How does luxury car lease hacking work?

that's where all the car dealership mystery happens is and where they play their games as usually in the money factor my first car kind of turned into a bit of a nightmare because I had bought my first car and it was a 2007 BMW and about two and a half years into ownership the value had tanked and it needed about $3,500 in repairs which is about half the value of the car at that point so I immediately said to myself I don't really want to deal with this anymore I just want to be able to take my car to a dealership and get it fixed always and never have to pay a dollar for anything so the first lease deal I did was on a 2014 3-series and I got hosed on that for sure I definitely I definitely did not get the best deal possible because I didn't know what I was doing at the time it certainly wasn't bad buy by any standards but it definitely wasn't the best and from there on out I'd said IRA and I really like leasing because I like the the idea that nothing is about nothing with this car is my problem but I wanted to make sure that I was never paying a single penny more than I had to for for a leased car and so I would say about three months later I had realized that that 328 really wasn't what I was looking for it wasn't really an enthusiast car it was just a loaner car spec really nothing special about it and so I started researching and learning and and searching for my next car which was gonna be a a4 series and M Sport and 4 Series if you're looking for the cheapest way to drive around in a nice new car something cool that you might actually like and the maintenance is somebody else's problem leasing does make a lot of sense especially if you can hit the perfect storm of circumstances the first would be to look for a car that's aged on the deal or a lot something that they want to move typically anything more than 60 to 90 days is something that a dealer's gonna want to get rid of if you can compound that with it being a demo or a former loaner car that also usually can take a heavier discount and if you get really lucky find something with damage reported on the car fan just because everybody knows you can get more money off if there's if there's damage reported and in many cases it really doesn't matter on a lease because it's not your problem you're giving it back at the end and it doesn't hurt you you in any way financially to to have that car you also want to look out for models that have high residual values meaning what they're gonna be worth at the end of the lease you want to also look for low money factors which is your interest rate on the loan and in some cases you can even find cars typically electric cars with the government kicking in some money on your lease payment so I had found luckily not too far for me because I live in a very saturated market which which helps this definitely isn't as easy to do in other markets but in Long Island we have I want to say eight or nine BMW dealerships within a thirty to forty mile radius of each other so the competition's pretty fierce and I wound up finding a car that was was very fairly close to me and it was a demo it had about three thousand miles on it I work up this this email and I've been using this email for years and basically it sort of sets out my intention I give the stock number and I and I go on the website and I grab usually two of the managers emails and I CC them on the same email and I just state my intention which is if we can do the following deal I'd like to come take the car this weekend tonight I believe that that's an important thing to do if you're gonna try lease hacking is to actually be serious about taking that specific car because what you're doing when you send a lease hacking email is you're sort of just making a proposal to a manager where there's no work involved if you did your work right and you know the numbers there's no negotiation it's just a simple business decision for them do I want to move this unit or do I not so I would definitely say be serious if you're if you're gonna try this don't don't just go sending fifteen emails to a bunch of dealerships hoping that one of them might come back because you'll probably find that multiple dealerships come back with with the offer that you were hoping for so the way you you calculate a lease payment and figure out whether or not you're getting a good deal you're gonna first want to start with figuring out what the MSRP is of the car which is simple because that should be on the window sticker and then you want to find out what invoice is for that and invoice is the price that the dealer pays for the car and in general if you're hacking the lease you want to get a pre incentive discount meaning a discount before any manufacturer cash regional credits lease incentives you want to negotiate the discount before incentives and you want to try to get invoice or better as a discount because remember we're usually going after aged inventory something maybe less desirable something so highly optioned that nobody wants it because it seems like it would be too expensive so you start off with your MSRP figure out the discount you want pre incentive then you'll put in your tax incentives and the difficult part in calculating calculating a lease is the money factor in the residual that's where all the that's where all the car dealership mystery happens is and where they play their games as usually in the money factor and the money factor is basically your interest rate on the loan some brands have very reasonable interest rates close to 0% some brands like Porsche are charging you almost 7% interest on a loan and then you have brands like BMW that are in the middle somewhere around 3% so the best way to know what your based money factor is and what your residual is is to utilize the Internet unsurprisingly the Edmunds forms are pretty much the only place in the best place you're ever going to find this information you'll typically Google something like BMW 4-series lease deals Edmonds and you'll get a whole thread where you can simply just request the money factor in the residual for the deal that you're looking for and somebody will get back to you and they'll tell you the base money factor in the base residual you'll plug all this into the calculator and you'll get a monthly payment then with your local sales tax included and then you'll have an idea of what that payment should look like at a base rate so leasing does allow