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Discussion Starter · #1 ·
My dealer and I agreed to a sale price and he handed me off to the finance guy. The dealer and I agreed to no money down, but now the finance guy is telling me I need to put 10% down on my new M3 lease bc it's my first car purchase ever and I've never had such a large transaction before. Am I getting scammed? He claims my $12k of student debt is making BMWFS "nervous".
 

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<- Bailey
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Doesn't seem unreasonable to me to call for at least 10 percent down on a purchase. However, what you are saying is unclear, since you refer to the transaction as both a purchase and a lease.
 

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Discussion Starter · #3 ·
Sorry, I meant lease. He said that BMWFS is nervous because this is the largest transaction I've ever made.
 

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You agreed to zero down obviously subject to credit approval; BMW wasn't willing to buy the lease (extend you credit) at that value so now they're asking for some cash down. This happens all the time.
 

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While this does happen all the time and it is possible.

Ask the finance guy to give it to you in writing in BMW letterhead with a signature from someone at BMW FS. This would basically make it a "declined credit" and then this is your right under federal law, you should also get a copy of your credit report from them.

The reason i smell it a little off is because 12k in student loans is a drop in the bucket for debt. What a joke. A student loan normally gets paid over a very long term, and minimum payments are very small, probably 1/4 of what your lease payment would be.


So it IS possible he is telling the truth, however it doesnt sound right.
If you do cave in, do not put a cap cost reduction. Add multiple security deposits instead, it will server the same purpose and it will show BMW your commitment. Although I really doubt this is truly coming from BMW FS.
 

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I don't see how it's a scam since he's not increasing then cost of buying\financing.
 

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I know a thing or two...
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While this does happen all the time and it is possible.

Ask the finance guy to give it to you in writing in BMW letterhead with a signature from someone at BMW FS. This would basically make it a "declined credit" and then this is your right under federal law, you should also get a copy of your credit report from them.

The reason i smell it a little off is because 12k in student loans is a drop in the bucket for debt. What a joke. A student loan normally gets paid over a very long term, and minimum payments are very small, probably 1/4 of what your lease payment would be.

So it IS possible he is telling the truth, however it doesnt sound right.
If you do cave in, do not put a cap cost reduction. Add multiple security deposits instead, it will server the same purpose and it will show BMW your commitment. Although I really doubt this is truly coming from BMW FS.
If he has never had a car loan or any significant amount of credit issued in the past, it is very likely that BMW would want 10% down to lease him a new M3.
 

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You are getting scammed...just not sure by whom.

10% down on a lease is just pissing the money away. Educate yourself on leases.

As stated above, MSDs not downpayments.
 

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If he has never had a car loan or any significant amount of credit issued in the past, it is very likely that BMW would want 10% down to lease him a new M3.
Yes, you are right. But if thats the case then "the 12k in student debt is making BMWFS nervous" is a blatant lie. And that alone is enough for me to walk away.

EDIT: BMW would not ask for 10% downpayment actually. They would be more than OK if the buyer used MSD instead.
 

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I know a thing or two...
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Yes, you are right. But if thats the case then "the 12k in student debt is making BMWFS nervous" is a blatant lie. And that alone is enough for me to walk away.

EDIT: BMW would not ask for 10% downpayment actually. They would be more than OK if the buyer used MSD instead.
Have you ever spoken to a BMWFS credit analyst?

I have on many occasions, and yes, they very much will say "we will consider this applicant with 10% down" for someone with no prior auto or mortgage loan experience trying to get an expensive car.

The finance manager might be able to talk them into a compromise if the OP maxes out the MSD, but that would not be the first thing that BMW would suggest.
 

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You are getting scammed...just not sure by whom.

10% down on a lease is just pissing the money away. Educate yourself on leases.

As stated above, MSDs not downpayments.
Is it financially smart? no, not at all.

