I can tell tyou that the DCX brand cars are sold back to dealers at closed auctions. They'll end up at a dealer, but will have to be sold with a disclosure on the window and on the title. Both have to be signed by the buyer and returned to DCX. Not a whole lot a delaer can do here except avoid the car at auction if he doesn't believe it'll sell. Sometimes, dealer shyness makes the cars so cheap, and a great buy to the consumer. If the manufacturer replaced the engine and trans and was willing to back the repair to 70k, would you be willing to purchase the car with 2500 miles for lets say $8000 less than your neighbor did when it was new? The number varies (as does the repair) - usually between $4 and 10,000.
If a person owns a business and he wants to lease a vehicle. The thing is that he want to pay more for the lease such as lowering residual or with higher mileage allowance so that he can buy off the vehicle at lease end at lower price; i.e. let Uncle Sam helps pay part of the vehicle cost at the front end. Is that possible within a reasonable limit? If it is, how you go about approaching a dealership with this scheme as most of the lessee (sp?) tend to pay the least as possible. Thanks in advance. This is just a question so please no question of integrity here.
In many business leases, the least payment is a % of the capitalized cost plus interest plus tax. At the end of the lease, the LESSOR bears the risk at the time of disposal.
For example, a cable company will lease a van and send it to an upfitter who will prepare the van for its needs. Those vans will hit 100k in 2-3 years. The lessor will return the vehicle to the leasing company who will remarket them. If the value of the vehicle exceeds the remaining cap cost, the LESSOR recognizes a gain. If not, the leasing company bills the lessor for the dufference.
Hope that helps.
Do remember that leasing is much a kin to renting a vehicle. You are buying the use of a vehicle for a certain time OR mileage. Nearly anything is negotiable.
danf1 gives good advice here... This is the easiest way to inflate the lease price and lower the residual..
Just be certain that they are lowering the residual, and not just charging you for extra miles...
For example, for a 25K/year lease, Honda Finance would lower the residual by $0.10/mile over 15K per year, lowering the residual by $3000 total on a 3yr/75K lease...
Other companies might just add $3000 to the cap cost.... That will only cost you money in the long run.. Make sure it lowers your residual.
some manufacturers (ford, honda, and nissan that i know of) will go as high as $30k miles per year. as long as the total mileage doesnt go over 100k miles, they will do it. ive seen a 40k mile ford lease for 2 years before.
Thank you all for your insightful advice. What you all are saying is I should ask for higher mileage allowance in order to reduce the residual; not let them charge for extra miles and keeping same residual. The thing is I don't even put in that much miles at all; just want to take advantage of business write-off and I am not sure it would help a whole lot. Again, thanks.
Lowering the residual will increase the amount of depreciation you pay during the lease...
So if residual is $12K, instead of $15K, then your payments will go up about $83/mo., giving you the higher payment you desire, and simultaneously lowering the residual you have to pay to buy the car at the end of lease.
Possible downside:
You total the car during the lease, paying higher lease payments for mileage that you will never get to use... and also, not having a low residual car to buy at lease end..
That is exactly what I want to do: higher lease payment (paid with business income) and lower residual; thus lower buyout (paid with after-tax money). You are right about the car being wrecked but I will keep it in garage most of the time even though I ask for higher mileage allowance. The follow-up question would be if individual is allowed to purchase the leased vehicle even it has been leased by company? Or only the entity that leased the vehicle is allowed to purchase; in this case the company?
I have bought many cars off-lease for my personal drivers ... or to sell when I have a family member in need of transportation.
Look, any company wants to get RID of cars as they come off of lease. My wife's employer puts them on a website and offers them to all of their employees just to move the metal.
had a customer today looking at a new, high-demand vehicle. offered what i knew to be about $2000 under what was realistic, and gave me the bobst speech:
"just say yes or no...dont try to bump me. if its no, i will leave and possibly return if noone else can do it."
came back and told him we were $2100 away from a deal, and he said "ok...when you get to my figure, you can call me...if you cant do it, then dont call me."
i told him not to wait by the phone.
the moral of the story is, if you want to use the bobst method, make sure you get solid figures in your equation and make a reasonable offer to begin with.
You won't do it because it is wrong, and you know it... I've seen your posts.. you are an honest salesman.. to "low-ball" that customer would be dishonest.
That customer negotiated in good faith.. He told the salesman exactly what he wanted and what he would do..
To then say he deserves to be lied to? Where does that come from?
So, he is mis-informed... not a crime or a character flaw..
Nothing wrong with that... if you are telling the truth.. You won't get my business that way, but that is your prerogative..
Still doesn't make telling lies okay..
