs. individual thing but the deal ok to me. Would be a great deal if you didn't have to put down $2100. I suggest you go back for more.
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  #3  
Old 09-10-2009, 06:57 AM
RichmondR RichmondR is offline
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Logic 3 --

Welcome. I was following your posts over on the Edmunds forum and suggested you post here.

Taking another look, I have the following suggestions.

1. Ask the dealer why, if there's a personal guarantor, why the MF would be higher? Would it be possible for the guarantor to secure the lease directly and just get the lease expense reimbursed by the non-profit?

2. I dont know about the actual cost to the dealer of a loaner with 7,000 miles. Is it still the usual invoice price, or does BMW offer a financial accomodation for loaner/demo cars?

3. I'd strongly urge you to take a look at the maintenance records on the car and confirm there have been no collisions or body work.

4. I agree with the prior comment about the cap cost reduction ... one way to go back to the dealer would be to say that you are willing to do it at those rates, but without the cap cost reduction. That would defacto have the effect of reducing the purchase price by $2100 on the argument that this is now a "used" car. I would probably pursue the MF rate issue first to see if you can get that down based simply on the facts of the situation.

5. Lastly, just re-check to make certain that this car has all the options you need/want.

Again, good luck ... I have almost the same car ('09 535xi), and they are really wonderful vehicles.
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  #4  
Old 09-10-2009, 07:45 AM
Wichard20 Wichard20 is offline
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couple of things, like one of the other posters stated I would confirm that indeed by leasing through a non-profit your rates will not be as good (this does not make sense to me), I am not sure if calling BMWFS would help but check around with some other dealerships. I also recommend putting down no down payment. My view on leasing is, you should only pay a monthly fee for the vehicle (plus tax or if you live in a state tax is paid upfront), and then if needed a security deposit. When I am looking for a car to lease, I look for something that I am comfortable paying a month for without needing any kind of reduction (I also wrap everything up as well, for VA we have to pay sales tax up front so I wrap sales tax, acquisition fee, tags/tile, etc into cap cost) if I need a reduction to make it affordable I would look at another car (of course this is just my opinion). My second potential area of concern is a demo car, like one of the posters mentioned as well I would go over the car in detail and check all the records. With a demo car who knows what it was used for and how it was maintained and treated. To me even if they classify it has a new car, I look at it used. I think you should get a better deal. Have you calculated how much your monthly payment would be on a new non demo car (say you can get a new one at invoice) with the residual and MF that is advertised by BMWFS? Finding a dealership that will provide you with the rates BMWFS advertifies might be close to making up that 3k you got off invoice for buying a demo car.
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  #5  
Old 09-10-2009, 09:02 AM
LOGIC 3 LOGIC 3 is offline
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I just got off the phone with BMWFS. I asked the rep if there are different MF for individuals vs. non-rpoftis. She told me that BMW does not control the MF at all. The MF is completely up to the dealer. That is totally against what I have come to understand based on my research the last couple of weeks.

Thanks RichmondR for all your feedback on this. It's been a great help and has uncovered some excellent questions.
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  #6  
Old 09-10-2009, 12:21 PM
LOGIC 3 LOGIC 3 is offline
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Just spoke with a dealer who was really cool. He was very straight up with me. He confirmed my suspicion that MF rates are the same for individuals as well as corporations.
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  #7  
Old 09-10-2009, 01:21 PM
BlueC BlueC is offline
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Quote:
Originally Posted by LOGIC 3 View Post
I just got off the phone with BMWFS. I asked the rep if there are different MF for individuals vs. non-rpoftis. She told me that BMW does not control the MF at all. The MF is completely up to the dealer. That is totally against what I have come to understand based on my research the last couple of weeks.

Thanks RichmondR for all your feedback on this. It's been a great help and has uncovered some excellent questions.
I think they meant that they establish a floor on the rates, but they cannot dictate what the dealership uses (above the rate).

BMWFS very much so establishes the rates.
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  #8  
Old 09-10-2009, 02:52 PM
RichmondR RichmondR is offline
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Originally Posted by BlueC View Post
I think they meant that they establish a floor on the rates, but they cannot dictate what the dealership uses (above the rate).

BMWFS very much so establishes the rates.
I'm sure this is the case as I assume they, either directly or through some funding mechanism, supply the funding, and there's a price associated with the money.

Logic 3 ... good to hear about the MF. Go back to the selling dealer with the MF evidence and ask him to re-calculate based on the base MF. Once you get that, we'll move on to that cap cost issue.

Remember not to forget the underlying investigation of the car's condition as you could be getting closer to a deal.
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  #9  
Old 09-10-2009, 03:08 PM
LOGIC 3 LOGIC 3 is offline
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Originally Posted by RichmondR View Post
I'm sure this is the case as I assume they, either directly or through some funding mechanism, supply the funding, and there's a price associated with the money.

Logic 3 ... good to hear about the MF. Go back to the selling dealer with the MF evidence and ask him to re-calculate based on the base MF. Once you get that, we'll move on to that cap cost issue.

