[Asiann]

Since you are in the field, do you know if Hawaii honors the SCRA? I was told last week that I would pay the 4% excise tax for being a "resident" and I'm a resident of TX and in the military! I cannot find anything and the State taxation office agrees that I have to pay. I have never paid taxes on cars that I bought in Colorado, SC, VA and TX. :mad:

[SteveMD]

Just a quick note. The money factor is multiplied by 2400 not 24 to reach the equivalent APR.

[HKlein]

I pasted this post from another (off topic) thread, and think it belongs here.

Originally Posted by HKlein

It all depends on how long you/I plan on keeping the car. If I'm going to keep the car more than 3-4 years, then it pays to buy/finance the car. But if I only keep it for the 3 year lease term, I think it pays to lease.

For example, with a $44,000 price (for a well-optioned 330xi) the lease payment is a little over $600 with nothing down. The monthly LOAN payment (assuming 60 months at 5.8%) would be $846.56.

So, with leasing you're in the car for $246 less per month, but you are correct -- you don't OWN anything.

Philosophically, there's something to be said about investing in a depreciating asset. Why put all that money into something that immediately drops 20% in value and conitnually drops over time, when you could take the $246 monthly savings (from leasing) and invest it in something that actually appreciates....like a mutual fund.

...it's an interesting discussion. I'm not sure where I will end up.

Any thoughts?

[kevbh]

Atty - well said and much appreciated!

Just to throw in my two cents... With indirect auto lending, I believe the standard practice is for the finance guy to split the yield spread premium 50/50 with the bank. One thing I still find odd is that even with a yield spread premium included, you will probably get a much better rate through the finance guy than if you go directly to the bank he is getting his rate from! It's the difference in competition in the indirect auto lending area (fierce) versus competition in the retail business (so so), but still it seems odd. I was recently qouted 4.75% through Bank of America by the finance guy, but BoA's advertised rates are generally closer to 8% at a branch. Of course, this is why you go visit a credit union for an alternate quote.

As a bank regulator, I also had a little fun at the dealership, but more so with the finance guy. I think I made him more than a little nervous with my line of questioning. What amazed me was the amount of junk he was trying to sell! The various financing options were pretty good (nothing like competition in a large metro market to eliminate origination fees, prepayment penalties, credit life, etc.), but pre-paid maintenance, extended warranties, tire and wheel insurance, and on and on - I couldn't stop laughing. I finally had to stop the poor guy and just tell him I "self insure".

Again, great info Atty. Real value there.

By the way - the one area you didn't touch on that I feel is the most predatory of all is Credit Life/Debt Cancellation Agreements. World's most expensive "insurance", and they've been known to make you think it is required for the loan...

[deltron]

Great info Atty.

I have a question for the group. I have a piece of paper that I got from the dealer when I negotiated the price of the car and what kind of down payment I'll be putting down etc... The paper has the unit price (price of the car with options), a registration/title ($375, I'm sure this is normal) and a doc free which is $189. It also lists my deposit and what I plan on paying out of pocket when I pick up the car.

The salesman if I remember said this fee non-negotiable. He also called it a PAC or something along those lines. He said all dealers charge this, and the money goes toward the preparation of the car (and paperwork as well... I think). Does anyone know what this PAC is? Is this a hidden fee I'm going to get?

Any who, that's all I have in the paper work I have signed thus far with the dealership. None of its binding (and its not binding for them either).

I'm going to keep in mind YSP and origination fees when I finalize the finance stuff. I don't want to pay anymore than the amount left after my down payment (plus the simple interest). I a got interest rate 6.15 with ELoan and 5.7 from the dealer so I'm going with the dealer.

Does anything smell fishy to you guys? I'm from Jersey too if that helps. (Note, this is my first time buying a car so its all new to me.)

Thanks.

Update: Talked to my CA, all the car preparation stuff (PAC) is included in my price. Whew... the more you read this forum the more you double back to everything that happened at the dealership and parse it all looking for anything shady. This forums is really a great resource for buying any car, not just BMW's.

[KevinC]

Originally Posted by Atty

Q: What's wrong with Lawyer jokes?
A: Lawyers don't think they're funny, and nobody else thinks they're jokes.

Q: What's the difference between a lawyer and a catfish?
A: One's a bottom-dwelling, scum-sucking, filthy SOB.. and the other's a fish.



Seriously.. great info, thanks for sharing. And thanks for being a good sport.

[shimshimhada]

Originally Posted by LEDZEP

925 is max.

Oh, there are different ranges for different companies:

Equifax only goes up to 850, while Transunion goes up to 925.