Unpleasant, misinformed, stupid, lazy, whatever.. None of those qualities in a customer make it okay to lie to them.. No matter what business you are in..
The buyer learned that his offer was too low, and it took very little of his time. Now he can decide whether he wants to increase his offer or buy a different type of car. Sounds like a pretty sharp buyer to me.
just purchased a 2005 honda suv. i got the 2.9% financing through amer. honda finance corp. i negotiated a very good purchase price -putting about $5,000 down, then made the mistake of chatting w/ the finance mgr. i mentioned i was going to get lojack since i sometimes park in some not-so-great areas of our city. the mgr said why spend so much money on lojack when you can get a brand new car if my new one is stolen. stupidly, i took, upon the mgr. recommendation a "total loss guarantee". i thought it was going to cost "only about $495" for the 5 year term of my financing... and add "about another $9 or $10 bucks" to my monthly payments. OOPS. i left the dealership (had a bad headcold, had to get back to bed) and when i got home realized that the negotiated price of the suv had gone up almost one thousand dollars! and the monthly payments up about $18. this "total loss guarantee" as explained to me by the mgr, would cover me (up to $5,000) the difference between the fair value assesment my insurance company would give me if my car was stolen or totaled and the price to get a brand new suv of equivalent or greater value...again only up to a max of $5,000. isn't this gap insurance? i will end up paying over $1,000 for this "total loss insurance", ($185 per year at 2.9%) which, IF i incur a total loss will pay a max of $5,000. do the math, i really end up with $4,000. the honda suv i got depreciates very little any way... so i think this whole thing stinks. if i want, i can get GAP insurance online at a much lower rate. i don't even think gap insurance is needed when financing and putting down 20% like i'm doing. i am seeing the finance mgr on monday (bought the suv friday) and i'm going to try to get rid of this back-end add-on. any one ever hear of this "total loss guarantee"? the mgr says it is NOT gap insurance. what do you think are my chances of me getting rid of this thing. too bad -i was otherwise really happy with the original salesperson i dealt with and was ready to sing the praises of my experience at this honda dealership.
...... For starters, we need to get you into "Paragraph School" ...... you a makin' me blind ...
It sounds like a good deal, but not for $1,000 or even $500, that can be bought via Gap insurance thru the local Credit union or even the dealer for $300 or less, and like you said, you put a ton down on a vehicle type that has a strooong resale ...
The program can be taken off the contract .. call the lender on Monday morning and tell them you don't want that program and a new contract will get written, make sure you get full names and/or employee numbers, this way if he try's to dump the contract, the lender is already aware of it and it's on the computer .... then, take some Alka Seltzer cold tablets, meet with the guy, he can rewrite the new contract minus the "total loss guarantee" stuff, your payment goes down - and all is well with the world ..................
"i don't even think gap insurance is needed when financing and putting down 20% like i'm doing"
You got that right. GAP only covers the difference between what the insurance pays and what you owe, not what a new one costs.
This would be a good idea if you had financed the entire price of the car, as most people do. Actually, most people will finance the taxes and fees and roll negative equity in, but that's another story.
In your case, GAP is of no benefit. Had you bought a Trailblazer, it'd be different...
>I thought it was going to cost "only about $495" for the 5 year term of my financing...
Just how did it end up costing $1000. Did the F&I guy misrepresent it??? Or did the 'fog' of the cold cloud your judgement?
Never negotiate when you're sick. I took a Graduate Record exam with a nasty peppery nose cold and didn't do as well as I should have. I swore I'd never do anything when wasn't alert again. I had no choice that day; test was given once a year.
It is negotiable. I had two dealers oofer to knocj 1/2 of the fee off and a third, all of the fee. The dealer may insist on showing the full amount on the buyer's order...and that's OK so long as your Offer price is reduced by the amount of the processing fee you want to knock off. you should visit carbuyers.com for further tips to inform yourself about this major expenditure.
Here's a fun one for the dealers. I'm looking to get my wife a new car, approx. $20k, and putting the whole thing on my father-in-laws Amex card. The car will be bought in PA, and he lives in NY. He get the points from Amex, and we'll pay him back from our account. No interest charge to us...very generous on his part, clearly.
Dealer does not want to do this, as they pay a merchant fee to Amex. I'm willing to split the difference with them, but they claim the rate they pay is almost 5%. This is a large New Car dealer. I spoke with Amex, and while they won't give me the specific merchants rate, they make it clear that the merchant wouldn't pay that much. Looks like more likely they pay closer to 2%.
So can I force the issue somehow, or just find a dealer that will be straight-forward about the rate they pay? How do you dealers feel about this?
Unless you are talking to the person that actually negotiated the rate or reconciles the AMEX statement, they may not know the actual rate.