you a lot of a lot of movement and you want to be sure of that before you lease a car because some leasing companies do not allow these transfers some leasing companies also make you keep a part of the equity so to speak there are certain brands that they'll transfer the lease to somebody else but they'll want you to still remain liable for say 20% of the remaining payments should the other person to fall in the case of Porsche Financial they up until recently and I believe this is changing they keep you on the lease as a guarantor even after you've transferred it so now your car is in somebody else's possession completely and you're still just on the banknote with them and if they stop paying they'll just come after you for the remaining balance without doing anything to recover the car give the car back to you or you're just you're completely out of luck so I would say make sure before you lease a car if you have the intention of wanting to transfer out of it which is very common thing to do make sure that you can freely transfer with no obligation after the fact so at this point I think I've successfully completed about three maybe four lease transfers and especially with BMW for me that's what I have the most experience with it's a very smooth process you just make a phone call they send your new buyer credit application that they can fill out online and if they get approved you get emailed a set of documents everybody signs sends it back and then they get their registration papers and you get a note saying alright you can legally hand over the car and in the case of BMW I've done a lease transfer and as quick as two weeks if you overnight the paperwork back so the best way to advertise the lease transfer if you got a really good deal you can go on the lease hacker forums you could go on your relevant brand related forms I've always advertised on the BMW forms or if you really want to move something quickly you can go on SWA police comm and you can pay their marketing fee I think it starts at 99 goes up to almost five hundred dollars and they have different packages but they are without a doubt the number one market place for for moving a lease because that's that's just a market that they've managed to capture and usually it takes me no more than a week to find a taker or in a asumi for a good lease deal now if you were to go into a dealership which I don't typically recommend because the worst way to negotiate any cars to just walk into the dealership I always recommend sending an email ahead of time well you'll find is that most dealers have a money factor markup just built straight into the system so even if it looks like they're being transparent and they're just showing you the computer and take a look at these numbers don't these look great well that money factors probably marked up it without them even having to mark it up to begin with so if you go in armed with that knowledge of what those base rates are you have a lot of advantage over a standard buyer who who isn't necessarily sure what they're looking at on that computer screen so one thing that's really common for a dealer to do is to show you an insane discount on the price of a vehicle and this is why I say that the monthly payment doesn't matter you really want to watch what your your discounts and your incentives are because it's about how you get to that monthly payment that matters so dealer might have a car that's forty thousand dollars and they're showing you a ten thousand dollar discount and that's three or four percent below invoice and they're saying to you look at this great discount I'm giving you on this car nobody's gonna match this discount but then the money factor is let's say point zero zero one to eight which I believe is about three and a half percent and that's the base rate but on their computer it's point zero zero one five six and now they have made a markup on the money factor which turns into basically pure profit for the dealership some brands cap the amount that a dealer can markup the money factor some brands don't really care it's just more about how the deal is structured but if you didn't know that that was a marked up money factor you would think well this is a great deal I'm getting a huge discount when in reality it's probably an average discount or in many cases not really much of any discount and they've just sort of made that money back up somewhere else in the deal so there's this notion in the the lease hacking community if you'll let me call it that that if you can lease a car for one percent of the MSRP per month with zero down and your taxes rolled in so basically the only thing you pay to pick up the car is your first month payment any DMV fees and maybe some other small dealer fees that they use to just pad in that little extra bit of profit but if you can get to that one percent mark with your taxes rolled in and and no cap cost reduction meaning no money you pay to lower the monthly payment that's usually considered a good deal because that means that you're just paying 1% of the MSRP per month to own the car which is fairly in line with the honest depreciation of a car versus you paying for any accelerated depreciation if you're shopping and your goal is simply to just get the best deal and you really don't care whether or not it's a BMW x3 or and Audi q5 or whichever midsize German luxury SUV it is then you're at an advantage already because you have a lot broader range and you can go on those headsman forms and you can take a look at what the residual values are and what the lease incentives are for that month and you can see what should lease best for that given month and then pick a car based on that personally I always look for cars that I actually want which makes it a little bit tougher but one of the funny things about doing this is over the years I've made really good relationships with a lot of dealerships and I've referred a lot of business to too many dealers and I try to show some level of loyalty of the people who have helped me out and one of the things that I I like to say is the best way to to get yourself a good deal on a car is to simply just be nice to these people because they deal with nonsense all day long and people coming in and saying I will definitely buy this car if you can do that deal and then they definitely don't buy that car the moment they say that they can do that deal because in their minds they have this notion that well if he can do the