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What is Bank Fee when it comes to buying/leasing a car?

A

Argo

Lifer
I was checking out some cars today and one of the salespeople gave me lease details, which included $2200 down (even though I said I'm not paying anything down). When I asked him to explain what was included in that $2200 he listed:

First month payment (which is only $527)
Registration fees ($200 max in my state)
And bank fees (which using amazing power of math comes out to $1400+).

Now, I know that this is total bs and he's trying to screw me. Furthermore, he conviniently forgot to mention $2000 manifacturer rebate that was going on, which I didn't bring up just yet, I'm waiting for later. But what I'd like to know what exactly he means by bank fee. I know it's shouldn't be $1400 (I bought cars before, never had to pay it), but I'd like to know more about it.

 
Most lenders will charge 'loan origination' fees. These cover their up-front costs of the paperwork associated with issuing a loan. Typically, these fees are a small percentage of the total loan amount. It is very common to cover those costs with the loan. For example, the bank issues you a loan for $10,200 to cover your $10,000 dollar purchase. The bank keeps the extra $200 as their 2% origination fee.

I'm not sure of the arrangemnets that are made on leases, though. My impression was that you were basically paying for the depreciation of the vehicle, plus a little profit for the dealership. I don't see why a bank would need $1400 to facilitate that process.
 
are you sure that wasn't a Cap Cost Reduction fee??

Capitalized Cost Reduction

Capitalized cost (lease price) can be reduced by rebates, factory-to-dealer incentives, trade-in credit, or a cash down payment. These are known as cap cost reductions. Even modest cap cost reductions, such as a down payment, can create significantly smaller monthly lease payments, especially in shorter leases.

When you subtract cap cost reductions from cap cost, you get net capitalized cost, sometimes called adjusted cap cost. This is the figure you'll use in the lease payment formula later
 
That's not what he mentioned. I didn't like the whole attitude the dealer had, it was almost like "ok if you don't buy the car somebody else will". Well, let's see what their competitor says.
 
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