Here's something I don't understand and perhaps someone, anyone, can explain how this can be.

My MCS is due in 1-2 Weeks (YAYAYA!). Went into the dealer tonight to fill out the lease/credit application and decide how much down, term etc for the lease. I was going with numbers that I've entered into the MINI Canada website lease calculator, www.mini.ca, $1000/down low millage lease, car costs $32590 with options (see my sig).

Here's the problem. The price the dealer came up with is $30/month more than what the MINI Canada website lease calculator calculates. He couldn't explain it at all. He even went to the website with me and he agreed that we seem to be comparing apples and apples. No taxes are included in the website lease price and he took them out of his lease calculator too. Nothing we could do could explain this $30/month discrepancy. $30/month works out to around a $1000 difference in price of the car, not insignificant. Had it been say $10 or less I wouldn't have made such a fuss but $30, relatively speaking, is a huge difference. Mini Canada's lease came to $499 while the dealer was $528, all before taxes. We even played with lease rates to see if that could explain it, the website having lower rates or something, made little difference and the rates were going to a point he's never seen them at in our experimentation.

Can anyone explain how this can be? The sales guy removed all taxes, dealer prep all of that was due on signing and it was $30 different than Mini Canada's website.

Any Canadian dealers around that could possibly explain this?

Furthermore, I've visited around 5 lease calculators on various sites on the net and all of them jive with MINI Canada. I'm not saying someone is trying to pull a $1000 fast one on me. I just want to know how all the charges break down in order to explain this $30 difference.

Could the MINI Canada website be construed as false advertising?

Anyone care to comment?

Paul

My comment (or actually a slightly educated guess) is that most lease calculators on the web use historical interest rates, the rate as of a certain date, for instance "as of September 1 the apr is..." Your dealer is getting a real time rate.

I believe somewhere in the fine print on the MINI websites it says the lease/finance payments are for ESTIMATION only.

One of the first things my dealer told me when I went to talk to him about getting a MINI was that the estimator is "soft".

I would hazard a guess that is due to the rather complicated way APR is actually calculated. The website estimator may do simple intrest instead.

Talked to BMW Finance and they agreed with my numbers. Something to do with residual. They are going to talk to the dealer on monday and fix it up for me.

:) I'll post back here with exactly what the issue was when I have more info on Monday.

One things I don't like is the fact that my dealer made ME do all this leg work and get the answer. He even called me and said no one at BMW Canada could help him. I got the answer. Come to think of it I think this should be worth some floor matts. :)

Paul

I can think of a couple of things that might be in there:

Gap Insurance -- this is insurance that covers the difference between what you owe and what the car is worth, should you total loss it.

Taxes, fees, etc. -- Often the dealer will finance your sales tax when you'd prefer to pay it up front. Same with DMV registration fees, advertising costs, & EDP (extra dealer profit).

Chip H.

Originally posted by GMINI03
I believe somewhere in the fine print on the MINI websites it says the lease/finance payments are for ESTIMATION only.

One of the first things my dealer told me when I went to talk to him about getting a MINI was that the estimator is "soft".

I would hazard a guess that is due to the rather complicated way APR is actually calculated. The website estimator may do simple intrest instead.

There are not many numbers involved in calculating a lease:
- the amount being borrowed (total cost plus any taxes or fees to be included in the lease less downpayment)
- the length of the lease
- the residual value at the end of the lease
- the interest rate
That's it. Any difference in payments must be due to one of these four numbers changing.

The sceptic in me thinks that a dealer saying the estimator is "soft" is trying to hide some fees to pad his bottom line. It is very easy for dealers to get buyers to believe their lease numbers. Its as though you went to the supermarket, bought 10 things at $1 each and just said "OK" when the cash register comes up with an $11 total.

Originally posted by chiph
I can think of a couple of things that might be in there:

Gap Insurance -- this is insurance that covers the difference between what you owe and what the car is worth, should you total loss it.

Taxes, fees, etc. -- Often the dealer will finance your sales tax when you'd prefer to pay it up front. Same with DMV registration fees, advertising costs, & EDP (extra dealer profit).

Chip H.

I don't know about other place but in Canada a lease doesn't have any taxes payed up front. The only tax you pay is on the monthly payment. All my numbers were without taxes, all taxes including Air Conditioning tax was removed. No gap insurance, no nothing. Like I said we were comparing Apples to Apples.

Paul

I agree, a lease is only made up of those numbers so something was a little funny. As I mentioned in a previous post it seems to be something to do with the residual. I don't think the dealer was pulling a "fast one" and unlike the States it's actually illegal to charge over MSRP in Canada. They find ways around it but generally it's not done(see below). BMW Finance said that the dealer was forgetting something to do with the residual or something. However I wonder how many other customers of this dealer are paying the $30/month more?

How Canadian dealers charge more than MSRP. Two basic methods.

First, the store owner/sales manager will buy the vehicle from the "dealer" in his name. When you go to buy your hot new car it's a "6 Month wait..." however the "Sales Manager" is selling his car but he's selling it for more than list. Because it's a private sale it's legit.

Second, the accesories scam. Add accesories to the car so you pay $2000 for some mud flaps and a shift nob.

