Money factor reduction with Multiple Security Deposits?
#1
Senior Member
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SOLVED: Money factor reduction with Multiple Security Deposits?
My 2017 C-300 coupe should be ready for delivery in about two weeks. I am new to leasing and have contracted to lease this car. I understand that if one pays upfront multiple security deposits (up to nine,) each MSD will reduce the money factor a certain amount. I have heard that each MSD may reduce the MF by either 0.00007 or 0.00005. So as to make sure that the dealership doesn't short-change me, I was wondering if any here would know just what the reduction actually is (I live in Florida)?
EDIT: For each MSD made, the MF is reduced by 0.00007 and you can give up to 10 MSDs at lease signing. So, if you have cash around that isn't doing much, this is a great deal. Here's how it works: Each MSD = your monthly payment rounded to the nearest $50. So, if you are paying $549/mo, then each MSD will cost you $550. Mlutiplying this by 10, you have to come up with $5500 for 10 MSDs. All MSDs are returnable at the end of the lease. Your original MF (let's say 0.00121) is now reduced to 0.00051 (0.00121 - 0.00051). In terms of APR, the interest on the lease is reduced from 2.9% to 1.2% AND this amounts to about $3000 over the term of the lease. Truly an believable deal if one has cash that isn't doing anything in the bank or money market, eh?
EDIT: For each MSD made, the MF is reduced by 0.00007 and you can give up to 10 MSDs at lease signing. So, if you have cash around that isn't doing much, this is a great deal. Here's how it works: Each MSD = your monthly payment rounded to the nearest $50. So, if you are paying $549/mo, then each MSD will cost you $550. Mlutiplying this by 10, you have to come up with $5500 for 10 MSDs. All MSDs are returnable at the end of the lease. Your original MF (let's say 0.00121) is now reduced to 0.00051 (0.00121 - 0.00051). In terms of APR, the interest on the lease is reduced from 2.9% to 1.2% AND this amounts to about $3000 over the term of the lease. Truly an believable deal if one has cash that isn't doing anything in the bank or money market, eh?
Last edited by flycaster; 08-10-2016 at 12:35 PM.
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C43NME (12-29-2016)
#4
Senior Member
I just picked up a new E300 and applied the 10 MSDs to reduce my monthly payment by $67.
IIRC, in NYS, MSDs are not permitted. Some silly state banking rules.
IIRC, in NYS, MSDs are not permitted. Some silly state banking rules.
#5
Member
Quick Question....
When MSD payments are calculated, they're calculated at the pre-discounted MF. So if the normal MF is .00071, and you put 10 MSD each discounting it .00007, the MSD amount is calculated using the .00071 MF and then multiplying it by the 10 MSDs. Is the MSD amount pre-tax or post tax?
When MSD payments are calculated, they're calculated at the pre-discounted MF. So if the normal MF is .00071, and you put 10 MSD each discounting it .00007, the MSD amount is calculated using the .00071 MF and then multiplying it by the 10 MSDs. Is the MSD amount pre-tax or post tax?
#6
Super Member
Quick Question....
When MSD payments are calculated, they're calculated at the pre-discounted MF. So if the normal MF is .00071, and you put 10 MSD each discounting it .00007, the MSD amount is calculated using the .00071 MF and then multiplying it by the 10 MSDs. Is the MSD amount pre-tax or post tax?
When MSD payments are calculated, they're calculated at the pre-discounted MF. So if the normal MF is .00071, and you put 10 MSD each discounting it .00007, the MSD amount is calculated using the .00071 MF and then multiplying it by the 10 MSDs. Is the MSD amount pre-tax or post tax?
Let's say the vehicle sticker is $75,000 and you negotiate a selling price of $70,000. On a 36 month term, RV at 58% and MF at .00071 (which is 1.7%), the base payment would be $817/mo. How tax is handled depends on your state. Here in Mass, we would pay 6.25% tax on the monthly payment so it would be $868.
