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  #1  
Old 04-26-2016, 12:41 PM
SMJT2013 SMJT2013 is offline
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Money Factor/Invoice

How common is it for the dealership to hike the money factor? Is it uncommon to get base money factor along with a great discount off MSRP or is it one or the other?
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Old 04-26-2016, 12:46 PM
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Old 04-26-2016, 12:59 PM
Ninong Ninong is online now
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Originally Posted by SMJT2013 View Post
How common is it for the dealership to hike the money factor? Is it uncommon to get base money factor along with a great discount off MSRP or is it one or the other?
For starters, it's depends on your local market. Since we don't know where beautiful downtown Bfe is located, we can't be more specific than that. For example, customers shopping almost anywhere in Texas or anywhere in South Florida will not run across the same experience as customers shopping in an area with two dozen BMW dealerships, like Los Angeles.

It's quite common for most dealers to negotiate the money factor, as allowed by BMWFS. The current Tier 1 money factor is .00135-.00175, negotiable within the range. The negotiation is entirely up to you. Many dealers in some areas, like those I mentioned above, have a dealership policy of not offering the lowest possible money factor. Many dealers in some parts of the country charge much higher dealer doc fees than dealers in states that do not allow that.

Everything on a lease other than the residual and the lease acquisition fee is negotiable. Obviously you can't negotiate fees charged by the state, like taxes or license. The money factor range is determined by BMWFS and communicated to the dealer and it is based primarily on your FICO credit score, assuming you are otherwise qualified. It's all part of the experience of shopping for a new car. Or you can go to Tesla and just pay full asking price as determined by Tesla because they run their own show and consistently report a much higher gross profit per car than other manufacturers.
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Old 04-26-2016, 03:11 PM
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Old 04-26-2016, 05:51 PM
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Ninong, my sense is it's almost universal for dealerships to use the marked up MF in the absence of a customer who protests. It seems foolish to me for them not to. The percentage of customers familiar with what a money factor is, much less what the base rate is, is pretty much infinitesimally small. The VAST majority of lessees care only about getting the payment where they want it.
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Old 04-26-2016, 06:03 PM
Michael @ BMW Seattle Michael @ BMW Seattle is offline
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Ninong, my sense is it's almost universal for dealerships to use the marked up MF in the absence of a customer who protests.
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Old 04-27-2016, 06:59 AM
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Old 04-27-2016, 08:21 AM
rocketman48 rocketman48 is offline
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Originally Posted by Ninong View Post
For starters, it's depends on your local market. Since we don't know where beautiful downtown Bfe is located, we can't be more specific than that. For example, customers shopping almost anywhere in Texas or anywhere in South Florida will not run across the same experience as customers shopping in an area with two dozen BMW dealerships, like Los Angeles.

It's quite common for most dealers to negotiate the money factor, as allowed by BMWFS. The current Tier 1 money factor is .00135-.00175, negotiable within the range. The negotiation is entirely up to you. Many dealers in some areas, like those I mentioned above, have a dealership policy of not offering the lowest possible money factor. Many dealers in some parts of the country charge much higher dealer doc fees than dealers in states that do not allow that.

Everything on a lease other than the residual and the lease acquisition fee is negotiable. Obviously you can't negotiate fees charged by the state, like taxes or license. The money factor range is determined by BMWFS and communicated to the dealer and it is based primarily on your FICO credit score, assuming you are otherwise qualified. It's all part of the experience of shopping for a new car. Or you can go to Tesla and just pay full asking price as determined by Tesla because they run their own show and consistently report a much higher gross profit per car than other manufacturers.
My dealer jacked up the MF to the maximum allowed, but reduced the cap cost to well below invoice so the quoted payment remained the same. Maybe there is some advantage to the dealer to get higher MF at the expense of lower price. It doesn't matter to me since my total cost is the same.
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  #9  
Old 04-27-2016, 08:55 AM
Ninong Ninong is online now
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Originally Posted by tturedraider View Post
Ninong, my sense is it's almost universal for dealerships to use the marked up MF in the absence of a customer who protests. It seems foolish to me for them not to. The percentage of customers familiar with what a money factor is, much less what the base rate is, is pretty much infinitesimally small. The VAST majority of lessees care only about getting the payment where they want it.
Most "client advisors" have less autonomy that the ones on here as Bimmerfest sponsors. They must do as they are told. Yes, "the vast majority of lessees" are clueless -- or at least used to be -- when it comes to money factors. Different strokes for different folks. Whatever makes the customer happy as long as the dealer is happy too, one way or another.

