Direct Mazda - Not so Direct

[nomik2]

Started off as a really good experience. Sales person was nice, spent a lot of time with me showing me the car and test drive was good too. This was the Mazda 3.

When it come down to negotiating they were surprisingly accommodating and eventually came down to my offered price (albeit, when I got ready to leave). I was really happy with the price and best of all they had my exact configuration/colour waiting for me with delivery in 3 days.

I told them I was thinking of leasing and that's where shit went down. The lease payments they showed me were higher than what I had assumed them to be from the MSRP on the website and the negotiated price. They told me that the website didn't include freight + pdi and then further reduced the monthly payment. Excited...I agreed. I was very naive...

When it came time to print the lease papers their computer system wasn't working and won't print properly. They wasted an hour and half trying to fix the computer. I won't blame them for this as this was out of their control and understandable. Ultimately they decided to fill out the form by hand and as they filled out the form, I told the guy the negotiated price just to confirm (he wasn't the dealer who negotiated the price with us). Unfortunately that was not the price he had....they had used the MSRP to calculate my lease payments as opposed to using the negotiated price.

Now I may be wrong here (I don't think so) but I think I have a clear understanding of how leasing works. I spent an hour trying to figure out why they were using the MSRP and what happened to the negotiated price as it didn't show up anywhere in the lease agreement. There was a $20 difference in monthly payment if you used the negotiated price. All I kept hearing was that they have to use the MSRP to calculated the residual value and that is why the MSRP is used to calculated the capital cost. His logic at this point was: Hey, the MSRP is used to calculated the residual cost (42%) and if I reduce the cap cost then your residual value would go down and your monthly payments would go up as the value of the car would decrease.

WTF!!!

A cheaper car = lesser payments if the residual value is a % of the cost!

At this point:
"You know what, I can't make a decision right now"
-Ok, what would you like your monthly payments to be.
"I am not comfortable with telling you that, I would much rather prefer that you use the negotiated price to calc. that cap cost"
-Ok, if I put in the negotiated price as the price of the car your payments will be y. Will you lease it then?

This was the monthly payment that I was expecting using my own lease payments calculations. Now I thought to my self: "He is offering me the price that I wanted the car for, my monthly payments make sense and I have wasted the last 4 hours discussing this...how can I walk away from this?"

However, there was too much trust lost at this point...asked him if he could get someone to drop me off back at work and he said ok, but just went into his office. I asked the secretary and someone from the service dept was nice enough to drop me off as their shuttle service was running late.

Was I wrong to walk out? I have a feeling that he thought I would get confused about leasing and end up just caving in...I will admit that I had agreed to the lease monthly payments before I was presented with the form but this is before I knew that they were not using the negotiated price. Unfortunately for him I completely understand how leasing works....

All in all: Don't go to Direct Mazda in Mississauga, specially if you are planning to lease. They either don't understand how leasing works or they are running a scam.

*sigh*

Thought I'd have a car by now....

[nomik2]

Edit: Ok my language might be a bit harsh. I shouldn't say they are running a scam, but they did try to con me.

...also, if I am wrong about leasing, please tell me. I don't mind feeling like an idiot.

[Olestra]

Nope you aren't wrong. It's common sense and simple math. If the price of the car is negotiated down, how can the monthly payments go up if everything else remains the same (% residual is the same and interest is the same).

You're never wrong for walking out. You should be able to do whatever you want and never feel obligated to buy especially from someone you don't trust.

Now everyone's going to come in here and tell you to go to Jeff (TheBiz). Find him on the forum and PM him.

[emcdonnell]

First of all you are never wrong to walk out if you don't feel comfortable for what ever reason (real or imagined). Peace of mind is hard to pin a value on.


With that said, I think that they were right. MSRP should be represented on the bill with the negotiated amount should be shown as a discount.

For example, If the MSRP is $25,000 and you negotiate down to $24,500 the bill should show the MSRP at $25,000 with a $500 discount. The MSRP does'nt change but the discounts may very. Residual value is based on MSRP.
The MSRP is not negotiable, the discount is.

The only thing that doesn't make sense is that the monthly payments should have remained the same based off your negotiation.

Oh and I just checked the website...they do include freight and pdi on the site so they where screwing you a little ( next time ask them to buy you dinner first)

[nomik2]

I actually called Jeff in the middle of my deal. The dealer was confusing the shit out of me so I went outside to get some fresh air and make some calls. Called Jeff before I called my parents lol.

The worst part is that he told me that he CANNOT change the price and the residual cost is ALWAYS calculated from the MSRP at any dealer, but changed it anyways mere minutes before I walked out. It was at the point when he switched gears that everything broke apart.

The reason why I asked if it was a good decision to walk out was because I was ultimately getting the deal that I wanted/could afford. I walked out on principle not price, now I am afraid if I'll get that deal again, even though he did say that he saved it on file, I doubt he would offer it again if I walk back with my tail between my legs.

