Bank Acquisition Fees. What to Expect.

Here is a partial list of bank acquisition fees. If you have leased with a brand or bank that’s not listed here, please share with the rest of us. Fees marked with a (*) are unconfirmed.

UPDATE (12/10/2012) – Had a very interesting conversation with the Honda finance guy the other day regarding bank acquisition fees. My original understanding of bank fees was that they served as two things: 1) loan processing 2) GAP coverage (for most banks). However, there is another little known reason why the amount is so high…apparently, the bank (which is a separate entity from the manufacturer) uses portions of that fee to pay for an multi-million dollar umbrella policy for their leased vehicles in case the lessee damages property or kills someone. As you know, we live in a very “sue-friend” country and when the plaintiff can’t get money from the defendant, we all know who they sue next.

Acura – $595
Audi – $695
BMW – $725
Buick – $795
Chevrolet – $795
Ford– $595
Honda – $595
Hyundai – $595
Infiniti $595 $700
Jeep $795 (Ally)
Kia $595
Lexus – $695
Lincoln– $595
Mazda – $595 (Chase)
Mercedes-Benz – $795
Nissan – $595
Porsche – $895
Range Rover – $795
Subaru – $595
Toyota – $650
Volkswagen – $595
Volvo – $695

Special thanks to everyone who has contributed to this list!

FQ4 – Recession? What happened to those cheap luxury leases?

For our Featured Question No. 4, I’ve decided to dig into the Forums and pick out Supercharged’s question: Recession? What happened to those cheap luxury leases? I remember the days when I would see leases for the Jaguar X-Type, Porsche Boxter going for like 399 per month (with a reasonable amount due at signing). Those days are indeed gone, now the payments are more in the 499-599 range and require nearly $5k+ at drive-off. So what DID happen for things to turn out this way?

Read and participate!

Don’t forget to use the Forum to post your specific questions!

G’s Guide To Auto Leasing

This guide is meant to show you through the auto leasing process. I put this together based on my past experiences with leasing. Some experiences were good, others were less than perfect. Overall, I learned a lot about the leasing process and I think these recommendations will have a positive impact on your leasing experience. If I missed anything or if you disagree with some of my steps, please feel free to leave a comment.

Finding the Car
I usually start my research by visiting Edmunds.com and CarsDirect.com to get model/trim/options/pricing information about the car I intend to lease. You need to know exactly what you want because each option can change the price dramatically. CarsDirect.com does a better job letting you pick the correct combination of options for a specific trim.

Get Your Credit Score. Knowing your credit score is important because it qualifies you for the lowest money factors. Typically, I let my dealer know that my credit score is “XYZ” and I am looking for car “ABC”. Telling the dealer your credit score informs the dealer in advance that you are prepared to make a deal and you aren’t wasting their time negotiating. Since you don’t want your credit run multiple times from dealer-to-dealer, finding out ahead of time will keep your credit score from getting hit with too many inquiries (personal inquiries do not hurt your credit). Typically, I don’t even deal with dealers that request to run your credit before working with you or to get a test drive. You let them run your credit ONLY when the negotiation is complete and you are ready to begin paperwork. If you credit is less than perfect, leasing is not for you because you cannnot qualify for the lowest rates. In some cases, you won’t even qualify at all. Lease loans usually have stricter approval guidelines than purchasing loans. 

You can use the following credit services to check your credit scores:

In my experience, most dealers I have worked with have used Experian or TransUnion credit scores. However, I recommend checking all three if you haven’t done so in a few years.

Locating a Dealer. Once you are set on the car, you have a couple of options. You can go to the manufacturer’s web site to search for all local dealers or use third-party quote systems like TrueCar.com or Edmunds.com to find local dealers. I personally prefer using TrueCar.com because it provides excellent data which is crucial when negotiating your lease.

