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      03-11-2008, 09:31 AM   #1
mikeriley
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Dealer gave wrong residual value

Hi, I ordered a e90 335 sedan two weeks ago and my car is being built. After checking with this site I saw the dealer gave me a residual value that is 2 point higher than either feb or marches residual value for 36months/10k a year. It obviously was a mistake or intentional but either way it makes my payment significantly less than if the correct value was used. Problem is I put down a deposit and that is the price I agreed with but how do I handle the dealer when he says he made a mistake?
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      03-11-2008, 10:27 AM   #2
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Residual value or money factor? The residual value is set by BMW financial and cannot be changed-the money factor (like interest rate) is given to the dealer by BMW financial and can be increased by the dealer to a certain point. Anything the dealer gives you above the buy rate they got from BMW fin. is profit to the dealer. This is very common. That's why I don't understand why people who lease brag about the sale price when they have no idea what they paid above buy rate. Dealers will trick you and show you a low sale price to hook you in.

The best thing to do is payment shop multiple dealers on a similar car so you know how low you can really buy the car. On a lease, the sale price is only part of the equation.

If you know the buy rate-money factor, residual, msrp, sale price and fees you can calculate a lease online with calculators that are available. That way you will know where you are at.

If they did quote you the wrong residual, I would point it out. If you are talking about money factor that is negotiable......maybe.
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      03-11-2008, 10:34 AM   #3
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Quote:
Originally Posted by mikeriley View Post
Hi, I ordered a e90 335 sedan two weeks ago and my car is being built. After checking with this site I saw the dealer gave me a residual value that is 2 point higher than either feb or marches residual value for 36months/10k a year. It obviously was a mistake or intentional but either way it makes my payment significantly less than if the correct value was used. Problem is I put down a deposit and that is the price I agreed with but how do I handle the dealer when he says he made a mistake?

Ask the dealer if you made a mistake if they would give you your money back. No. You should always get a copy of a contract before putting money down on the car. Everyone makes mistakes, but it should be the person who made the mistake that pays for it.....
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      03-11-2008, 10:39 AM   #4
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If a mistake was made, it will be caught by BMW FS and it will need to be corrected anyway. The deal is not final until accepted by FS, even after delivery, so you should address this up front if you are certain that a mistake was made. We have a few CA's on the site who may chime in here.

Also, they should be calculating the residual based upon MSRP (rather than negotiated price), correct? This could account for the difference.

If you haven't already done so, check these resources:
http://www.leaseguide.com/lease08.htm
http://www.leaseguide.com/calc.htm
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      03-11-2008, 10:45 AM   #5
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Absolutely postive about it being the residual value. I have the lease calculation sheet. the money factor is correct, base rate, but the residual is two point off, two point higher which works in my favor so thats why the payment is lower. But, I know the dealer cannot just put in any residual they want, it and the money factor (yes I know that can go up a bit, but never less than base) are set. So I feel this has been bait and switch. We negotiated a set 800 over invoice, base money factor, no fees. So now when I go to pick it up after waiting he will be like, ooops sorry. Any realistic options except backing out and getting my money back?
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      03-11-2008, 10:49 AM   #6
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Quote:
Originally Posted by mikeriley View Post
We negotiated a set 800 over invoice, base money factor, no fees. So now when I go to pick it up after waiting he will be like, ooops sorry. Any realistic options except backing out and getting my money back?
You got a great deal there, why even consider backing out? Try the calculator linked above and see how that compares to your paperwork.
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      03-11-2008, 10:54 AM   #7
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Quote:
Originally Posted by mikeriley View Post
Absolutely postive about it being the residual value. I have the lease calculation sheet. the money factor is correct, base rate, but the residual is two point off, two point higher which works in my favor so thats why the payment is lower. But, I know the dealer cannot just put in any residual they want, it and the money factor (yes I know that can go up a bit, but never less than base) are set. So I feel this has been bait and switch. We negotiated a set 800 over invoice, base money factor, no fees. So now when I go to pick it up after waiting he will be like, ooops sorry. Any realistic options except backing out and getting my money back?
Make sure you are comparing the right residual. 10k miles per year has a different residual value than 15k and so on.

