Topic: Reasonable offer

[JohnnyMac]

I know everyone has a different opinion on what a reasonable offer is but wanted some feedback on this one.  I'm helping my future brother in law purchase a new vehicle.  Here's the specs and numbers.

2017 Honda CR-V EX, it's a dealer demo with over 12,000 kms on the odometer.  He's okay with lease or buy.  Either way he'd want full warranty for the duration of the loan/lease term (considering how reasonably priced Honda's extended warrantys are).

He's military and the dealer has a $500 discount.  He'll be trading in a 2008 Ford Fusion V6 with a billion kms on it and needing over $3,000 to pass inspection, I'm giving it a value of $500 as that seem to be about what this type of vehicle gets for trade ins.

Online the price to buy is roughly $565 per month financing over 84 months with extended warranty and including trade in and discount.  Lease is about $507 per month over 48 months and 24,000 km per year mileage allowance.

The offer I sent the guy at Honda is winter tires and rims included, warranty, buying for $530 per month, and leasing for $485 per month.

I figure with it being end of year and being a Demo with quite a bit of kms on the odometer, this is a reasonable offer. 

Thoughts?

[Solstice2006]

I know everyone has a different opinion on what a reasonable offer is but wanted some feedback on this one.  I'm helping my future brother in law purchase a new vehicle.  Here's the specs and numbers.

2017 Honda CR-V EX, it's a dealer demo with over 12,000 kms on the odometer.  He's okay with lease or buy.  Either way he'd want full warranty for the duration of the loan/lease term (considering how reasonably priced Honda's extended warrantys are).

He's military and the dealer has a $500 discount.  He'll be trading in a 2008 Ford Fusion V6 with a billion kms on it and needing over $3,000 to pass inspection, I'm giving it a value of $500 as that seem to be about what this type of vehicle gets for trade ins.

Online the price to buy is roughly $565 per month financing over 84 months with extended warranty and including trade in and discount.  Lease is about $507 per month over 48 months and 24,000 km per year mileage allowance.

The offer I sent the guy at Honda is winter tires and rims included, warranty, buying for $530 per month, and leasing for $485 per month.

I figure with it being end of year and being a Demo with quite a bit of kms on the odometer, this is a reasonable offer. 

Thoughts?

Is there an MSRP for the demo already?

[OliverD]

Keep in mind that if he leases, the 12k that is currently on the vehicle goes towards the 96k mileage allowance. So I would definitely want a reasonable discount to offset that.

[valuator]

You are asking for vastly different discounts....$2,940 in the case of the purchase and $1,056 in the case of the lease.  The present value of the discounts would be a little less.  Just something to consider.

When we leased our Outback, which we ended up buying out at the end of the term, I was able to get the same discount for all of the cash purchase, finance, or lease options.  It was the best "deal" for someone who thought they might turn in the keys at the end of the lease, because the residual did not change and thus your discount was a bigger percentage of your total cash outlay.

Also, it's hard to be ambivalent about the different acquisition options.  You really need to consider if the residual makes sense for you if you're thinking of leasing.  I'd only lease if the residual after 48 months roughly equates to what your outstanding loan balance would be, keeping in mind if you want to buy out the car you won't be getting any promotional loan rates for the balance.

[tortoise]

That ends up being $47.5k for a used CR-V.  Seems high.

You're asking for $3k off the total price, including financing.

Without knowing asking prices and interest rates it's impossible to say.

[JohnnyMac]

Keep in mind that if he leases, the 12k that is currently on the vehicle goes towards the 96k mileage allowance. So I would definitely want a reasonable discount to offset that.

Yes well aware of that.  That's why he's going with the 24,000 km per year instead of the 20,000 km per year that he usually drives.

[JohnnyMac]

That ends up being $47.5k for a used CR-V.  Seems high.

You're asking for $3k off the total price, including financing.

Without knowing asking prices and interest rates it's impossible to say.

Interest rates on a 84 month term is 3.99%, lease is 2.99% over 48 months. 

Yeah I'm asking for just over $3K off the total price (if buying), plus winter tires and rims.  Does that seem reasonable?

[OliverD]

That ends up being $47.5k for a used CR-V.  Seems high.

You're asking for $3k off the total price, including financing.

Without knowing asking prices and interest rates it's impossible to say.

Interest rates on a 84 month term is 3.99%, lease is 2.99% over 48 months. 

Yeah I'm asking for just over $3K off the total price (if buying), plus winter tires and rims.  Does that seem reasonable?

$3k off of MSRP, or some other number?

[tortoise]

I'd work that $3k off back to what the actual discount is on the Vehicle. 

Also, I just went to honda.ca and built a 2017 CR-V.  Nothing down, no discounts and it came to $530 a month for 84 months, taxes in.  That includes $750 off from Honda.

Presumably he could do a bit better than that.  For a new car, with a full warranty.

Why 84 months?  The $5.7k in financing costs seems kinda crazy.

[JohnnyMac]

MSRP for a Honda CR-V EX with all taxes and fees is a total of $39,571.88 after the $750 Honda Canada rebate they have on right now.

[JohnnyMac]

I'd work that $3k off back to what the actual discount is on the Vehicle. 

