Culminating a Deal

On Monday I leased a Royal Blue Pearl Acura TL with Ebony interior, and I almost received the exact deal that I expected. In my last two posts Leasing my First Car and Leasing an Acura TL I discussed what I learned about the leasing process through the abundance of information on the web and my spending threshold for this particular vehicle. To summarize, my goal was to pay no more than $435/month for the car (including sales tax of 6.5%) and only pay inception costs at signing. My monthly payment assumed I would be able to purchase the cost at invoice, included a $500 buffer for unexpected fees, a $1,505 dealer lease contribution per Acura’s website, and a residual value and money factor (market value of the car after the lease ends and interest rate) from my research. Inception costs include the first month’s payment, tags, title, and a $700 Acura dealer fee which I estimated at $1,400 to $1,500. It should be noted that based on the above, every $1,000 added to the price of the vehicle translated to $30/month on the lease payment.

Prior to signing my lease on Monday I had visited the dealership to test drive the TL and build a rapport with the salesman. I attempted to negotiate a price prior to signing my lease, but the salesman assured me that the dealership would not negotiate until I was ready to consumate a deal. When I returned ready to make a deal I started the negotiation process well below my target lease payment. This is due to the dealership wanting to guage my spending threshold. If I came it at my target payment, I would likely pay more than I wanted to. My initial offer was $400/month with $1,500 down and the dealership came back with $470/month with $2,000 down. After standing firm, they returned with $470/month and $1,500 down.

Frustrated by the process the salesman brought me into the financier’s office to have a chat. When speaking with him I started asking detailed questions about what I was paying on the car. First, I noticed I was paying about $600 over invoice for the car. I demanded to pay invoice for the car and the financier explained I was paying invoice, but there was a $595 bank fee — charged by American Honda Finance Corporation, for their costs. I was then assured that the bank fee I was paying did not include a profit margin for the dealership. The bank fee fit into my threshold of $500 over invoice, but did not explain why I was paying an additional $35/month on my lease.

My next question involved the lease cash from Acura which the dealership listed at $1,000 and I had researched to be $1,505. I questioned this and the financier showed me his price sheet that listed lease cash for my model — the TL without navigation, at $1,000. When I brought up the lease cash being $1,505 on the website they still refused to budge. I was told that their hands were tied on the matter and there was nothing they could do. But that $500 discrepancy should have only added $15/month to the lease payment making my maximum payment $450/month which was $20/month less than my quote. After the negotiation hit a stand-still I left the dealership.

Five minutes later I received a call from the salesman who made a last attempt to earn my business. He told me that the financier would do the deal at $448/month but I would have to return to the dealership immediately to complete the deal. Considering that the monthly payment was within the range that I wanted to pay, I accepted and returned to the dealership.

Overall, the negotiation process took about two hours and I was happy to have received what I felt was a fair deal. I had hoped to pay about $13/month less on the lease but I needed a car immediately and the residual value and money factor was set to change the next day. Ultimately, I decided paying a little more on the lease negated the risk of losing the deal completely due to potentially unfavorable residual vaues and money factors in the next month.

Posted on July 9th, 2009 | By: bootstrap economist | Filed under Personal Finance

One Response to “Culminating a Deal”

1. bootstrap | economist » Blog Archive » Power of the Wingman Says:
   September 21st, 2009 at 11:44 pm

   [...] my first week getting settled in my new home; furnishing my room, bonding with my new roommates and acquiring my first car in four years. Once all the necessities were taken care of, it was time to hit the street and meet people. I [...]

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