Anyway to protect against residual change?
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Cadillac ATS General Discussion Forum Discussion, Anyway to protect against residual change? in Cadillac ATS Discussion Forums; My Caddy was ordered this past friday (lease) and right now I think my residual is at 62, and payments ...
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    Stevo Supremo's Avatar
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    Anyway to protect against residual change?

    My Caddy was ordered this past friday (lease) and right now I think my residual is at 62, and payments of $320/month. The salesman told me though that when it comes in (probably sometime mid march) that he cant promise it'll be $320/month.. that the residual might change between then increasing my payments

    how is that possible? thats like rolling up to the drive through, ordering your big mac they tell you "that'll be $5.50 at the window" driving up to the pay window and hearing "that'll now be $7.50, beef became more valuable while you were waiting on your meal"

    Its just not fair, how can I sign up for payments at one amount and than them just go change it? I should be locked into that amount the second the pen hits the paper, is there ANYWAY to protect against that? or am I just going to have to go with it? I tell ya I'm extremely excited to get this car.. well, beyond excited I just cant wait, but if that residual takes like a 4+ point dive they can take the car and stick it where the sun doesn't shine, as painful as it'd be for me to walk away I would do it, theres no way I'd pay $400+/month for that car.

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    Atswatcher is offline Cadillac Owners Fanatic
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    Quote Originally Posted by Stevo Supremo
    My Caddy was ordered this past friday (lease) and right now I think my residual is at 62, and payments of $320/month. The salesman told me though that when it comes in (probably sometime mid march) that he cant promise it'll be $320/month.. that the residual might change between then increasing my payments

    how is that possible? thats like rolling up to the drive through, ordering your big mac they tell you "that'll be $5.50 at the window" driving up to the pay window and hearing "that'll now be $7.50, beef became more valuable while you were waiting on your meal"

    Its just not fair, how can I sign up for payments at one amount and than them just go change it? I should be locked into that amount the second the pen hits the paper, is there ANYWAY to protect against that? or am I just going to have to go with it? I tell ya I'm extremely excited to get this car.. well, beyond excited I just cant wait, but if that residual takes like a 4+ point dive they can take the car and stick it where the sun doesn't shine, as painful as it'd be for me to walk away I would do it, theres no way I'd pay $400+/month for that car.
    The lease will likely get better not worse. Your sales guy just wants more money.

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    scsgoal31 is offline Cadillac Owners Member
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    Re: Anyway to protect against residual change?

    Residuals always fall during a model year. A three year old 2013 MY vehicle is worth a lot more in resale in August of 2015 than it is in August of 2016. The residual will drop during the model year to reflect that. That's not to say an OEM/Financing Company won't have incentives to counter that drop.

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    Stevo Supremo's Avatar
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    Re: Anyway to protect against residual change?

    Well my my friend went to lease a BMW 3 series in june, it came in july and his payments went from $350.month to $420/month because the residual changed, he said something about it changing by 6 points.

    But you guys wouldn't worry about it then? it should be alright? I just want this car so bad and the worst thing ever would be having to walk away from it at the dealer because something ludacris happened with the lease rate. But again, you guys are saying nothing really should negatively happen?

    *oh and I looked into it and in Canada GM/Cadillac Cant... or ..wont? guarantee residual rates/payments, but they do in the states, wich to me is beyond ridiculous.

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    If your truly worried about the notes going up or down while waiting... Could you not find a car on the lot or do a dealer trade instead of ordering?

    I think you'll be ok until around July, August. That's usually when the new models start to surface or buzz causing the rates to really become a major factor.

    My friend is a Cadillac Sales Manager and he has always told me to lease before April. After that its a guessing game on rates yada yada yada.

    On my ATS I actually wanted to sign before 2013 to help him out but we couldn't get the car I wanted, so we waited and took a couple of days to decide on what to do. I said screw it and changed from a MT to a Auto on 1/2/3. Figured the notes out and went home to think about it. Called him on 1/3/13 and said go get it (dealer trade). Ran the numbers on the 3rd and guess what, the residual rate went up one point overnight making my note cheaper. Nice surprise.

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    Re: Anyway to protect against residual change?

    well its actually better if the residual goes up, that increases what the dealer can sell if for after I give it back therefore lowering my monthly payments now, on lease you're paying the amortization of the car, so a higher residual reduces your lease payments, its just bad if you want to buy it out after lol.

    We looked into a dealer trade, the only other car like the one I wanted was in Victoria B.C (literally across the country) and deliver charges were astronomical.