Also, I just went to honda.ca and built a 2017 CR-V.  Nothing down, no discounts and it came to $530 a month for 84 months, taxes in.  That includes $750 off from Honda.

Presumably he could do a bit better than that.  For a new car, with a full warranty.

Why 84 months?  The $5.7k in financing costs seems kinda crazy.

Did you add in the extended warranty out to 7 years 160,000 kms?  Plus not sure where you're at so maybe the HST is a bit different there, we're in NB and it's 15%.

[JohnnyMac]

That ends up being $47.5k for a used CR-V.  Seems high.

You're asking for $3k off the total price, including financing.

Without knowing asking prices and interest rates it's impossible to say.

Interest rates on a 84 month term is 3.99%, lease is 2.99% over 48 months. 

Yeah I'm asking for just over $3K off the total price (if buying), plus winter tires and rims.  Does that seem reasonable?

$3k off of MSRP, or some other number?

I'm not actually looking at x$ off MSRP and more focusing on $ off payment.  This seems to be the lingo dealers speak nowadays.  Based on what I'm looking it, it would be roughly $3k off MSRP, plus the winter tires and rims.  That's to buy, the lease number would be lower as from my experience you have less negotiating room on lease over a buy transaction.

[tortoise]

No, I didn't add the extended warranty.  'Cause Financing that at 4% is crazy. 

And taxes are 13% in Ontario so it's not that far off.

Does it have to be the EX?

[OliverD]

That ends up being $47.5k for a used CR-V.  Seems high.

You're asking for $3k off the total price, including financing.

Without knowing asking prices and interest rates it's impossible to say.

Interest rates on a 84 month term is 3.99%, lease is 2.99% over 48 months. 

Yeah I'm asking for just over $3K off the total price (if buying), plus winter tires and rims.  Does that seem reasonable?

$3k off of MSRP, or some other number?

I'm not actually looking at x$ off MSRP and more focusing on $ off payment.  This seems to be the lingo dealers speak nowadays.  Based on what I'm looking it, it would be roughly $3k off MSRP, plus the winter tires and rims.  That's to buy, the lease number would be lower as from my experience you have less negotiating room on lease over a buy transaction.

I don't see why the negotiating room would be different unless there are different incentives lease vs. buy. The dealers shouldn't care whether you buy or lease.

I think you're going about this all wrong. You should be negotiating the bottom-line price, irrespective of how the vehicle is being paid for. From there you should be able to figure out what a fair discount is, and how that translates into a loan or lease payment.

Dealers like to talk monthly payments because it hides the true acquisition cost of the car. Don't let them do that.

[JohnnyMac]

So what everyone is saying is I should be asking for X$ off MSRP.  Forget about the whole payment thing, even though that's how all the dealers talk and how most people do their budgets.

[OliverD]

So what everyone is saying is I should be asking for X$ off MSRP.  Forget about the whole payment thing, even though that's how all the dealers talk and how most people do their budgets.

It's especially important if you're weighing your options between leasing and buying. The proposed monthly payments you posted translate to vastly different discounts.

Obviously you may want to be targeting a certain payment but the numbers used to arrive at that number are just as important as the monthly payment amount itself.

[tooscoops]

yes yes yes.... work the numbers on the total amount.

also, if i have a demo that is priced to clear out on my lot (like a hanger and all that in it and price on trader.ca) i am moving like a few hundred *maybe* off that number.

i literally just let a guy walk who wanted 900 off my demo price. we don't make ANY money on cars anymore. that demo has already been RDR'd, so the only incentive they have is because they want to move it. things could be different out east, but likely not THAT different.

with the internet the way it is, shop around the price. find a REASON it should be 3k lower. if you can't find a reason other than "i don't pay asking price", then you are in for a bad time. i know everyone has a story about getting big discounts, but most of it is bunk. the only time you get a big discount is if they are overcharging to start, or it is a private sale that they need to move.

also, figure out if leasing or buying is what makes sense. don't buy a deal, buy a vehicle.

[Jaeger]

So what everyone is saying is I should be asking for X$ off MSRP.  Forget about the whole payment thing, even though that's how all the dealers talk and how most people do their budgets.

Yes.

Negotiate the best price possible then work out your payment after while never losing sight of that best price.

Exactly this.  And yes, dealers HATE this - which should tell you something.

[Sir Osis of Liver]

So what everyone is saying is I should be asking for X$ off MSRP.  Forget about the whole payment thing, even though that's how all the dealers talk and how most people do their budgets.

Yes.

Negotiate the best price possible then work out your payment after while never losing sight of that best price.

Exactly this.  And yes, dealers HATE this - which should tell you something.

  Completely this.

If they haul out the "four square sheet" tell them to put it away or you'll walk. Be prepared to walk if they insist.

https://consumerist.com/2007/03/30/dealerships-rip-you-off-with-the-four-square-heres-how-to-beat-it/

[JohnnyMac]

Update, basically the offer they sent back was full MSRP, but they throw in winter rims and tires, plus some $328 winter package which is basically some rubber mats.  Told him they had to do better than that and they basically said they can sell it no problem with this deal.  Maybe that's true but a demo that is a model year old and over 12,000 Kms should have more off than what I would guess is $1,000 worth of accessories.  But maybe I'm being unreasonable.