[KenYork]

Hmmm... but in that case what if the buyout ended at your negotiated price. Then they wouldn't have be lying. Just that if you didn't wish to keep the car at the end of the lease, that is where the problem lies with your negotiations. Caus with a lease you still don't own the car till you buy it out.

Lets say the negotiated price is $20k and you're only paying $200 a month/lease. By the end of the 3 year term, you've only put in $7200(+tax/interest), so the buyout would be $12800. At that point you can walk away returning the lease.
Where buying the car they'd get the $20k. So I'm assuming they had a higher leasing rate of (lets say) $400/month, so $14400 over 3 yrs(+taxes...), and buyout at $5600.
Still at $20k(negotiated price), but you're already in for so much that you'd buy it out.

(never been through a lease, but is that possible?)

[nomik2]

With that said, I think that they were right. MSRP should be represented on the bill with the negotiated amount should be shown as a discount.

For example, If the MSRP is $25,000 and you negotiate down to $24,500 the bill should show the MSRP at $25,000 with a $500 discount. The MSRP does'nt change but the discounts may very. Residual value is based on MSRP.
The MSRP is not negotiable, the discount is.

Ah, but thing is, he was adamant that the discounted price won't show up on the lease agreement and it was all calculated in the computer. I told him to show me where it was in the computer and he said its not there because you are not paying for the whole price of the car you are only leasing it. Honestly, the only thing I asked was for him to show me the negotiated price somewhere in the lease calculation, but unfortunately he couldn't because it didn't exist.

Oh and I just checked the website...they do include freight and pdi on the site so they where screwing you a little ( next time ask them to buy you dinner first)

I had a feeling it did but for the life of me couldn't figure out how the line items were adding up and trusted them for it. Ironically one of his arguments when I mentioned the negotiated price was that I forget to add Freight + PDI to it...I asked him if he was suggesting that at the MSRP the lease calculations don't have F+PDI added in and then he shut up about it.

[nomik2]

Hmmm... but in that case what if the buyout ended at your negotiated price. Then they wouldn't have be lying. Just that if you didn't wish to keep the car at the end of the lease, that is where the problem lies with your negotiations. Caus with a lease you still don't own the car till you buy it out.

Lets say the negotiated price is $20k and you're only paying $200 a month/lease. By the end of the 3 year term, you've only put in $7200(+tax/interest), so the buyout would be $12800. At that point you can walk away returning the lease.
Where buying the car they'd get the $20k. So I'm assuming they had a higher leasing rate of (lets say) $400/month, so $14400 over 3 yrs(+taxes...), and buyout at $5600.
Still at $20k(negotiated price), but you're already in for so much that you'd buy it out.

(never been through a lease, but is that possible?)

Except thats not how leasing works. You calculate the "buyout" or "lease end value" or "residual value" as a percentage of the cars MSRP first, this is probably set by Mazda Canada and not the dealer. Then you calculate the montly payments as a function of the Capital Cost (negotiated price+freight+PDI), Residual value, ALR (annual lease rate) and taxes (applied to monthly payments, not the whole price of the car).

[nomik2]

So essentially you need:
Lowest Capital Cost
Highest Residual Value
Lowest interest rate or highest Money Factor (interest rate/2400)
...for the lowest monthly payment.

He really picked the wrong guy to screw around numbers with as most of my job revolves around spreadsheets. Yes, I am one of those losers who keeps a spreadsheet to keep track of his own personal finances. I'm guessing he felt I was naive bcuz I'm only 21.

[Olestra]

So essentially you need:
Lowest Capital Cost
Highest Residual Value
Lowest interest rate or highest Money Factor (interest rate/2400)
...for the lowest monthly payment.

He really picked the wrong guy to screw around numbers with as most of my job revolves around spreadsheets. Yes, I am one of those losers who keeps a spreadsheet to keep track of his own personal finances. I'm guessing he felt I was naive bcuz I'm only 21.

Yes in the end you want the lowest monthly rate. The dealer trying to increase your monthly rate is really shady.

I wouldn't say that you're a "loser", since you will always be very good at keeping track of your finances. My friends in accounting and financing all do the same.

Edit: I just learned about the terms you were using in this thread regarding leases.
http://www.leaseguide.com/lease07.htm

As you say, residual remains the same (a % of the MSRP). That means if you negotiate a lower capitalized cost, you lower your monthly payments.

Because this is where dealers make their profit, they will sometimes imply, or possibly state outright, that price isn't negotiable in a lease, and that somehow leases are different because you aren't buying the car. This is simply not true.

It's in your best interest to always negotiate the lowest capitalized cost possible — a discount off the sticker price — just as if you were buying. The lower your cap cost, the lower your monthly lease payments will be.

Capitalized cost may also include certain fees, such as an acquisition fee (similar to mortgage "points" , or loan origination fee). Acquisition fees are typically not specified in lease contracts, so it's not readily apparent that you are paying it in your capitalized cost.

