jtrichel

In the past I have paid for weekend toys with cash, but very low interest rates have me considering financing. My credit union is at 1.9% for 60 days or even less for shorter term financing, approximating free money. Given my record with never keeping toys more than a few years, it has me thinking.

This also caused me to inquire about lease rates through MB. Curious if people think this is a good lease deal on the 2013 C63 Black Series:

36 months
WAC money factor .0016
Residuals: 52% for 10k miles/year

Vic55

If you flip your cars, lease and avoid the tax implication on the sales price unless Texas is an "up front" state.

And you can do .00150 with auto pay... just cancel it after a few months. 150 is 3.60 APR equivalent... which is high in todays enviro--- money is cheap.

Lets say sticker is 118675 and there is no gas guzzler (I think there is) your residual is 61711. If you net adjust cap is 118675 (sticker) your depreciation is 1582.33 plus 270.58 for interest or 1852.91 plus taxes... Your call.

If you dont drive that much bump the residual another point and do the 7500 mile lease. If taxes are up front then retail it at your rate instead.

CoolBDPhenom03

Damn, that's some good financial analysis right there. It sounds like leasing is the way to go unless there's a chance you think this car is a keeper.

callmiro

I'm assuming with that payment, you still have to pay your PDI/First/Last/other taxes upfront (which could be from $4k-$6k)....

Just wondering....

$1800/month seems about right as i was quoted similar for a CLS63 36 months lease with a similar sticker.

jtrichel

Appreciate this very thorough response. Texas is not an upfront state. Sticker is $110,005. Are you saying I should walk from MB and find a better money factor than the .0016 they have quoted me? Or just implying that the rate will drop to .00150 if I commit to auto pay? I wouldnt call myself a car "flipper", but I have never kept one longer than 36 months (daily driver, different story, keep them longer). This would be my first lease ever. Still not sure I will do it. I like the idea of being able to sell if/when I like, keep it, etc. My understanding is that with a lease you can do those things, but you get hosed.

Even Money

I financed at 72 months, 1.9% IDK if this is the kind of car you would lease....

Vic55

Leasing is not much different than retailing... its all about the price negotiated and if you payoff early the unearned interest (leasing rent charge) is not included. So if you flip cars quickly and since Texas is not up front, you should be better off leasing. In Cali the sales tax is 7.75% so on a 110k car we are talking about 8525 in fees alone. If you only kept a 3 year lease for lets say 1 or 2 years you would not have these fees loaded in your cap cost unlike in retail where you would. The money factor of course would create a slower perceived equity generation since leasing interest factors are greater but it still wouldnt add up to the taxes paid (at least in Cali as Im not sure what Texas sales tax is). Of course the one part that packs a lease payoff is the residual which is based off a percentage of msrp and not the net cap. But since most if not all CBS's go for sticker the point is relatively moot.

When I said .00150 I was talking with MBFS... .00160 is their tier 1 non subvention rate under the auto approval program (760 Trans union or higher) but you can drop it the additional .00010 if you do auto pay with them. They cant force you to keep auto pay so you could essentially do the .00150 and then after the lease is booked, reject it and revert to standard statement payout. .00010 is .24 basis points in APR fyi. And I seriously doubt any other bank other than MBFS will lease a C63 BS. Its over 100k and most banks check out or dont even have residuals set up for this car.

Vic55

State to state has its rules but general rule of thumb is:

Minimal Drives are first payment, license and reg fees, bank acq fee... and sometimes security deposit but this is usually waived based on credit grade. Ive never heard of PDI ever being charged on a lease. So in his case his drive off fees would be under 4k even with a 2k payment. Texas registration is probably lighter than California where our fees are circa 790 dollars for about 100k of car. I think the MBFS bank fee is 795 with a dealer allowed add on of up to 300 dollars.

jtrichel

Vic55, extremely helpful, thanks! The .0016 is what I was quoted based on my credit from MB, the dealer didnt mention the auto pay additional discount, but that makes sense. By the way, Texas tax on a car purchase is 6.25%.

I think the key thing I need to get my head around is how this would work if at 24 months, I decided to sell to a private party. Keeping is a little clearer to me, at 36 months, I could buy the car for the residual amount. But what if at 24 months, I get itchy for a new E63 4Matic?

Vic55

The residual at 52% is pretty soft for 3 years so your payment will have a good chunk of depreciation in it...

In the past MBFS has had high 50's residuals at 36 months and even low 60's on certain cars. This is good for those who keep their leases to term but not so good if they like to flip prior to term as they have not depreciated their cars down to actual cash value. I dont mind paying depreciation if the money factor is reasonable.

jtrichel

So Vic in this circumstance, would you lease at the .0015 or buy at the 1.9%? Ultimately, I am going to make my own decision here, but you are uniquely qualified to understand this car, its rarity, market value, lease vs. buy, and from reading many of your posts, I also think you understand the sickness of moving from one car to the next I think I will keep this 36 months, but there is always the possibility of earlier. I doubt I would sell before 24 months though.

Cash is also an option, I have set it aside... but with money so cheap not sure that is the right answer.

norb

Are you sure Texas isn't an upfront state? I thought it was, but what you can do, is sweet talk your dealer into seeing if they can use their lease credit to do away with the tax. That's what I've used before.

jtrichel

ahhhh.... maybe that is what they are offering to do.... now that you mention, I recall a comment like "we will take care of tax" vs. there is no tax...on the lease....

