Good lease or bad?
 

Without doing the math on your deal, I can comment that leasing today seems higher than at any time in the past. My last two BMWs had MSRPs in the upper $80's, and payments of $870 (with $5k down) on 36 mo. 30k mile leases. Today that same MSRP is over $1000 for the same deal, and the MB quotes have been the same. Im told residuals are coming down. Before they made a market with the high residuals to sell new cars (and BMW had lots of incentives no longer available) but with the improved economy the manufacturers are taking advantage.

If you found a 2018 with the exact options you want, grab it. There are no more 2018's coming and the inventories of them will only go down as we head into the new model year. And the 2019's will only cost more.

Just tell your dealer you'll take the car, but the payment has to be lower than $1K/month. Your talking about $37/month, which isn't that much for them to eat.

Absolutely right. I think i'll drive the convertible for 1 more month and see how it plays out. I have nearly 4 months left, no sense of urgency.

Hope it all works out for you. I didn't know I could love a car as much as I love my E400!

Just my $.02: never ever put anything down on a lease: In the event your car is totaled or stolen, anything you put down is gone - puff like smoke. Today with the complexities of the modern car including replacement of air bags, minor fender benders of years past can turn into the insurance company totaling your car.

I too am coming out of my lease on my 2016 E350: I know I got a killer deal: MSRP was $62,640 plus two-year maintenance ($890), monthly payment of $632 which includes NYS sales tax at rate of 8.625% and bank fee included in the lease payment. At lease inception all I paid was first months lease payment and NY registration $170. Lease is 36 months 10,000 miles per year.

I leased at the end of December 2015 so there were end of year incentives to the dealer, plus the new models were coming out. Interesting my dealer had to get the car from another dealer. I actually contacted the other dealer and his price was much higher, so I guess my "sale" helped my dealer with his end of year hold backs.

Two things that are not variable on the lease: residual and money factor (interest rate). Of course, the residual is a function of mileage and term of lease. The MSRP is fixed so the only real variable is your negotiated price which will include all incentives and how much of his profit the dealer is willing to give you.

Here is a link to the lease calculator I use:

https://www.leaseguide.com/calc/

In 2015 MB was supporting the lease payments with relatively high residuals (60%) for end of model year and very low interest rates.

I am also using a Costco affiliated MB dealer and will then compare his price with my local dealer.

As I want all the safety features and a particular color (silver but not black interior) I too may be forced to order a 2019 E450 as there are very few 2018 E400 around in my color with the safety features I want.

I will start my search in September for delivery in December when my present lease runs out.

BTW, my lease is "upside down" in that the residual, $37,459 is much higher than the book value of my car so buying it at the end makes no sense.

Those are the best deals. That means the manufacturer is losing money on the lease deal and you're paying less per month than the actual depreciation. With a lower residual value, the manufacturer isn't eating as much of the cost.

Leasehackr.com also has good calculators. You really need the money factor, all discounts/incentives and the residual to figure out whether you're getting a good deal or not.

The residuals and money factor are information that your dealer will give you - mine always does, but you must ask.

You can also go to advertised Lease Deals under the MBUSA.com web site. There under lease details you will see the MSRP and the residual value. Divide the residual by the MSRP and you get the percentage.

Upside down: Almost every lease out there at the end the residual is more than the book value. That is why over 90% of leases at the end, the car is turned in.

If residuals reflected book value at the end of the lease, they would be so low and lease payments so high, sales would really suffer.

Remember over 70% of MB, E, S and M class are leased. Without factory support, (high residuals), sales would tank.

MB, BMW and Audi, take the cars at the end of the lease and resell them to other countries, at a profit. For example, you turned in car will be sold somewhere in South America or the middle East at a profit.

.

Currently leasing a 2017 E300 MSRP 63k
Drive off little over 1k + 4k in MSD's
$410 with maintenance 2year/10k

There is a tremendous amount of information online, for 1k/month I personally would not be looking at the E Class, you can get a lot more car for that monthly. Some other examples of lease deals I have been able to get are 2015 528i 52k msrp- 299$ 0$ drive off expect MSD's. Chevy Equinox 33k msrp one pay 2k for 2/24k
If you are set on a particular build it makes negotiations very tough, I was able to find the color and specs I wanted on the E300, black on nut brown, airmatic with sports package.

A good lease deal is monthly payment being 1% of the MSRP $0 down

No work involved
$0 down 750+tax on a 100k 7 series
1500$ down lease transfer on a E300 P2 package $500 ( meh deal prob can get the $1500 knocked off)

Dear G3710:

You wrote:

"A good lease deal is monthly payment being 1% of the MSRP $0 down"

Is 1% of MSRP including tax and bank fee?

How many months and what mileage per year. At 1% are you saying at lease inception all you pay is first month's payment plus motor vehicle fees, usually less than $200.