So what he told you (in bold) was confusing and incorrect.

[nomik2]

Ah yes...lease guide. I read the site back and forth a million times.

Lease vs Finance...Took me a two months to decide between those and picking a car.

[Krakor]

I lease office equipment from $3000.00 to $350,000.00.

You did the right thing.

First negotiate a price.
Then tell them you want to lease.

If the lease buyout is 42% of the car value, then you take 42% of the negotiated value.

Simple stuff.

Good thing you walked away.

Now give yourself a cool down period before going to see anyone else because you may have your back up right away.

Go see Jeff of Mazda of Toronto or Jason at Oakville Mazda. Not sure which one is closer to you.

Don't be taken advantage of. If you are not comfortable, don't do it.

I had a similar issue.

Good luck.

[KenYork]

Except thats not how leasing works. You calculate the "buyout" or "lease end value" or "residual value" as a percentage of the cars MSRP first, this is probably set by Mazda Canada and not the dealer. Then you calculate the montly payments as a function of the Capital Cost (negotiated price+freight+PDI), Residual value, ALR (annual lease rate) and taxes (applied to monthly payments, not the whole price of the car).

But the final numbers are negotiable somewhat... rite? +-2k. I wish I were more of a spreadsheet person. Wouldn't be spending as much.

[rad3]

He really picked the wrong guy to screw around numbers with as most of my job revolves around spreadsheets. Yes, I am one of those losers who keeps a spreadsheet to keep track of his own personal finances. I'm guessing he felt I was naive bcuz I'm only 21.

Who did you deal with at Direct Mazda?

[nomik2]

Who did you deal with at Direct Mazda?

Maria at first, then this brown guy...ermm...didn't get his names...something sound like 'Shams'.

[nomik2]

I lease office equipment from $3000.00 to $350,000.00.

You did the right thing.

First negotiate a price.
Then tell them you want to lease.

If the lease buyout is 42% of the car value, then you take 42% of the negotiated value.

Simple stuff.

Good thing you walked away.

Now give yourself a cool down period before going to see anyone else because you may have your back up right away.

Go see Jeff of Mazda of Toronto or Jason at Oakville Mazda. Not sure which one is closer to you.

Don't be taken advantage of. If you are not comfortable, don't do it.

I had a similar issue.

Good luck.

Spoke to Jeff...closed the deal in 20 mins on the phone. Far from the 4 hours at the dealer.

[She_Prime]

So you bought a 2010 from Jeff over the phone?

[nomik2]

So you bought a 2010 from Jeff over the phone?

Yes...quite unorthodox I agree. After spending 4 hours at a dealer (I went during lunch and ended up doing a half day, thank god my boss took the day off) I was up for anything.

[She_Prime]

Well congratulations on the purchase! At least something good came out of that horror story! I was ready to volunteer to pick you up and drive you to either Jeff or Jason!

So when do you take delivery?

[ElegantGremlin]

So you bought a 2010 from Jeff over the phone?

I did the same thing. I bought a 2010 over the phone with Jeff a couple weeks back. Difference is I live up in Sudbury and there was no way for me to get down.

[She_Prime]

I did the same thing. I bought a 2010 over the phone with Jeff a couple weeks back. Difference is I live up in Sudbury and there was no way for me to get down.

Well I'm not one to talk. I bought my 3 (unfortunately not from Jeff) without taking a test drive etc.

It was not until the next day (when I brought in my direct deposit info etc) that I got to take one out for a spin.

[ElegantGremlin]

Well I'm not one to talk. I bought my 3 (unfortunately not from Jeff) without taking a test drive etc.

It was not until the next day (when I brought in my direct deposit info etc) that I got to take one out for a spin.

Reading this forum gave me enough faith in the Mazda 3 (and Jeff) to purchase one without a test drive. I never really considered any other car besides the 3.

[She_Prime]

Reading this forum gave me enough faith in the Mazda 3 (and Jeff) to purchase one without a test drive. I never really considered any other car besides the 3.

Ditto.

[nomik2]

Reading this forum gave me enough faith in the Mazda 3 (and Jeff) to purchase one without a test drive. I never really considered any other car besides the 3.

I should have just called Jeff, but I was still a bit skeptical and couldn't even imagine buying a car over the phone. I highly recommend people don't go to Direct Mazda for sales, although I can't speak for their services/maintenance.

I'm getting the same price from Jeff that I get after 4 hours of haggling, getting lied to in the face and being told that I don't understand how leasing works....ya....I know what I should have done.

Thanks! Can't wait to meet you Jeff and drive off. Tuesday evening you say?

[sip]

Spoke to Jeff...closed the deal in 20 mins on the phone. Far from the 4 hours at the dealer.

Congratulations!

I don't mean to rain on your parade, but just wondering why you considered leasing when financing gives lower interest, lower monthly payments (if you select 7 year term) and felxibility.