How many miles?

Don't take this the wrong way (and I don't think you will), but the R-Class was never a good car. It was always a piece of junk.

 

I'm still confused. So your dealer is going to pay MBFS the residual value, and buy the car from them. Then they're going to pay MB corporate for the certification, plus pay for whatever reconditioning it needs to meet CPO standards. Then they're going to sell the car back to you for whatever they have in it, but no profit to them?

So your cost is residual + certification & reconditioning?

Am I getting that right or no?

 

Yeah, for the most part. The dealer will undoubtedly make money off the certification — between the work they do, the fee, etc. I asked them if we have to do cosmetic reconditioning, and they said no (which is good for me). They basically told me they will be making money off the certification. Don't forget, there's the doc fee and all the other crap they charge for, too.

Obviously there would be contracts to do this and financing and/or cash/check payments.

I do bring them a good amount of business for one person. This either consists of myself or a family member buying a car, or me selling someone on a car, calling my salesman, asking him to draw up the papers, and the person coming in for a test drive the next day and signing (I enjoy it, what can I say). Wish I could have gotten a Benz instead of the BMW, but I needed that same day and the deal was too good (Benz couldn't have matched at the time).

 

Ok, but understand that the dealership, which is an independent business that is not owned by Mercedes, must pay Mercedes around $2,000 in order for Mercedes to agree to certify the car for them. Not the other way around. The dealer doesn't get paid to certify by Mercedes...he has to pay Mercedes. The dealer is not Mercedes.

Then the dealer also has to come out of pocket for any repairs or maintenance required to get the car to CPO standards. So not only is there no profit to a dealer for getting a car through certification, it actually costs them money. That's why dealers are very picky about which cars they submit for certification. They know CPO adds some retail value and moves the car off the lot quicker, but not enough to justify thousands of dollars in up front expense. They choose to certify the very cleanest cars possible.

It's not just cosmetics. Wear items like tires and brakes have very tight tolerances, almost new tolerances.

At best it costs them a couple grand. At worst, several grand. Granted the $800 dealer fee is pure profit, but the tag, title and loan doc stamps are pass thru costs. No profit there.

The other issue you have is that MB pads their residuals to improve lease rates. Odds are your car is actually worth several thousand less than the residual, and that's not including the hit for mileage. (The residual assumes you'll stay within the mileage limit. It takes a hit if miles go over).

So if the residual is $35k for example, but the actual market value is $30k, you're starting out with $5k negative equity if you buy the car for the residual. Add to that the $2k certification fee and you're $7k upside down, plus another $800 for the dealer fee, and you've paid close to $8k more than market value to get the same car with 12 more months of warranty. Versus eat the excess mileage fee and walk away.

 

I am very aware of how the process works. It may cost them $2k, but it will cost me around $3.5k, according to my dealer. And I will be paying for the reconditioning, obviously, see that price.

I am well aware about MB padding their residuals. That is correct. If it weren't, I'd just "trade" the car into Mercedes and cover the difference with MBFS (which would be the amount I was over miles in actual depreciation at roughly $0.10 per mile). This wouldn't be a conversation.

I'm not looking at it like an "I'm starting off with negative equity." If I buy any car, new or CPO, I'm going to be starting off with negative equity. This is not unexpected to me. I'm looking at it as "I'm continuing financing." Sure, the lease redisuals may be inflated, but I'm continuing my payments as if I purchased the car originally. I'm also going to be getting the warranty for 3 years, not 1 year (yes this is more money, but it's like that on any CPO purchase). Where's the value to me in that? I'll be putting 40k per year on this car when I do that. And driving my Mercedes, which I really enjoy, instead of my Lexus, which is extremely comfortable and super reliable, but boring. Can't do that on a new Benz (practically), or on any other car (reasonably), besides a Lexus. So walking away doesn't do much for me (except mean me paying about $3k in fees beyond depreciation to MBFS) unless I purchase a CPO Mercedes (or stay doing the 40k per year on my Lexus, which I wouldn't like nearly as much as all of this). Let's say I want to do that, but I don't get this car. Well, I need to walk in and get a CPO, deal with the dealer's prices, still pay that $2k+reconditioning one way or another (built in price), have already paid $5k to Mercedes for mile overage, $595 for lease termination fee, and whatever else they decide to tack on as lease end charges. The residual on my car is actually $31,386.60, the taxes are $1,883.20, and the fees roughly $885. The price of a CPO car (with my options and accounting for increased mileage) will be roughly the same. Maybe mine will be $2k higher because of certification fees and all. (Negative equity or not, ALL CPO vehicles will be when you look at trade in values after you get them... as with new cars... just to a lesser extent than with new cars...) The extra warranty is the same for any CPO car. So the situation is the same — maybe I pay $2k, maybe a bit more, than any other CPO car — and I get my car and avoid paying the $5k to MBFS, and getting a CPO Benz is a great idea for me... (if I can manage that last year, without warranty). Yeah, sure, you have technical "negative equity," as with any new car or CPO car purchase... that's not exclusive to this situation. Any time you go in a dealer and get a new car or a CPO car, you'll have negative equity, period for new, and if you look at your trade in price for CPO (unless you consider the new owner reducing value). But here, I pay maybe $2k more than any other CPO, but don't pay $5k to MBFS.