MB Financial is the same in any US State, no? They set the MF's and RV's and there shouldn't be any regional differences, correct? The only variable is how much profit the dealer wants to (or doesn't) want to make. I imagine how good a customer you are, the month they are having, how bad they want the car off the lot, if they had to secure it from another dealer, etc all play into it.

So, for sake of argument, each $1000 in cap cost relates to around $30/monthly payment. If a $75000 MSRP is discounted to $71,000 from one dealer and sticker from the other... could there be a variation of $120/month in lease payments? Assuming all other things equal

For reference if it helps, I leased my 2018 E400 coupe in January. MSRP $72,XXX. First month plus fees down, 36/30k $859/month including SoCal tax.

That's an excellent reference. The one Im looking at is $75,XXX with 36/45k with similar down at around $1000.... so he doesn't seem too far off. I think it makes sense to wait a month. I just made a payment on the current car and the next one is due 9/20. At that time, I can look to pull the trigger. I gotta believe the numbers are not going to be any more as MB will be one month closer to getting the '19's in and will be eager to sell the remaining 400's. Big question... do I wait for the E450 with the add'l HP and a few interior refinements?

How important would an extra 33 HP be to you? It's going to cost you more to get into a 2019, so that would be a deciding factor for me. Since I had ordered a 2019 E450, but wound up buying a E400 off the lot, it turns out the extra HP wasn't worth it to me.

It wouldn't be that impactful and I think im going to do the 400 mid-September vs now. Thank you

Good luck. I hope whatever you get makes you as happy as my E400 makes me!

Remember that the residuals on the 2018 change every 60 days and they always go down, never up.

The residuals on the 2019 will be higher than the residuals on the 2018 so leasing the 2019 E450 may actually be cheaper than leasing the 2018 E400!

BTW, I have ordered cars vs. taking cars off the dealer lot. Sometimes the savings on taking a stock car are not that much more than ordering a car. Remember when you order a car, there is no floor plan expense: it is sale and sometimes the dealer needs sales, especially at the end of the year as holdbacks and other dealer incentives are determined by the number of cars sold. So a dealer can take an order at a loss, as it will boost his incentives which will more than cover the loss.

Unlike RBYLAW I have done an internet search for 2018 E400 in stock and cannot find one that has what I want and those that have the safety features I want, have so many extras that I do not want that drove the price upwards, that I am better off just ordering a 2019 E450.

I do not have access to a MB corporate employee control number. What is that?

12.25% off of MSRP is excellent!

If you can get 12.25% off of either a 2018 E400 or a 2019 E450 and there are no other incentives, the residuals on the 2019 will be much higher and offset any increase in price between the 2018 E400 and the 2019 E450, so yes the 2019 should lease cheaper than a 2018.

I have looked over the DOG for 2019 and the prices for a 2018 E400 and 2019 E450 with the same equipment are within $500. Even if the 2019 cost $500 more and the residuals are the same, which of course they are not, the residuals on the 2019 are higher, a one year newer car is worth more than $500 on resale!

Dealers order cars for stock and for customers: As I said sometimes the deals on an ordered car, because it is a "sale" are even better than on an in stock car and of course sometimes the opposite!

The DOG (Dealer ordering guide) has been posted in several other threads in this forum. It gives the MSRP of all options.

You can configure the car with the MSRP, take off 12.5%, and use the lease calculator guide that I previously posted to ascertain your lease payments.

I'm not sure where you're getting the E400 and E450 are within $500 of each other. The E400 base price is $58,900. The E450 base price will start at $59,950. My calculator puts that at a difference of $1050.

OK......thanks for the clarification.

If you go to my post I said with the same equipment - not base price. When I configured the car I wanted the prices were within $500.

If you check out the DOG for the 2019 E450, many options that were in packages are now stand alone. The DOG for the 2019 E450 gives you more flexibility (and saves you money) in configuring a car as compared to a 2018 E400.

Remember that Russmna29 is getting 12.25% off either a 2018 E400 or 2019 E450. As Russmna29 is leasing it does not make sense for him to lease a 2018 E400 vs a 2019 E450 as there is no additional savings to him in leasing a 2018 E400 as the residuals on the 2019 will be higher than on the 2018. (Russmna29 said no further incentives other than the employee discount)

Further in a few years when you go to sell or trade in your 2018 E400, it will be one year older than a 2019 E450. As you know, a 2019 model vs. a 2018 model will be worth substantially more than the $1050 difference in base price.

That is why I said that a 2019 model is worth more than $500 as compared to a 2018 model.

I get it. I'm not sure if it matters whether one is worth more than the other when it's a leased vehicle. By virtue of a lease, when the lease is over, you turn it in, rinse and repeat. In my case, I know buying a 2018 likely reduces my trade value down the road, but I'm hoping I can hold onto this one for long enough and I won't be smitten with the new car bug as quickly as I typically am. I will be able to retire in about 3 years and won't have the income after I retire to keep buying more and more expensive cars.

