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General Questions about Leasing Vehicles



  • Why the variations though? In your example, it would seem like Volvo would be pushing better deals in parts of the country where they (in my mind) might not be as popular. Granted, I know nothing about marketing, but using Volvo as an example it would seem that the best deals would be offered in place like Missouri, Alabama, Iowa, the Carolinas etc. as a way to entice/introduce the brand to a region that might not be as inclined to purchase or be as knowledgeable of the brand. I would think that Volvo already has a lock on the affluent yuppie-ish metro NE or West coast crowd -- therefore, the deals there might not be as generous. Am I thinking backwards?

    Is there any where that provides the demographics on who typically purchases a given car? I very rarely see info like this mentioned in an article or website. For example, IIRC I read somewhere that the Chevy Trailblazer buyer was typically less affluent and less educated than the typical Ford Explorer buyer. Seemed odd to me, as I would think that these 2 vehicles would be cross-shopped by the same people and would boil down to personal preference.
  • Volvo tends to tailor their programs for what they see as the best fit for that region.

    People in the NYC Metro area lease more than most, so leasing is crucial here. When i worked at a Volvo store in Jersey at one point we were at 80% lease penetration. In Missouri it was barely 50%.
  • volvomaxvolvomax Posts: 5,274
    Looks like that is the base car lease.
    Volvo is running a lease on the 7 seater out here.
  • cccompsoncccompson Posts: 2,388
    No, as I said in the first post on this topic, the MSRP is $44,725. I'm not intimately familiar with Volvo options but it is an XC90 with leather, all wheel drive, and 7 passenger seating. Virtually all of them around Ohio are equipped the same way with several pricey option packages.

    No matter, have decided against it.
  • joel0622joel0622 Posts: 3,302
    Traindriver, the reason for the difference is because incentives are driven by days supply in a particular region. If Volvo has a huge days supply in say Region 1 then they will have heavier incentives then another region with a small days supply.
  • Karen_SKaren_S Posts: 5,095
    A reporter from a national newspaper is hoping to talk to consumers who purchased a car recently instead of waiting, fearing that prices may rise as the dollar weakens. Please reply to no later than Monday, October 1, 2007 with your daytime contact info.

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    Need help picking out a make/model, finding inventory, or advice on pricing? Talk to an Edmunds Car Shopping Advisor

  • Are money factors negotiable with dealers? I'm considering leasing a Lexus.
  • delta737hdelta737h Posts: 606

    Yes, money factors (MF) are negotiable. However, your credit history will have a huge impact on your MF. Strong credit means you'll be able to qualify for the top tier rate. A weak credit position won't leave you with much room for negotiation, if any.

    The cost of money follows a tiered structure. For example...

    0.00150 + 0% reserves

    0.00165 + 1% reserves

    0.00180 + 2% reserves


    Reserves are amounts paid to the dealer by the fund provider as compensation for writing the lease at a higher cost of money (e.g., MF). The 0.00150 MF with 0% reserves is called the base rate or buy rate. ALWAYS ask for the buy rate or that rate with 0% reserves. Some dealers insist on reserves. And so, I simply deduct the dollar equivalent of the reserve level from the negotiated selling price. The dollar equivalent is computed by multiplying the reserve level (%) by the adjusted cap cost less acquisition fee. So, if your $25,000 adjusted cap INCLUDES a $500 acquisition fee and the MF reflects a reserve level of 1%, then the reserve dollar amount is 1% x $24,500 or $245. The reserve level is always embedded in the MF and so the consumer has no idea whether or not they're paying reserves.

    Hope this helps.

    Medina, Ohio
  • Thanks very much John. That helps a lot.

    I am looking at a lease currently with a money factor of .00275 provided through Lexus Financial Services. I qualify for tier 1 + credit with a FICO above 730. With their current money factor it looks like they have a large reserve (8.5%), would that be a correct assumption? Is the buy rate the same for all dealerships? For this particular lease, the cap/sale price is 47,800 on a vehicle with a MSRP of 56,519, the residual is $29,955, term is 3 years/36K miles for $758 including tax. I sure would rather have a .00150 money factor if it would be possible.
    Thanks for your help.
  • John you are just going to confuse people with all this talk of reserves.