Vic55

It all depends on what your intent is and if Texas is an upfront state. If its upfront, go retail as your 1.90 is lower than .00150 (3.60%). If its not then you have to figure out if you will keep it 3 years and walk away scott free; then you lease. No taxes up front, no taxes on the residual, just taxes on the payment and depending on your line of work and your tax attorney you may have some writing off of the payment.

Now if you buy it and want to get rid of it in 3 years, you will play mercy to the market and ACV of the car at that time. You also will have an extra 6k plus built into the deal in the form of sales taxes (maybe more since Texas is higher than 6%). Will you make up that 6 plus k over 36 months in the reduction in interest? Possibly over the full period- Id have to run an amortization schedule under a simple interest contract to confirm but can't right now. But even if you did make that number up would your car be worth the payoff? It all depends on the market at the time of sale. Leasing will guarantee you a walk away free card (if you follow the lease rules of course via miles and wear and tear).


I thought Texas was an upfront state which would render all this leasing stuff less important.

rory breaker

Great thread. I have the same sickness with cars and have gone through a number of different scenarios. In the end, given forecasted values, it is very close in financial outcome after selling 36 months down the line. Except with the lease, no concerns about anything, just walk away at the end. Which to most of us is a huge value.

Keep in mind, you can always trade the car in during the lease too if you needed/wanted to, its not like you need to keep it. Also, MB may still have a good 33 month lease available, if they still do that gets you closer to addressing your 24 month concern.

2012C63AMG

Also if you own a small business or are self employed and want to purchase the car you can lease for 36 months but make the miles per year 25,000. This will drop the residual value lower and increase your lease payments which you can deduct as a business expense. So what you get is a residual value for a car that is 3 years old with "75k" miles on it or more but in reality you will prob have a 3 year old car with 30k miles on it, and you can purchase it and only pay sales tax on that much smaller deprecated value. Obviously this doesnt work for everything but you have to run the numbers and explore/

jtrichel

The only thing at this point causing me pause is the low residual. This is a 2013 BS, only literally a couple dozen of these for 2013. It will have very low miles, under a car cover in the garage, weekend only. I have to believe it will be worth more in the market than low 50s% residual at 36 months.

CoolBDPhenom03

Possibly. Who knows? Anything could change in 3 years, like legislation. Let me give you an example. A bill just got submitted in CA that would make all aftermarket exhausts on motorcycles illegal for bikes made after January 1, 2013. If a law like that were passed affecting autos, or something along the lines of EPA/fuel economy, that could change the outcome of your decision too.

Vic55

This is a good thing... if the value clearly exceeds the residual you can possibly move the car well before the end of term. And you might even make some money (LOL- its an AMG). Remember you can buyout your lease at any time. The payoff will be the unused depreciation and residual minus the unearned rent charge (money factor). The only heavier side to this is the higher payment during the lease since you are covering more depreciation. I dont mind it as much since the MF's have dropped. I remember when MF's were in the 3's for tier 1 credit.

Remember the amazing CLK63 Black Series? It came out in Q3 of 2007 and was selling for all the money... but then the economy collapsed and you could steal this car in the end of 2008 and 2009 in the used environment. The market corrected slightly in 2010 regarding this car but clearly it never held the value some may have expected it to hold. Now its 5 years in and you can get good deals on them but most of the owners either took a hit back in the day or still have the car. I didnt get one but was thinking lease at the time in Sept 2007.

rory breaker

Great example. With a lease, no worries. Obama could pass some massive guzzler tax, or gas can shoot to $10 a gallon resulting in a totally dry market for these cars...who knows. But with a lease, the more important question becomes who cares. Not you.

Yes, OP if the car is worth more then you sell it yourself. If its worth less, not your problem.

2012C63AMG

You still have to pay gas guzzler tax with a lease, just as you are still paying sales tax but your just paying it on the monthly payment not the entire purchase price, some states require you to pay tax on the entire purchase price of the car with a lease..... With my dealer I agreed to $1k over invoice and they payed the tax, essentially we split the tax.

Vic55

I think when Rory mentioned the gas guzzler tax he was talking in a macro economic level not in regards to the GG tax associated with the car directly.

And yes one pays for the tax on each payment during the term unless, as I mentioned at the start of the discussion, the state where the lease occurs is an "up front" state.

jtrichel

Thanks again for all the advice. I am a fairly financially-saavy guy, but have never leased before, and the ins/outs/rules are a little complicated...

This thread is leading me to think that lease is the right answer given the circumstances. What is the downside? Someone please pay devil's advocate...

DiscoZ

The only downside is if you flip or return and your residual bakes in a higher than likely depreciation assumption, you've overpaid. As for saving on taxes, can you save on tax on a trade in where you are?

I've leased many cars, but my 63 is part financed. The SUV is leased as it is a daily driver.

GrnLantern

Wow, I missed this thread, and it's blown up a bit. My responses will probably be meaningless.

I can contribute in this way: (confirming certain fees/taxes for 2013 BS's)
Destination & Delivery = $905
Gas Guzzler = $1700