Allen.smith

Noob Benz owner here with my first post!!!

Was curious to hear feedback on the deal I just signed....

2014 E350 Sport 4Mattic
-62,900 msrp
-sale price 52,300
-27 month
-12k miles
-647 per month

Thanks for all the advice, as I've been lurking here a while!!

CEB

Can't rate it until you tell us the residual. You are making $17469 in lease payments. Add that to the residual (along with any other charges and fees you paid) and then you'll know what the car actually cost you.

ghstudio

?? The residual has absolutely nothing to do with the lease unless you plan to buy the car which for MB's is usually a poor choice since their residuals are artificially high. To get the full cost of the lease add up all checks you will write over the period of the lease and divide by the number of months...that gives you the real monthly cost of the car.

Allen.smith

Yeah... I have no intention of purchasing car at lease end. I believe residual was based off of the 24 month rate. At about 60%. That's apparently how they got payment down.

I forgot to add... I put zero down, with the exception of first payment. Everything else, tax. Tags, etc, was rolled into lease. So is this a good number? I went to 5 dealers and nobody could come that close.

instantfob

Residual and Money Factor are two key factors for any lease program.
Here's a helpful guide to leasing for those who are interested.

http://www.ridewithg.com/index.php/2...-auto-leasing/

Cheers

ImInPA

If you feel good about it, then it is a very good deal. If you need our approval, maybe, not.

CEB

While you are correct that the true amount that the OP is spending is any downpayment, fees, monthly payments and any lease return fees, that doesn't tell you if he got a "good" deal.

Residual plus all the payments, fees and so forth will tell the OP what he really "paid" for the car relative to MSRP.

In theory, for a "good" deal, the residual plus all costs should equal the negotiated price plus the money factor (essentially interest). If it adds up to significantly more then you didn't get the negotiated price.

The residual is vital in knowing if you got a "good" deal regardless of your future intentions. A high residual should lead to lower monthly payments as you are only leasing the difference between the negotiated price and the residual.

CEB

If the residual was 60% then here's what you paid.

60% of 62900 is 37740
37740 plus 17469 is 55209

Your negotiated price of 52300 did not include the 873 or so of sales tax (I figured the tax at 5% since I don't know where you are) that needs to be added to your negotiated price or about $53173. Add $200 for tags, title and other fees and your negotiated price is at 53373, so you are paying roughly $1863 in interest or roughly $70 per month. That works out to about 10.66% - or about 4.74% per year.

If your tax rate is different or your tags and title are different then you need to adjust for that.

And that is why it is important to know the residual.

Allen.smith

I entered my first post on an enthusiast forum to get an accurate gauge of how good of a deal I got on a lease. Certainly not looking for anybody's approval, perhaps just other lease offers similarly equipped vehicles were given. Perhaps I am in the wrong on-line community. Thanks for the warm welcome "iminpa"....

Allen.smith

CEB... Thanks for the break down on residual. But I still find myself wondering why I need to know it if my only concern is lowest payment possible? I'm not gonna buy the car so does it really matter to me how much of my monthly payment is interest vs. fees, etc. I appreciate the feedback as 27 months goes by quick

ImInPA

You are welcome. Leases vary so much by geographic area, dealer incentive, etc. It only really matters if you feel good about your deal. There is always going to be those that did "better" than you, and, those that did worse. A search through this and other forums and you will likely find others that did much better than you. So, not to hurt your feelings, or make you feel unwelcomed, it really only matters how you feel about your deal. I am sure you would not have done the deal if you didn't feel good about it. Enjoy the ride. It is a great car.

instantfob

Here is a deal offered in the SoCAL area now...

E350 Sport RWD on a 58k sticker car
27m/10k / drive off$2,253/ $481+tax oac700+credit

CEB

Given the residual and your payments, you know that you paying about 4.75% interest per year on the $16+k you have invested. I've known people who put down multiple security deposits and paid virtually no interest and I know people who paid in excess of 15%.

E Classy

+1

mileage and length of term factor into the residual determination

K-A

$10K off is decent but the payment seems high. Maybe it's 'cause 2014's just hit the lots but very soon season you could have probably gotten that in the low $500's to $400's if you find the right deal. Deals are out there on these cars that have them selling/leasing for far less than the MSRP suggests, you just have to do research and maybe buy out of city/state if it comes to that.

SolidGranite

Considering how long this model has been out I would say its a pretty good deal. Enjoy! Comparing against people who leased a 2012 or 2013 isn't apples to apples.

The biggest question right now is what money factor did you get? This can have a huge effect on your payments.

CEB

The "money factor" he got was an effective interest rate of 4.74%

Money factor is just another leasing term that they've created to confuse the customer. All of that is immaterial. What counts is my calculation.