[abc]

Originally Posted by Mr.Abulia

I don't know if the US is a lot different than Canada for insurance, but up here if you are uninsured for even 1 day, most companies will treat you like a brand new driver (ie. no history, no driving experience) once you are re-insured. Therefore, ALWAYS keep yourself insured, even if it is as a tertiary driver on a car that's on blocks someplace. Fire/theft insurance of a few bucks a month on a car that doesn't even exist anymore can save you thousands over the first few years you start driving again! Stupid, but true.

Interestingly, if you have a lot of tickets, go off insurance and try to get new insurance, they don't forget about your driving history. It only seems to work in their favour. Go figure...

Good luck navigating the bigest legal scam in North America.

damn thats a stinger... i still dont know if it's true in USA or if it depends on ea. state... but if it is true that gaps in insuring a car bring you back to zero... then we all need some VIN # and plates to insure it.

but i thought you can call your insurance company and tell them to suspend your policy till you 'get back'...?

[abc]

Originally Posted by SteveMD

Just a quick note. The money factor is multiplied by 2400 not 24 to reach the equivalent APR.

"You can get a rough equivalent of an annual percentage rate if you multiply the money factor by 2,400; this calculation will be slightly above the equivalent APR that the money factor represents. If a dealer quotes you a money factor such as 3.1, which sounds like a low APR, you can multiply that by 2.4 in order to get the equivalent APR. In this case, the rate would be akin to a 7.44 percent APR."

i just copied that from a site...

my curiosity is, what formulated this 'magic' # 2,400 or 2.4?

[dot1q]

Originally Posted by Atty

I've read alot about purchase prices, leasing, residuals, etc. in the few days I've been on this board, and thought I should chime in.

When I'm not breaking laws limiting how fast one can drive, I'm a consumer finance attorney specializing in the federal/state fair lending laws; so here's my $.02 on buying and financing cars. You may already know many of these concepts, but I always think it's helpful to explain this to others:

When people talk about how much they paid for a car, do they include the little "add-ons" in the price?

Case in point#1: the salesman and I agreed on the price for the car. Then, when he wrote it up, he added on $145 for "doc prep". Arguably, this is a violation of federal and state fraud laws...I'm sure you've all heard of the concept of "bait and switch". You can make the argument that when you agree on the price of the car, that amount is all-inclusive, thus he just increased it on me.

My salesman practically cried, telling me it was "unfair" (his words, not mine) to dispute the fee, because everybody has to pay it. [So if everybody jumps off a cliff....] Frankly, I see a potential class-action claim against the dealer if he doesn't watch it.

I asked him to justify the fee to me and then I'd consider paying it. Of course, he couldn't. Because there's no way a dealer spends $145 out of pocket to process a piece of paper. I made a deal with him - I told him that maybe they pay a clerk $15/hour (plus another $5 for benefits), and maybe the clerk spends 2 hours processing the paperwork (but this is unlikely; probably more like 10 minutes), so that comes out to $40. The salesman was speechless, but the salesman's manager overheard our argument and cut me a deal on this.

Case In Point #2 - Dealer prep fee. Same thing, although in the case of Bimmers the dealer is actually required to do some prep work. Oddly, with 4 yrs/50k free maintenace, you'd think this would be a part of that, woudn't you? Like "doc prep", its a junk fee and should be avoided at all costs. At the least, fraud laws, if not the concepts of honesty and fair dealing, generally require dealers to disclose this fee up-front.


Financing
This is my area of expertise. For those of you who did not pay cash for your car:

a. Origination Fees: Beware of "origination" fees on a car loan or lease. These can usually range from 1-2% of the loan amount. Problem is, a car loan is a consumer loan, the type of which is usually approved by a loan company within 15 minutes. Or you could put it on your credit card and nobody would charge you that. Again, why give the dealer this added profit that can easily run into the hundreds of dollars? Note that dealers do not necessarily have to disclose this fee until the very last minute, so beware and don't be afraid to walk if it happens to you.

b. YSP's: Beware of dealers who charge higher interest rates than you otherwise qualify for. Loan companies will send their daily "rate sheets" to dealers with minimum rates that can be charged; the salesman is then free to increase the rate as much as s/he thinks they can get away with, up to the state's usury limits. In return for charging you the higher rate, the lender will actually pay the dealer the present value of the additonal interest you will be paying the finance company over the life of the loan, after the loan closes and you are out the door. This is called "yield spread premium" (YSP); think of it as being analogous to the dreaded dealer hold-back.

c. Watch out for losing your shirt on leases. I can tell you that even us consumer finance lawyers have a hard time figuring out when a lease is a good deal. This is because of the confusing terms used in leasing as well as the fact that a lease is basically based on a "bet" - how much are you willing to bet that your new E90's residual will be 50% of the MSRP in 3 years? Does it depend on condition? Location? Economic prosperity? Whether it's a stick or automatic? Color choice? iDrive?