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Originally Posted by rocketman48 View Post
My dealer jacked up the MF to the maximum allowed, but reduced the cap cost to well below invoice so the quoted payment remained the same. Maybe there is some advantage to the dealer to get higher MF at the expense of lower price. It doesn't matter to me since my total cost is the same.
No, there is absolutely no advantage to a higher MF at the expense of a lower price from the dealer's point of view. In fact, it's exactly the opposite. If the profit is in the cap, it's locked and can't be charged back later. Finance reserve will be charged back later if the contract does not go to term. The only people happier to see the profit in F&I are the people who work in F&I.

Dealerships vary in their employee compensation policies but it is my firm conviction that all managers should be compensated equally on the front and back and not just the front. Otherwise they are more than willing to throw away the F&I to avoid dropping the gross on the front. This is more complicated than it sounds because BMW has so many different ways of paying back-end money on contracts and often it's better to just give the buy rate and try to hold gross on the front of the deal, unless you have a total lay-down. Unfortunately for the poor client advisors, none of you guys are lay-downs once you have been reading all this crap for a few days.


Last edited by Ninong; 04-27-2016 at 10:23 AM.
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  #10  
Old 04-27-2016, 10:14 AM
chloe92us chloe92us is offline
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I'm dealing with .00175 MF AND $799 DOC FEES here in SW Florida.

...and they do not sound eager to move on them. I have now walked out of two dealerships. Our local sales process seems to be "good cop (SA) vs. bad cop (Finance guy)" and it is extremely frustrating. One of the most frustrating experiences I've ever had. The SA's I've dealt with at both have been uninformed on even the basics.

Last edited by chloe92us; 04-27-2016 at 10:19 AM.
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  #11  
Old 04-27-2016, 10:45 AM
Ninong Ninong is online now
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Originally Posted by chloe92us View Post
I'm dealing with .00175 MF AND $799 DOC FEES here in SW Florida.

...and they do not sound eager to move on them. I have now walked out of two dealerships. Our local sales process seems to be "good cop (SA) vs. bad cop (Finance guy)" and it is extremely frustrating. One of the most frustrating experiences I've ever had. The SA's I've dealt with at both have been uninformed on even the basics.
From what I have heard, dealers in Florida hold to either $699, $799 or $899 as their "doc fee." Whatever they use, just add that amount to the selling price of the car and consider that as the real selling price when comparing against a salesman in a different state where they may charge only $80 for their "doc fee."

Your salesman (now called "client advisor," CA for short) may be brand new. He may not even be there six months from now. He is just bouncing back and forth between you (the customer) and his sales manager (the desk). So you're actually negotiating through him with his manager.

If they have a car in stock that you would like to buy (or lease), then you have to counter with your exact numbers. For starters, you may be able to get their "doc fee" down to $699. They probably will accept that but nothing lower. It's a thing with them down there. They know the nearest "state" for you to shop them against is Cuba. And if you compare them with a dealer in Georgia, he will probably want $599, maybe more.

You may be able to get the money factor down to .00155, if you think that would be okay. Or you can shop one of the Bimmerfest sponsors anywhere in the country to see what they're willing to do for you, including trucking the car to you. Sometimes that's cheaper but it seems like a lot of trouble to me if the bottom line saves you no more than about $1,000 or so on a $50,000 car or $1,500 or so on a $75,000 car. Much better to deal with somebody where you expect to have your car serviced.