    My car HAS to be a manual, I hate automatics (personal thing) manuals to me are just a million times more fun to drive and there's less drive train loss.

    So you figure the rates will really change in April on? I cant see the car taking longer to get here than mid march can you? I ordered it saturday and it was put on top priority, when do you guys think it'll show up? 6 weeks about?

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    gfxbt is offline Cadillac Owners Fanatic
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    Re: Anyway to protect against residual change?

    I'm under the impression that the residuals are adjusted monthly. I believe they are also set by the lessor, not GM or the dealer. It is all about what the lessor thinks the car will be worth when they get it back from you. If they decide the car will be worth less, you will pay more. I've ordered all my past cars (expect my ATS - I too required a manual, but ended up dealer trading to something that was 99% of what I wanted - the decision to wait was based on me trading in a vehicle and not wanting to wait until 2013 when it would be "4 years old" instead of "3 years old, not fear of worsening residuals), and I have never had a huge jump in lease rates from the time of ordering to the time of delivery. This however is only 3 cars ordered total, so not a huge sample size.

    You should ask the dealer more specifically about it. Like I said, I'm under the impression that the lessor sets the rates so there may not be much the dealer can do. However, when I was cross shopping a 135 with my ATS, I discussed this with the BMW dealer when he said I would have to order a car. I was told that they would quote me a lease rate at order, then again at delivery, and whichever was lower I would get. If the lessor does indeed set the residual, the only way I can see the dealer being able to do that would be to "give me" cash as a down payment. This would in effect reduce the monthly rate, as you paid more up front. That is, the car sells for 30,000, lessor expects it be worth 20,000 at the end of the lease term. You pay 10,000 (30,000 - 20,000) (over the course of X months). If the lessor decides when the car comes in that it will be worth 18,000 at the end of the lease term, you now pay 12,000 (over the course of X months). If the dealer "gives you" 2,000, you again are only paying 10,000 (30,000 - 18,000 - 2,000) (over the course of X months).

    My guess is that when the car comes in, if the price has gone up significantly you will be able to negotiate with the dealer. If you just walk away, he is stuck with an MT car on his lot which will likely sit in inventory for quite sometime (1. it is a manual and probably only about 1% (at absolute most) of ATSs built are manuals signifying a small demand, and 2. in Canada RWD probably isn't the volume seller). If you go in with the attitude that if the price increases significantly, I'm walking, you will probably have a pretty good negotiation position.

    On a side note, I read someone saying something about the dealer wanting more money. Based on my understanding, this probably isn't the case. The price of the car is the price of the car. The dealer sells it to the lessor. The lessor decides how much it is going to be worth when they get it back. Subtract the residual value from the selling price, then divide that number by the number of months. In sum, an increased lease rate would only benefit the dealer if they sold the car for a greater amount. This however would be extremely transparent in the paperwork. So, I wouldn't worry about the dealer "trying to screw you."

    Hope that helps some . . .

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    Re: Anyway to protect against residual change?

    thank you very much for the response^ thats pretty much the clarification I needed^

    The cars order status is at 3000(whatever that means), so I'm hoping it'll be here before april and lessen the chance of a residual change over 2 months

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    Atswatcher is offline Cadillac Owners Fanatic
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    Quote Originally Posted by gfxbt

    On a side note, I read someone saying something about the dealer wanting more money. Based on my understanding, this probably isn't the case. . .
    The above story about the guy paid $400 instead of the initial $330 a month on his BMW, was the dealer wanting and getting more money.

    Usually if the residual goes down, the bank will adjust the lease rate down to keep the deal at least as competitive. That in addition to the fact one can walk away from the car with full deposit refund, tends to reduce any risk of a good deal going bad.

    But if you just have to have it, the dealer can play into it and make a few more bucks. There are a few things not disclosed in the lease contract it is easier for a dealer to play.

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    Quote Originally Posted by Atswatcher

    The above story about the guy paid $400 instead of the initial $330 a month on his BMW, was the dealer wanting and getting more money.

    Usually if the residual goes down, the bank will adjust the lease rate down to keep the deal at least as competitive. That in addition to the fact one can walk away from the car with full deposit refund, tends to reduce any risk of a good deal going bad.

    But if you just have to have it, the dealer can play into it and make a few more bucks. There are a few things not disclosed in the lease contract it is easier for a dealer to play.
    Not really, no. There's cap cost, cap rebates, money factor and residual. That's it.

    Banks don't adjust lease rates to make the deal more attractive if the residual drops, either. The factory may choose to buy down the rate through the lender to keep their lease offer competitive (subventing) or offer more cap reduction rebate, but that's the factory not the bank.