When you are looking at leasing over buying, there are really 5 things I look at in making the decision:
1) Cash-flow analysis: will this require a smaller outlay as opposed to traditional financing? Will this free up extra cash for you each month? What do you plan to do with the additional money not spent on the car?

2) Money Factor: this is a rate, analogous to the interest rate, charged by the lender in return for giving you gobs of money. By multiplying the MF by 24, you will know what the annual interest rate is. IMO the only reason the MF exists is to confuse lessees. Example: my dealer just quoted me a MF of 0.00295. If you multiply that by 24, it comes out to 7%. So if I leased the car through BMW Finance with my dealer acting as loan broker, I'd be paying above market rates for the money I'm borrowing. I've got an 800 FICO score - there's no way you'd ever get me to pay rates that high.

3) Annual Percentage Rate (APR): This is important to me in leases (if disclosed) as well as in traditional financing. The APR should never exceed the interest rate. If it does, that means the dealer may be charging an origination fee, or that the loan is a variable rate loan, which is not as preferable as a loan with fixed terms in an increasing-rate environment such as we are currently in.

4) Residual: this is one thing BMWs definitely have in their favor. Theoretically, the higher the resid, the lower your payments will be.

5) Negotiated purchase price: I'm always concerned that unscruplous F&I guys will throw the negotiated price out the window when he prepares the lease docs and just insert the MSRP. If so, then what did you just negotiate? Of course this would be fraud, pure and simple. But if you can't read the lease docs, who would ever find out?


A buyer's best bet is always to visit their local bank for alternate financing. Credit unions are especially good at arranging for auto financing, with much better deals than most dealers offer. When I shop for a car, I tell the sales guy that I plan to finance through him in the hopes that this will give him some more flexibility on the negotiated price; he thinks he's going to make an extra $1000 on me through F&I. In the end, I'll go through the local credit union instead.

There is a ton of fraud committed daily by dealers around the country. I read about the actual lawsuits that arise from this on a regular basis. So when somebody says they got a "good deal", well what is a good deal exactly? One in which you paid $1500 over invoice but got KBB wholesale on your trade, paid $800 in origination fees on your loan, had your MF increased by a factor of 25% over what it should be for the life of the loan, and paid doc prep and dealer prep fees totaling $450? As far as I'm concerned, you just paid full MSRP for your new Bimmer.

In the end, you need to be able to walk in to the dealership knowing how much you are willing to pay for your new E90, and then work around that. It's not easy (even I struggle with it!), because it requires you to keep in mind the difference between the price of the new car and what you want for your trade, how much you want to pay to the lender for giving you money to buy it, and any other fees the dealer plans on making you pay. So, if the dealer hits you with all of these little add-ons, you can either refuse to pay them because you believe your offer was a fair price "all-inclusive", or make sure that the price of the car - with the add-ons - is still no more than what you originally set out to pay in the first place, and leave some room in your budget for additional dealer junk fees.

If you have any questions or need any clarification, just let me know.

*****Thanks for the great info***** What is the fair price for Registration/Title Fee and Doc Fee? The dealer in the Eastcoast charge us Reg Fee $345.00 and Doc Fee $125.00

[Disco Stew]

"This is because of the confusing terms used in leasing as well as the fact that a lease is basically based on a "bet" - how much are you willing to bet that your new E90's residual will be 50% of the MSRP in 3 years? Does it depend on condition? Location? Economic prosperity? Whether it's a stick or automatic? Color choice? iDrive?"

Great info! If the lease is "closed end" why would I care. Isn't that BMW's problem? I can just walk away and they need to dispose of the car. Right?

[teknochild]

Originally Posted by E90Fleet

Or just dont finance it, pay cash

now a-days i understand why my father once said "only idiots pay cash for cars" if you have the 40k to by a bmw, you have the 40k to invest and get a higher return than a loan you could get


as for fees, i wouldnt pay anything but TTT and destination ESPECIALLY if you already negotiated a price



a question for the OP, i have a ton of money but no credit, have any advice on getting a loan with a good rate?

ive alwasy thought it was dumb that banks wont give you a good rate, even if they know u have a stupid amount of money, just because you havent used credit before

[undecided]

But during the negotiations the dealer says I'll do $500 over invoice but then tacks on the posted Doc Fee? Legal or not?