Cheers,


Paul

Originally posted by Keith


There are not many numbers involved in calculating a lease:
- the amount being borrowed (total cost plus any taxes or fees to be included in the lease less downpayment)
- the length of the lease
- the residual value at the end of the lease
- the interest rate
That's it. Any difference in payments must be due to one of these four numbers changing.

The sceptic in me thinks that a dealer saying the estimator is "soft" is trying to hide some fees to pad his bottom line. It is very easy for dealers to get buyers to believe their lease numbers. Its as though you went to the supermarket, bought 10 things at $1 each and just said "OK" when the cash register comes up with an $11 total.

Some seem to think interest rates are straight forward and easy to calculate.... perhaps the mini site used one method and the dealer used a diffrent one. As you can see from the example "borrowed" from somewhere else, there are many ways to calculate APR. Now reversing that and locking your APR onot one # but calulating payments using each method you'd get 4 different answers.


Installment loans: there are several methods for calculating the APR on installment loans.
The actuarial method is the most accurate in calculating the APR and the one lenders most use. It can be defined as interest computed on unpaid balances of principal at a fixed rate, with each payment applied first to interest and the remainder to principal. Since calculation by this method involves complicated formulas, annuity tables, computer programs, or financial calculators are commonly used.
The constant-ratio method is used to approximate the APR on an installment loan by the use of a formula, but it overstates the rate substantially. The higher the quoted rate, the greater the inaccuracy.
The direct-ratio method uses a somewhat more complex formula but is still easier than the actuarial method. It slightly understates the APR as compared to the actuarial method.
The N-ratio method gives a more accurate approximation to the APR than either the constant-ratio or the direct-ratio method for most loans. The results of the N-ratio method may be either slightly higher or lower than the true rate, depending on the maturity of the loan and the stated rate itself.
Suppose you borrow $1,000 to be repaid in 12 equal monthly installments of $93. This represents a finance charge of $116.

[ ($93 X 12) - $1,000 = $116 ]

The APR calculated using each method is:

Actuarial Method: APR = 20.76%

Constant-ratio Method: APR = 21.42%

Direct-ratio Method: APR = 20.62%

N-ratio Method: APR = 20.76%

The residual makes all the difference. It affects how much money is in the loan! A higher residual means a lower loan amount but they sometimes tie the interest rate to the residual so that it works out somewhat better for them (ie. you get higher interest on a higher residual).

What was the residual on the web site compared to their calculations and yours?

Harry

Originally posted by HarryIndiBlue
The residual makes all the difference. It affects how much money is in the loan! A higher residual means a lower loan amount but they sometimes tie the interest rate to the residual so that it works out somewhat better for them (ie. you get higher interest on a higher residual).

What was the residual on the web site compared to their calculations and yours?

Harry

Residuals were the same. At least they looked to be. The BMW Finance guy mentioned something to the effect that the dealer had to at 8% residual back into the residual field (on this computer) or something. So it sounds like it comes down to the dealer not using the BMW Finance lease software correctly. I'll know more on Monday when BMW Finance opens and my dealer can talk to them.

Paul

THis is the answer to your grief!!

When you price out a car on the website it DOES NOT INCLUDE the padded dealer documentation fees!!!!

and does it include the freight and PDI charged by your dealer, and the leasing fees

from Oakvilled dealer it worked out to quite a bit

freight and pdi was 1295
Leasing fees 475
doc fees more

I forget what the total was

Originally posted by arabinow
THis is the answer to your grief!!

When you price out a car on the website it DOES NOT INCLUDE the padded dealer documentation fees!!!!

and does it include the freight and PDI charged by your dealer, and the leasing fees

from Oakvilled dealer it worked out to quite a bit

freight and pdi was 1295
Leasing fees 475
doc fees more

I forget what the total was

Okay, one more time..:confused: BMW Finance figured it out, it has to do with the way the dealer was calculating residual. All other charges were taken into account, PDI, freight, taxes were all removed from the calculation.

I will post the solution on Monday once I have a better understanding.

Paul

Here we go!

Turns out that the difference was in respect to how the dealer was applying the $1000 deposit that I already gave him. If he applies it to the capital which makes the car $31590 then the lease does indeed become $498+tax/month +PDI+Freight+First+Security deposit+++ ($2900cdn) at time of delivery. However the dealer was applying that amount to the "Time of Delivery Expenses." That keeps my capital at $32590 but means that at time of delivery I will give them $1750. So it doesn't change the capital and hence produces a lease charge of $528/month +tax. The $1000 down is a taxable transaction so by putting the $1000 towards the capital I'm actually charged the 15% sales tax. They then add this sales tax to the "Time of Delivery" charges, hence the $150 differnce between the two "Time of Delivery" charges above.

What I can't believe is that total lack of knowledge that my dealer seems to have had at explaining all this to me. I've leased 4 cars before the MINI and have NEVER (EVER!) had this much trouble understanding the cost break downs. The sales person just doesn't understand how the a lease works and takes the "BMW Finance" computer as the bible. "It can't be wrong, the computer is always right" :rolleyes:

This lack of knowledge has given me a great deal of lack of confidence in my dealer. Not good before you even buy the car! I plan to bring this up with the manager the next time I am in.

Paul