Is he getting "scammed"?? I wouldn't go that far. It sounds to me like he has limited experience with any type of credit of this size. They want him to have some money at stake to make sure that he makes his payments. Just like mortgage companies realized that when people were putting little or no money down, they were much more likely to just give up and walk away when times got tough because they had no money on the line. For someone's first large auto loan, it makes sense. I think it would be a different story if this was his 2nd, 3rd, etc. BMW lease.
 

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BMW FS is making a credit decision on a client with limited credit experience, so they want a large financial commitment from the client to hedge. Not a scam at all. :tsk: that downpayment helps recovery and depreciation costs in case the client defaults.

I'd liken it to buying a house. Bank wants money down to approve loan. Simple.

Heck, the client is lucky that he or she even got an approval at all.

Personally, it would've been better had they requested MSDs instead of cap reduction. But that's not my call, that's the banks.
 

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Have you ever spoken to a BMWFS credit analyst?

I have on many occasions, and yes, they very much will say "we will consider this applicant with 10% down" for someone with no prior auto or mortgage loan experience trying to get an expensive car.

The finance manager might be able to talk them into a compromise if the OP maxes out the MSD, but that would not be the first thing that BMW would suggest.
I am not disagreeing. It is very possible that BMWFS wanted a financial commitment. I did not say that BMWFS should/would have suggested MSDs instead. Thats the job of the finance manager. Maybe its just e, but if i want to close a loan, i try to find the best way for my client to do it.

BMW FS is making a credit decision on a client with limited credit experience, so they want a large financial commitment from the client to hedge. Not a scam at all. :tsk: that downpayment helps recovery and depreciation costs in case the client defaults.

I'd liken it to buying a house. Bank wants money down to approve loan. Simple.

Heck, the client is lucky that he or she even got an approval at all.

Personally, it would've been better had they requested MSDs instead of cap reduction. But that's not my call, that's the banks.
Agreed.

My only comment is that he should have been offered the possibility to use MSDs instead of a cap cost reduction. It would have made a lot more sense from the customer standpoint (ie. you never had a car loan, BMW would like you to have a stake in the car by increasing your deposit, and these are your benefits too boot!)

I just want to point out an not lose sight that while this is very possible, i highly doubt that BMWFS pointed to his 12k in student debt as the reason. It is a stupid argument that I am more likely to believe came from the finance manager and not from BMWFS.
 

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I am not disagreeing. It is very possible that BMWFS wanted a financial commitment. I did not say that BMWFS should/would have suggested MSDs instead. Thats the job of the finance manager. Maybe its just e, but if i want to close a loan, i try to find the best way for my client to do it.

Agreed.

My only comment is that he should have been offered the possibility to use MSDs instead of a cap cost reduction. It would have made a lot more sense from the customer standpoint (ie. you never had a car loan, BMW would like you to have a stake in the car by increasing your deposit, and these are your benefits too boot!)

I just want to point out an not lose sight that while this is very possible, i highly doubt that BMWFS pointed to his 12k in student debt as the reason. It is a stupid argument that I am more likely to believe came from the finance manager and not from BMWFS.
The msd suggestion could be offered in lieu of cap reduction but that's usually the bank's call, not the dealer's.

I think what the finance mgr said was that the only credit the op had was 12k in student loans and no other high credit experience.

If the op just finished college and has a new job, I'd inquire about the college grad program- job offer letter, proof of graduation, etc.
 

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Discussion Starter · #15 ·
Thanks for all the responses, sorry I was away for most of Sunday and didn't see them all.

I am 30 and recently graduated from business school. I have been fortunate enough in my past to essentially pay for all of my college and business school without having to take on much debt, save for this $12k that I took out for business school. My credit scores average to just under 800 (about 790ish). I have two credit cards and pay everything on time without any issues (no bankruptcies, etc.). You are all correct, however, and I have not had any experience with such a large transaction before (never bought a house or car, etc.).

