tron786

Now I'm awake....

Just curious as I'm not in the USA and it's all a learning curve for us who used to buy cars for cash once upon a time.
Even in my country the revenue service has closed the loopholes on using cars as tax deductions for a business.

Isn't the "residual" of a lease agreement the same as the balloon payment except that in the case of the lease the residual value = trade in value when you return the vehicle. In the case of "balloon" the future value of the vehicle may be lower than the final payment due on the car?

Are the interest rates for lease versus normal finance different in the USA?

Here in my county there is a finance offer called "Agility finance" and I'm really not sure how it all is defined as the dealer couldn't say if it's a lease or a balloon with guaranteed future value.

See here.
http://www.thebesttimeisnow.co.za

Mike5215

Its possible that it could work out on a buy with a balloon to the point where the balloon is the same as what the residual on a lease would be. I think in this case though the dealership built the chicken to fit the pot.

They got him a low payment not by renting him the car for MSRP less the residual x the money factor (interest) divided by the term, but by hiding a chunk of the amount being financed in the form of a balloon.

Balloon financing is very rare here on a car note. There would typically be big bold type on the loan contract warning the buyer that paying the monthly payment over the term would not satisfy the note.

Obviously the other key difference is at lease end you drop the car off and owe nothing, where in his case he owes $30k and has to sell the car himself or refinance the $30k

No doubt here that the dealer took full advantage of an inexperienced buyer. If I'm reading between the lines here I don't think the OP knew exactly what he had signed or the deal he made until his Dad's accountant looked at the paperwork a week later. When I posted that Lease Calculator spreadsheet I did a long write up about how to use it, and about the psychology dealerships use to their advantage to prevent you from knowing all of the numbers, so when they pad the lease you don't catch it. The Lease Calculator lays bare every aspect of the deal. They have nowhere to hide.

It doesn't stop them of course. They'll try to create a new fee or cost and use that new category to insert padding. They'll name it something you may not recognize. On the current deal I was working on a C300, the dealer agreed to reduce MSRP by 10%. Since I knew the residual percentage and the money factor, I was able to calculate to the dollar what my payment would be.

I sent the spreadsheet to the sales guy to have the sales manager either sign off on it ( a neat trick...they're used to it going the other way) or to let me know if any of my calculations or presumptions were incorrect. Instead, he sent me his own breakout. The MSRP was the same, the discount was 10%, the payment was the same... but the amount due at closing was over by $2k. They had added in me making a $1000 "capitalized cost reduction", essentially giving them back part of the 10% discount. Then they charged another $100 in "tax on capitalized cost reduction". Obviously if the cap cost reduction doesn't belong there, the tax does not either.

Then they added $167 in a category called "Other Fees". Now, I'm no financial genius, but if you don't know what a fee is for, how do you know how much it is? Lastly, they included the first months payment into the amount due at closing, which is fine. But then they added a disclaimer to the break out stating the cash to close did not include the first month's payment, putting another $700 in profit on the deal.

I'm a very experienced buyer and this very nice upscale Mercedes store still had cheating so deeply ingrained in their sales culture they simply could not help themselves, knowing full well they might get caught. Honestly, I think the fact that I was so able to box them in on the numbers it created a challenge for them to try to sneak stuff in.

My favorite Mercedes lease story happened back when I was shopping the W221. The numbers didn't line up (as always). I had the sales manager swing his monitor around so I could see where the discrepancy was. Immediately I found all kinds of padding. One $2500 line item had been created from scratch called "Miscellaneous Up Front Fees". The guy mumbled something about how, with a lease, there are a lot of special magic fees, blah blah blah. No, there aren't. It's the Dealer Fee, the Acquisition Fee,and the Title fee and I'd already accounted for all of those.

The guy gets really pissed, stares at me for what felt like five minutes, then threw up his hands and said, "Fine! If I work it up without any padding will you take the deal today?!" Like he was doing me a special favor by not cheating.

mvw

Keep speaking with the dealership. Stop talking to the sales and finance guys and book a meeting with the general manager. Explain everything to them, along with the docs you have and the docs you signed but have not been provided a copy. Basically work with him with the attitude of "this must be some sort of mistake and I'm sure you will make it right". My experience is that works very well across a wide range of customer service requests.

Point out the potentially fraudulent aspects of what they did (listing a new car as used, telling you it was a lease when it was financed) but be careful about dropping the word fraud (mention that this says used but clearly it is a new car and that's what you were told repeatedly by the sales guy etc).

