solekeeper

After 4 years of buying cars with cash, i'm thinking of diving into a lease.


I want it to be 2 years max,as i get bored quickly. What are the do's and dont's of leasing? Should i put down a large chunk of money?


And how does insurance work, i know it is more, but is it substantial?



Looking to get into a c63. I'd like to know what some of you are paying if you don't mind me being all in your business, lol. Ideally i don't want to be paying more than 650 a month. I've never had car payments before, so just jumping out the gate and paying that kind of money is not appealing to me in anyway.

Thanks for any input guys.

johnny--2k

Leasing is a great thing if you don't mind never owning the car.

Do NOT put down a large sum of money, you will not get it back... period. Put down as little as possible if you don't mind the payment.

Do NOT lease if you drive more than 10-12K miles per year

Do NOT lease if you want to keep the car.

DO lease if you like always having a car under warranty, newest technology, and don't mind always having a car payment.

Insurance is no different, anyone who told you that is full of it.

As far as payments, you won't get a $650 payment on a C63 lease. The way it works is all based on residual. Figure a 2 year lease, at 12K miles per year. Lets use round numbers here, so say a 50% residual value. On a 70K sticker price, your residual is 35K. So that means that in 24 months, you are required to pay the other 35K PLUS interest/money factor. That math comes out to $1,458 not including interest or taxes (depending on where you live, that could be paid upfront or monthly).

Now, MB typically has GREAT residuals on their cars, but not so much on the AMG's. They tend to drop like rocks in the first year of ownership, so the leases tend to be higher. Realistically figure a lease somewhere in the 900-1200 range on a new C63 depending on options and lease terms.

johnny--2k

The biggest pro to a lease is you don't ever have to worry about negative equity. Since MB sets the residual, they are on the hook if they were wrong.

Using above numbers again, say at the end of two years, your car is no longer worth 35K but only 25K due to the new body being released, you are not responsible for that 10K loss, MB is.

On the flip side, say the market is great on your car, and used trade value is 45K, you can buy your car from MB for 35K and turn around and trade it for 45K for a 10K profit!

Either way, you are not responsible for it after you turn it in, and if you keep it lower miles and clean, you might put yourself in an equity position at the end!

solekeeper

thank you for this explanation, so as far as payment goes.. let's just say, IF i put down some kind of money.. that could lessen the monthly payment?

-I drive about 6-8k miles a year, so good to go there.
-The only car i plan to keep is my Gallardo, everything else is a stepping stone.

The real reason I'm doing this is to just say i had a new car once in my life. LOL. I stick to the used game, to avoid depreciation.


And hm, maybe i can stretch it out to a 3 year lease, to lessen the payment load... ? I feel like i could last 3 years in a v8 with 500+hp.


Is is possible to leased a used car? Like a year or two old?

solekeeper

Neat! I will definitely keep that in mind.

Ingenieur

Without knowing your financial situation and how the car will be leased, ie, personal, business related, etc. it's hard to say what is best

According to my wife, a cpa, leasing usually doesn't make sense unless you can write part of it off as a business expense

If you just want no strings and want to trade frequently you will pay for that

Imo the best deal is cpo with 1/2 down and a low interest special offer paid off before the warranty expires, but there are other ways equally as good

solekeeper

Credit is about 750+, 0 loans/debts. Father has a business, did not think of that!

Vash

A couple things;

Putting money down on a lease is not a bad thing. It is in direct relation to the payment, whether you pay it up front, or over term, it is the same amount. It isn't like financing, where paying early forgoes interest. Instead of interest, you pay a "money factor". In the event of a "total wreck", your down isn't lost either because your negotiated cap cost is decreased in relation to your cap cost reduction (down, trade in, etc.). Example, I had a 2 year lease on a G37, but payed the lease off after 6 mos. to boost credit (account remains "Open", each month thereafter still reports as "Paid as Agreed", but the 0 balance vs original loan amount gives a nice bump to your score) and take advantage of low financing on another car (why would anyone pay cash for a car when 0/1/2% financing is available? You're "losing" money). 3 mos. later, someone ran into me, G totaled. The car was 9 mos old. Received a check from my insurance co. (he had liability, I had uninsured/underinsured) three days later for MSRP+TTL-residual value/balance. I made money there (had negotiated $200 over invoice).

The only downside to the "down on a short lease" is that the money factor is lost in the above scenario. I've heard of 4 and 5 year leases (which are a bad idea to begin with), in which case a large down wouldn't be advisable due to depreciation after 3 years eating into it and you would then forfeit the benefits of GAP coverage.

Bought the C63 though, she's a keeper.

zibby43

Buying and leasing both have their own distinct advantages and disadvantages. It comes down to what fits your needs. If you plan on keeping a car for a long time, then buying is a good option. Furthermore, if you plan on racking up tons of miles, buying is once again a solid choice (as there are no mileage "constraints").

