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rated:
I'll try to keep this from turning into a novel, but here it goes.

Walked into the dealer looking to purchase a new truck. Eventually settled on a truck and was told there was a $10,500 rebate associated with the truck if I leased it and only an $8,500 rebate if I bought it. I was also told that the cost of the lease was approximately $16,000 (New price 47,000 and a 31,000 residual value).~~So I ended up putting 6,000 down and ended up agreeing to pay $300.00 per month for 36 month, essentially paying the other 10,000 of the lease.... which didn't hit me at first, but eventually began to do the math and started to wonder where the hell the rebate went, which should have essentially covered the other $10,000.  

I understand there is also a leasing charge, but also couldn't help but remember at the end of the sales session, we were only in the managers office for the last few minutes to sign the paperwork and were essentially kept out and not provided with any paperwork until we were ready to sign the deal. Doing the math, there was approximately a $2,061 difference between the net cost and the residual value. At the end of the day, the rent charge is $7,822, which seems astronomical considering the other numbers.  

Before I go any further, maybe its just me not understanding the way the numbers work out in the end, but here they are. 

A. Gross Capitalized cost................................................................   $49,013
B. Capitalized cost reduction (Trade ins and down payments) .........$15,940
C. Adjusted capitalized cost ..............................................................$33,072
D. Residual Value .....(value at end of lease).....................................$31,011
E. Depreciation and amortized amounts (amt charged for 
     vehicle's decline in value through normal use (C-D).......................$2,061 
F. Rent Charge ..................................................................................$7,822
G. Total of base scheduled payment(s) - Depreciation + Rent chg.....$9,844
H. Lease payments (number of payments)..........................................    36
I. Base scheduled payment ..............................................................$274.56
J. Sales / use tax.................................................................................$24.71

Total scheduled payment .................................................................$299.27



Here is how the numbers were presented in another area:
1.   Amount due at lease signing ........($4,049 cash, $2,000 trade in & $10,500 rebates).......$16,549
2. Total sum of monthly payments ...........................................................................................$10,773
3. Other ....none
4. Total amount of payments....................................................................................................$27,024

    
The way I see it, I'm paying an extra $11,000 dollars to finance the $16,000  cost of the lease....which is over 50% interest.

Bottom line, can somebody please tell me whats going on?

1. Did I get screwed
2. Am I missing something?
3. Did the dealer steal my rebate through a huge rent charge?

Member Summary
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Typically lease agreements prohibit using the vehicle for business or for-profit purposes.

jaytrader (Mar. 10, 2017 @ 11:34p) |

The answer appears to be that you are "missing something" because the amount due at lease signing is not the same thing ... (more)

LOOPHOLE (Mar. 12, 2017 @ 2:00p) |

Lease rates, even sub-vented ones are often treated the same way as interest rates determined by credit scores, based on... (more)

LOOPHOLE (Mar. 12, 2017 @ 2:23p) |

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rated:
When you lease you negotiate 

1) The price of the car BEFORE rebates (This does NOT have to be full retail, this is done with the power of 'negotiation')
2) The amount of Rebates and Down Payment
3) The Money Factor (Interest rate, lower the better)
4) Term of the lease.

first the main part of $7822 is $2061 (Price you paid vs the residual). The rest of the ~$5600 is the interest rate. (Looks like a MF of 0.0025) or 6% interest.

Looks more like they didn't give you any 'deal' on the full price of the car which is Item 'A'. Then they took off the rebate and the trade in, and some of the cash (T&L aren't included in 'B').

For the quick and dirty, you didn't lose any rebate, but you may have been skunked on the MF and Price of car. (6% is a bit high)

 

rated:
Your "rent" charge isn't on the cost of the lease (16k), it's on the purchase price minus down payment, trade-in, and rebate.

rated:
Use this as a lesson to never sign a purchase agreement until you fully understand it and it is what you were expecting. Take your own notes along the way on what they have promised you, pay no attention to what they write down. It will all vanish before you get ready to sign.