    At the end of the day, you're at the mercy of whatever the above 4 factors are at when you take delivery, not when you order. You may have noticed all TV and print ads always say "Must take delivery from dealer stock by ____ date", and that's why. Chances are not much will change on the ATS in the next 60 days, so I wouldn't worry too much.
    Rest in Peace, J.D. (aka Dirt_Cheap_Fleetwood)

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    gfxbt is offline Cadillac Owners Fanatic
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    Re: Anyway to protect against residual change?

    Re: order status code - Saw this earlier in another thread



    "Order status codes:
    1100 = Preliminary Order (Order passed GM edit tables but dealers has not received allocation to place order)
    2000 = Accepted By GM (Dealer used allocation to place order into production)
    2500 = Preferenced (Order pulled to the production system)
    3000 = Accepted By Production Control (Order input into the production system)
    3100 = Sequenced (Order sequenced for Production)
    3300 = Scheduled For Production (Order is scheduled into the plant build cycle)
    3400 = Broadcast (Order is sent to various build & supplier areas to bring order together)
    3800 = Produced (Order is built and VIN# shows in the Dealer Order system now)
    4150 = Invoiced (Order is invoiced to the dealer)
    4200 = Shipped (Vehicle is shipped to the dealer or point of delivery)
    5000 = Delivered To Dealer
    6000 = Delivered To Customer"

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    Atswatcher is offline Cadillac Owners Fanatic
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    Quote Originally Posted by The Tony Show

    Not really, no. There's cap cost, cap rebates, money factor and residual. That's it.

    Banks don't adjust lease rates to make the deal more attractive if the residual drops, either. The factory may choose to buy down the rate through the lender to keep their lease offer competitive (subventing) or offer more cap reduction rebate, but that's the factory not the bank.

    At the end of the day, you're at the mercy of whatever the above 4 factors are at when you take delivery, not when you order. You may have noticed all TV and print ads always say "Must take delivery from dealer stock by ____ date", and that's why. Chances are not much will change on the ATS in the next 60 days, so I wouldn't worry too much.
    In most cases, manufactures are very much their own banks anyway so it is only semantics. The bottom line is, as the model year progresses, chances are deals will have to be better, not worse, in order to move the cars, and the customer can walk away from an order without restrictions in most states.

    The only exception often is if you order during a year end (or any one particular) period when deals were exceptionally good to meet their sales goals. It may not duplicate in a few month after the period. But then we are talking exceptions.

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    gfxbt is offline Cadillac Owners Fanatic
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    Re: Anyway to protect against residual change?

    If your lease is through GMAC, that is one thing (although I don't know if GMAC is leasing ATS, if leasing at all). If however your lease is through US Bank, they really aren't affiliated with the manufacturer and would have to imagine they aren't concerned with "moving cars," other than the fact that they want to lease cars period (not cars of any particular make or model, but just cars generally) because they make money on it.

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    Atswatcher is offline Cadillac Owners Fanatic
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    Re: Anyway to protect against residual change?

    Quote Originally Posted by gfxbt View Post
    If your lease is through GMAC, that is one thing (although I don't know if GMAC is leasing ATS, if leasing at all). If however your lease is through US Bank, they really aren't affiliated with the manufacturer and would have to imagine they aren't concerned with "moving cars," other than the fact that they want to lease cars period (not cars of any particular make or model, but just cars generally) because they make money on it.
    It is Ally, not GMAC anymore.

    US Bank and Wells Fargo are two more visible independent banks that offer leases. Even so, they get large sum of lease support cash from manufactures to "move cars" for them. As the car model year gets older, the residual drops, even if they do not adjust leae rate down to compensate, they still get higher lease support cash from the manufactures.

    The logic is very simple, they need to move cars regardless what time of the year and how new or old the model year is. If residual for an older MY is forced to go lower, something else (manufacture cash incentives, lower lease rates, or both) will have to kick in to keep the sales going, otherwise no one will lease them.

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    AdamVIP is offline Cadillac Owners Member
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    Re: Anyway to protect against residual change?

    The deals not done till you sign the papers. If the car gets in and the numbers are changed unfavorably dont sign. Im not sure what you have already committed to but I cant imagine you signed anything that said I promise to buy this car but you can raise the price later. Bottom line you have a number you and the dealer mutualy came to and they either agree or you walk. Never be afraid to walk out of car dealership that isnt treating you right. There are more cadillac dealers than there are you and they need to sell that car more than you need to buy it.

    Car buying should be fun not stressful.

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