topgun04

The only place I noticed has 9.25% for some reason is Santa Monica... I don't know why. I thought it's part of LA County.

I think it is voter approved tax for a particular city. I lived in Northern CA and we have 9.25% sales tax in our city and the next city has 9.5%

dakrisht

If you live in Santa Monica, you have to pay 9.25% sales tax (or actually, I think it's over 10% these days) Elsewhere in LA it's the standard fare 8.75%

The MF is NOT negotiable, however, there's Tier-1 MF which is 0.00210

Ferrast

Will a stellar credit score get you to qualify for a Tier 1 MF or is it up to the discretion of the finance person at MB?

Ferrast

topgun04: After reviewing your leasing formula, I have a quick question about the rent portion. Why is the money factor applied to the aggregate of the price and the residual value? Although the money factor is not the interest rate, I would think that the interest component would apply to the negotiated price plus the fees less the residual.
Thanks.

topgun04

I would think that the interest component would apply to the negotiated price plus the fees less the residual.


It is exactly as you say..

cap cost is the total of negotiated price + all the fee that one want to roll into the lease (and there is an option to pay fee upfront and lower the monthly fee. that is why it is meaningless to talk about monthly lease payment without talking about drive off). MSRP*residual factor will give you the residual of the car at the end of the lease (in the lease document, they will show Residual as the value of the car at the end of the lease and they won't show the residual factor in the document at all. Sometime mistake are make here. .so that is one are to check to make sure one get the right payment. Dealer won't benefit from it so it is mostly mistake if someone put in the wrong number when they run the lease calculation.)

Money factor can be converted to interest rate (and domestic manufacturer like FORD and GM quote their stuff in interest rate rather than money factor) by mulitply the money factor by 2400.. So a 0.0024 money factor is equal to 5.76%.. And if you stair look enough to ask why 2400 and you would figure out that rent can be figured out by taking the average monthly balance of the car value times the monthly interest rate (i.e. take the 0.00576 and divide it by 12)..

The other alternative is to try to use a lease calculator on the web and just input the number and let them figure out the math behind it.. I only bring up the math to show how unlikely we are at the beginning of the product cycle and expect a 700-800 dollars monthly lease for an 82K car. Mercedes has to heavily subsided the car to make 700-800 a month a reality instead of a fantasy...

topgun04

Not the finance person, but Mercedes finance department. These are mostly automated transaction. When you have a certain credit score, couple with the income you fill in the app, plus credit history etc., they will come out with a rating of your creditworhtiness and quote you the rate.. But the dealership can pad the money factor and it is up to us to catch it and try to remove it from the deal..

storm10

Dealership can easily mark up the money factor on the lease as well APR rate on financing... that's how they make money in finance department. In dealership nobody gets paid by salary. They all work on commissions, including service and parts department. Even GM of the dealership gets paid based on performance: commissions. So everybody tries to sell.

So if you are shopping for the best deal, my advice is to try negotiating the bottom line: Total Drive-off amount and total monthly payment. If you start negotiating fees, rates, residuals and taxes - the dealership will put you together very quick.

Obviously if you negotiate the bottom line it will be all inclusive and there is no way they can do anything about it. You need to shop multiple MB dealerships against each other. This will save you time and headache and will make your life easier...

Ferrast

Good point. Did you ever use leasing software to make sure that you are getting a really good deal?

storm10

Yes, but it's a waste of time. I'm well versed on all aspects of financing and leasing, as I used to do it for living. I can calculate the entire lease on the piece of paper without any software. But there are a lot of items in the structuring of lease that nobody aware of. Even most salespeople don't exactly know how the deal gets done.

For example, MBF has Super Tier above Tier 1. Finance director has ability to buy-down the rate and get additional discounts based on some tricks like Auto-Pay. Some high performance dealers can get individual incentives that are not available to other dealers. There numerous financial programs like CAP, DEPP, EVP, Loyalty, Conquest, Graduates, USAA pack etc... that can be utilized.

Don't try to negotiate the bits of the lease, because you will loose every time. You have to negotiate the bottom line: Total out of pocket all inclusive AND Toatl monthly payment all inclusive! Shop MB Dealers against other MB Dealers. Whoever comes up with the lowest BOTTOM LINE - earns your business.

If someone sells me 2012 CLS550 for $10,000 over the MSRP, but they give me the lowest monthly payment - I will buy from them! I don't care if someone is selling the same CLS for $10,000 below MSRP. All I care is who can provide the lowest monthly payment. When I got my E-Class, they charged me $1,095 for Aquisition fee, even though I know MBF buy fee is $795. But at the end nobody could beat their deal, even though I made sure the Aq. fee was $795 - so I took the deal with $1,095 charge, because their deal was the best overall.

