# Acquisition fee? Destination fee?



## x5forever (Oct 10, 2017)

Can someone please help me understand these fees and why there are 2 of them? Are they negotiable?


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## jjrandorin (May 8, 2013)

x5forever said:


> Can someone please help me understand these fees and why there are 2 of them? Are they negotiable?


No they are not negotiable. A destination fee is the fee that the dealer is charged for delivering the car (its on every car, not negotiable). (995)

The "acquisition fee" is a LEASE acquisition fee and is only applicable if you are doing a lease, If so, the fee is charged (925) by BMW FS for providing you with a lease. You CAN get the fee not charged by taking an increased money factor, HOWEVER that increased money factor will cost you MORE than 925 during the life of the lease (so its not really removing the fee, just moving it to another line in the lease).

Both fees are legitimate, and non negotiable if you are getting a lease.

What IS negotiable is the price of the car (cap cost on a lease), Money factor (down to the base money factor anyway... right now for tier 1 credit MF is between .00152 and .00192, and its negotiable between that range), and unofficial fees.


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## Shon528 (Oct 3, 2003)

Think of the destination fee as the cost (set by the manufacturer) to transport the vehicle from the factory to the dealer. Acquisition fee is set/charged by BMWFS similar to when you take out a new mortgage, there is an origination fee.


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## ard (Jul 1, 2009)

I've never paid the acquisition fee.


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## smed melo (Jul 3, 2017)

ard said:


> I've never paid the acquisition fee.


how did you avoid?


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## Squeak (Sep 13, 2014)

smed melo said:


> how did you avoid?


Buy the car?


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## jjrandorin (May 8, 2013)

smed melo said:


> how did you avoid?


He doesnt lease.... so no lease, no acquisition fee (and no money factor, and no lease end disposition charge, and no mileage limitation pre purchased. Those are negatives of leasing (and this is from a person with 2 leased vehicles, so I obviously like leasing). In exchange for the above, you can drive more car, for less money, and givve it back to them after 3 years if you dont like it.


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## 1968BMW2800 (Aug 13, 2016)

So, BMWNA often adds rebates and incentives to leases, and then claws a chunk back with the acquisition fee. It appears there's some sophisticated accounting going on wherein one segment of the BMW business offers a rebate/incentive on a lease and then another segment of the business, Financial Services, charges the lease acquisition fee, which stays with BMWFS and is not returned to the dealer. or the customer

I believe the complexity of this business model must serve some bottom line purpose. We used to rationalize paying the fee because the subvented lease money factors and inflated residuals more than offset the high acquisition fee. Now that residuals are lower and money factors are going higher, the dealer needs to be asked to do a bit more to keep the leasing costs reasonable. For some, it can happen. Others pay more.

But there is no way out of the lease acquisition fee, unless you purchase instead of lease -- and, at lease end, there is a lease return fee that can only be avoided if one enters into a new transaction with BMW.

From a negotiating perspective, it is often helpful to focus on the "out the door" drive off totals. How much, if any, cash drive off payment is required, what is the monthly lease/loan payment, and how is that calculated (what are the cap cost, money factor/interest rate, residual, allowed mileage, doc prep fees, added protection packages, etc.)? 

If one fixes on the total package at a price (payments and drive offs) target which factors in the acquisition and disposition costs, then how the dealer hits that target is for the dealer to figure out. So much easier than haggling over trade-in allowances or trying to grind off doc fees, or trying to discern if there's any trunk money to be had, and such. If the dealer finds a way to hit or get close enough to the customer's desired numbers, then how the dealer does it doesn't much matter in most instances.

Since I don't like the hefty acquisition fee, my price target always includes a discount to offset a chunk of that fee. It works out.


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## MJBrown62 (Jun 15, 2016)

1968BMW2800 said:


> So, BMWNA often adds rebates and incentives to leases, and then claws a chunk back with the acquisition fee. It appears there's some sophisticated accounting going on wherein one segment of the BMW business offers a rebate/incentive on a lease and then another segment of the business, Financial Services, charges the lease acquisition fee, which stays with BMWFS and is not returned to the dealer. or the customer
> 
> I believe the complexity of this business model must serve some bottom line purpose.


1968 ... you are correct in the context of years' past. The current rebates for leasing or financing with BMW are coming from BMWFS.

Incentives like Corporate Fleet and USAA are coming from BMWNA.


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## Dr. F (Apr 29, 2017)

Does anyone know if the lease acquisition fee is waived if you are doing a pull ahead deal? I swore that I read this somewhere when BMW e-mailed me about pulling ahead, but I cannot find the info now. Maybe wishful thinking.


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## Squeak (Sep 13, 2014)

Dr. F said:


> Does anyone know if the lease acquisition fee is waived if you are doing a pull ahead deal? I swore that I read this somewhere when BMW e-mailed me about pulling ahead, but I cannot find the info now. Maybe wishful thinking.


