For those who have leased their cars in the past, the bank acquisition fee is nothing new. Most would recognize it as a fee that is always included in the upfront "drive-off" payment or added to the cap-cost of the lease. However, this charge is really never fully explained?
Since leasing has rapidly become the preferred method to purchase a new car (especially for luxury brands like Mercedes, BMW and Lexus), it is important that you understand exactly why you are paying a bank acquisition fee. And, is it negotiable?
What is a Bank Acquistition Fee?
If you ask your neighborhood car salesman the common response might be that the bank acquisition fee is charged by the lessor to cover costs associated with administrating the lease. This may be true, however this fee's function is never really disclosed. Lessors collect a rent charge on every lease payment. This amount is calculated into the lease and is based on the contract's money-factor. This rent charge is why banks lease cars - to make money and this is amount can certainly pay for any administration cost associated with the lease. The fact is that this fee is most likely just a pure profit center for the bank.
Can I Negotiate the Bank Acquisition Fee?
Unfortunately, even if it is simply pure profit that does not mean that it is negotiable. The way that it has been explained to me by leasing companies is that once the bank charges a specific fee on a qualified lease contract they will have to charge that same amount on all similar contracts. For example, if I leased a new car and paid a one thousand dollar bank acquisition fee, then two months later I discover that my friend had leased the same car and had his bank acquistion waived I could have a legitimate case that I was overcharged and I could have a legal retribution. Obviously, the bank will avoid refunding all of their previous collected fees so don't expect them to discount it.
Does the Car Dealer Make Money from the Bank Acquisition Fee?
The dealer will almost always mark-up the acquisition fee. The best way to see how much they have increased the fee is to locate the factory's national lease advertisement and then compare it to the fee that your local deal is charging. For example, in 2012 Mercedes-Benz advertised a $795 bank acquisition fee on their new E-class. However, my local dealer charged a $1195 on all their Mercedes leases. It is clear that they are making an extra $400 on the sale. Here's the problem, just like the bank, once the dealer sets the acquisition fee they will not negotiate because they could also expose themselves to a law-suit.
You may think that it might be a good idea to shop all the dealers in your area and lease your car from the dealer that has the lowest acquisition fee. This strategy could lead to success, but most of time you will discover that all the dealers in any given market will maintain the same fee. This is because within their market they will collectively set the price of the acquisition fee.
The best way to negotiate the "marked-up" acquisition fee is to negotiate it from the cap-cost of the lease (the price of the car). If the dealer has marked up the fee by $300, then the customer should negotiate an additional $300 from the price. However, it is important to enter into this negotiation with the understanding that the sales department and salesperson normally do not share in the profit bernerated by the bank acquistion fee. In other words, the extra $300 of fees goes directly to the dealer principal and not to the front-end profit of the car from which the salesperson is paid.
In conclusion, if a bank acquisition fee is a component of your lease you will not be able to "line-item veto" this charge. But knowing how much the car dealer is making may help you reduce the overall price of your next car.