He could have reduced his rate by making multiple security deposits.

SolidGranite

Right. Just wanted to know how much the interest is affecting his payment. I would say 4.74 is high on a new car.

CEB

About $70 of each monthly payment is interest.

It is a brand new release so he should expect to pay a bit more. Since he is only paying interest on the portion that he is leasing it sounds worse than it is.

GregTR

There are several places where the dealer can make money on a lease.

1) Sales Price
2) Money Factor
3) Back end fees

The only other number that affects your monthly payment is the residual value. The residual is set by MBUSA and the dealer just adheres to it. It changes month to month, usually getting lower and lower as the model year progresses as the cars essentially getting older. Residual is also expressed as a percentage of MSRP not a percentage of the sale price so the lower the sales price the better the deal gets and this is why it's important to get a good sales price even on a lease.

However as the year progresses and residual drops manufacturers also tend to drop the money factor and subsidize it to get a similar lease rate throughout the year, otherwise the monthly lease rate would keep going up as the year progresses.

The residual is also mileage dependent. Usually they are posted for 10k miles/year and you have to subtract 2% for 12k/year or 3% for 15k/year. Anything over 15k/year is generally calculated on a per mile basis and you can buy miles up front or pay for them at the end. So if you know that you will be driving the car 20k miles a year you can buy miles up front for $0.20/mile or you can pay for the excess miles at the end of the lease at $0.30/mile. I don't know the per mile charge for MBZ I just used those numbers for illustration. The up front charge is always less than the end of the term charge. The charge is rolled into the capitalized cost.

1) The sales price on this car was $10k+ off MSRP. I'm guessing that is a good price but it's hard to tell what dealer rebates were applied to achieve it. I know that there is no way to get that kind of discount on an e-wagon. Most dealers will probably sell you the car $750-$1000 over invoice less any applicable rebates. Invoice is about 7% under MSRP so on this car it was around $57,900. Less the $5k rebate brings it to $52,900. I'd find you to be hard pressed to get more than that off so the deal looks good as far as sales price goes.

2) Money Factor is also set and published by MBUSA. To get a corresponding interest rate that you can actually comprehend you have to multiply the money factor by 2400. So if the published money factor by MBUSA for the E350 4matic is 0.002 then the interest rate is 4.8%. Right now there are no subvented (discounted) money factors in effect so a 0.002 sounds reasonable. But MBUSA, just like other manufacturers only provides dealers with "buy rates" which is essentially the rate the dealer can get the money from MBUSA. They are free to up it and make money on the back end. So it is possible that MBUSA is currently offering 0.0015 and your dealer added 0.0005 to it to make more profit on the back end. Did it happen? It's hard to tell without knowing the actual buy rate your dealer paid to MBUSA. You can always ask the F&I guy to show you the current money factor and residual bulletin to verify that you get what MBUSA offers. Given the sale price of the car I would not be surprised if there was a bump on the money factor to make some money on the back end.

3) Dealers can and do tack on arbitrary fees on the deal. Documentation fee, inventory fee, prep fee, etc. It's up to you to contest them or suck them up. When you're buying a $60k car I usually stop worrying about $100 fees and don't try to beat the dealer down over it. Now if they were charging a $300 doc fee I'd probably be miffed...

So the bottom line is: concentrate on getting a good sale price (which you did), make sure the money factor is not outrageous (0.002 on a new 2014 model sounds right in line) and you didn't get raped with enormous fees (I hope you didn't). Otherwise the monthly payment will be what it will be based on all these variables and you can take it or leave it.

CEB

I disagree. $100 is a dinner for two at a decent place regardless of the price of the car. There are some legitimate fees and some junk fees. You can try to negotiate anything.

GregTR

$100 is a dinner for two for sure. However it's hard to enjoy it when your stomach is all tied in a knot because you fought the dealer over $100 instead of enjoying the experience. Nobody likes to get beat down in the F&I office. Neither the buyer nor the seller. And when you're already squeezing the dealer on the sale price down to invoice because you "read it on the interweb that $12k off an E350 is commonplace and to be expected" (it is not BTW) they have to make a decent profit somewhere else.

Then you have people who just need a warm pat on their back from fellow MBZ owners that they got a decent deal to get rid of that pesky cognitive dissonance...

To me a deal is good where both parties walk away satisfied and happy.

E Classy

exactly!

E Classy

also, leasing luxury cars often goes something like:

"i have no capital set aside for an automobile down payment. i have a lower monthly allocation for auto/transport outgo. i have little budgetary risk/fault tolerance for the next 2-3 years. i still have a desire to drive a nice car. can you help me?"

lame.

CEB

Correct, but that $100 is $100 if it is a $2k beater or a $100k luxo-barge. The question is really "how much is $100 worth to you to argue over?"