When they hand you the paperwork don't just go ahead and sign like they want you to. They are trying to distract you with upsells or small talk. Don't feel like you need to "hurry up", remember you are the one paying them.

Ask them to grab you a cup of coffee while you verify everything is in order. Pull out your phone/calculator, notebook (real or electronic) and start running the numbers. Ask questions and don't stop until you fully understand the deal and it is the deal that you expected. Don't be afraid to leave if you feel they are trying to confuse you or something doesn't feel right. That handshake and any other signatures on random paper with numbers they "took to their manager" do not mean the deal a thing. The deal is done when you sign the official purchase and/or loan agreements and you don't do that until you read and understood every word and number on all of the pages.

It is rare I have purchased a vehicle and they have not had to redo the agreement 2 or 3 times until it was at it should be.

rated:
The last line did show exactly what you were paying. $27k to rent/lease the vehicle worth around maybe $35k ($47k sticker -8.5k rebate- -~3.5k negotiating).
Doesn't seem like a great deal on the surface.  However that is for you to decide.

Edit: Just curious... Did you make sure the $2k given for your trade in was the True Value?  A lot of places the salesperson gets to keep 80% of the difference of what they get you to take.  Example: Appraiser says car is worth $5k and then they tell you it is worth $2k they get to take home $2,400 extra in their check that week.

rated:
it all comes down to the buyer. are you happy with the deal you got and the truck? that's all it matters

rated:
vipercon said:   The last line did show exactly what you were paying. $27k to rent/lease the vehicle worth around maybe $35k ($47k sticker -8.5k rebate- -~3.5k negotiating).
Doesn't seem like a great deal on the surface.  However that is for you to decide.

Edit: Just curious... Did you make sure the $2k given for your trade in was the True Value?  A lot of places the salesperson gets to keep 80% of the difference of what they get you to take.  Example: Appraiser says car is worth $5k and then they tell you it is worth $2k they get to take home $2,400 extra in their check that week.

  Doesn't that $27k include the $10.5k rebate making his actual out of pocket only $16.5k?

rated:
Rajjeq said:   
vipercon said:   The last line did show exactly what you were paying. $27k to rent/lease the vehicle worth around maybe $35k ($47k sticker -8.5k rebate- -~3.5k negotiating).
Doesn't seem like a great deal on the surface.  However that is for you to decide.

Edit: Just curious... Did you make sure the $2k given for your trade in was the True Value?  A lot of places the salesperson gets to keep 80% of the difference of what they get you to take.  Example: Appraiser says car is worth $5k and then they tell you it is worth $2k they get to take home $2,400 extra in their check that week.

  Doesn't that $27k include the $10.5k rebate making his actual out of pocket only $16.5k?

  That's correct.
He paid $6.5k upfront and $10k in payments.
There is no 'negotiating' amount.  That would be on Line A (Unless this truck was sticker more than $49k)

A = Sticker - Negotiation + Tax
B = Rebate and Trade In and Cash
C = A - B
D = Value of Car at end of Lease
E = How much of your Car payment goes to principal.
F = E + (Interest,  This number is hidden and appears to be about $5600,  Interest is based on D)

So to get an additional $2k in Rebate, he paid $5600 in interest (This number really depended on his credit rating and what percentage he could've gotten as a loan)
 

rated:
I always negotiate leases with zero down so I can see exactly where the money went. As soon as you give them a payment number to meet, $300/month they will get you there by putting 5-6k down which is a lot of upfront cash.

rated:
I'm a lease noob. Could somebody explain this?

OP said he agreed to a vehicle price of $47k, right? how come gross cap. cost is $49k+? are we to assume he bought $2k+ of stuff from F&I mgr.?

how come cap. cost reduction is $15,940, instead of $16,549 (cash + trade + rebate)?

rated:
forbin4040 said:   When you lease you negotiate 

1) The price of the car BEFORE rebates (This does NOT have to be full retail, this is done with the power of 'negotiation')
2) The amount of Rebates and Down Payment
3) The Money Factor (Interest rate, lower the better)
4) Term of the lease.

first the main part of $7822 is $2061 (Price you paid vs the residual). The rest of the ~$5600 is the interest rate. (Looks like a MF of 0.0025) or 6% interest.