    Money factors have more to do with the programs in place for the particular vehicle you are looking at.

    For the cars I sell we have money factors as low as .00070 where your credit score doesn't matter. As long as you have enough credit to get approved you pay the same rate.

    On the other end of the scale I have cars with base money factors as high as .00310 and that is with perfect credit. If you have poor credit it climbs as high as .00568.

    Cali go to the thread on edmunds that talks about leasing the particular vehicle you are looking at. Someone in that thread will know the base money factor which could very well be .00275 although I doubt it. Lexus tends to heavily incentivize their leases so I would think it would be less.
  • delta737hdelta737h Posts: 606

    I was only giving you an example for illustrative purposes only. Sorry for the confusion. Although I could be wrong, my gut tells me that the 0.00275 MF is high and may include reserves. I would ask for the buy rate. The tiered rate structure is dependent upon the fund provider. So, the buy rate depends on the fund provider and not ther dealership.

    Given the info you provided, I get a base payment of $709.52 plus tax. So it appears as though your sales tax rate is around 6.75%. It also appears as though the $47,800 sell price is reasonable but check edmunds for invoice pricing in case you already haven't.

  • delta737hdelta737h Posts: 606

    I was only trying to educate her. Nothing confusing about my presentation. In fact, many people have expressed their appreciation and thanks for my brief "dissertation" on reserves. Tiered rate structures are tied to reserves. Different funder providers have different tiered rate structures. When there is a huge divergence between MF's (e.g., 0.00070 and 0.00310), you're most likely looking at different model cars as well as different terms (i.e., different levels of risk).

    Everyone who buys or leases should familiarize themselves with reserves and the many different ways in which they are computed. Knowledge of reserves has saved me several hundred dollars on each of two transactions in the past.

    Your suggestion that she look at the appropriate Lexus thread on edmunds is very good advice. I just didn't think of that. At any rate, she needs to find the base (buy) money factor as you've described.

  • cccompsoncccompson Posts: 2,388
    Sorry, John, but I found your post to be confusing. Still don't understand the significance of reserves, how they're calculated, or what (if anything) they'd mean to (or cost) me.
  • delta737hdelta737h Posts: 606
    Sorry it was so confusing for you. If you want me to take another approach, I'll be glad to do so. Or, if you're interested, email me at and I'll be happy to provide as much detail as you need so that you will understand. You have posted a lot. Are you in the car business?
  • volvomaxvolvomax Posts: 5,274
    Simply put, reserve is how much commission a dealer makes from the lender for doing a lease or finance contract.
    Lenders have a buy rate, which is the cost of funds to the dealer.
    If the dealer increases that rate on your contract, they get a percentage of that increase.
    For example, buy rate is 6%, you are contracted at 7%, so the dealer makes a commission on the 1%.
    Your payment is higher than it would have been at 6%,that is the cost to you.
    Leases work the same way, although there can be alot of difference in the rates themselves.
    Most Lexus dealers tend to pad their lease rates,mostly because they can.
    Some dealers will not do a deal unless it has some rate adjustment built in.
    Car Man can usually tell you what the buy rates are for leases.
    it is important to remember that lease and finance rates are usually based on your credit score. So, the lower your score, the higher the rate.
    Car Man usually only quotes the top tier rates, so if your score isn't in the range the lender thinks is top tier, your buy rate would be different anyway.
    Good Luck!
  • cccompsoncccompson Posts: 2,388
    LOL, no, not in the business. If I was, I'd have understood your post! In any event, it's always good to see a fellow Ohioian here. That's a helluva noise wall they've built on I-71 just south of SR 18.

