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Every dealer I have gone to always suggests that I put down $2,500 as some cash to lower the payment on a lease. I never have, as its' my money, whether I give it up front or monthly...not to mention the part that if the car gets totaled GMAC won't give me my down payment back. But I was thinking, is it more probable that the reason a dealer wants cash "out-of-pocket" is so that it gives him capital to pay the salesmans' commission plus his profit? Otherwise he has to wait for reimbursement from GM, doesn't he? If this is the case, then shouldn't the fact that you're putting money "down" be a bargaining tool? Just curious.
 

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I don't know what they do with the downpayment but every dealer pushes each buyer for to have one. The bigger the better and the more buying power you have. They can't screw with the numbers so much as long as you do the math by looking at the invoice, MSRP, and residual after lease. You may also get extras like oil change, tint, mats, etc for having more downpayment. Sorry, I don't have any experience when it comes to lease but hope you get the numbers you're looking for.
 

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They get paid either way, but cash is "king" as they say! I think they do it to "pad" your bill some more, without raising the payment! But not a strong bargaining tool for us, in my experience.

For instance, when I leased mine, They only wanted to discuss "monthly payments" to see what my max tolerance was! They always ask "what are you paying now?" as a qualifier. I refused, and bargained from MSRP down, because I knew "invoice price" was never gonna happen here! (and that didn't help me too much either,as he had what I wanted, right in front of me, and we needed a car NOW)

Anyway I find out that he wanted "cash down" so he could meet my monthly payment goal without lowering his sale price and/or through extras into the deal! I agreed to pay the sales tax only, and he still didn't want to lower the monthly payments when I told him I had "Conquest " cash of $1,000 available to me, by saying "I figured that in already!" (he wanted to keep the Conquest himself.) A true con-artist. We finnally came to agreement only after I walked for the door.

Beware of hungry Dealers! These guys know they have a hot item and want your lungs for "in-Stock" units!!
Pay zero or no-money -down, and if a accident "totals" you, you don't lose your down -payment to GM!
 

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Down payments have nothing to do with the dealer profit. They get all their money from GMAC Financing or some from you and the rest from GMAC. It is just good business to look for down payments as it increases credit approvals (if your credit worthiness is a bit shaky), and it reduces losses should you fail to pay and the car must be repossessed. If you have good credit, and you are happy with the payment, with no money down, then just tell them that's how you want the deal done. It's no different than when they recommend you get paint protection and many other things...just say no if you don't want these things.
 

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AlanD said:
Down payments have nothing to do with the dealer profit. They get all their money from GMAC Financing or some from you and the rest from GMAC. It is just good business to look for down payments as it increases credit approvals (if your credit worthiness is a bit shaky), and it reduces losses should you fail to pay and the car must be repossessed. If you have good credit, and you are happy with the payment, with no money down, then just tell them that's how you want the deal done. It's no different than when they recommend you get paint protection and many other things...just say no if you don't want these things.
Sorry to say, the down payment has nothing to do with credit approval on a lease -- it's all credit score based.
As for how they make their money -- if they can get you to pay a rate above their "buy" rate (right now 8%), that's all profit in their pocket. So, if in fact they quote you using a 9% rate (which most dealers are doing with the Enclave right now), that 1% is PURE PROFIT TO THEM. It amounts to about $15 per month to you, depending on the negotiated selling price (example I just gave was on a base CXL, no options, sold at Supplier price).

As for the down payment, there's another thread (don't have time to look) that I've posted quite a bit of detail on leasing and how it's calculated. Bottom line is -- NEVER negotiate payment -- know how it's calculated and NEGOTIATE SELLING PRICE. Moreover, NEVER put money down. If you car is totaled, the insurance co pays the leasing co (GMAC typically --- they own it and lease it to you). You will never see a dime of what you've put down.
 

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I agree with Desgnconcpts and recommend no money down. My point about credit worthiness is based on a scenario where your credit score is not where they would like it to be. They will look for a good size downpayment, for their own protection, if they feel you are a higher risk. No differnt to any other loan or financial transaction really. Good luck.
 
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