If you live anywhere in South Florida, just realize that you're in a captive market. If all of the BMW dealers in your area are charging the same outrageous "doc fee" then it just means they know they can get away with it. In fact, just look at the entire East Coast (except for NY where it's only $75) and the "doc fee" is absurd.

If the car is in stock and it's one you want, hit them up again this coming Saturday afternoon, April 30th, and see if they will accept your offer or come closer. Run your exact numbers in advance so that you know what you're doing. That's the last day of the month. If they need to pump out more cars for the month, that's when they will be more willing to take whatever they can get. If it's an ordered car, then the end of the month doesn't matter because it only counts when it's delivered, not when it's ordered.

Good luck!
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  #12  
Old 04-27-2016, 11:34 AM
chloe92us chloe92us is offline
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Originally Posted by Ninong View Post
Run your exact numbers in advance so that you know what you're doing.

Good luck!
Thanks....that's what is so frustrating. I HAVE run all the numbers. These are cars that are in stock; dealer #1 has a 428 GC demo, and dealer #2 has a diesel WAGON. At dealer #2, the CA told me I should be able to get a "screaming deal on the wagon; it's probably the cheapest car on the lot!" so he says....and why I specifically went to that dealership for that car. In the end, I am expecting to buy the car well under invoice, because I KNOW it's the one they'll sit on for a while, but perhaps I'm beginning to realize that I'm not going to be able to get as good a deal as I had hoped and that I'm being unreasonable.

I want to lease, but they keep coming at me with this cash sale proposal on paper, none of which is applicable to a lease deal. It's like they are trying to confuse me. And then they just want to talk monthly payment, when I want detailed NUMBERS that they are not willing to confirm or deny lol. It's maddening. I just walk out.

Last edited by chloe92us; 04-27-2016 at 11:37 AM.
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  #13  
Old 04-27-2016, 12:10 PM
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Originally Posted by rocketman48 View Post
My dealer jacked up the MF to the maximum allowed, but reduced the cap cost to well below invoice so the quoted payment remained the same. Maybe there is some advantage to the dealer to get higher MF at the expense of lower price. It doesn't matter to me since my total cost is the same.
I'd rather do that for a client as well. If we do base rate, the finance manager earns $0 unless he sells product. But they have to prepare the paperwork, package the deal for accounting and tag and title, fund it, not to mention review paperwork and assist the client with closing. Many think this is "just pushing paper". It's not.
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  #14  
Old 04-27-2016, 03:08 PM
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tturedraider tturedraider is offline
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Quote:
Originally Posted by chloe92us View Post
Thanks....that's what is so frustrating. I HAVE run all the numbers. These are cars that are in stock; dealer #1 has a 428 GC demo, and dealer #2 has a diesel WAGON. At dealer #2, the CA told me I should be able to get a "screaming deal on the wagon; it's probably the cheapest car on the lot!" so he says....and why I specifically went to that dealership for that car. In the end, I am expecting to buy the car well under invoice, because I KNOW it's the one they'll sit on for a while, but perhaps I'm beginning to realize that I'm not going to be able to get as good a deal as I had hoped and that I'm being unreasonable.

I want to lease, but they keep coming at me with this cash sale proposal on paper, none of which is applicable to a lease deal. It's like they are trying to confuse me. And then they just want to talk monthly payment, when I want detailed NUMBERS that they are not willing to confirm or deny lol. It's maddening. I just walk out.
Type up the deal in detail that you want and hand it to the CA. Has the 328d wagon been on the lot for a long time? Without manufacturer support they will be loath to go below invoice.
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Old 04-27-2016, 03:58 PM
GerWil GerWil is online now
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Originally Posted by adrian's bmw View Post
I'd rather do that for a client as well. If we do base rate, the finance manager earns $0 unless he sells product. But they have to prepare the paperwork, package the deal for accounting and tag and title, fund it, not to mention review paperwork and assist the client with closing. Many think this is "just pushing paper". It's not.
I never knew that finance managers make money on a jacked up rate. I would certainly be agreeable with an offsetting cap cost reduction.
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