Looks more like they didn't give you any 'deal' on the full price of the car which is Item 'A'. Then they took off the rebate and the trade in, and some of the cash (T&L aren't included in 'B').

For the quick and dirty, you didn't lose any rebate, but you may have been skunked on the MF and Price of car. (6% is a bit high)

 

  
Actually the OP did get hosed.

If the gross cap. cost is $49k and residual is $31k, the OP is on the hook for $18k.  OP paid $6k plus a $10k rebate, making his liability only $2k, which over 36 months, comes out to $55/month.  The fact that he's paying $274 a month tells me he's financing the lease for $200 a month.

cliff notes - dealer gave OP the $10k rebate, but made up for that $10k by raising the vehicle price by 2k and increasing the finance fee by $7.8k to get back that $10k rebate.

rated:
rexij said:   I'm a lease noob. Could somebody explain this?

OP said he agreed to a vehicle price of $47k, right? how come gross cap. cost is $49k+? are we to assume he bought $2k+ of stuff from F&I mgr.?

how come cap. cost reduction is $15,940, instead of $16,549 (cash + trade + rebate)?

49=  47 + tax + title + license
16,549 = 15940 + fees such as (Document fee).

There are little items that show up on other lines that OP didn't post.

rated:
jtuttlemiester said:   
A. Gross Capitalized cost................................................................   $49,013
B. Capitalized cost reduction (Trade ins and down payments) .........$15,940
C. Adjusted capitalized cost ..............................................................$33,072
D. Residual Value .....(value at end of lease).....................................$31,011
E. Depreciation and amortized amounts (amt charged for 
     vehicle's decline in value through normal use (C-D).......................$2,061 
F. Rent Charge ..................................................................................$7,822
G. Total of base scheduled payment(s) - Depreciation + Rent chg.....$9,844
H. Lease payments (number of payments)..........................................    36
I. Base scheduled payment ..............................................................$274.56
J. Sales / use tax.................................................................................$24.71

Total scheduled payment .................................................................$299.27


 

With the above numbers:

Monthly depreciation charge is 57.26 (2061/36)
Monthly rent charge is 217.30 (217.30*36=7822) which is approximately .003391 money factor (approx 8.14 interest rate, OUCH!)
Monthly tax of 24.71 (9% tax rate)

which gives you a monthly total payment of: 57.26+217.30+24.71 = 299.27

 

rated:
My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth.....

rated:
robby69 said:   My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth. ....

  Did you have to re-sign the contract to make it worse? What would have been their recourse if you refused and insisted on keeping the contract as-is?

rated:
robby69 said:   My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth. ....

  
Honestly, if I had seen this, I would have gotten up and walked out.  You were doing them a favor by coming in to fix their mistake.  For them to use that opportunity as an attempt to scam you is outrageous.  

rated:
cestmoi123 said:   
robby69 said:   My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth. ....

  
Honestly, if I had seen this, I would have gotten up and walked out.  You were doing them a favor by coming in to fix their mistake.  For them to use that opportunity as an attempt to scam you is outrageous.  

  Don't forget about 'walking home' as that poster would not have come with 2 cars.  Well maybe an Uber.

rated:
If you are still within 3 day period or whatever, go back and return the truck.

rated:
Rubl said:   If you are still within 3 day period or whatever, go back and return the truck.
Most Leases don't have cool off.
OP didn't say what state he was in so I can't tell if there is one.

rated:
cestmoi123 said:   
robby69 said:   My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth. ....

  
Honestly, if I had seen this, I would have gotten up and walked out.  You were doing them a favor by coming in to fix their mistake.  For them to use that opportunity as an attempt to scam you is outrageous.  