No. Just paid it on a pull ahead.

What they claim is they will waive your disposition fee! Ha!


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## Dr. F (Apr 29, 2017)

MJBrown62 said:


> 1968 ... you are correct in the context of years' past. The current rebates for leasing or financing with BMW are coming from BMWFS.
> 
> Incentives like Corporate Fleet and USAA are coming from BMWNA.


Do you know what the Corporate Fleet discount is on a lease right now?


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## Squeak (Sep 13, 2014)

dr. F said:


> do you know what the corporate fleet discount is on a lease right now?


$500 to $1500 depending on model.

http://www.bmwgroupfleet.com


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## jjrandorin (May 8, 2013)

Squeak said:


> No. Just paid it on a pull ahead.
> 
> What they claim is they will waive your disposition fee! *Ha!*


They should waive the disposition fee if you get into a new BMW with BMW FS... did they not? Its BMW FS that waives the disposition fee, provided you lease or buy a new BMW with a BMW FS account.... has that changed?


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## Squeak (Sep 13, 2014)

jjrandorin said:


> They should waive the disposition fee if you get into a new BMW with BMW FS... did they not? Its BMW FS that waives the disposition fee, provided you lease or buy a new BMW with a BMW FS account.... has that changed?


No, they are just making it look like they are doing you a favor.

Here is a letter I got just this week:


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## Ibiza (Jun 15, 2007)

1968BMW2800 said:


> So, BMWNA often adds rebates and incentives to leases, and then claws a chunk back with the acquisition fee. It appears there's some sophisticated accounting going on wherein one segment of the BMW business offers a rebate/incentive on a lease and then another segment of the business, Financial Services, charges the lease acquisition fee, which stays with BMWFS and is not returned to the dealer. or the customer
> 
> I believe the complexity of this business model must serve some bottom line purpose. We used to rationalize paying the fee because the subvented lease money factors and inflated residuals more than offset the high acquisition fee. Now that residuals are lower and money factors are going higher, the dealer needs to be asked to do a bit more to keep the leasing costs reasonable. For some, it can happen. Others pay more.
> 
> ...


Think of the acquisition fee for the GAP insurance for the lease which a purchased/financed vehicle doesn't have of $308.33 per year for a 36 month lease or $25.69 per month. A lifetime BMW CCA membership is paid off either after the 2nd vehicle (if $500 rebate) or 1st vehicle (if $1,000 rebate) and the rebate can offset ($500) or pay the acquisition fee ($1,000) with subsequent leases as this money flows out of BMW NA as corporate heavily subsidizes the CCA. So, Customer pays BMWFS acquisition fee, but BMW NA pays back customer the rebate, it's a net sum game after all is said and done, just have to stay within the BMW brand and can't cheat with Merc, Audi or P.


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## Robert A (May 18, 2003)

I think of the acquisition fee as the put option on the car. $1k for GAP coverage would be an insane amount to spend, especially since it's given away for free in a finance arrangement.



Ibiza said:


> Think of the acquisition fee for the GAP insurance for the lease which a purchased/financed vehicle doesn***8217;t have of $308.33 per year for a 36 month lease or $25.69 per month. A lifetime BMW CCA membership is paid off either after the 2nd vehicle (if $500 rebate) or 1st vehicle (if $1,000 rebate) and the rebate can offset ($500) or pay the acquisition fee ($1,000) with subsequent leases as this money flows out of BMW NA as corporate heavily subsidizes the CCA. So, Customer pays BMWFS acquisition fee, but BMW NA pays back customer the rebate, it***8217;s a net sum game after all is said and done, just have to stay within the BMW brand and can***8217;t cheat with Merc, Audi or P.


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## namelessman (Dec 23, 2004)

Robert A said:


> I think of the acquisition fee as the put option on the car. $1k for GAP coverage would be an insane amount to spend, especially since it's given away for free in a finance arrangement.


In addition to $1k acq fee, there is also interest rate difference between finance and lease, e.g. 1% penfed(or even BMWFS recently?), and 3.33% of lease interest.

For a $50k MSRP car, with cap cost 85%, and RV 65%, that extra 2.3% is $2.6k for 3 years.

The put option(for $3.6k) is not cheap.


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## Squeak (Sep 13, 2014)

namelessman said:


> In addition to $1k acq fee, there is also interest rate difference between finance and lease, e.g. 1% penfed(or even BMWFS recently?), and 3.33% of lease interest. The put option is not cheap.


Who is getting 1% from BMWFS on a sales contract?


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## namelessman (Dec 23, 2004)

Squeak said:


> Who is getting 1% from BMWFS on a sales contract?


1% BMWFS finance is on used car, but some recent posts in other enthusiast forum quoted 0.99% on new cars too, it is unclear those are dealer/third-party financing or BMWFS.


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