Money factor

anninohio2

Just leased a new Honda Pilot at an Ohio dealership. During negotiations, I was told the money factor was .00209 for a 3 month lease. I told the car dealer that that was double the # listed on bankrate.com, but he said the money factor was non-negotiable. They game me 2k off the sticker price, with a great residual value, so I still agreed to the deal, but would like to be in the know, when I trade in the lease in a few years. Any advice on how to check if dealer's money factor is legit? Is it normal for their money factor to be non-negotiable, and to be double the interest rate on bankrate.com? Furthermore, the dealer said that my credit score (which is top notch) does not factor into the money factor percentage (which goes against what I found in my research). Thanks for your insights!

kyfdx

anninohio2 said:

Just leased a new Honda Pilot at an Ohio dealership. During negotiations, I was told the money factor was .00209 for a 3 month lease. I told the car dealer that that was double the # listed on bankrate.com, but he said the money factor was non-negotiable. They game me 2k off the sticker price, with a great residual value, so I still agreed to the deal, but would like to be in the know, when I trade in the lease in a few years. Any advice on how to check if dealer's money factor is legit? Is it normal for their money factor to be non-negotiable, and to be double the interest rate on bankrate.com? Furthermore, the dealer said that my credit score (which is top notch) does not factor into the money factor percentage (which goes against what I found in my research). Thanks for your insights!

.00165 MF w/security deposit. .00175 MF w/o security deposit. I'm surprised to see a higher MF, unless it's for lower credit or unless they went through a bank other than Honda Finance.

Bankrate.com isn't a reliable source for money factors from captive finance companies.

anninohio2

They went through honda finance and i gave a $2500 downpayment. They insisted that they did not check my credit until the negotiations were over and we were signing papers. They said there are only lower money factors when Honda is having a special sale. What am I missing here? Do dealerships usually flat out lie about the money factor? How can I get an instant, reliable Money Factor next time i'm in the middle of negotiating? Thank you for helping to make me a better consumer!

kyfdx

anninohio2 said:

They went through honda finance and i gave a $2500 downpayment. They insisted that they did not check my credit until the negotiations were over and we were signing papers. They said there are only lower money factors when Honda is having a special sale. What am I missing here? Do dealerships usually flat out lie about the money factor? How can I get an instant, reliable Money Factor next time i'm in the middle of negotiating? Thank you for helping to make me a better consumer!

The regulations for leasing are different than credit installment contracts. Dealerships are under no obligation to disclose the actual money factor.

Of course, they couldn't write your lease without checking your credit. Also, you don't really know what the actual money factor is, just what they told you during negotiations. For all we know, it might have been .00175 . Plenty of dealers blow off questions like that with whatever they "remember" from the last deal.

anninohio2

how should i go about confirming the money factor that the dealership quotes, next time i'm in negotiations (when i trade-in the leased car for a new one)? thanks!

Michaell

anninohio2 said:

how should i go about confirming the money factor that the dealership quotes, next time i'm in negotiations (when i trade-in the leased car for a new one)? thanks!

The best approach is to get the numbers from us, then calculate your own lease payment and compare to the number the dealer gets. The math behind leasing is very simple; use this article to build your own spreadsheet:

http://www.edmunds.com/car-leasing/calculate-your-own-lease-payment.html

That way, if you get a different number than the dealer, you can walk through the calculations line by line and find the difference - there are only two variables in a lease, the net cap cost and the money factor.

anninohio2

thank you!

anninohio2

Even with the high MF, I negotiated a monthly payment of $369.45 (includes tax) for a 2016 pilot ex-l (36 month lease). I put $2,500 down. Does this seem reasonable?

Michaell

anninohio2 said:

Even with the high MF, I negotiated a monthly payment of $369.45 (includes tax) for a 2016 pilot ex-l (36 month lease). I put $2,500 down. Does this seem reasonable?

How is the $2500 being applied? If it is all "down payment" (aka cap cost reduction), then your true payment is closer to $439/mo (2500/36 + your current payment)

anninohio2

Yes, you are correct. My true payment is $439/month for 36 months if you factor in the down payment. Does this seem like a reasonable monthly rate or did I get a raw deal?

Michaell

anninohio2 said:

Yes, you are correct. My true payment is $439/month for 36 months if you factor in the down payment. Does this seem like a reasonable monthly rate or did I get a raw deal?

The inflated money factor hurts, for sure.

What trim level Pilot did you get? What was the MSRP and net cap cost?

anninohio2

Thank you for your help, Michaell. The trim level for the 2016 Pilot is EX-L. The MSRP was $38,605. I talked dealer down to $36,107. After subtracting my trade-in & downpayment, my Net cap cost was $32,684.55. Factoring all this in, is my true payment of $439/month reasonable, great, or crummy?

Michaell

anninohio2 said:

Thank you for your help, Michaell. The trim level for the 2016 Pilot is EX-L. The MSRP was $38,605. I talked dealer down to $36,107. After subtracting my trade-in & downpayment, my Net cap cost was $32,684.55. Factoring all this in, is my true payment of $439/month reasonable, great, or crummy?

I read back through this thread and there is a couple of missing pieces we need to calculate the payment:

1. What is the tax rate?
2. How many miles per year did you get?
3. AWD or FWD?

anninohio2

8% tax rate (my monthly payment of $439 includes this), 12,000 miles (i won't drive more than 10,000), AWD. Thank you Michaell!

Michaell

anninohio2 said:

8% tax rate (my monthly payment of $439 includes this), 12,000 miles (i won't drive more than 10,000), AWD. Thank you Michaell!

With the numbers you've given ($38,605 MSRP, $32,685 selling price, .00209 MF and 62% residual for 36/12 on the EX-L AWD), I get $390/mo when I add 8% tax.

So .. find out what the net cap cost is; if higher than the selling price, find out what was added into that number.

anninohio2

thank you! looks like i got taken for a ride

Michaell

anninohio2 said:

thank you! looks like i got taken for a ride

But think about how much you're learning when you do this again in 3 years!

anninohio2

true

Michaell

anninohio2 said:

true

Wait, we haven't determined if you got a bad deal ... the net cap cost is almost certainly higher than the selling price.

The increased MF may have bumped your payment $20-30, so not altogether too bad.