Tell them you really want this fixed and be confident and nice about the fact they WILL fix it, unless it is clear that the guy is not going to back down. In that case escalate if you feel like it because you have nothing to lose. You can start using the word fraud a bit more (like saying "sorry, I'm having trouble understanding how the dealership telling me X and then writing down Y isn't fraud"). Start implying that you have an ability to impact on the dealership's reputation (I have coworkers looking to buy, I'm a 5 star yelp reviewer, I'm very active in local community, I know the consumer reporter at the local paper etc). Suggest that you will take it up with Mercedes USA and that you would imagine this sort of misrepresentation is in breach of their dealership agreement and that this seems like it is a small reason to create such a big headache for the dealership.

All with a view not to try to walk away from them but just to change the relationship into what you intended.

Basically you want to position it that you are a nice and reasonable and rational guy, but they are better off doing what you want than not doing what you want. And hope for the best.

A lawsuit will be too expensive and take too long. This might actually be criminal fraud but cops won't do anything and I don't know enough about your jurisdiction (or really criminal law). Civil stuff can be threatened, I believe, but that's usually the sign for people to stop talking so I'm not sure I see the value of saying "do this or I'll sue".

But stop dealing with the little peons who are now out to cover their own asses and deal with the guy in charge to see if you can get him to throw his people under the bus. A good manager would be disgusted by this sort of behavior from his reps.

Just my 2 cents.

mvw

Right. Forgot all about how it works down there. In Canada this would be a small claims issue and no one would have any interest in it (and the loser would be required to pay the winner's costs). This seemed way too small potatoes to be worth it to a lawyer but when you factor in the out of control tort values in the US, maybe not.

I still think trying to work something out is always better than litigating. And maybe the dealership (as opposed to the sales people) has no interest in actually addressing this, but you never know till you try.

cidtek

Before you enter any negotiation you still need a lawyer's opinion even if he isn't going to represent you. You may as well at least be going in with realistic expectations and a sense of your position.

Pam C

I love you guys. No wonder the rest of the world thinks Americans love to sue. I am Canadian and suing is the last resort for us when we have exhausted working out our problems through civil discussions and mediation.

To the young man who had the problem with the dealership I would suggest you get a copy of all the paperwork from them. Threaten to take your case via social media to the public letting them know what happened. Your 22 years old (based on your profile) and the dealership is well aware social media is a powerful thing for the up and coming.

Once you have the paperwork, which I am quite sure they will eventually provide I would read it over to confirm what you signed is not what you understood. Talk to the dealership manager about what your options are. After that if you can't get a satisfactory remedy see a lawyer. Don't let it drag on as there may very well be time limits in your area were you can get out of a car purchase or lease depending on were you live. You didn't mention what state you live in and I understand it can vary from state to state.

Good luck young man, keep the forum posted.

Pam C

Looks like another fellow Canadian pretty much agrees with me. Litigation should be the last resort. More often than not, only the lawyers win. The rest of us lose time and money and get stressed out.

Talk to the dealership and try to work it out. Then and only then, if you can't get what you wanted, see a lawyer.

Pam C

This happy Canuck, never had to sue once in her life. Always been able to negotiate and get things worked out, bought and sold cars, houses and settled estates. In fact in Canada if you do seek legal advice in a civil matters they suggest you try to work it out amongst yourselves recognizing litigation is costly, time consuming and stressful.

Again good luck young man.

Pam C

You said it all in the last sentence, thank-you.

'We all understand that litigation has risks, and is expensive, so what else is new?'

Mike5215

I think we're well beyond a strict reading of the rules at this point. You've been providing him a lot of very specific legal advice, in writing. If you're a member of the bar in his state, I'm sure he could use your help. Admitted in Illinois? Yes or no?

mvw

Actually, the prudent person in Canada typically just talks to someone about it and the two parties work it out since there is generally an outcome that both parties are comfortable with that does not involve tying the matter up for years and costing a fortune (there are no contingency fees for this sort of nonsense litigation).

Mike5215

There's no case here and certainly nothing an attorney would take on contingency. He'd be looking at a 3rd of what as payment? A 3rd of the value of the difference in an illegal tax write off between a lease and a purchase? Yeah, they'll be lining up for that one. All it takes is a few thousand cases like that and an attorney can retire on that money.

The kid screwed up. Dad and the accountant should have gone with him. He's 22. His family attorney may be able to make headway with the GM but I don't see anything that would compel them to somehow unwind the deal.

Show's over folks.

mvw

Which is why it's worth an open discussion with the GM. Nothing to lose and you never know, they might actually be reasonable with a little bit of pleading and soft threats.