Don't forget, I do want to do this, for the most part. Sure, I may pay $2k higher, maybe a bit more, than any other CPO to avoid paying $5k to Mercedes, but I want to buy my car (or a CPO Mercedes) and have a 3 year unlimited mile warranty and put 40k per year on it, instead of my Lexus (again — super reliable and very comfortable, not fun — can only really do this practically with a CPO Benz or a Lexus). I've done the math on the pricing and all of that, know about the equity, etc etc...... the only variable will be how much it costs to maintain (reliability/dependability) in the final year before I can trade it in without being underwater on the car. That will be the final deciding factor. Because I want to do this, and the numbers work and make sense, but what I'm asking about is the car in that final year. If everyone thinks it's going to be a nightmare and not worth it, then I won't do it. If not, then I will. And, will it exceed the cost of getting a CPO vehicle with like 10k miles on it and at least 1 year of manufacturer's warranty that I can get another year out of for a total of 4 years at 40k per year (with CPO extended warranty)?

 

I don't understand how that gets you out of paying over-mileage to MBFS...in order for the dealer to end your lease and CPO it, they need to report to MBFS the actual mileage during the inspection at the end of lease. Then when MBFS receives the info, wouldn't they send you a bill for $5K? Since it's in your lease contract, there's no way of someone (you or dealer) paying the over-mileage amount due at the end of lease to MBFS. Unless...your dealer reports a lower number of miles or is able to negotiate a much much lower price from MBFS. It sounds a little sketchy to me.

 

If you choose to buy the car at lease end all you'd owe is the residual. No miles or excess wear/tear charges. He'd like to avoid the mileage charge and also extend the warranty.

I'd buy the car for the residual, add the ELW and finance it into the deal and be done with it. The other way seems convoluted AF.

 

See Mike's post (he posted after you).

Mike, normally I'd agree. It is convoluted. But the key here is... if I'm buying it, which I do want to do (especially with the mile issue), I want to drive it 40k miles per year, instead of my Lexus — because I prefer it over my Lexus (I'd still keep and use my Lexus, though). The ELW for 75k miles would last me a bit more than 1/2 of a year. At 100k miles, we're at around 1.25 years.

A 3 year unlimited mile warranty lasts me 3 years, period. And the cost is not that much more, all things considering (value, etc). (Cert cost + 2 years warranty cost, especially when not paying the $5k to MB (can be used as down payment), can roll anything else (and the fees and all) into financing (again, have that down payment), etc...).

 

Got it. You'd buy 2 extra years of CPO which has no mileage limits. I'd just watch the net cost when all is said and done and make sure the deal still makes sense.

 

I said RUN!!!!! Don't do it!!! When the tranny falls out and the motor blows good luck.... trade it in on a 1998 Honda, it will last longer!

 

That will send you straight to prison. Good luck.

 

Absolutely will.

Never have I had issues nearly that bad in any Mercedes. I have a 2014 Lexus, trust me, I know it's more reliable. But I'd probably never buy a Honda, lol.

 

Is it your contention it is insurance fraud? Guess what, it is not. But, the insurer has complete defenses to the claim as the loss is not fortuitous, but expected or intended.

