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Re: Bad Faith??
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Posted by Duke (more from Duke) on Fri, 9 May 2003 11:09:59 Share Post by Email
In Reply to: Re: Bad Faith??, Patrick in DC, Thu, 8 May 2003 05:28:58
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It doesn't seem to me like anyone is complaining. Rather, it makes little logical sense for Saab (or other manufacturers) to refuse to negotiate with people who want to buy their cars back while flooding the wholesale auctions which only helps to erode the residual values of their cars. Of course, this argument was before I heard of the residual insurance they allegedly have on their contracts. Frankly, I'm amazed that any insurance company played that game. Rather, I'd guess that Saab USA or GM somehow covers the losses that Saab Financial has... remember, the execs at Saab get paid to sell cars and the execs at SFS get paid to make money on financial contracts.

A similar situation happened to me about a year and a half ago. I had leased a 1999 Saturn SL2 when I was going to grad school. It was a screaming deal (I think I paid $139/month for that car for three years with nothing down). Anyway, the contracted residual value was about $8,900. Since the car was really well maintained, looked new, and hadn't even had a single warranty repair during the years I had it, I thought I might like to buy it. Of course, $8,900 was much higher than what the books were telling me it was worth. I offered GMAC $7,500 for it. They refused to negotiate so I just handed them the keys back and walked away.

I later learned that the car sold at wholesale auction for $6,200! Yikes... I don't care what kind of insurance they had, they just cost themselves $1,300 in potentially lower losses by not entertaining my offer. Saturn corporate probably covered GMAC's ass on this deal and I'm sure they would have been happy to sell it to me rather than cover the difference. Of course, they can't directly deal with consumers and the dealers couldn't care less (they'd rather buy the car at auction for $6,200 and sell it for $7500 than help me make a deal wholesale).

This is a classic situation of a bunch of different parties with different motivations involved in the same business deal.

The big difference to me as the consumer, and to you as a Saab leasee, is that the car is actually worth MORE to me than it is to some stranger because I personally know the condition of it, the maintenance history, etc.

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