I always lease. I like to change cars frequently and cars are depreciating assets. The vast majority of the time, when you buy a car, it is going to be worth a lot less when you go to sell it (especially AMG and M cars). With leasing, you don't have to worry about the tanking resale values of these cars (although there is an argument that you pay for depreciation to an extent with your lease payment when leasing). I don't have a long commute so I don't need tons of miles to play with.

With a lease, there is no need to worry about resale value (unless you plan to exit the lease by selling the car privately, which is always an option).

If you drive off the lot in your new leased car and someone smokes your car, so long as it is repaired (e.g., repaired by your insurance), all you have to do is turn in the car and the keys at the end of the lease and you are not on the hook for any of the additional depreciation caused by the wreck.

If you like to change cars frequently, leases are nice because you can enjoy a car for 24-36 months and then turn it in and pick a new car. No need to spend several weeks/months trying to get the best price for the car.

johnny--2k

There is one option that I forgot to mention, and it may suit you much better.

You can do what's called a 1-Pay lease. This allows you to pay the entire lease upfront, in a lump sum, and you usually get a discounted money factor as well, basically you are borrowing their money, but paying it all back right away, so they cut you a break. This may be the best option for you since you are not a fan of car payments, and are used to paying cash anyways.

abcut973

Pros and Cons of leasing have been mentioned above.
As far as used car goes it is possible to lease very low mileage used cars (<1000 miles). Some dealerships will qualify the car as "new" but will certainly mark up the money factor.

m a x i m u s

i've never leased before, but from what others have told me, leases require the maximum coverage (correct me if i'm wrong, or if i've been lied to). if this is this case, then insurance may be more depending on what coverage you would have gotten if left to your own devices.

Vash

I've never heard of coverage requirements, but I have really high coverage anyway (always cya, or you may have to pay out the "A").

GAP insurance is included in every lease and covers what isn't by your/their carrier.

abcut973

Yes lease requires maximum coverage but if you have already a good coverage then you won't see any difference. GAP is usually included on most of leases but it is your responsibility to check that in your contract terms.
As well you have to bear in mind that you have fees with any lease contracts: acquisition fee $795 (dealers mark this up), return fees, buying fees.
Basically a good lease contract is when you have a high residual (60% or more), low selling price (to be negotiated with the dealer and not including any down payment) and good money factor (based on your credit history). In most cases 3y/10k miles seems to be the sweet spot. GL

sloanbj

Depending on what state you live in, you may save sales tax on the residual. In other words, if you buy a $100,000 car you may owe $10,000 in sales tax. If you lease it for 3 years and a residual of 60%, you will save $6,000 in sales tax by leasing instead of buying.

abcut973

Correct. Some state make you pay what is "use tax" which is the tax owe on the leasing amount. You only pay tax on the duration you are using the car therefore a lower sale tax. Other stats like Texas make you pay the tax upfront.

alexmtl

Also one thing to keep in mind is that to get off a lease before the end of the contract, you need to either:
* Find someone to take over your lease, then you have some transfer fees to pay, like 750$
* Sell the car to someone

When finishing the lease or transferring it, a technician will inspect your car and anything that isn't "normal wear" will have to be repaired at your cost.

solekeeper

lots of helpful info, thanks gents!

maybe i will pop into fort lauderdale MB this weekend and see whats up.

A C

Another thing you could do is take over someone's lease. I have 6 months left on my 24 mo lease that I prepaid for $22k.

I'm looking at a Tesla and my car would give someone 1k miles per month to play with for the remaining lease and only cost them $6,000. Just a thought...

JimmyR

Pretty sure a car under finance ie leased will be more expensive to insure than one owned outright, all other things being equal.
This is mostly due to the concept of "moral hazard", which in insurance terms means that the insured behaves differently ie takes on more risk because they don't have to bear the consequences of that risky behaviour. The driver of a leased car will behave differently simply because they recognise they do not actually own the car (which is in effect owned by the finance company). This can manifest itself in a multitude of different behaviours, such as driving the car more recklessly, not maintaining it properly, parking it in a dodgy area at night etc etc, all of which in insurance terms add to the probability of that car being involved in an insurance claim at some point.

coladin

Came close to pulling the trigger on a new GL, these cars are the kings of resale, even the older previous version is still in super high demand. These cars would be great to own, however what turned me off from buying is if you get in a major accident, the car is essentially worthless on a trade one day.

I'll stick with leasing!

m a x i m u s

you can check sites like swapalease.com also.

rediesel

I've never leased a car, but when I bought my AMG the dealer said I should consider a lease where I pay everything up front in the future. I think it had something to do with me never putting a lot of miles on my cars and that using cash on hand to prepay makes for attractive terms. That or salesman BS.

abcut973

That is called one pay lease where you pay the lease up front instead of monthly. Doing that way you save on interest rate vs a normal lease. It has nothing to do with mileage I think.
In lease mileage only impacts the residual at the end of the lease. The lower the mileage the higher residual.