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Captive leasing

The last post in this topic was posted 789 days ago. 

 

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I’d like to lease a new car and have a question regarding captive leasing.

 

My FICO’s are in the 630-640 range, my wife’s are 660-670 range. I have always had a feeling the dealers spiked the interest/lease rates to grab more money than what the captive banks offered. Would it make sense to complete credit application at manufacture web site such as Nissan’s or Mazda’s to get approved prior to negotiating with the dealer? Would this method block dealers from spiking the rates?

 

 

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1 hour ago, Steven85 said:

 

I’d like to lease a new car and have a question regarding captive leasing.

 

My FICO’s are in the 630-640 range, my wife’s are 660-670 range. I have always had a feeling the dealers spiked the interest/lease rates to grab more money than what the captive banks offered. Would it make sense to complete credit application at manufacture web site such as Nissan’s or Mazda’s to get approved prior to negotiating with the dealer? Do not ever do a captive application directly to the captive lender.They are an indirect lender and will only disclose terms and rates with the dealer, plus you would probably get an extra inquiry or maybe two.Would this method block dealers from spiking the rates?  Absolutely not unless it was a subvented rate special similar to say .9% or the lease equivalent.

 

 

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7

Been in the auto business since 1972.  I have ever only worked for one dealer whose common practice was to mark up the lease rate.    For that reason, most F&I managers have a deep-seated hatred of leasing vs retail.

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Marv - wasn't the practice of dealerships marking up the interest rates on mainly special finance banned or at least severely curtailed?

 

I recall a few years ago it was either 20/20 or 60 Minutes did a segment on dealerships marking up interest rates on minorities but not majorities and proclaimed racism in the auto industry.

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20 minutes ago, IndyPoolPlayer said:

Marv - wasn't the practice of dealerships marking up the interest rates on mainly special finance banned or at least severely curtailed?

 

I recall a few years ago it was either 20/20 or 60 Minutes did a segment on dealerships marking up interest rates on minorities but not majorities and proclaimed racism in the auto industry.

Subvented rates whether retail nor lease rates may not be marked up for profit to the dealer.  You are absolutely correct.

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On 11/6/2018 at 7:07 AM, MarvBear said:

Been in the auto business since 1972.  I have ever only worked for one dealer whose common practice was to mark up the lease rate.    For that reason, most F&I managers have a deep-seated hatred of leasing vs retail.

This surprises me Marv.  It could be the brands you have worked at, but In most of the car purchases I have made in the last 10+ years (almost all primarily Audi/BMW, but have shopped other competitor makes), the initial MF on a lease is marked up at least somewhat.  Of course I never do a deal at anything other than base MF.  I do know that there is a mark-up ceiling which likely prevents some of the issues you describe above (for example, BMW allows a mark-up of .0004 over the buy rate).  

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