    Volvomax, thanks, you put it in terms that I can understand.
  • delta737hdelta737h Posts: 606
    Yeah, I pass it almost every day. You said that you understand. Okay, how do you calculate the amount of reserves earned by the dealer using volvomax's example? If you don't know or don't care, then you risk paying more than you otherwise would. I just think it's a good idea for folks to understand how reserves are determined. It can save them money. It certainly saved me a few bucks.
  • bodble2bodble2 Posts: 4,519
    :confuse: I didn't know the lease rates can change according to your credit score. For example, if BMW is offering 4.9% lease rate on X3, is that not the rate everyone pays? And that's not negotiable, no? Do we need to know about reserves, commission, etc? I didn't think your credit score has any bearing on the lease deal other than the fact that they could turn you down if you're not credit-worthy.
  • kyfdxkyfdx Posts: 70,300
    BMWFS only charges different rates for different credit scores on their "standard" lease rate. Any model that has a "special" rate is on a pass/fail system, with no tiers.

    For instance, their standard rate right now is around .0031

    That is the rate you'd pay on an M5, if you were top tier. For lesser tiers, you'd pay more..

    But, an '07 328i sedan has a special rate of .0014.. There are no tiers.. if you qualify, that is the buy rate.

    Of course, all BMW dealers are permitted to mark-up the BMWFS buy rate by .0004, but that has nothing to do with credit-worthiness.

    All of this applies only to BMWFS, and most others don't quite work in the same way. Those numbers are from September and are for illustration purposes only.. they may have changed.

    visiting host


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  • Thanks John, the information you have provided has helped a lot. The more info, the better! I sure wish the buy rate was the same for all dealers. The Lexus GX470 leasing forum has been slow. I put a post over there several days ago about the deal I've been considering. Thanks for all info provided here.
  • jestrsjestrs Posts: 4
    I am working on a deal for an 08 Suburban and I would like to know the buy rate.

    Also does anyone know the difference between the SmartBuy and the SmartLease? The dealer was really trying to push the SmartBuy. The SmartBuy was only about $10 more per month.

    Thank You.
  • volvomaxvolvomax Posts: 5,274
    Lease rates are no different that finance rates in that regard.
    As for needing to know about commisions and reserves,no you don't need to know that.
    What matters is the price of the car to you,not how much the dealer is making on it, and the cost of funds to you,not how much the dealer is making on that.
    Dealers are gonna make money. BMW dealers are gonna make it on the car and the rate.
    That is just how it is.
    Try shopping around for the best package, of price and rate.
  • volvomaxvolvomax Posts: 5,274
    BMWFS only charges different rates for different credit scores on their "standard" lease rate. Any model that has a "special" rate is on a pass/fail system, with no tiers.

    VFNA operates differently.
    Even their special rates have tiers.
  • kyfdxkyfdx Posts: 70,300
    Exactly... I think BMWFS is alone in that practice...


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  • LRCG is different again. Some of the special rates are the same no matter the tier and some can have a 5 percent or more spread between tier 0 and tier 5.
  • Hi. I am looking for a 36 mo 12k lease. I am comparing the Acura MDX Tech and Sport to a Lexus Rx400h AWD+FWD w/ Navigation. I am looking for the October Residuals and Money Factors. Thanks
  • Kirstie_HKirstie_H Posts: 11,042
    Hi smalkin,
    For info on specific vehicles, you'll want to visit the make/model-specific discussions about leasing.

    Just use the search box at the left and type in Acura Lease, and you'll get a list of related discussions... same goes for Lexus. You'll have much better luck getting feedback there.


    Need help navigating? - or send a private message by clicking on my name.

    Share your vehicle reviews

  • jvosjvos Posts: 72
    The deal I am currently negotiation on a 2008 TSX is as follows:
    $26,631.00 for the TSX, $58.48 for the title transfer, $1,868.26 for the tax, $15.00 for the county fee and $143.00 for new plates. This totals $28,715.74 out the door.
    36mo X 15K mile term of .00152 and 60%, the dealer comes up with a payment of $442 while I come up with $360. (Note this is IL, so I believe tax is included up front.)
    Who is right?
  • kyfdxkyfdx Posts: 70,300
    What is the MSRP, including destination?

    You need that figure to calculate a lease.



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