rory breaker

Exactly. If you are going to break even or be upside down at the end of 2 or 3 yrs when many of us will want something new.....why buy?

taylorcoleman

I think I'll start my own leasing business and you both are welcome to be my first victims....er, customers. Strike that...I think I'll start my own leasing brokerage business...you're still welcome to be my customers.

rory breaker

Can you or someone else breakdown my post above to tell me why its boneheaded? Residuals dont matter, lease % doesnt matter, none of that matters since Im not going to buy the car at the end of the lease. Im looking purely at whats coming out of my pocket over 24 months to drive that car.

Listen, if it makes more sense for me, as someone who wants to drive this car for 2 years and only 2 years, to finance, I'll do it. No pride here.

shap07s550

If you LEASE the car for 24 months at current Mercedes interest rates(~8%) and residual(~64% for 10k miles per year) with no discount off of MSRP and put no money down, your total out of pocket for the lease "all-in" will be NO LESS than $31,000 and NO MORE than $35,000(~ $1300-$1400 a month - the $100 range represents possible differences in your tax rates).

If you BUY the car for $65,000 and finance all $65,000 at 8% for 5yrs, BUT dump it for 64% of MSRP after 24 MONTHS for $41,600, u will owe the bank $41,000 on the remaining principal and will have paid $1300-$1400 a month on the loan for 24 months - ABOUT THE SAME AS A LEASE!

It's a wash leasing vs financing at current rates.

If you think you can sell the car for more than 64% of MSRP after 24 months then finance it. If lower than 64% lease it...

taylorcoleman

I beg to differ on the following points:
- you can get a 60 month loan for 4.75% (or lower)
- MB charges 9% to lease the '09 C63 (as of November 10, 2008)
- Tax does matter as some states and counties have different tax rates depending on buying versus leasing. For example, in Allegheny County of PA, it's 7% tax to buy, 10% tax to lease. Further, when you buy, you pay tax on the entire purchase price and when you lease, you pay taxes only on your monthly payments (plus on any down payment if made).

But even keeping taxes out of the equation (though they matter a great deal), let's use your same numbers except use 4.75% instead of 8% on the loan.

Lease:
- $1,329.98 per month (again, excluding taxes)
- value of car end of 24th month: $41,600

Loan:
- $1,219.20 per month (again, excluding taxes)
- value of car end of 24th month: $41,600
- balance of your loan: $40,832.16

So Financing makes better sense, as you pay less per month, and have $767.84 in equity. Factor in pocketing the difference between the loan payment and the lease payment and you get an additional $2,658.72. Spend that money with one of the sponsors of this forum.

As I've said before, if the lease rate and the finance rate become closer together, the more leasing becomes favorable. They are just too far apart on a C63.

shap07s550

U are right too. BUT the biggest wild-card is what u can sell the car for in 2yrs. If you can't get $41,000 for your car you may regret not leasing...

MB_Forever

In general, you always want to lease new cars and buy used cars. However, in this case, Mercedes lease terms on new C63 AMGs are so terrible that the numbers of leasing are so close to those of financing. If you could wait 6 more months, you'll find plenty of lightly used C63 for as low as $15k off MSRP (maybe even $20k if the economy continues to worsen).

taylorcoleman

Good point indeed. In a close-ended lease (most common) the leassor sholders the risk at lease end. Though with the calculations above, one has about a $3,000 margin (being able to sell the car for $38,000) if one takes a loan.

As opposed to a loan, however, the leasee must usually pay all the remaining payments if the leasee needs to get out of the lease prior to lease maturity. As the lease nears the maturity date, this payment becomes closer and closer to zero but prior to that, it's like paying more for the car than it's worth.

For the record, I'm a fan of leasing when all of the below are true:
* lease rates are close to loan rats
* residuals are relatively high (more risk put on the leassor)
* one can afford to finance, but put a value on having a new car every 36 months or so
* a bonus is when one can use the lease as a tax write off

But for the C63, the first 2 bullet points are violated.

Even so, I understand that some people just look at how much $ goes out the door each month as the exclusive deciding factor on whether to lease or to buy. This is the most simple comparison calculation, but usually the least favorable to the consumer.

rory breaker

You guys are all assuming a $1300/month lease which...in my estimation in talking to people on this board and my dealer, is WAY more than reality.

One guy on here posted he pays about $1k a month for his loaded (minus PP and teleaid) 09.

Residual doesnt matter. Tax rate should be built into the payment were talking about here so thats irrelevant too.

I still dont see how my original post was inaccurate.

taylorcoleman

Gee, where do I begin?

Based on your assumptions above, you already indicated the car will have depreciated 50% after 2 years. So taking a $65K car, putting down $2K, leasing for 24 months at 9%, and having 50% depreciation, your payment is $1,628.96 per month without taxes. This is arithmatic, no magic hand waving.

Using the above assumptions you would have to put nearly $16,000 down to get a monthly payment of about $1,000 (without taxes included--which is significant because you pay tax on the $16,000 plus your monthly payments).

Although I don't claim to be the most concise writer, I believe that if you read my posts carefully, and think about it, you'll see where your calculations are not valid.

shap07s550

I stand by my calculations! Sure, 1k a month payment is possible if you put a lot down, negotiate a lower price and live in a state that does not tax u like a b*tch! Your numbers are fine, you are simply using different assumptions. Who's more right? I think I am of course! Hahahaha!!

rory breaker

We are using the C55 as a base, which is essentially 50% after 2 years.