Stay in your satrapy, diesel.

 

I worked SIU for Progressive (special investigation unit) that handled all theft and fire cases. I popped several frauds and we always referred the cases to the DA but only one I recall led to a prosecution and conviction. Usually the cops couldn't care less.

In that case a woman bought a policy on a new Mazda 929 three days before she claimed to have struck a deer, causing extensive damage. She was pissed that we were investigating the claim at all, which is a red flag.

I inspected the car and I'd never seen damage so extensive from a deer hit. The animal had crushed the hood, most of the engine, and peeled back the roof a good two feet. I took some hair samples from the car to a vet, who determined it was bovine (cow).

The obvious difference between a cow and a deer is that the cow probably has an owner. I went to the police department in her town looking for any reports of a cow being struck.

I found one. Two days before the lady bought the policy another motorist reported finding a dead cow carcass in the road. Then I tracked down the farmer who owned the cow, which he had buried. He agreed to exhume the cow, and we were able to retrieve headlight fragments from the body. Those were later matched forensically to the remains of the headlamps still on the car. We denied the claim and she served three years for insurance fraud.

People, in my experience, are incredibly naive about how a theft or fire claim gets investigated. When they try to pull one off they make a dozen mistakes in the first hour. Like rolling your car down the driveway away from your house, and removing your stereo, wheels, battery and personal effects before setting it on fire.

I actually had a guy cut the engine out of a car with a torch on a fire case and claim the fire must have melted it.

Or your new locked truck getting stolen from your yard, but there's no broken glass and you can't produce both sets of keys, and you're three months behind on payments. Then the thing is found burned out in the woods three miles from your house. (Actual case).

Or you keep trading the use of your car for crack and then reporting it stolen when they don't return it, and have your wife conduct the interview with me in a nighty with her ***** hanging out and her hand on my knee the whole time. Classic!

 

In Gunga's hypothetical, there is no material misrepresentation of fact to an insurer, express or implied, concerning either an insured peril, or the cause in fact of the loss. A person who has a car stolen owing to an intentional act on their part, without a conspirator or conspirators, has committed no crime, but the insurer has a complete defense to the claim. One must analyze the facts, and distinguish criminal acts from merely stupid ones.

In the hypothetical, there is no inchoate crime, nor a substantive crime. There is merely an uninsured loss.

 

I think there are good people who have made good suggestions for you - and frankly what you have to say about "the deal" is frankly all jacked up... if you think paying residual+certification incl servicing (you quote $3500) - then my friend I hope the next time you get a suit cleaned they don't charge you $1,000 to clean that suit..

If in all of this - it's worth the convenience to wrap it up with no cash out - so be it - but yes you will be buried in that car note when all is said and done.

Your dealer smells blood-in-the-water - and that's OK as long as you know your bleeding for your own reasons.

You should NOT be paying more than market value for any MB - and frankly the way you describe the numbers adding up it "sounds" like close to 15% OVER market value for a comparable Certified C with much leas miles.
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Well.. to be helpful.. let's just take 1/2 step back..let's chat about purchase #'s for a second

1. On the Mercedes Financial side - at the end of your lease - all payments paid - "lease purchase cost" from MBFS will be the residual shown on your lease - if you don't have that at hand - you can call MBFS and get that # - and they can also list any additional fee's.

2. Your local MB dealer - if they buy your MB from MBFS - there is a different cost the dealer will pay - often several $1,000 lower.
If that "dealer price" is lower enough - the dealer might be able to inspect + service as needed + sell that same MB back to you Mercedes Certified at same-or-slightly lower cost than your direct cost to purchase from MBFS.

3. Depending on credit tier with MBFS or another 3rd party lender - Mercedes Certified at solid low market price - if you're concerned about the additional cash outlay for sales tax on purchase you could choose to leverage that into the financed amount on top - or pay sales tax yourself as lump sum - again that has to do with your personal situation.
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If you want to hold out until '18's start arriving - leading to even bigger discount newer - or any other reason - you can call MBFS and extended your existing lease month-by-month until you have the "new" MB you really want.

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Keep the beat !