To get the best deal, I suggest to contact Internet departments by e-mail, because they are experienced, knowledgeable and most aggressive on prices. You can request quotes from one of the websites below:

Edmunds.com
Autobytel.com
BenzOnly.com
AutoUsa.com

And see who can give the best deal. This is easy and smart...

topgun04

Did you ever use leasing software to make sure that you are getting a really good deal?


No, I write my own spreadsheet so I can figure out the dirve off and monthly payment together. Some salesman (and their finane manager) are pretty stuck in how they structure a lease (e.g. they would ask me to put and odd number such as a downpaymetn like $457 to lower the cap cost ???.. Once they start, they don't want to go back and rerun the number with a different set of drive off etc.).. With a spread sheet it is easy for me to figure out if they are fogging me or just the way they structure it.. However, if you are not too picky, lease caculater that I see so far will get the job done as well.. Just pay attention to all the line in the lease contract to make sure they don't slip anything addition charge into the lease (especially the drive off which seems to be the easiest play to slip something in without getting notice).

Some manufacturer like BMW, Lexus, Volve, and Infiniti allow leasee to put in multiple deposits to reduce their money factor (e.g. for each deposit, Lexus allow a 0.00008 deduction off the money factor. And Infiniti allow 0.0001 (about 0.24% in interest rate term) deduction. Up to 9 deposit.. BMW seem to do 0.00007 per deposit and only allow 7 deposit). Unfortunately Mercedes don't offer this. A spread sheet is much easier for me to figure out the deposit, saving etc. etc.

Multiple deposit can save qutie a bit of money (return anywhere between 10-18% per year of the deposit in the form of reduction of the monthly payment e.g. I put down $5850 deposit for my current M37 lease (a 58K msrp car) and I am saving about about 85 a month and my lease payment go from 675 a month to about 590 a month for 36 month/12k mi). My return on the 5850 deposit is about 1020 a year or 17+%. I can not get a better return anywhere else... I did 3 mulitple deposits leases with Lexus (02 SC430,02 LS430, 08 ls460) and got all my money back at the end of the lease. And I did and am doing 3 multiple deposit lease with Infiniti (07 G35, 10, G37 and 11 M37) and already get one set of deposit back (07 G35) and the other 2 car leases is still active.

topgun04

I beg to differ. Shopping for bottom line price is great except that it won't tell me whether I should hold on and wait a little bit or just take the current best deal and for that matter whether my expectation is reasonable or not. It get even more complicated if I decide that I am willing to travel to get the best deal available. With your particular approach, if 3 dealer come back with a monthly payment of 1800, 1700, and 1500, I would take the 1500 one thinking that I did a great job. But may be when I look under the hood, 1500 represent a cap cost of above full MSRP.. Do I really want to pay above full MSRP? Not really.. So I should wait.. without knowing the detail, I don't think I can make an informed choice.

storm10

In today's market, dealerships internet department generally don't give "high-ball", because they will loose you as a customer instantly. They know you are shopping around. The only chance they have, to bring you into the dealership, is to give you the "lowest ball" possible. That's a beauty of internet shopping. It's a different scenario if you walk into the dealership in person. Then you really need outstanding negotiating skills. Plus, when you are dealing with the internet dept. they will not have any problems, showing you the full lease disclosure in the computer or vehicles invoice. All you need is ask. I think 3-4 dealerships is enough to shop against each other, but if you need more: there are about 55 MB dealers in CA.

By the way, you can use multiple security deposits with most banks - including MBF. However, MBF will not let you buy down the rate - if the rate is already reduced (special). But since CLS has standard rate you can easily apply Multiple Security deposits. You can also reduce the rate by 0.0008 if you use Single Pay lease. Also MBF lets you do low mileage leases as low 7,500 miles per year to bump Residual. Also MBF gives free Gap insurance. I think it's actually one of the best banks to deal with.

topgun04

including MBF. However, MBF will not let you buy down the rate - if the rate is already reduced (special). But since CLS has standard rate you can easily apply Multiple Security deposits


I assume MBF is mercedes Benz Financial? that would be good news.. The last lease I did with Mercedes (05 CLK55), I asked the finance manager and she has no clue.. How many deposit Merceds Financial is willing to take? That may help me get into a 12 CLS550.. My pain level is around 1100 a month with minimal drive off.. Anything over that I am more incline to wait..

Ferrast

Can you expand on multiple security deposits and single payment lease?

Thanks

dakrisht

You CANNOT apply Multiple Security Deposits on MB Financial to decrease the MF rate. Wrong.