Email or  Call Dealers, Do Not Visit Dealerships unless you are just doing a test drive. Ideally, you want to email (since the process will then be in writing) your dealer to locate the car with the colors/options you want, let them know the term you want (months and miles per year), then ask for the following:

  1. MRSP (to make sure it doesn’t have ‘extras’ on it).
  2. Sale Price (start with invoice, or $500 below invoice and go from there)
  3. Money Factor
  4. Residual Value
  5. Acquisition/Bank Fee
  6. Dealer Doc Fee
  7. Other Fees (such as DMV, tire, etc…)
  8. Is there a disposition? Gap coverage? (these are important things to know!)
  9. Taxes (depending on which state you live in, find out if you have to pay those up front and/or if you need to pay for the entire car or just the depreciation)

Once you have those numbers, you can calculate your own payments to see if there are any discrepancies between your numbers and theirs.  If you have never used my RWG Lease Calculator, you may want to read up on my “How To” post.

If the payments are still higher than you like, ask for the option to make “multiple security deposits” or MSDs. You basically pay security deposits to lower the Money Factor. This will lower the interest paid on your lease but increase your up-front costs. The good news is that you will get that money back at lease-end. If the numbers are still not to your satisfaction, try having the dealer thrown in some free oil changes to help you offset the costs. Now remember, if you trade-in or sell your car before your lease is up, you will LOSE your MSDs! If you put MSDs down, you better make sure you wait until your lease term ends.

Only work with dealers that are up front with you. A pleasant leasing experience is worth something, believe me. It will make you feel better bringing the car in for service and you won’t feel angry driving around in your car because you feel you got ripped off.

Avoid “All-In-One” Quotes. By those I mean “$1999 down, $399/month” type of quotes…the ones the dealers love to quote you. You want to avoid those because it’s easy to start losing track of what you’re actually paying for since everything is bundled and nothing is itemized. If this seems like nit-picking, it is, but you must realize that for every $100 paid in bogus charges, you are doing so with interest (and maybe even tax) if you roll it into your lease payments. Experienced lessees can take the “All-In-One” approach if they have already pre-calculated their payments and know what to expect.

The Numbers look Good, Now What? If you haven’t gone in for a test drive, go ahead and schedule a visit to your dealer. You will probably want to visit the person you’ve been dealing with via email, that way, he or she will already know you and won’t go into the “sales-mode”, thus making your test drive more enjoyable.

Got a Trade-In? If you do, negotiate it after the new car and keep it separately. I usually use this as a “deal-breaker” if the offer isn’t good enough (to see if they will bump out the trade value to make a sale). If you don’t like the offer, remember you can always get it appraised elsewhere or sell it on your own. You can get a good idea as to how much your trade is worth to a dealer by going to Edmunds.com and appraising your car at “GOOD/AVERAGE” condition to get a more “realistic” idea of the value of your car. If you are still financing your car and the offer is lower than the balance of your loan, you will have to pay the difference. If its more than your loan, the dealer will either give you the option to apply it to your new car or cut you a check (I generally prefer the check). If you are trading in a lease, the process is similar.  The only difference is that you need to find out what your “PAYOFF” is from your bank and see how close the dealer’s offer comes to it. If your leased vehicle is a popular model, has low miles and is in great condition, you could get some money back.

What Should I Pay Up Front/At Signing? I normally advise people to pay the 1st Month Payment, Acquisition/Bank fee, DMV fee, Doc fee and Tire Tax (Some states will ask for the sales tax to be paid upfront instead of monthly). Sometimes you may be assessed other fees, so double check and make sure they aren’t bogus. Try not to put any money towards cap cost reduction, after all, this is a lease. In the event of an total loss accident or theft, you could lose a significant part of all the money you have put down (or all of it).

Beware of the Finance Guy/Gal. The Finance Guy/Gal is the dealer’s last ditch effort to sell you stuff you may or may not need. Seriously, do you really need anything more than the standard bumper-to-bumper warranty on a lease? You don’t need Lo-Jack on a lease, specially since most leases have GAP coverage.

Make sure you READ the papers BEFORE you sign. You got time, after all you negotiated online before you showed up to the dealership, so READ, make sure the numbers are correct and ask questions. Once you sign, the deal is binding by those terms.

Leasing Is More Than Just Monthly Payments

My simple definition of leasing = a sometimes cheaper and easier way to get in and out of a car over a given period of time. Leasing is not for everyone. But if you do decide to join the car rotation club, you need to make sure you understand all of the costs involved in a Lease.