If you are correct, just go and talk to them. If your payment goes up because of their mistake you should be able to get your deposit back. You still may be getting a good deal in the end, though.
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      03-11-2008, 11:05 AM   #8
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If I were you I'd just wait and see what happens. Think of the situation from his point of view... Let's say he notices the mistake and the dealership realizes that they just cannot honor you that deal because they will be taking a hit, on the same time they don't want to loose you as a customer, so most likely they will try to renegotiate it to their absolute minimum price so that the deal makes sense and you don't get pissed off and walk away. The end result is still going to be a great deal.
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      03-11-2008, 11:25 AM   #9
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Yes, you make excellent points but remember, if he is off 2 point on residual, on a 50K car thats 1K more I pay over the course of the lease so overall my sweet deal is now like 1800 over invoice. Sounds a bit different now huh?

Secondly, to be dishonest is wrong. Bait and switch is illegal in some states. I hate feeling like i got screwed.
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      03-11-2008, 11:31 AM   #10
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What did they give you for a residual and what was the length of the lease?
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      03-11-2008, 11:50 AM   #11
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63% again thats for 36 months at 15K per year (mistyped 10K up top!) and the going rate is 61%
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      03-11-2008, 11:52 AM   #12
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keep you eye on the prize, you are still getting a good deal.
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      03-11-2008, 11:55 AM   #13
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Quote:
Originally Posted by mikeriley View Post
63% again thats for 36 months at 15K per year (mistyped 10K up top!) and the going rate is 61%
ummm, if you got 63% and the going rate is 61% aren't you doing better that way?

61% means the car would be worth less after you are done renting it. Lower residual = more depreciation = higher payment (along with higher finance fee).

On the flip side the buyout of your lease is higher than it would be at 61%, but if you don't plan on buying it seems like you are in a better situation.


Edit -- Oh I get it. You're worried what will really happen when they find the error.. yeah it sounds like there will have to be some discussion going into that... I just picked up a car and was doublechecking stuff, and nervous something like that would happen. I'm glad it didn't.. good luck.

Last edited by kefler; 03-11-2008 at 11:59 AM. Reason: didn't read.
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      03-11-2008, 11:56 AM   #14
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Again, what i negotiated was a good deal, but HRB see my post #9. What I bargained for is not what i'm getting.
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      03-11-2008, 11:58 AM   #15
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Riigggggght, thanks kefler I know. But as I said, the rate is wrong and the dealer cannot make up there own numbers to make the deal better for the customer on the residual factor, i wish they could but they cant. So although i was promised 63% when i go to sign the papers he will say ohh, its 61% and raise my payment.
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      03-11-2008, 12:10 PM   #16
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Quote:
Originally Posted by mikeriley View Post
Riigggggght, thanks kefler I know. But as I said, the rate is wrong and the dealer cannot make up there own numbers to make the deal better for the customer on the residual factor, i wish they could but they cant. So although i was promised 63% when i go to sign the papers he will say ohh, its 61% and raise my payment.
I think you're over thinking this. Just wait. Let them point out the problem. They have as much interest in selling the car as you have in buying it.

If they in fact during the signing tell you that they made a mistake and bring forth a new price if I were you i'd just tell them that you need a day to think about it. They won't sell your car in a day and if anything will give them a reason to even lower the price.
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      03-11-2008, 12:11 PM   #17
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Good point noro!
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      03-11-2008, 12:32 PM   #18
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Quote:
Originally Posted by mikeriley View Post
63% again thats for 36 months at 15K per year (mistyped 10K up top!) and the going rate is 61%
Yep, you are right. I would still do some shopping to see where you are at with other dealers. Then if they try to make a correction you know where you really stand in the market.

I would still point it out now rather than at the last minute. That gives you some time to take their temperature and evaluate the situation.

Yes, most car dealers suck!
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