 

Let's say hypothetically the plan was to "accidentally" leave the car in a "bad" neighborhood with the keys in it. And the car actually gets stolen. And you have a perfectly plausible explanation for what you were doing parked in that neighborhood with the key in the car when the insurer takes your recorded statement under oath. And of course there's a record of you calling the police the moment you realize the car is gone.

The insurance company at that point still owes you nothing. Not even a rental. 90% of true thefts are recovered in the 60 day waiting period in your insurance policy. Rarely do they completely disappear.

Once the car is recovered, the insurer owes for any incidental damage attributed to the theft, but the cars are almost never a total loss. It takes a lot of incidental damage to total a $50,000 car. They don't owe for excess mileage caused by the theft.

Car thieves lack the motivation to actually destroy the car, A lot of work for no payoff and time spent doing it increases the risk of getting caught. They drive the car for a few days, or trade it for drugs or whatever, but after that it just gets abandoned somewhere until the police finally discover it.

In order to walk away clean from a theft (less your deductible) you need the car to stay gone for the sixty days. Obviously a random car thief is unlikely to oblige. I did bust a guy on a $70,000 SL who did exactly that. Left the car parked overnight by his club and the next day it was gone. Hotwired (since he had the keys). He did remember a group of black kids eyeing the car that night. Then he got so drunk a bartender drove him home.

Actually he'd had an extra key made three days before the car went missing. Hot wiring a Mercedes, even back then was almost impossible. Mercedes keeps a record of every key produced against a VIN.

A buddy of his had driven the car down to Miami and hid it in a storage unit. The owner couldn't explain the extra key and after interviewing other people at the club the whole stupid plan got exposed. We told him to get the car and in exchange we'd close the claim and decline prosecution on the fraud.

 

It is not a crime of attempt nor a substantive crime under these facts as there is no coverage for expected or intended losses. Where there is no coverage there is no possible species of insurance fraud.

It is not a crime to hope, expect or intend that your car be stolen so long as you don't conspire with another. Theft, of course, is a covered peril, unless you expect or intend the theft. So, again, there is no criminal act, merely a probable uninsured loss.

Merely expecting or intending a loss, albeit under the mistaken belief it is covered, IS NOT A CRIMINAL ACT.

Before you ask, a competent prosecutor knows that OBJECTIVE impossibility is a probable defense.

In our little hypothetical, since there are no agreements or overt acts, the insured has a potential uninsured loss, and the state actor-prosecutor, if stupid enough to be swayed by a stupid claims adjuster-non state actor, has potential civil and criminal liability for conspiring with a moron to deprive the insured of his civil rights, I.e., the right to be stupid, viz unlawful prosecution.

What we do have is a confederacy of dunces blowing smoke up each others' asses. See, e.g. Glyster (right, doc?)

Somewhere outside Svalbard, a polar bear walked into a high school dropout bar, followed by an angry little man with a scroll under one arm...

 

What if a polar bear wet farted all over the interior because the windows were down.. then drove it to the North Pole and made love to a seal in the back seat.. they had a family and then decided to drive the car off the iceberg into the bottom of the ocean where nobody would ever find it.. How would insurance deal with that situation?

 

First or third-party claim? Given the form over substance club, I gotta ask..... (Unless there is an absolute pollution exclusion)

The consequences of asking....

 

If I paid $5k on mine for miles, and then bought a CPO, my total expenditure would be equal. Market value plus that amount equals residual value, in this case.

If I wanted to keep my car, that'd be the way to do it, considering how much I'd be over miles. If I weren't over miles, then obviously I'd just get one off the CPO market... but when the price plus mileage fee becomes equal to the residual...

Also, I did consider about trying to get the dealer to purchase for their price based off residual (but less, as you said) and sell back to me. Would have explored that later. Would only make cost less.

But I think I've decided to just pull it ahead in two months. Cost won't be too much. Will just use my Lexus for high mile driving that doesn't involve worrying about miles and repairs, instead of the Mercedes. Will have a lower payment and a new car. Still can't use it for high mile driving, practically (without spending even more than to do this as I'd basically need to either buy mine CPO or buy a CPO and pay mileage fees on mine, which would around equal my residual), but whatever, that's fine.

Also, I've been seeing Facebook ads that now say "up to 5 years of unlimited mileage warranty, CPO" from Mercedes-Benz USA. What?? 5 years???