Let’s use a current Lease incentive of one of the most popular cars in the world. The BMW 3 series.

$429 Monthly Payment
36 Month Term
$2500 Down Payment
$450 Security Deposit
10000 Annual Mileage
Lease is based on a 2008 328i Sedan equipped with automatic transmission, Premium Package and destination charge included. Dealer contribution may affect terms.
$3379 due at signing.

Thank you Edmunds for the info above.

Monthly Note: $3,379 due at signing with $2500 being a cap cost reduction, 10k miles per year. Not too bad other than the $2500 cap cost reduction. Lets say you sign all the papers and drive off the lot. You pull 5 feet off the lot and a car broad sides you.. totaling the car. It just cost you your first monthly payment and $2500 to drive 5 feet. Don’t put money down on Leases. Back to the point… What are the hidden costs involved in this lease?

G’s Thoughts: As B says, it’s never a good idea to put money down for cap cost reduction. A lot of folks fail to understand what inception and money down is. Inception is the 1st month payment and the fees you pay at drive-off. Down payment is the money you put down to lower the price of the vehicle. You don’t put money down, period.

Insurance: BMW requires 100/300 50k property damage liability and a 1000 max deductable. For some not a big deal. For this example lets say you have a good driving history, 30 years in age, with 0 points. Your monthly insurance is $190/month.

G’s Thoughts: 100/300 is the bare minimum recommended coverage. If you own a home or any sort of property, this should be the bare minimum you should insure your vehicle anyway, unless you want to potentially lose some or all of your assets in the event of a big accident.

Lease end fee: So you were thinking you will get that Security Deposit back…. Ha. You loose $350 of it for BMW’s “disposition fee”. Of course you can get this money back if you re-lease another beemer. In this example we are not going to lease another bmw thus you lose $350 of your $450 security deposit.

G’s Thoughts: Luckily, some automakers such as Infiniti and Acura, do not charge a disposition fee nor require a Security Deposit. Acura even offers a $1500 damage waiver during turn-in. Woot!

Wear and Tear: At this point you are slated to get $100 of your security deposit back. I’d love to see a statistic of how many leasers actually get this back. Now is the time to read your wear and tear description from your leasing company. In BMW’s case… Any scratch or ding more than an inch long is considered excessive. You will now be paying full retail price to have them repaired 🙂 There are other wear and tear details that I won’t go into because each leasing company have their own guidelines. In this example lets say you only have 2 “dings” more than an inch long and they will cost $250 to repair. Oh, and that 8 inch crack along the windshield. Guess what… new bmw windshield = $700. Do yourself a favor and repair the windshield before turning in the lease. But in this example we didn’t know. Total wear and tear costs = $950

G’s Thoughts: Wear and Tear is pretty painful part of leasing. You have to literally baby your car. Just because you rent it, doesn’t mean you can mistreat it. Specially expensive cars such as the BMW. Best advice is to treat it as if you own it, who knows, you may want to buy it at the end of your lease.

Tires: This can be a wear and tear issue. But do yourself a favor. Understand now that most modern performance tires will wear out before the end of your lease and that you WILL be buying AT LEAST one new set of tires. In our example the OEM replacement tires are Bridgestone Turanza EL42 RFT’s. $900 after shipping, mounting and balancing. You “can” get away with buying a cheaper tire but some dealers have been known to make judgment calls and say that your tires are not the same quality as the OEM tires. Enter more fees.

G’s Thoughts: This is part of the reason why 24-month leases have become more and more popular. In 24 months, chances are, you won’t be paying for new tires unless you enjoy burning rubber on a daily basis.

Routine Maintenance: This can include everything from oil changes to brake pads to a new clutch. This can be a wild card depending the type of vehicle you lease. BMW is actually a pretty good car to lease in this regard. They take care of most maintenance costs for the first 4 years or 50k miles. This easily gets you through a 36 month lease. Just be careful because they don’t (I may be wrong) cover clutches if you wear one out in your 6 speed manual. For this example we have an Automatic. We will assume $0 for routine maintenance.

