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Prices Paid: Buying & Leasing Experiences Mercedes-Benz S-Class Lease Questions
100 messages, Last post on Apr 26, 2008 at 7:26 PM
You are in the Prices Paid: Buying & Leasing Experiences Forum. Your Hosts are car_man & kyfdx
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Replying to: britcrlvr (Aug 14, 2007 2:46 pm) You couldn't be more wrong. No dealer has ever taken advantage or has had the upper hand with me. How could they? I don't mean to be boastful or arrogant; but I know more about lease financing than they could ever hope to know. For instance, I know exactly how GMAC and Ford Motor Credit computes lease payments. Most people don't. In fact, I don't know of anyone who does! I often see some of our hosts telling people to convert the GMAC rate to a money factor to get an estimate of the payment. ESTIMATES or BALL PARK DOESN'T CUT IT! They'll get you close but they are not good enough for a lease proposal. At least, not the ones I create. Try doing the following experiment... Choose any GM dealership at random and ask the GM or F&I guy how GMAC computes lease payments. I promise you they won't know. The only thing they know is what their computers tell them. That reflects poorly on them. And, you think they're going to have the upper hand over me? YOU MUST ALWAYS IN CONTROL OF THE DEAL. When you make a statement like... "...you have already played your hand, and they have the position over you. It would be better for you to wait and let the dealership make the first offer. as you insinuated stupidity has no limits." it speaks volumes about you. It certainly shows your inexperience because it clearly illustrates that you don't have the knowledge or confidence to negotiate with dealerships. The key to negotiating with dealerships is DON'T NEGOTIATE. No offense, but your statement is a billboard that says you're inexperienced, brit. One often hears the advice to keep trades and new car transactions seperate. That's only because most folks are inexperienced. Your approach is used by a lot of people because they're inexperienced. Heck, if I were inexperienced, I'd be doing the same thing. For example, many people will wait for the dealer to make an offer on the lease payment. And then, they counteroffer. BIG MISTAKE! NEVER EVER NEGOTIATE PAYMENT IN A LEASE. That's EXACTLY what dealers want you to do. ALWAYS negotiate sell price. And, above all, know how to calculate lease payments. Otherwise, you're dead in the water. To be honest, I'm not interested in what they have to offer in terms of sell price and couldn't careless! I've done my homework and know exactly what to offer in terms of sell price. I've checked multiple sources and have factored in supply and demand, customer and dealer incentives, MSRP/invoice pricing, holdback, spiffs, etc. I routinely FAX/email a very professional looking one page lease proposal. In fact, several people in other forums have used my proposal as a template to negotiate their leases and have done so very successfully. For instance, below is an example of a lease proposal constructed by yours truly. And even though the numbers aren't aligned, they are in my word document. Every number was calculated by me; not the dealer. NEVER EVER let the dealer do ANY calculations. Do them yourself! And, you had better be spot on; otherwise, you're going to look very foolish. 2007 Acura TSX Retail Pricing Information Base MSRP 2007Acura TSX 5 Speed Automatic (CL9687JW) . 28,090.00 Premium Pearl White . . 0.00 Destination Charge . . 670.00 MSRP .. . ... 28,760.00 Agreed Upon Value . 26,700.00 Amounts Financed 1st Months Payment 361.71 Security Deposit .. 375.00 Acquisition Fee 595.00 Sales Tax  6.00% x 35 x 329.77
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.. 692.52 Capitalized Costs Gross Capitalized Cost . 28,724.23 Capitalized Cost Reduction . . 0.00 Adjusted Capitalized Cost 28,724.23 Residual Data Residual Factor .. . . 0.62 Residual Value (Residual Factor Χ MSRP) .. . . . 17,831.20 Cost of Money/Term Money Factor (0% reserves) . . . 0.00127 Term (months) . 36 Lease Payment Itemization Monthly Lease Payment including Sales Tax .. . . . 361.71 Monthly Lease Payment excluding Sales Tax .. .. 340.99 Taxable Monthly Lease Payment 329.77 ________________________________________________________________________________- - - - - - - - - ______ Charges Payable at Lease Origination License, Title, Registration Fees (estimated) . . . . . 120.00 Amount Due at Lease Signing .... . 120.00 GAP Coverage Included Annual Mileage Allowance: 10,000 Disposition Fee: None Excess Mileage $0.15 per mile Reg. M Disclosure: NA ______________________________________________________________________ All that remains, assuming the dealer accepts, is to transplant the numbers from the proposal to the lease contract. It should be clear that the purpose of a proposal is to save lots of time, save money, and eliminate aggravation. I call the dealer soon after Ive FAXED/emailed my proposal to review it with them. Should they ask silly questions such as how I arrived at the agreed upon value, I politely tell them that it is irrelevant. What is relevant is whether or not they can do the deal. THE ONLY RESPONSE I WANT TO HEAR IS EITHER: (A) YES, WE CAN DO THE DEAL OR; (B) NO, WE CANT DO THE DEAL. THERE IS NO NEGOTIATING! So tell me; how do they have "position" over me? If they say no, I simply FAX/email the proposal to another dealer... pretty easy, huh? If they can do the deal per the proposal, I ALWAYS make sure that they are in complete agreement with every last bit of detail described. Nearly every number on that proposal must be transplanted to the lease agreement. If it's not, I won't sign. I want to make it virtually impossible for them to claim that they made a mistake once Ive arrived at the dealership. If they say that they made an error once Ive arrived, theyre going to look awfully silly. In that case, I remind them that the purpose of this exercise is to prevent mistakes, save time, and eliminate aggravation for all concerned. Unless they can remedy their mistake quickly, I tell them that Ill be taking my business elsewhere and thank them for wasting my time as well as their's. The GM of a dealership once told me he forgot the tax on the bank fee. I reminded him that there is no tax on this fee in the state of Ohio. Unfortunately, some dealers will will try to get away with as much as possible. I walked and they lost a sale. I have zero tolerance for dishonesty and/or incompetence. I hope you can better appreciate my approach. |