Pam C

For the younger people on this forum let me say that I am not Nancy Greene. I wish I were as she is a great lady of great accomplishments here in Canada.
I am not quite sure why "JS" refers to me that way but considering who she is I will take it as a compliment.

Greene, Nancy
Nancy Greene, alpine skier (b at Ottawa 11 May 1943). Raised in Rossland, BC, Greene only began serious racing at age 14. Outstanding ability led to her selection to the 1960 Olympic team after only 2 years of racing. After finishing 22nd in the Olympic giant slalom, she became determined to match her roommate Anne HEGGTVEIT's victory. During the early 1960s she had several major US and European victories, but was inconsistent. Her aggressive style caused several injuries, including torn ligaments in the 1966 world championships. Resolving to try for more control she achieved remarkable results, concluding the 1967 season with 3 straight victories to win the World Cup. In 1968 she continued her domination of the sport, winning an OLYMPIC gold medal in the giant slalom on 15 Feb with a wide margin of 2.68 seconds. Later in the Games she won a silver in the slalom. She also accumulated an additional 9 straight victories and her second World Cup that year. In all, when Greene retired at the top of her game at age 24, she had amassed 17 Canadian Championship titles and had garnered 13 World Cup titles (a record that still holds). In 1967 she was made a member of the ORDER OF CANADA, was named Canada's Athleteof the Year (and again in 1968), and was inducted into CANADA'S SPORTS HALL OF FAME. In 1999 Greene was named the Canadian female athlete of the century by the Canadian Press and was awarded an honorary Doctor of Laws from the University College of the Cariboo. In 2002 she was awarded an additional honorary doctorate from Royal Roads University.
Well into retirement Greene continues to both inspire the next generation of athletes and to contribute to the sport and the surrounding community. She is an ardent promoter of ski tourism in BC, and has assumed administrative positions at several alpine resorts in the province, including Sun Peaks, of which she is now director. In addition, the Nancy Greene Ski League, of which Greene continues to serve as honorary chairman, was formed in 1968 in affiliation with the Canadian Ski Association (now Alpine Canada), its goal to introduce young athletes to ski racing. Greene has also served as chancellor of Thompson Rivers University, and in 2009 she became a senator in the BC government.

Mike5215

Agree. I think I posted that very thing a few days ago. A friendly chat to see if anything can be done on a goodwill basis. Although I still don't see what the guy's damages are.

Mike5215

Oh, a heads up. Jonathan's just a wee bit of what we here in The States would call "a complete a-hole."

But, once you get past that, I think you'll find he's also boring as hell and more interested in trying to impress the forum with arcane legal jargon then actually helping anyone with anything.

Pam C

Sorry I have no control over how the threads are posted: just trying to clear up some lose ends for folks who may not appreciate your dry sense of humour.

rbrylaw

We Americans are litigious. We are. Here in Tampa, just about every single billboard is an advertisement for a law firm.

While it wouldn't be bad advice for the OP to seek the advice of a qualified attorney, I have to agree that the first thing I would personally do is open a dialog with the sales manager at the dealership. Explain the situation in a calm rational manager and ask for the dealership to help him accomplish what he thought he was getting in the first place.

If that produces no acceptable result, then hire an attorney to act as his representative.

Pam C

I was referring to 'JS' s sense of humour in that last post. I am being Canadian,
"kind"

rbrylaw

What difference does it make what country she is from? She could be from Lithuania, for all it matters. Her advice was thoughtful and reasonable. Is there a reason to be rude to her?

Mike5215

No, no. I've actually given the guy a lot of really useful insight. Re-read the thread. I've been super helpful. You,on the other hand,have been kind of useless. A lot of good that law degree, if in fact you have one, did ya.

mvw

Not going in there seeking damages, just to "fix" the "error" or at least get something to make the customer happy.

I'm sure in the US there are lots of damages for pain and suffering and making his brain hurt and the like. Probably worth at least a cool billion.

mvw

Choice for what?

Everyone has the option of going to talk to a company about a previous sale and seeing if the two parties can come to an agreement as to how best to address a situation that one party believes to be unfair.

That has nothing to do with law.

mvw

Lol. yeah, one of our favourite pastimes up here is to make fun of all of the local bottom feeder lawyer commercials that come across the border over the airways.

If I'm hurt in a car in the Buffalo region, I certainly know who to call...

Mike5215

In Canada does "Dry Sense of humor" mean the same thing as "complete a-hole"? Canadians are generally more polite in my experience, but would "complete a-hole" be synonymous with "dry sense of humor".

Like in Canada would you say something along the lines of "Wow! That guy just ran into that parked car and didn't even leave a note! What a total f'ing dry sense of humor!"