jimm

Selfish question: What’s best for me? As I’ve said elsewhere, I’m quite good
at real estate cash flow discounting to determine present values of future
income streams, etc. BUT, I’ve always had trouble with lease conclusions.

So, I’m seeking advice from the many of you who are much smarter than
me to help me determine what’s best for me in my upcoming deal.

When my new car comes I’m trying to decide whether to pay cash or lease
it. God’s been good to me and I have the funds to pay for it. But, if I lease
it, I'd use those funds for some other minor investment which may, or may
not, turn out good. So, I don’t rate that investment opportunity too highly.

My history.. has been to not keep a car too long. I would expect to keep the
new E350 for one, but not longer than, two years. (I’m well aware of the
severe depreciation for a 1-2 year period.)

My latest car sale (and worst one of my life) was when I recently sold my 6
month old DTS (which I paid 50,000 cash) for 35,000 because I decided I
wanted to go back to MB. (But, the best MB dealer trade-in I could get was
only 27,000.) It was an EOY ‘06 but only 6 months old when I sold it.

The new E350: If I pay cash, I can sell it myself at the end of the 1 or 2
years for more than a dealer would allow me. If I lease it for, say a 27-36
month period, I’m going to owe a sizable balance when I terminate it early.
(I know the residual is an important factor in lease evaluation but, I don’t
know how to apply it here and am not sure it would have any meaning
anyway to my calculation, since I don’t plan to buy it at the end.)

Of course the big advantage to any leasing is the low initial payment and
preservation of cash at inception. That’s always a plus.

Can anyone piece together my situation to determine what would be best
for me? One direction must be better than the other, but I'm having a hard
time sorting it out.

jimm

==========

On Order: 08 E350 Sport, P2, Black/black,
Parktronic, Voice, Bluetooth, Burl Walnut,
Split rear seat, Rear mud flaps

Barry45RPM

1. Your Real Estate deal may or may not be profitable... it is an investment, losses may help you tax-wise. A car is NEVER an investment. it is ALLWAYS a loss.

2. If you plan to keep the car 1 or 2 years, the only smart thing to do is lease it because you will only be charged about 1/2 price for the car, (You're only using up half of it) so you will also be saving 1/2 the Sales Tax. If you buy it, you will be eating the big hit of depreciation, if you lease, the artificially high residual MB credit is saying the car will be worth when you are done with it, is in your favor. (Yeah, try and get that high residual they quote a lessor if you buy it & want to trade it in.

3. Your monthly payment will be substantially lower, partly for the reasons above, and partly because MB gives low interest rates to Lessors, and regular street value Rates for people who buy.

4. I have NEVER Leased a car in my life, but I too want a new car every 3 years or so, and given the above, Purchasing doesn't seem to make any sense to me either anymore. (I allways bought because I thought that if I leased, the car wouldn't feel like it was "mine", & why should I love & take care of the car just for the next owner!... but a new car every 3 years might make that point irrelevant.) Just be sure you STILL negotiate the lowest purchase price you can with the dealer BEFORE you tell him its a lease. (Find out what the money cost is around town before too). Some dealers prefer to sell the car to the "leasing company" at a much higher price than you would otherwise be charged for a well negotiated outright purchase deal. That affects your payments too.

jimm

Thanks Barry. Your thoughts were exactly what I was looking for!
Your tax suggestion was good. I’ve never leased before either and I had
forgotten that you only pay tax on the actual amount extended. So, if I pay
cash I'll have to immediately pay tax on the whole thing, because I have no
trade-in. (About $3300. Not small.) Leasing, I'd only pay tax on each payment.

=====

You also said:

If you plan to keep the car 1 or 2 years, the only smart thing to do is lease
it because you will only be charged about 1/2 price for the car. (You're only
using up half of it so you will also be saving 1/2 the Sales Tax.)

If you buy it, you will be eating the big hit of depreciation. If you lease,
the “artificially high residual” MB credit is saying the car will be worth
when you are done with it, is in your favor. (Yeah, try and get that high
residual they quote a Lessee if you buy it & want to trade it in.)

Your monthly payment will be substantially lower, partly for the reasons
above, and partly because MB gives low interest rates to Lessees, and
regular street value Rates for people who buy.

=====

Your above commentary was just excellent and helpful, Barry. Just what I
was looking for. So, unless I get hit by lightening between now and
delivery, I will be leasing.

jimm

jimm

Another question, which I can “guess” the answer:

Do any car leases ever terminate with the death of the Lessee?

My “guess” is that any remaining obligation flows to the estate.

jimm

chairman

I am a CPA and have been leasing cars for about 10 years now. I have experienced the good, and the bad.

There are lessons to be learned, first, no cash out of pocket (except for first mont payment and tags). As Barry said, these things always depreciate, so you are throwing good money after bad.

Second, check the "financing" section of this board. It has invaluable information about leasing these cars. I leased my E350 earlier than anticipated because of all of the "gimmes" from Mercedes Benz Financial. If you want to calculate the interest rate from the money factor, multiply the money factor by 2400.