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Replying to: delta737h (Aug 14, 2007 5:25 pm) |
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As I indicated, my data collection involves the use of a variety of sources; KBB is just one of many. The idea is to secure reliable and accurate data. KBB does not necessarily reflect how anyone car dealership arrives at its pricing and so I'll have to disagree with you. Automobile sales is highly competitive and mimics a perfectly competitive market structure. Pricing publications like KBB and edmunds provide only estimates... nothing is etched in stone. MSRP's can change very quickly and often do. As any economist will tell you, pricing is a dynamic that is dependent upon the market driven forces of supply and demand. And although KBB was founded by Lester Kelley, owner of the Kelley Kar Company in the 1930's, I take strong exception with your suggestive hint that KBB pricing strategies may be biased toward dealerships. That simply isn't true. In fact, that can actually be tested using a valid statistical sample. If there were sufficient statistical evidence to suggest that KBB was biased in their pricing, they would lose credibility and be out of business in a heartbeat. They're simply not going to take that risk. Would you? My approach saves time, money, and aggravation. I refuse to spend more than one hour from start to finish with any dealership. Unless you want to test drive a car, I see no reason to visit a dealership other than to sign documents and pick up the keys. It minimizes your exposure to dealership personnel and eliminates a lot of unnecessary conversation. I don't have the time nor the desire to sit on my hands talking about how the Cleveland Browns are going to do this season (I predict no better than 6-10 lol). I'm not much for games like "can you beat this" that involves two dealerships competing against each other. However, it's not uncommon for people and even corporations to use the bidding process. It's been around for centuries and has been very effective. But, it can be very time consuming and costly. So one must weigh the cost-benefit of engaging in such a strategy (i.e., time spent v. money saved). Afterall, time is money. And, for those that bill their time at $350 per hour, it doesn't seem to be a prudent strategy. And so, my strategy may be very appealing for self employed people earning high wages. This is a Mecedes-Benz forum and it's a pretty good bet that a large number of Benz owners earn a pretty good wage. As long as you perceive that you got a good deal, that's the most important thing. And, as far as our approaches being parallel, I agree as they share nothing in common (parallel lines never meet). They are two totally different approaches that use different philosophies. I'm not saying that your's is wrong. On the contrary, as long as each approach follows rationally, there are no right or wrong approaches. Each of us must to do what is best and use that approach with which we're most comfortable. Best of luck to you. John
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Replying to: delta737h (Aug 14, 2007 5:25 pm)
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Replying to: mlroberts55 (Aug 16, 2007 12:04 pm) Here is how it works. First, ask the dealer what the excess prepaid mileage charge is (one of the few things they can't lie about because it's itemized in the lease contract). Let's suppose that it's $0.15 per mile and that you're considering a 3 year lease. The pre-paid excess mileage charge is computed as follows... $0.15 x (20,000 - 15,000) x 3 = $2,250.00 Second- Yes, this charge is deducted from the residual. So, if the residual = $20,000, then... Adjusted Residual = $20,000 - $2,250.00 = $17,750.00 The adjusted residual is used to computed your payment. The $20,000 residual is based on 15K miles per year (res. factor x MSRP) and so it must be adjusted downward to account for the additional mileage. Because you're putting an additional 15,000 miles on the vehicle (assuming the benchmark is 15,000 miles... which, I believe it is), it depreciates an additional $2,250.00 over the term of the lease and so the residual is adjusted downward by this amount. One thing to consider... If you don't use all your pre-paid mileage, be sure that any unused mileage is credited to you at lease end. Many fund providers will not do this. Also, if your state charges sales tax, you will most likely have to pay tax on any pre-paid mileage charge. That tax can either be paid upfront or rolled (i.e., capitalized) into the lease. Another possibility is that a few fund providers might lower the residual factor by a few percentage points to account for the additional mileage. I've never seen or heard of that being done but I suppose that is a possibility. Hope this helps. John
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Replying to: delta737h (Aug 16, 2007 1:46 pm) Of course, you can't get any of that back, if you don't use it... regards, kyfdx |
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Replying to: delta737h (Aug 16, 2007 1:46 pm) John |
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Does anyone know the current Mercedes money factor and residuals for either a 2008 S550 (the one I'm looking at is MSRP at $102,515 with a sell price of $7,500 off) or an '08 S63 (MSRP at $140,090 with a selling price right about that). Thanks, Michael
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Replying to: qpmicro (Aug 30, 2007 5:37 pm) Can anyone help? |
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