Continuing w/ the above example, doing 10 MSD's reduces the MF to .00001 (.024%). The new payment including tax is $783/mo. So putting down a refundable $8000 ($800 x 10) saves you $3,060 over the term of the lease.
#7
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#8
MSD in Orlando/Tampa Area
I am planning to lease MB but dealership is pretending they dont know what is MSD. can you let me know which dealership in Orlando/Tampa FL area did you do your deal and how to work it out?
Last edited by bilpamp; 08-27-2017 at 09:14 AM.
#9
Member
Not sure if I understand exactly what you're asking so I'll run through a quick example using some of your numbers.
Let's say the vehicle sticker is $75,000 and you negotiate a selling price of $70,000. On a 36 month term, RV at 58% and MF at .00071 (which is 1.7%), the base payment would be $817/mo. How tax is handled depends on your state. Here in Mass, we would pay 6.25% tax on the monthly payment so it would be $868.
Continuing w/ the above example, doing 10 MSD's reduces the MF to .00001 (.024%). The new payment including tax is $783/mo. So putting down a refundable $8000 ($800 x 10) saves you $3,060 over the term of the lease.
Let's say the vehicle sticker is $75,000 and you negotiate a selling price of $70,000. On a 36 month term, RV at 58% and MF at .00071 (which is 1.7%), the base payment would be $817/mo. How tax is handled depends on your state. Here in Mass, we would pay 6.25% tax on the monthly payment so it would be $868.
Continuing w/ the above example, doing 10 MSD's reduces the MF to .00001 (.024%). The new payment including tax is $783/mo. So putting down a refundable $8000 ($800 x 10) saves you $3,060 over the term of the lease.
Is the MSD given on top of the required down payment for the lease?
MB website says only up to one MSD.
Is a security deposit needed if I decide to lease a Mercedes-Benz? It's not required. However, Mercedes-Benz Financial Services does offer a Multiple Security Deposit program which allows you to lower your monthly payments by including up to 1 refundable security deposit in your lease (not available in all states).
Last edited by nadz; 09-27-2017 at 12:17 PM.
#11
Member
Hi,
I am in Miami-Fort Lauderdale Florida and I am thinking of doing the Pull Forward program between Feb and June of 2018. My lease is up in Nov 2018. I have a 2015 c300 and I am not sure what to get next.
I have my eye on the GLC300 or the Coupe or the e class.
I use to have the 2010 E-class. Just a little history.
#12
Hi,
I am in Miami-Fort Lauderdale Florida and I am thinking of doing the Pull Forward program between Feb and June of 2018. My lease is up in Nov 2018. I have a 2015 c300 and I am not sure what to get next.
I have my eye on the GLC300 or the Coupe or the e class.
I use to have the 2010 E-class. Just a little history.
#13
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Join Date: Feb 2018
Location: Los Angeles, CA
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2016 Mercedes Benz C350e Hybrid
MSD's are allowed on Mercedes Benz leases'. Don't listen to the fools. If you do 10MSDS it lowers your money factor by 70 base points. Note: There will be a minimum MF cant be zero. Each class will vary
#14
Brian, does MSD affect dealer profit/salespeople's commission? If not, how do you maintain profit margin when using MSD?
#15
MSD by themselves do not have any direct impact on commission. It’s when lease rates (money factor) is marked up that causes an increase in backend profit - this applies to any lease with or without MSD. MSD buy the rate down thereby decreasing your lease payment and the rental income collected by MBFS. Dealer profit is not affected. In turn, MBFS gets to play with your money (MSD) for 36 months for investment purposes.
Tom Wolf
Fleet Manager
Tom Wolf
Fleet Manager
#16
Member
#18
NOOOO... MSD (MULTIPLE SECURITY DEPOSIT) is money you get back after your lease is up. It doesn't go towards your payments. It sits in an account and mb gets to play with your money and in return knocks down your MF or interest rate down.