How do you do the math with three free months?
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1977 6.9; 2007 CLK350
How do you do the math with three free months?
My son got a letter from MB on his lease. Everything is pretty straight-forward except there are no payments for three months. I have no idea how to do the math on something like that. Can anybody help?
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Joined: Apr 2006
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From: Boston, MA
'06 SL600
That's interesting. Many times MB will give you "three free months" of depreciation on a lease. So a 24 month lease becomes a 27 month lease. The key is that you calculate your principal depreciation over 27 months, but only have to pay down to the 24 month residual value. So, you basically don't have to pay the depreciation from month 24 to month 27. But, you still make 27 payments (they're just lower than they would have been).
To be honest, I'm not sure what three months free could mean, otherwise. Maybe, you don't pay for 3 months but then do the principal portion of the payment under the same calculation (so, you end up paying the same amount but over 24/36 months instead 27/39 months???). That doesn't seem to be any real benefit, so the only other thing I can think of is that you calculate the payment just as you normally would and then just skip the first 3 months payments. So, if the lease calc comes out to $1k/month for 36 months, you only pay $1k for 33 months?
You might need to be more specific on what the details of the lease are...
To be honest, I'm not sure what three months free could mean, otherwise. Maybe, you don't pay for 3 months but then do the principal portion of the payment under the same calculation (so, you end up paying the same amount but over 24/36 months instead 27/39 months???). That doesn't seem to be any real benefit, so the only other thing I can think of is that you calculate the payment just as you normally would and then just skip the first 3 months payments. So, if the lease calc comes out to $1k/month for 36 months, you only pay $1k for 33 months?
You might need to be more specific on what the details of the lease are...