It's 0.00240 for everyone and 0.00210 for Tier-1.

topgun04

You CANNOT apply Multiple Security Deposits on MB Financial to decrease the MF rate. Wrong.

Dark, Do you mean one cannot apply mulitple security deposit to MB lease or you mean one can apply MSD? I read you sentence a few times and cannot decide which way you meant..


Can you expand on multiple security deposits and single payment lease?

Ferrast, I have never done a single payment lease so Storm may need to explain that. I heard a lot of bad things relate to single payment so I never investigate it (most relate to gap insurance and trade in time). MSD is relatively simple. After you strike the deal on the cap cost, drive off amount and money factor, the financial manager will run your lease number to figure out what the payment would be before tax (let's say it is 1251). In infiniti case, they multipy 1251xthe number of security deposit (let say 9) and then round the number up to the next $50 to determine the amount forthe security deposit. And then the finance manager will rerun the lease number with the lower money factor and viola, you get your new payment. The saving depend on the amount of money being finance (cap cost + residual) and if sales tax is applied on each monthly payment (e.g. Kalifornia do that while Texas, I think, charge the sales tax of the whole car up front), and of course the reduction of money factor per security deposit.. In my M37 case, I save about 1000+ a year and lower my money payment to about 590 a month. In my 08 LS460 case, I think I saved about 120+-a month and lower the monthly payment to 1030 (but my 9 security deposit is about 10000+-, so my saving is about 14+% on my security deposit vs m37 saving is about 17% or so. The difference is the size of reduction on money factor, Lexus is 0.00008 per deposit and Infiniti allow 0.0001 per deposit). At the end of the lease (whether it is at the end of the term or I traded it in), the manufacturer will send a check to refund all the deposit.

dakrisht

^^^^ You cannot apply multiple security deposits (MSD's) to DECREASE the Money Factor (MF) in a lease with Mercedes Financial.

For the CLS, it's really simple, again: 0.00240 and 0.00210 for Tier-1 applicants. That's it.

In the BMW Financial world, if you were to apply MSD's to a lease you would lower your interest rate (Money Factor (MF)) (so for example, 1 MSD would lower you from 0.00180 to 0.00175, or something like that)

storm10

Yes you can and you should if it makes sense. The last time I used Multiple Security deposit with MBF was 6 years ago. The only time you can not apply Multiple Security deposits is when you use SPECIAL money factor. The reason I've never used it ever since, because all other Benzes I got already had special money factor.

Ferrast

Thanks for the info. It seems that the CLS prices are loosening - at MB Encino there weren't any premium pricing stickers on the autos a couple of weeks ago. You could get a $3,000 incentive on a '12 CLS. With a slow or no growth economy and very low interest rates, the next few months could a be very good time to get a good deal on most luxury autos. Good luck.

storm10

Yes, CLS cooled down now. Talk with MB of Encino Internet department, you'll get it close to invoice. By the way, you don't need to use Multiple Security deposits anymore, because CLS has special money factor right now, so it's a good time to pull the trigger...

Ferrast

Through USAA you could get 1.9% financing if you were interested in buying rather than leasing. With interest rates so low, it may make sense buying rather than leasing. However, would it be a good idea to purchase a new model with a new engine and steering mechanism? In addition, would it make sense to purchase or lease a $75k+ vehicle?

K-A

Just a matter of time before M-B's insane discounts apply to the CLS. The E-Class is getting discounted $10K for some people (mine was), being that the CLS costs more, $10+K shouldn't be out of the question at all, especially in due time. A basic Packaged CLS deep into the $60's? Very possible, unless MBUSA can get a grasp on their inventory/MSRP, given the unbecoming price slashing they have to incorporate (I wish car makers can just give a fair and realistic MSRP, it would keep things like resale, and shopping, etc. less "sloppy").

bigben320e

Correct. It always boils down to this. Time = Money.

Despite the CLS being new, it will drop in price as used ones are already showing up on the market and just from regular old depreciation.

storm10

I would recommend to lease, because if the lease is good - you will pay slower per month than the actual depreciation of the car. If you buy the car + you have to pay the whole sales tax immediately - it is waste of money... Eventually the car worth nothing and cost a lot of extra $$$ to keep it up. So financially it makes more sense to lease.

By the way, if you have USAA membership, you can get additional discount on 2012 CLS...

Ferrast

Thanks storm10. Through USAA you could obtain a $3,000 incentive for the 2012 CLS 550 (there are greater incentives for an '11 E class and an '11 S class) plus the options are priced at approximately invoice. Thus, you could get a $79k CLS for $74k and change.