Remember not to forget the underlying investigation of the car's condition as you could be getting closer to a deal.
For the cap cost situation, it looks to me like the multiple security deposit is going to be the way to go. I saw on another post back in '06 the following "It is now 0.00007 reduction in MF per MSD, with a maximum of 7 MSDs.". The dealer I talked to earlier said the same thing. So I believe this is correct. I am going to replace the $2100, with MSD's.

Time is coming close, I meet with the dealer this weekend, so we will see how it goes. I normally would not have a problem walking away from a deal, especially if I am being feed a line. But this deal seems quite unique.

How would you all recommend handling checking the cars condition? Do I just take their word that it is in good shape? What is my recourse once the paperwork is completed and a major problem develops 4 weeks from now? Could I be stuck with massive repair bills if I later find out the engine has damaged due to the oil never being changed or something?
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  #10  
Old 09-10-2009, 04:07 PM
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adrian's bmw adrian's bmw is offline
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It sounds like a crazy deal especially based on the price. I wouldn't complain much about the mf since they're crushing the price. Take the deal and run. Seriously. Sometimes, it's not worth obsessing over the minutae of the deal when you're already getting a stupid deal, IMO. Some here will beg to differ, but I'm stunned by the price itself that hell, let the dealer make a few points on the mf, they're taking a bath on the front end of that deal.
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  #11  
Old 09-10-2009, 05:04 PM
LOGIC 3 LOGIC 3 is offline
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Originally Posted by adrian's bmw View Post
It sounds like a crazy deal especially based on the price. I wouldn't complain much about the mf since they're crushing the price. Take the deal and run. Seriously. Sometimes, it's not worth obsessing over the minutae of the deal when you're already getting a stupid deal, IMO. Some here will beg to differ, but I'm stunned by the price itself that hell, let the dealer make a few points on the mf, they're taking a bath on the front end of that deal.
Thanks for chiming in Adrian. I saw your no-holds bar post on a few other threads and figured you'd give me an opinion from the other side of the table.

Don't get me wrong, the dealer needs to make a living too, but they still will have a decent meal to eat at a .00175 MF, wouldn't they? Plus they are making $200 over cost on the aq. fee.
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  #12  
Old 09-10-2009, 05:18 PM
RichmondR RichmondR is offline
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Quote:
Originally Posted by adrian's bmw View Post
It sounds like a crazy deal especially based on the price. I wouldn't complain much about the mf since they're crushing the price. Take the deal and run. Seriously. Sometimes, it's not worth obsessing over the minutae of the deal when you're already getting a stupid deal, IMO. Some here will beg to differ, but I'm stunned by the price itself that hell, let the dealer make a few points on the mf, they're taking a bath on the front end of that deal.

On a more general matter, what would be a "market" deduction for mileage "X" per mile, on a car, assuming its "new" (titled at time of sale) ?
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  #13  
Old 09-10-2009, 08:09 PM
LOGIC 3 LOGIC 3 is offline
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Eureka!!!

I had an ah-ha moment while I was driving home from the office today. I think I finally figured out how the dealer is making their money on this deal.

Since it is a demo with 7k, they had to write down the car every month, thus the $3,000 off. So they are giving me the 3k off up front but making a portion of it back on the markup of the money factor and the acquisition fee. If I run the same numbers but use the standard MF of .00165 for this car, the payment difference ends up being about $45. They will make back $1,620 over the life of the lease plus the $200 aq. fee markup. So in essence I am only getting the car with 7k miles for $1,000 under invoice. Now my number could be slightly off and they may be getting more back or even the entire amount that they wrote down.
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  #14  
Old 09-10-2009, 11:51 PM
ard ard is offline
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My rule of thumb is that miles cost you 50 cents per mile on a new car.

Worst if you are an indiivdual-

If you are a dealer, less it seems.

Why do the dealers think this is a fantastic deal (buying a car that has had the piss beat out of it as a loaner)?

Of course, if you are just renting transportation for a few years with no interest in owning it, prolly fine.

I have a suspicion that BMW gives dealers special pricing for their loaners. I wonder if any helpful dealers will comment on that.
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  #15  
Old 09-11-2009, 07:55 AM
RichmondR RichmondR is offline
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Quote:
Originally Posted by LOGIC 3 View Post
I had an ah-ha moment while I was driving home from the office today. I think I finally figured out how the dealer is making their money on this deal.

Since it is a demo with 7k, they had to write down the car every month, thus the $3,000 off. So they are giving me the 3k off up front but making a portion of it back on the markup of the money factor and the acquisition fee. If I run the same numbers but use the standard MF of .00165 for this car, the payment difference ends up being about $45. They will make back $1,620 over the life of the lease plus the $200 aq. fee markup. So in essence I am only getting the car with 7k miles for $1,000 under invoice. Now my number could be slightly off and they may be getting more back or even the entire amount that they wrote down.
True, but I would still think you'd want the lowest money factor possible so that as much of your payment as possible is going toward depreciation, not interest. That way, should you ever have to end your lease early, I believe you will have less negative equity in the car, or if you intend to purchase at lease end, most of what you have paid to date will be applied toward reducing the end of lease purchase price.