  "we screwed up your paperwork.  please come in so we can fix it" is a common dealership scam.  the $.00 was intentional, so that dealership could get a shot at squeezing another $26/mth out of buyer.  the idea is to tell buyer the "mistake" is about something minor (like cost of excess mileage).  that way, he's likely to have his guard down and sign without scrutinizing the entire contract. 

rated:
forbin4040 said:   
cestmoi123 said:   
robby69 said:   My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth. ....

  
Honestly, if I had seen this, I would have gotten up and walked out.  You were doing them a favor by coming in to fix their mistake.  For them to use that opportunity as an attempt to scam you is outrageous.  

  Don't forget about 'walking home' as that poster would not have come with 2 cars.  Well maybe an Uber.

  He'd be driving home in the car he leased, under the terms of the lease the dealer drafted, and he signed, which provided unlimited free miles.  Dealer is asking for a favor, and I'd argue he's under no obligation whatsoever to provide it to them.  At very least, I would have gotten compensation for my time and effort in helping them out.  When they tried to scam me, that would have been the end of it. 

rated:
forbin4040 said:   Rubl said:   If you are still within 3 day period or whatever, go back and return the truck.
Most Leases don't have cool off.
OP didn't say what state he was in so I can't tell if there is one.

Sure. Dealer could accept current terms. Or if they say they made a mistake, they have a right to roll back the deal and offer the new terms, but NOT to obligate three buyer to the new terms that the buyer has not agreed to. No need for a cooling off period.

rated:
cestmoi123 said:   
forbin4040 said:   
cestmoi123 said:   
robby69 said:   My last lease, the finance manager at dealer had me come back in (or was going to send salesman to my home) to re-sign the contract, because they put $.00 for each mile over $15,000, instead of $0.20.  Did show this on my copy, which WAS incorrect.

Ok, no problem, went it and was just about to sign, when I see the monthly payment didn't look right... $26 more per month that my original contract.
Finance manager after looking at the old contract I brought, quickly said oh !, no problem, let me change that...
You like to think mistakes happen, but if only 1 line is being changed in a contract....left me with a bad taste in my Mouth. ....

  
Honestly, if I had seen this, I would have gotten up and walked out.  You were doing them a favor by coming in to fix their mistake.  For them to use that opportunity as an attempt to scam you is outrageous.  

  Don't forget about 'walking home' as that poster would not have come with 2 cars.  Well maybe an Uber.

  He'd be driving home in the car he leased, under the terms of the lease the dealer drafted, and he signed, which provided unlimited free miles.  Dealer is asking for a favor, and I'd argue he's under no obligation whatsoever to provide it to them.  At very least, I would have gotten compensation for my time and effort in helping them out.  When they tried to scam me, that would have been the end of it. 

  This! 

As a matter of fact, I would have told the dealer that I was about to quit my job and drive around the country a few times with my newly leased vehicle.  maybe even do the cannonball run (once or twice).  And that in my spare time I was gonna UBER with it... Until I put a million miles on it and got my picture in the newspaper.

then ask him if he wants to try again on the paperwork, for a MUCH, MUCH greater deal for me... and warn him he has one shot...or he gets a lease turn in with 1,000,000 miles!

rated:
Typically lease agreements prohibit using the vehicle for business or for-profit purposes.

rated:
jtuttlemiester said:   I'll try to keep this from turning into a novel, but here it goes.

Walked into the dealer looking to purchase a new truck. Eventually settled on a truck and was told there was a $10,500 rebate associated with the truck if I leased it and only an $8,500 rebate if I bought it. I was also told that the cost of the lease was approximately $16,000 (New price 47,000 and a 31,000 residual value).~~So I ended up putting 6,000 down and ended up agreeing to pay $300.00 per month for 36 month, essentially paying the other 10,000 of the lease.... which didn't hit me at first, but eventually began to do the math and started to wonder where the hell the rebate went, which should have essentially covered the other $10,000.  