AMEX traditionally used to charge a much higher rate than the other cards but there isn't a standard rate.
As for the dealer accepting it for the purchase, most merchant agreements specifically prohibit accepting cards for the purchase of vehicles - I know my company's did. Also, how much are they making on the sale - do you think they want to eat another 2-5% on the sale?
Lastly, 10,000 points on the AMEX membership rewards program is worth a $100 gift certificate - it isn't like you'll get a free trip to Costa Rica with 10,000 points.
For a number of reasons. First, the service charge. Also in case of a dispute, AMEX will charge the dealer back until the matter is resolved no matter whose fault it is.
Agreed, but I know there are dealers who don't care... it may not happen often enough to make a difference, but I've charged $2k before with no problem.
Additionally, my Pontiac dealer allows any amount you wish; you pay the 3% on a normal card, and you don't pay anything if you use the GM Card.
The 5% quote for Amex was told to me by the salesman. Quite right, he may not really be sure. I'll address the question with the finance manager.
If it's only 2%, I'll split it, or come up with something else. From what I understand from Amex, the dealer can add a surcharge to the sale here in PA, but not in NY. With the Amex holder in NY, Amex isn't quite sure how to handle this.
I may just skip the whole thing, if the points aren't that significant. If it's only worth a $200 gift certificate or so, I'll treat my father-in-law to something worth that. He's saving us tons in any event, so it's the least I could do.
I never considered the concern for a dealer chargeback. Thanks, Isell, for that one.
Thanks for the quick feedback folks. I'm trying to get this done by the end of the week, so this helps.
When I got my wife's car, I paid around $2,000 down. The dealer practically begged me to put it on my credit card even though I intended to pay with a check.
The difference may be that I did not have my checkbook with me, and he was afraid I might never come back with it.
Comments
what type of vehicle did you buy, and what date? i can help you further with this information.
If a person owns a business and he wants to lease a vehicle. The thing is that he want to pay more for the lease such as lowering residual or with higher mileage allowance so that he can buy off the vehicle at lease end at lower price; i.e. let Uncle Sam helps pay part of the vehicle cost at the front end. Is that possible within a reasonable limit? If it is, how you go about approaching a dealership with this scheme as most of the lessee (sp?) tend to pay the least as possible. Thanks in advance. This is just a question so please no question of integrity here.
For example, a cable company will lease a van and send it to an upfitter who will prepare the van for its needs. Those vans will hit 100k in 2-3 years. The lessor will return the vehicle to the leasing company who will remarket them. If the value of the vehicle exceeds the remaining cap cost, the LESSOR recognizes a gain. If not, the leasing company bills the lessor for the dufference.
Hope that helps.
Do remember that leasing is much a kin to renting a vehicle. You are buying the use of a vehicle for a certain time OR mileage. Nearly anything is negotiable.
Just be certain that they are lowering the residual, and not just charging you for extra miles...
For example, for a 25K/year lease, Honda Finance would lower the residual by $0.10/mile over 15K per year, lowering the residual by $3000 total on a 3yr/75K lease...
Other companies might just add $3000 to the cap cost.... That will only cost you money in the long run.. Make sure it lowers your residual.
regards,
kyfdx
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Lowering the residual will increase the amount of depreciation you pay during the lease...
So if residual is $12K, instead of $15K, then your payments will go up about $83/mo., giving you the higher payment you desire, and simultaneously lowering the residual you have to pay to buy the car at the end of lease.
Possible downside:
You total the car during the lease, paying higher lease payments for mileage that you will never get to use... and also, not having a low residual car to buy at lease end..
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Did you get a good deal? Be sure to come back and share!
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Look, any company wants to get RID of cars as they come off of lease. My wife's employer puts them on a website and offers them to all of their employees just to move the metal.
"just say yes or no...dont try to bump me. if its no, i will leave and possibly return if noone else can do it."
came back and told him we were $2100 away from a deal, and he said "ok...when you get to my figure, you can call me...if you cant do it, then dont call me."
i told him not to wait by the phone.
the moral of the story is, if you want to use the bobst method, make sure you get solid figures in your equation and make a reasonable offer to begin with.
" Oh, we are probably about a thousand dollars apart"
Then the mooch will spend days trying to beat that number. Finally, beat to death, he will return for his "deal".
" Well, I guess I was wrong. It's going to take a bit more than that"
Personally, I don't do this but it's so tempting!
-Mathias
No, he DESERVED a lowball with that attitude.
Having said that, I would never lowball a customer myself.
That customer negotiated in good faith.. He told the salesman exactly what he wanted and what he would do..
To then say he deserves to be lied to? Where does that come from?
So, he is mis-informed... not a crime or a character flaw..
regards,
kyfdx
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When he goes to shop your "number", then....