However, I see what you are saying, and $1,000 "net" under invoice is no bargain on a car with 7,000 miles IMHO. I see what Adrian is saying in that you normally cant get anywhere near a current model year 535xi for $600/month without a huge upfront payment, but it is an "apples to oranges" comparison since the car has 7,000 miles on it. Again, I think the best way to approach this is to first go after the MF issue ("I cant even consider your offer seriously since I know you are chariging me a financing premium, and I know you are") and then try to get the cap cost reduction decreased or eliminated. And dont forget in the heat of the moment to get the maintenance and repair history on the car. One other small request you could make is to ask them for an oil change as well ... even though the BMW maintenance system in the car may still indicate a few thousand miles, its not a bad idea to get an early oil change as I'd rather get fresh oil in there even if it is Castrol synthetic, especially if you are thinking of buying at lease end.
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Old 09-12-2009, 04:28 AM
LOGIC 3 LOGIC 3 is offline
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After getting some info from my sales person and a few phone calls to BMWFS and persuading them to answer some questions, I was able to confirm that federal tax exempt entities do get hit with a MF increase of .00035

Does anyone know how much the sales person makes off a deal? Do they get a portion of the lease if it is at the set rate? Or do they have to increase it in order to see some profit? How much does the sales person make off the aq. fee markup? If a dealer sells a car at invoice, is there still a profit in it for them, like a dealer hold back or something? My sales person is telling me they are only making $280 on this deal as it is. Since BMWFS requires the MF rate to be at .002 (.00165+.00035 for tax exempt status), they are hitting me with a .00217 which equals $80 on the backend for them. Plus they get the $200 markup on the acq. fee. Now I definitely believe in paying for good service, so I definitely want to be fair from that sense. So either the sales person is trying to get me to fall for the sob story and make a little more on top of the hidden profit I am not aware of, or all the profit is really squeezed out of this deal and I should take it and run like Adrian says.

Anyone know how the dealer reserve on a lease that BMWFS pays dealers works? I hear the dealer gets back 70% as long as the adjusted buy rates or the acq. Fee has been marked up. And they sales person gets 20% of the 70% the dealer gets. True or not true. Anyone know the details?
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  #17  
Old 09-12-2009, 04:30 AM
LOGIC 3 LOGIC 3 is offline
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Originally Posted by ard View Post
My rule of thumb is that miles cost you 50 cents per mile on a new car.

Worst if you are an indiivdual-

If you are a dealer, less it seems.

Why do the dealers think this is a fantastic deal (buying a car that has had the piss beat out of it as a loaner)?

Of course, if you are just renting transportation for a few years with no interest in owning it, prolly fine.

I have a suspicion that BMW gives dealers special pricing for their loaners. I wonder if any helpful dealers will comment on that.
So is there incentives, dealer rebates or some other price break to dealers on their demo/loaner cars?
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Old 09-12-2009, 09:18 AM
ard ard is offline
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Originally Posted by LOGIC 3 View Post
So is there incentives, dealer rebates or some other price break to dealers on their demo/loaner cars?


Like I said, lets see if those ever-so-helpful 'dealers' will chime in here on this issue.


I've heard this with some marques, cannot confirm on BMW.
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  #19  
Old 09-12-2009, 09:33 AM
RichmondR RichmondR is offline
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Quote:
Originally Posted by LOGIC 3 View Post
After getting some info from my sales person and a few phone calls to BMWFS and persuading them to answer some questions, I was able to confirm that federal tax exempt entities do get hit with a MF increase of .00035

Does anyone know how much the sales person makes off a deal? Do they get a portion of the lease if it is at the set rate? Or do they have to increase it in order to see some profit? How much does the sales person make off the aq. fee markup? If a dealer sells a car at invoice, is there still a profit in it for them, like a dealer hold back or something? My sales person is telling me they are only making $280 on this deal as it is. Since BMWFS requires the MF rate to be at .002 (.00165+.00035 for tax exempt status), they are hitting me with a .00217 which equals $80 on the backend for them. Plus they get the $200 markup on the acq. fee. Now I definitely believe in paying for good service, so I definitely want to be fair from that sense. So either the sales person is trying to get me to fall for the sob story and make a little more on top of the hidden profit I am not aware of, or all the profit is really squeezed out of this deal and I should take it and run like Adrian says.

Anyone know how the dealer reserve on a lease that BMWFS pays dealers works? I hear the dealer gets back 70% as long as the adjusted buy rates or the acq. Fee has been marked up. And they sales person gets 20% of the 70% the dealer gets. True or not true. Anyone know the details?
If you are concerned about the sales person, I'd suggest a $100 or so gift card to Best Buy or something like that. That's what I did, but the guy really went our of his way on my car search, which is another story.
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  #20  
Old 09-12-2009, 12:52 PM
SeaTown SeaTown is offline
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If you want to help the sales guy - buy the car. The dealership compensates him regardless of what's in the deal.

If you must, get them a bottle of something. Its tought to accept expensive gifts from clients. (well for me it is)
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