1 - too in depth...whats the monthly payment ALL IN
2 - residuals are irrelevant, what do I care what its worth at the end if Im not buying it?
3 - agreed, should not be based on affording a car one cant afford
4 - huge plus

Im not looking at monthly payment as the deciding factor, Im looking at it as the vehicle to determine the OVERALL cost of the car out of pocket for 24 months, which IS the deciding factor.

taylorcoleman

[QUOTE=rory breaker;3177243]

2 - residuals are irrelevant, what do I care what its worth at the end if Im not buying it?
QUOTE]

Even just this 1 point is critical to your misunderstanding. Here's why you care: your lease payment depends on the residual value of the car (among other variables).

Have you even looked up how a lease payment is calculated? If you rely on the dealer to do this for you, watch your back!

rory breaker

https://mbworld.org/forums/c63-amg-w...49995-omg.html

Its examples like this - a 2008 with 2100 miles already depreciating 20%+ - that make all the other stuff irrelevant.

My point in saying who cares about the residual is, if you tell me the payment is $1k, what do I care what makes it up? If its $1k its $1k. For negotiating purposes, yes, for comparison purposes of what we're talking about here, we're speaking in generalities and just using what others are paying as examples.

taylorcoleman

I give. I've offered as much as I can. I provided objective financial data and analysis--the numbers are the numbers. But if your approach makes sense to you and brings you the most comfort, go for it.

Although I'm done posting to this thread and contributing TTT visibility, I hope that some readers got some value out of it.

beemaze

I've been reading all the replies to this interesting topic, and here's my quick take on a few things:

1) Don't lease through Mercedes-Benz financial, try leasing through U.S. Bank for a better rate and compare your deal on leasecompare.com

2) Keep in mind your monthly lease payment is based on depreciation and interest plus your local sales taxes.

So yes, a higher residual value and a lower money factor will get you the lowest monthly payment.

3) If you decide to put additional money down to lower your monthly payment (it's called capitalized cost reduction), keep in mind you will pay taxes up front on this money down. I don't recommend putting additional money down - once it's paid, it's gone forever....

4) GAP waivers/coverage are part of most leases. If you lose the car to a major accident or theft, you haven't lost anything other than the money you have paid so far. If you purchase/finance a vehicle, and the same happens, your insurance company will pay you what the car is worth at the time of loss and you will be stuck with the balance of the loan.

4) If you decide to purchase, keep in mind you will have to factor in cost of maintenance, repairs, etc. into the cost after the warranty expires. Fixing these cars is expensive, and so are extended warranties.

PatSC23

I think with the economy the way it is right now, this is a very important factor...I leased a supercharged Rover Sport 2 years ago and had I chose to finance it, I'd be upside down on the car right now. As it stands now, given I leased, its due back in May and I know I'll be able to negotiate a really nice buy-out on it. I wont be taking them up on it b/c Ill be leasing a C63. If I financed, I'd be keeping that thing forever.

For me leasing is a no brainer...I switch cars every 2-3 years, I refuse to pay for new parts and labor (an oil change i can live with), i dont drive over 10k miles per year, and most of all, I do not want to deal with selling it privately at a price I think its worth, or dealing with sales managers on a trade-in.

Just to add, if the lease rates are as crazy as some say, then yes, it could make sense to buy...but for some reason $1300/month just seems high to me on a lease for the C63. Ill know better tomorrow, going to see a white C63 in the showroom finally.

rory breaker

Exactly my point. With the way these cars depreciate if you only plan to own 2/3 years, the likelihood of being upside down at that time is huge, and leasing gets the nod. Let us know what numbers you can get from your dealer, do a search on here, many have gotten around $1k.

shap07s550

money factor for Dec on the C63 is still 11% interest rate equivalent. Makes a lease ridiculous right now.

blownS

Holy crap! That's double what I got quoted in September.

beemaze

Agreed, that's basically double what I obtained in early October. Lease rates are ridiculous right now, all part of the tightening credit market. The economy is in deep doo doo...

PatSC23

So I changed my stance - im buying now, not leasing...

Initially when I saw people paying $1300 per month on a C63 lease i thought it was a rip-off, but like everyone familiar with MB says, its the nature of the AMG beast. Current lease rates (I went in 2 weeks ago) are near 10%. After going through numbers, the 39 month lease with 10k mile allowance will run appx $51k. For me its a no-brainer, I plan to put 30k down and financing the rest. Im pretty confident that in 39 months Ill have it paid off and can re-coup more than the $15k difference (+interest) between finance and lease at this time. With a 55% residual in 39 months, even if you re-couped 45% you would make out. The dealers rationale on leasing was to look at the value of the C63 in 5 years, which is mis-leading, because I plan on moving on in less than 4 years and the C63 should be worth at the very least $25k. (barring any major accidents of course. I also drive less than 10k miles per year and take very good care of my cars)

SEXYBEEST

find a car broker and go to an auction and hope for 08' to come up!

451/443=EW

You got it!! When so many manufactures are walking away from leasing that tells you THEY are looing the money. With an unstable market I would lease provied the resid is good and rates are reasonable. ( 62 % resid and 5.9% rate on a hot car is very reasonable for me) On a not so hot car NO.
Of course my numbers are based on Canada. Keep in mind when you look at low rates, it is also tipical of lower residuals. Meaning the payments will still be similar to a car with higher rates and higher residuals. So at the end of the day use them as a guide but your payment is most important to you!

sleewell

another thing no one has brought up is modding cars, something people on this forum love to do. i dont think its wise to modify a leased car as you probably cant return it without some major penalties if its heavily modded.