deal then that means that they there must be more or left and I have to get it from them when in some cases they really are just giving you a good deal so I think it's one of my own written rules this is just be as nice as possible and value the dealers time and say simply look if we can make this work great and if not then that's also a right and I appreciate it so I've been fortunate enough now to be at a point where if I wanted to order a new BMWs always been what I'm into so if I wanted to order a new car I can pretty much usually just custom order about 2% below invoice part of my recommendations are also are always to start your negotiations in the last week of the month with a deal that commences at the final two or three days of the month and if you really can wait and you're in an advantageous position and you don't need a car immediately the end of the year is also an incredible time to to buy a car I definitely had one lease deal where the dealership did money on the car this was a BMW 4-series that I had gotten at a dealership out in Pennsylvania and this was a unique case of I personally really thought that the car was cool but in that specific market which was a more wealthy ritzy part of Pennsylvania a gray with a bright red interior 4 Series coupe with a manual transmission was not something that their clientele was really going to want and to compound that further the car was a manager demo because we all know that they're not loaning out six speed cars to anybody for a loaner just by itself you should be able to get a good discount because it's a demo but in this case it had been sitting on their lot for quite some time and I had started the conversation on this car and I wound up getting I think it was about sixteen point eight percent off MSRP before incentives and what really made this deal even crazier is that BMW had a lot of four series is left in dealer inventory and there was about I want to say close to $8,000 in incentives on the four series and that in that month I believe it was $5,500 in leased cash and another 25 or 3,500 in loyalty if you had owned a BMW in the previous 12 months and when you're doing your lease payments in general incentives every thousand bucks is $30 off the lease on the 36 month or there abouts so if you can imagine that we're now artificially lowering the price of that car monthly by quite a large margin just from what BMW is kicking and that's not even a loss to the dealership but we know that if BMW invoice is 6% and holdbacks another five that's 11% well this dealership was going about 16 and a half off pre incentive because they just I guess they just knew that this car was never going anywhere in their market and they were probably going to have to wholesale it that was definitely the best deal and another thing to note that I also always say is not to put any money down on a lease even if you can and you just want to make your lease payment lower for some reason and you understand that there is a direct correlation to money down versus amount of off your lease you're not actually paying less for the car you're just paying that amount upfront from what I understand if you were to lease that car and then crash it a month later you wouldn't get any of your downpayment back and you have gap insurance on the lease they're gonna cover what you have left to pay on the lease but if you put $5,000 down well good for the insurance company then they just have to pay out less but you're not getting any of your $5,000 back if you crashed that car the day after you lease it so in general I would say don't do a cap cost reduction on a lease because there's some risk involved in that one thing to note when you're looking to do a lease hacking deal is not to just look at what somebody else paid for the same car three or four months ago because a lot of people think dealers are lying when they say that that's not possible this month this month things are different it's actually almost always true sometimes programs don't change month-to-month but in many cases they do when it's a very complex thing and every model has different amounts of manufacturer incentives and cash on it and the money factor can change month-to-month the residual can change month-to-month so don't just see a great deal online and walk into a dealer expecting that you can get that deal that month you have to do your research you have to know your money factor you have to know your residual you have to know your incentives and you figure out what the best deal is for that month and if the deal doesn't seem particularly great that month and you can wait then just see what happens next month we'd like to thank Avalon King for their continued support of the Ben wiki YouTube channel obviously I've installed it onto my Porsche 993 which one of our app users is gonna win once we hit a million subscribers I've got it on the lp640 and it's performed flawlessly in both cases the cars are much easier to clean the finish looks a lot better and I've really been impressed with it so we're gonna do some more experimentation with the ceramic coating this month but please do check out the link in the description below enter the code VIN will key for a discount and thank them for supporting your favorite YouTube channel

Channel: VINwiki

Views: 1,694,422

Rating: 4.8339744 out of 5

Keywords: Scott Smith, GlassParency, Transparent, Lease Hacking, Swapalease, VINwiki, Car Stories, lease deals, bmw, mercedes, gmc, gmac, lease termination, negotiation, car buying, car shopping, lamborghini, ferrari, financial, financing, exotic car financing, Premier Financial Services, aged inventory, money factor, term, interest rates, strategy

Id: 4k9XfEjbi1k

Length: 17min 32sec (1052 seconds)

Published: Mon Nov 18 2019

Reddit Comments

[u/Protagonista]

Changed the title but I honestly think it's worth watching for a relatable experience that I and others have had (this is way worse, but I've got stories too).

That people see a better option to this in Tesla is important. It was to me. I'll never go back. Seriously, I hung onto my old car from 2002 waiting it out until something better was available, anything.

I don't think we can understate the sort of anti-branding that's happening with the supposedly "high quality" german brands. They have not become better over the years (and I've owned several of them). The construction and paint was worse with each iteration. The bills were higher and more frequent.