I am going to inquire about MSDs instead of the deposit. The finance person at the dealership got back to me today and said I could do a $5k deposit that could be applied to my upfront costs. From what I've read, this sounds more like a traditional "money down" deposit that is coming from the dealer and not BMWFS. Prior to my original post, I had done the research and knew to avoid a traditional deposit. I guess I was under the misconception that being told by the dealer that "no money down" was "ok" doesn't necessarily guarantee it once the numbers are being negotiated.

Thanks.
 

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You recognize that what the finance person says BMW said, and what BMW actually said, can be different....you have no idea if BMWFS has 'issues' or if it is a finance person jerking you around into a better lease for them.

I am sure one of the helpful dealers here in "ask a dealer' will honestly tell us if a '$5k down' makes them more money than a "$0 down"...and not try to confuse the answer with 'it all depends on the other numbers'...
 

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Thanks for all the responses, sorry I was away for most of Sunday and didn't see them all.

I am 30 and recently graduated from business school. I have been fortunate enough in my past to essentially pay for all of my college and business school without having to take on much debt, save for this $12k that I took out for business school. My credit scores average to just under 800 (about 790ish). I have two credit cards and pay everything on time without any issues (no bankruptcies, etc.). You are all correct, however, and I have not had any experience with such a large transaction before (never bought a house or car, etc.).

I am going to inquire about MSDs instead of the deposit. The finance person at the dealership got back to me today and said I could do a $5k deposit that could be applied to my upfront costs. From what I've read, this sounds more like a traditional "money down" deposit that is coming from the dealer and not BMWFS. Prior to my original post, I had done the research and knew to avoid a traditional deposit. I guess I was under the misconception that being told by the dealer that "no money down" was "ok" doesn't necessarily guarantee it once the numbers are being negotiated.

Thanks.
Your file is way too light to support this lease without some type of commitment from your end. FS is probably asking for 10% cap reduction plus POI...as a matter of fact Im sure they are.

Do you have a strong cosigner available? If you do I would go that route. They will not need a cap reduction if you have a strong co signer.

If no cosigner; have FI submit to FS a smaller % cap reduction along with MSDs instead.

If I was you; forget the M3 and get into a less expensive model. Build up your installment credit file first. Your high credit score is not holding much weight right now because you have zero payoff installment accts. As they say...you are like "Casper"...you are a ghost in the system.

Going from 0.00 to a 60K+ installment loan is too much of a jump for a lender to take.
 

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Discussion Starter · #18 · (Edited)
I got the finance guy at the dealership to send me the numbers. A few things look off to me.

1. MSRP is listed as $73,825. We agreed to a configuration that is $70,375.
2. I have no idea what "Aftermarkets" of $139.00 is.
3. We agreed to no Document Fee, but he has $75 in there.
4. We agreed to $725 Acquisition Fee and he has $925 there.
5. Cap Fees of $845. Not sure what this is, but we agreed to roll in $725 for the Acquisition fee so I don't know what the additional $120 is.
6. Rate looks off too. It's listed as .00215 and it should be .00175 (according to March/April rates for M3s).
7. Not sure why there's a Disposition Fee of $350 as well.
8. Cap Cost reduction is only $4,095, but my cash down is $5,000. Not sure why this is off as well.

On a more general note, I can't help but feel like this dealer and his finance person are trying to screw me over. A lot of this lease is not what we agreed to via e-mail. And, not to mention, it's been extremely frustrating dealing with the finance person so far.

Thoughts?
 

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Disposition fee is what you'll owe at the end of the lease (unless you get another BMW), I don't think that's included in the payments or price of the car.

CC reduction looks to be minus your first month payment.

As for the rest, it does seem like they are putting in more than you agreed to. If you're not happy, try a different dealer.
 

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HerrDoktorProfessor
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Yes you are getting scammed.

Ask why the msrp is 3k higher?

They are marking up the money factor by .0004. BMWFS allows this but it is negotiable.

Not to mention the various $100 here $200 there. They are totally padding this sucker.
 
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