Still doesn't make telling lies okay..
Unpleasant, misinformed, stupid, lazy, whatever.. None of those qualities in a customer make it okay to lie to them.. No matter what business you are in..
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I tend to treat people the way I want to be treated.
From time to time someone would pop up who only wanted to argue endlessly or cause trouble.
They don't know when to back off when they get baited. I've even been guilty of that.
When this happens, people lose interest and go away never to be heard from again. Most of the "veterans" that contributed so much are now gone.
Cronic troublemakers eventually get banned and the threads get shut down out of fear, I suppose, that others will take their place.
The hosts can and will only put up with so much and I don't blame them.
Heck, I'm surprised they haven't booted me!
if everyone can remember to ignore an ill informed buyer after 2 or 3 corrections, the forum wouldn't get out of hand.
bring back the inconsiderate threads.
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It sounds like a good deal, but not for $1,000 or even $500, that can be bought via Gap insurance thru the local Credit union or even the dealer for $300 or less, and like you said, you put a ton down on a vehicle type that has a strooong resale ...
The program can be taken off the contract .. call the lender on Monday morning and tell them you don't want that program and a new contract will get written, make sure you get full names and/or employee numbers, this way if he try's to dump the contract, the lender is already aware of it and it's on the computer .... then, take some Alka Seltzer cold tablets, meet with the guy, he can rewrite the new contract minus the "total loss guarantee" stuff, your payment goes down - and all is well with the world ..................
Terry.
You got that right. GAP only covers the difference between what the insurance pays and what you owe, not what a new one costs.
This would be a good idea if you had financed the entire price of the car, as most people do. Actually, most people will finance the taxes and fees and roll negative equity in, but that's another story.
In your case, GAP is of no benefit. Had you bought a Trailblazer, it'd be different...
-Mathias
Just how did it end up costing $1000. Did the F&I guy misrepresent it??? Or did the 'fog' of the cold cloud your judgement?
Never negotiate when you're sick. I took a Graduate Record exam with a nasty peppery nose cold and didn't do as well as I should have. I swore I'd never do anything when wasn't alert again. I had no choice that day; test was given once a year.
2014 Malibu 2LT, 2015 Cruze 2LT,
;-)
Regards... Vikd
Dealer does not want to do this, as they pay a merchant fee to Amex. I'm willing to split the difference with them, but they claim the rate they pay is almost 5%. This is a large New Car dealer. I spoke with Amex, and while they won't give me the specific merchants rate, they make it clear that the merchant wouldn't pay that much. Looks like more likely they pay closer to 2%.
So can I force the issue somehow, or just find a dealer that will be straight-forward about the rate they pay? How do you dealers feel about this?
-Dan-
AMEX traditionally used to charge a much higher rate than the other cards but there isn't a standard rate.
As for the dealer accepting it for the purchase, most merchant agreements specifically prohibit accepting cards for the purchase of vehicles - I know my company's did. Also, how much are they making on the sale - do you think they want to eat another 2-5% on the sale?
Lastly, 10,000 points on the AMEX membership rewards program is worth a $100 gift certificate - it isn't like you'll get a free trip to Costa Rica with 10,000 points.
These are Amex's rates for auto dealers:
First line is annual Amex charge volume
Second line is rate for average charge size (<$150, $150 - $249, >$250)
$0 - $249,999
3.50% 3.25% 2.95%
$250,000 - $499,999
3.40% 3.20% 2.90%
pay for the remainder of the car yourself.
"(name) dealer group does not allow or accept credit cards as payment on vehicles, whether in part or in whole."
They don't accept credit cards even for a $500 deposit or down payment. Their store, their rules, and not a half bad idea.
Additionally, my Pontiac dealer allows any amount you wish; you pay the 3% on a normal card, and you don't pay anything if you use the GM Card.
-Mathias
AMEX charges large fees to dealers who don't do lots of AMEX transactions. Many smaller businesses don't allow AMEX use at all for this very reason.
If it's only 2%, I'll split it, or come up with something else. From what I understand from Amex, the dealer can add a surcharge to the sale here in PA, but not in NY. With the Amex holder in NY, Amex isn't quite sure how to handle this.
I may just skip the whole thing, if the points aren't that significant. If it's only worth a $200 gift certificate or so, I'll treat my father-in-law to something worth that. He's saving us tons in any event, so it's the least I could do.
I never considered the concern for a dealer chargeback. Thanks, Isell, for that one.
Thanks for the quick feedback folks. I'm trying to get this done by the end of the week, so this helps.
-Dan-
No thanks.
The difference may be that I did not have my checkbook with me, and he was afraid I might never come back with it.