I ran into an issue with the agressive residuals when shopping another make. My payoff on my 04 E320 was around 35k, the other brand (Infiniti) offered me 27k and wanted to add the difference to the lease, can you say "no deal"?

On the new E350, I am basically paying the same as I did on the 04, so either I got hammered on the 04 (which appears to be the case), or I made a great deal on the 07 (which also appears to be the case).

Sorry about the long winded post, but I wanted to emphasize what Barry said and try to give you some assistance. As with the real estate business, you can make a good deal by doing your research. You get sharper each time you do it.

Good luck

jschade

jimm-

You could consider the option from MBUSA to pay the entire lease up front since you have the cash. Doing this will 1) result in an even better money factor, and 2) help you avoid the minor hassle of writing checks each month with a coupon (unless you do the auto bank deduction).

There is the whole time value of money deal to consider with this type of transaction, and I have never done the math to figure out any advantages/disadvantages. Just wanted to throw that one other option out to you. Otherwise, I believe you have been given very sound advice from the posts above.

Good Luck!

konigstiger

You can post your question(s) here https://mbworld.org/forums/automotive-leasing-financing-73/ . BTW, I paid cash for my previous 03 E320, first vehicle bought rather than leased, in many years. Reason being it was a Valentine Day’s gift for my wife – pulled in, found a vehicle to her liking wrote a check and off we went. Needless to say never again! For us, leasing makes the most sense. Lease at invoice, let them manipulate the residual value if need be (you’re not buying at lease end), included GAP insurance covers if the vehicle is totaled, you (not MB) are still entitled to collect diminished value if an accident is caused by the other driver, if in an accident as long as the vehicle is repaired it will not cost you upon lease return, any interior and/or exterior damage smaller than a credit card is acceptable upon return, etc. Not to reiterate what others have already mentioned but IMHO the badge of ownership is great for things that appreciate, if it doesn’t appreciate forget it!

sosh

I believe that the only good reason to lease is with a business write off. A short term lease like you seem to want comes with relativly high payments. I would rather in your situation pay for it and stand up to the depreciation. No interest and no inflated sales tax (PA sales tax is 9% of each payment and fee on a leased car as opposed to 6% on a purchase) As for paying the sales tax you will recoop some of it against your next vehicle if you trade as you only pay on the difference. As for the death clause I am not certain but a friend's daughter had a leased C Class and sadly she became ill and passed away about half way thru the lease. The parents returned the car with a copy of the death certificate and heard no more but there was really no estate to go after.
Don't feel too bad about your DTS, Another friend just purchased a new S last Sat and traded his 2004 DTS with 23000 miles and received only 17K.
What ever you decide to do, good luck and I am certain you will enjoy the Benz at any price.

BudC

Of course if you keep a car more than a few years, you aren't going to lease and if you were married to my wife you wouldn't have paid interest on anything since 1963

I'm replacing my 2004 E320 in 3 years which is not something I've done since the 60's. There isn't anything wrong with the car but the 2007's are just so much better that we'll bite the bullet and eat the depreciation. When the '08 arrives, we'll do what we always do, write a check for her and try to drive her until the wheels fall off. We gave up trying to do that on our 17 year old 190D and I'm about ready to give up trying to do it with our 16 year old 300E.

I suppose if I were really well off, I'd lease everything. Since I'm not, I'll just enjoy being the proud owner of a beautiful white/cashmere '08 that's loaded to the gills with gadgets.

konigstiger

Good point relative to Jimm's two year interest. Nevertheless IMO a 36 month term taking into consideration all variants involved seems to work.

konigstiger

As long as you and your better half have your health, are happy, and living comfortably you can consider yourself well off. Without question I know you will truly love and enjoy the 08! “Someone” may very well be listening if the new S, midlife E, and C class is any indication.

Toog4me

I did a one pay with my CLK in March of 2006. I think it saved me about $1500-$2000. I wanted a one year lease but they couldn't offer it. Waisting my money on interest seemed so stupid to me since I had it in the bank. This is what I would suggest-- Lease and do a one pay.

jschade

Ahh...great choice. We just got an '07 white/cashmere. Man does that thing get looks. My '05 was desert silver (tan). Just seemed blah. You will love that white!

Sorry for the highjack...back to leasing.

ProV1

nice color but holychit that fender gap is !!! drop it and get some 19s

sosh

In addition to one pay with MB credit top tier credits have an option of placing a refundable deposit at the time of lease and reducing monthly payments. I have done this and reduced payments over a hundred a month. I have been told that this will be a larger reduction than one pay and I do not know if they allow you to do both.

ProV1

to the OP, i'd buy it with cash if you can get it at or under invoice. otherwise just lease it. you'd be kicking yourself in a few yrs when you find out how quickly MBs depreciate. W212 is just around the corner too. MB Financial residuals are way too optimistic, let them worry about true depreciation. MB runs lease specials on E350s all the time anyway