G’s Thoughts: Hurray for $0 cost maintenance. Audi used to have it, so did Mercedes Benz, but that is no longer the case.

Excessive Miles: This varies by company. 20 to 25 cents a mile in most cases. In our example we will assume that we are not going over our allotted 10k miles/year.


$465.47/month x’s 36 = $16,756.92 monthly note including a 8.5% sales tax

+ $2,500 down payment (don’t do it)

+ $900 in licensing, acquisition, other local county/state fees

+ $190/month x’s 36 = $6840 insurance

– $450 security deposit we get back at lease end

+ $350 disposition fee at lease end

+ $950 wear and tear

+ $900 new tires

+ $0 routine maintenance

+ $0 excess miles

= $28,746.92

Now in saying all of this and being overly naive with the example above… I have leased my last 5 cars and will continue to do so. What have we learned? Don’t put money down on a lease, know the costs involved in insuring your new lease, take into account lease ending fees, take care of wear and tear issues yourself as soon as they occur, replace worn tires yourself with a cheaper but comparable name brand, find a car maker that has a maintenance warranty built in to the price of the car (or at least find a car that requires little maintenance), and plan out ahead the number of miles you will drive in a lease. Some companies (BMW included) offer the option of buying additional miles at a discounted rate up to half way through your lease term.

G have I missed anything?

G’s Thoughts: You got it B! The leasing experience will be as good as you make it. If you get ripped off for not reading the fine print, or not doing your research. You kind of deserve it. Take care of your lease as if you own it and you will not have any problems. Lastly, nationally advertised deals on TV are the worse because they are based on MSRP pricing. Best deals you can cut are the ones you do yourself.

The Lease Down Payment Dilemma


So I received an email from a reader explaining the whole down payment dilemma in a very detailed and extremely convincing manner. It has, changed my view of down payments. I’m not saying I’d put down a large down payment, but if you got it, why not, specially if the interest is high on the vehicle you plan on leasing. Also, I do recommend everyone to call their insurance agents and find out how their policies treat leases.

So here are excerpts of the email sent by Damien from D.C.

“So I called my insurance company, Geico, and asked them about it. They report that their payout for a claim doesn’t rely on how the car was financed. That is, if they determine it is a $27k payout and residual value is $20k and you owe nothing, then you would get your $7k in cold hard cash.

I think what you are giving up is the GAP protection. In our example, you lost $3k. That would be the maximum you could lose, because there are no remaining lease payments and therefore there is no gap to protect.

Look at the other direction, where you pay $1000 to drive off the lot. In this case, your remaining lease payments are around $11k. The residual + the remaining lease payments is $29k, and the insurance company pays off $27k. This leaves a $2k gap, which the lease (if it includes GAP protection) would cover. In this case you only lost $1k, not $3k.

So it is a gamble, but not for the down payment amount. The gamble is for the gap, or depreciation. The depreciation is the highest when you drive off the lot, and should be $0 after your last lease payment.”

There you have it folks, I couldn’t have said it better myself. Props to Damien for this insightful email.
Now I gotta call my insurance agent tomorrow 😛


Lately, I have been putting a lot of thought into the down payment. Generally, I don’t advise people to put down a lot for their initial drive off costs since in the event the car is stolen/totalled, you will lose all that is put towards the car. That typically happens because GAP coverage from either your insurance or the leasing bank only covers your remaining payments. However, I have been analyzing the financial effect of paying a down payment and it makes a lot of sense (assuming you never get your car stolen or totalled). Take this for instance, lets say I want to lease a vehicle that at a cap cost of $30,000. The residual value is $18,000 (60%) after 36 months This would mean your depreciation fee you are paying is 12,000, which you will finance at a rate of say .00101 or 2.42%, then of course, you pay your sales tax every month. Now lets say you put down 10,000 dollars, lowering your cap cost to $20,000, which makes your effective depreciation fee $2,000. This pretty means that you are being charged interest and sales tax on $2,000 versus $12,000, saving you a bunch over time.

Of course all of this comes at a risk. Get the car stolen or totalled in an accident, you lose the $10,000 in a flash. So, are you the gambling type?