I understand there is also a leasing charge, but also couldn't help but remember at the end of the sales session, we were only in the managers office for the last few minutes to sign the paperwork and were essentially kept out and not provided with any paperwork until we were ready to sign the deal. Doing the math, there was approximately a $2,061 difference between the net cost and the residual value. At the end of the day, the rent charge is $7,822, which seems astronomical considering the other numbers.  

Before I go any further, maybe its just me not understanding the way the numbers work out in the end, but here they are. 

A. Gross Capitalized cost................................................................   $49,013
B. Capitalized cost reduction (Trade ins and down payments) .........$15,940
C. Adjusted capitalized cost ..............................................................$33,072
D. Residual Value .....(value at end of lease).....................................$31,011
E. Depreciation and amortized amounts (amt charged for 
     vehicle's decline in value through normal use (C-D).......................$2,061 
F. Rent Charge ..................................................................................$7,822
G. Total of base scheduled payment(s) - Depreciation + Rent chg.....$9,844
H. Lease payments (number of payments)..........................................    36
I. Base scheduled payment ..............................................................$274.56
J. Sales / use tax.................................................................................$24.71

Total scheduled payment .................................................................$299.27



Here is how the numbers were presented in another area:
1.   Amount due at lease signing ........($4,049 cash, $2,000 trade in & $10,500 rebates).......$16,549
2. Total sum of monthly payments ...........................................................................................$10,773
3. Other ....none
4. Total amount of payments....................................................................................................$27,024

    
The way I see it, I'm paying an extra $11,000 dollars to finance the $16,000  cost of the lease....which is over 50% interest.

Bottom line, can somebody please tell me whats going on?

1. Did I get screwed
2. Am I missing something?
3. Did the dealer steal my rebate through a huge rent charge?

 
The answer appears to be that you are "missing something" because the amount due at lease signing is not the same thing as the cap. cost reduction amount.
Here is how the numbers were presented in another area:
1.   Amount due at lease signing ........($4,049 cash, $2,000 trade in & $10,500 rebates).......$16,549
B. Capitalized cost reduction (Trade ins and down payments) .........$15,940.... So this amount breaks down to $10,500 + $2,000 trade= $12,500 + $3,440 =$15,940 thus out of the cash down you are paying out of pocket in the total amount of $4,049 subtract $3,440 which is being applied as a "down payment" to reduce the lease payment leaving a difference of $609 ($4,049 - $3,440)  which is likely first payment +registration doc fees, or acquisition fee which seems about right based upon the information you have presented.

The "interest" is the money factor which is typically sub-vented, (subsidized), by the manufacturer and equates to a very low rate.

You are leasing a vehicle which would cost you over $600 per month if financed over 60 months even at a very low finance rate or perhaps more if the rebate was $2k less on a purchase.


   

rated:
llepky said:   
jtuttlemiester said:   
A. Gross Capitalized cost................................................................   $49,013
B. Capitalized cost reduction (Trade ins and down payments) .........$15,940
C. Adjusted capitalized cost ..............................................................$33,072
D. Residual Value .....(value at end of lease).....................................$31,011
E. Depreciation and amortized amounts (amt charged for 
     vehicle's decline in value through normal use (C-D).......................$2,061 
F. Rent Charge ..................................................................................$7,822
G. Total of base scheduled payment(s) - Depreciation + Rent chg.....$9,844
H. Lease payments (number of payments)..........................................    36
I. Base scheduled payment ..............................................................$274.56
J. Sales / use tax.................................................................................$24.71

Total scheduled payment .................................................................$299.27


 

With the above numbers:

Monthly depreciation charge is 57.26 (2061/36)
Monthly rent charge is 217.30 (217.30*36=7822) which is approximately .003391 money factor (approx 8.14 interest rate, OUCH!)
Monthly tax of 24.71 (9% tax rate)

which gives you a monthly total payment of: 57.26+217.30+24.71 = 299.27

 

  
Lease rates, even sub-vented ones are often treated the same way as interest rates determined by credit scores, based on tiers, but if it's a lease through a bank and not a finance arm of the manufacturer the dealer may be able to receive a portion of the money factor up to a limit imposed by the bank which is typically capped...

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