Thanks


CZ

[laztigger]

ATTY great post!

I think we need to Sticky this one. Someone let the admins know.

BMW of Mountain View has a pretty decent finance department.

I did hit the Doc Prep Fee on their Purchase Orders, but it only cost $55 for them and with the below invoice price I got for my 335i, I wasn't about to nickle and dime the dealership for my car. In California, this is actually LAW. http://www.calnurses.org/media-cente...temID=28139875
But is not a governmental fee (and it states so right on the PO).

There was also a $28 DMV Electronic Filing Fee which allows you to get your license plates in 90 days instead of 3-6 months (optional, but hey, it's only $28 and I want my plates instead of getting pulled over with fixit tickets and that stupid sticker)

The license fee was dead on at $351. If you live in California and would like an estimation on your license fee, go to https://mv.dmv.ca.gov/FeeCalculatorWeb/index.jsp

California also has a tire fee, same fee you get when you buy new tires from any tire store. $7. Big woop.

And then for those who are FINANCING to own, i'd HIGHLY recommend you get the extended warranty, and for $1600 you get instead of 4yrs/50,000, you get 6yrs/100,000. This INCLUDES brakes and for those of you who have done brake replacements, this sucker almost pays for itself as brake replacements usually occur after 4 yrs.

Hope that helps for you future car owners.

[abc]

i dont think one needs to get the extended warranty right off the back? (at purchase of the car)

[flea333]

Originally Posted by Atty

I've read alot about purchase prices, leasing, residuals, etc. in the few days I've been on this board, and thought I should chime in.

If you have any questions or need any clarification, just let me know.

So did YOU pay any of the fee's??

MACO
Training fee
Doc fee
Acquisition fee
Cap fee
MF markup from BMW?

Those are the fee's in my lease quote totaling $1115, including TAX on the acquisition fee!! Tax on a fee, is that a service? Please!

I negotiated $1700 over invoice then get stacked with the $1034 in dealer fee's.

Then adding BMW charged MACO/Training BS at 400+130 to get $1564.

Then he marked up the MF by >1% over BMW rate which costs me an extra $2004 over life of the loan, making total extra $3568.

So after negotiating $1700 profit over invoice, what does he actually return my quote with?

$5268 dealer income!

[RandomHero]

Originally Posted by flea333

So did YOU pay any of the fee's??

MACO
Training fee
Doc fee
Acquisition fee
Cap fee
MF markup from BMW?

Those are the fee's in my lease quote totaling $1115, including TAX on the acquisition fee!! Tax on a fee, is that a service? Please!

I negotiated $1700 over invoice then get stacked with the $1034 in dealer fee's.

Then adding BMW charged MACO/Training BS at 400+130 to get $1564.

Then he marked up the MF by >1% over BMW rate which costs me an extra $2004 over life of the loan, making total extra $3568.

So after negotiating $1700 profit over invoice, what does he actually return my quote with?

$5268 dealer income!

This thread is 8 years old and Atty hasn't signed onto the board in over 2 months. You're probably not going to get much help from him.

This is a very useful thread and it was worth the bump so no harm there.

I'm not an attorney so I can't comment on the legality of paying fees.

The only real input I can add is that the money factor/interest rate is not guaranteed, but is certainly negotiable. If you have bad/no credit, you're obviously not going to get the best interest rate available. The money factor is most certainly negotiable and the "best" rate may change from dealership to dealership.

[DJJimGreen]

Zombie Threads!!!!

[divisionbell77]

Originally Posted by Atty

Credit unions are especially good at arranging for auto financing, with much better deals than most dealers offer.

Always use my local credit union. My rate is below inflation.

[badfish718]

Originally Posted by flea333

So did YOU pay any of the fee's??

MACO
Training fee
Doc fee
Acquisition fee
Cap fee
MF markup from BMW?

Those are the fee's in my lease quote totaling $1115, including TAX on the acquisition fee!! Tax on a fee, is that a service? Please!

I negotiated $1700 over invoice then get stacked with the $1034 in dealer fee's.

Then adding BMW charged MACO/Training BS at 400+130 to get $1564.

Then he marked up the MF by >1% over BMW rate which costs me an extra $2004 over life of the loan, making total extra $3568.

So after negotiating $1700 profit over invoice, what does he actually return my quote with?

$5268 dealer income!

Don't be upset, just call them and tell them you are walking. You said it was a quote so you haven't signed anything yet, tell them thanks but no thanks, the fees were the dealbreaker. Then walk to your car...slowly