Dear RBYLAW:

Keep in mind that in leasing a 2019 the residuals will be substantially higher than with a year old 2018 model. To get the same monthly lease payment, the 2018 will have to be substantially discounted more than a 2018, which hardly ever is the case.

Also if the lease rates are similar, I would always want to be in a new model year. For the same price, why drive a one year old car?

My experience is that once bitten by the new car bug, always bitten.

Of course. If there's really no financial incentive to drive a 2018, get the 2019. But if an amazing deal can be be had with a 2018, there's really nothing significantly different between a 2018 and 2019 E Class car. Sadly, you are right about the new car bug. I need to find a cure for that though. That's one reason I bought an extended warranty yesterday for my new 2018 E400. I hope it encourages me to keep it longer. But I do get my money back from the extended warranty if the bug hits sooner. Why don't they make a pill for people like me? Huh? Why?? I'm a car dealerships dream customer. I walk in, lay down and let them take my wallet. It's called being a wallet billed mattress pad!

At the top, in the box "Search Forums" type in "2019 E450" and then hit enter.

After you do this, a list of threads will be propagated: There are several that discus the DOG for the E450.

Seems about right as in 2 to 3 weeks the 2018's with the arrival of the 2019 will be one year old.

That is why I said that for you with a flat 12.25% discount that leasing a 2019 will be cheaper than leasing a 2018.

Just my guess:

Residuals on the 2019 E450 will be between 61% and 62% and the interest between .9% and 1%.

I leased a 2018 e-300 p-3 about a year ago. This was my method and it worked out rather well.

The lease payment is based on the price of the car, the factor and the residual value. The factor and the residual value are set by MB Financial and they are not negotiable. The only negotiable part of the lease is the price. I built my car online and then sent it to 5 different dealers. I told them to give me their best shot at the price. The dealer who came in at the lowest price would get the order. Four prices came back. The highest was 5% off the MSRP, but the lowest was 11% of the MSRP. I emailed the other three thanking them for their time and I would be back in three years. One of the losing dealers actually wanted to know if they could submit a revised offer. I said no because it would not be fair to the winning dealer. Your best shot just means that ... your best shot.

I wan't concerned about the monthly lease payment because, as I said, the only variable was price. Also it was a custom built car, so the dealers were pricing the same car.

With 3 years and 15k miles/year... I'd love to see RV's in the 60's! If I use any of the auto lease calcs and play with those numbers... how would you represent the interest rates as money factors? Right now, this month... MB is at .00237 MF on the E400

Interest Rate = 2400 * Money Factor

Money Factor = Interest Rate / 2400

I believe you may have the money factor wrong: a money factor of .00237 would equal an interest rate of 5.68%. This I believe is way too high.

MF of .000237 would be .568%. This would be extraordinarily low, but possible.

Using a MSRP of $74,000 a selling price (including bank fee) of $68,000 and a residual of 60%, 36 months and a MF of .00237 the monthly payment without tax would be $922. Using a MF of .000237, $684 per month.

Suggest you double check with your dealer to get the money factor.

I also believe that a residual of 60% or higher will limit the mileage to 10,000 per year for 3 years. If you want 15,000 per year expect the residuals to be below 60%.

Finally I agree with 704set and in fact for the past four cars I have leased, 2 BMW's, 1 Ford Edge and my present MB, this is exactly what I did: The first time in the dealer was to pick up the car.

One thing you might consider: If you local dealer is "competitive" then you might give them the opportunity to either match or beat your lowest quote - there being value in dealing with a local dealer. On the other hand, doing exactly what 704set suggested, I leased my present MB from one dealer and have had it serviced by my local dealer, without any difficulty: the local dealer even giving me a loaner. So dealing with a local has very limited monetary value, at least to me.

I agree with your assessments on numbers. I researched the August 2018 E400 sedan and found it to be .00237 (5.68%) That seems quite high, too. I also think a 15k/year lease will yield a RV in the 50's, somewhere between 56-58% im guessing. The big unknown is the money factor. Can anyone confirm the MF for August with the E400? The site I gleaned that .00237 from also had the E300 4matic at .00167 (4.008%). I need to ask the dealer, he told me the residual was 55%, he should be able to tell me the MF

In my case, putting dealers against each other won't impact my deal (shouldn't) because with the corporate control number I have, its a flat 12.25% off MSRP, no negotiation, no haggle. With MBFS setting RV's and MF's... each dealer with the same car should be identical.

You are correct: with your 12.25% discount, go to your local dealer.

For everyone else do what 704set recommends!

The MF you are listing: are you sure they are money factors: maybe it is interest rates for finance.

I have gone over my records: In April for a 2018 BMW 540i, 10,000 miles, 36 months, residual was 61% and money factor was .00156 or 3.74%: However the dealer said interest rate was .374%: As I had decided not to go ahead with the BMW, I did not question him further as to whether the money factor of .00156 was correct.

However when I put the figures in my lease calculator the MF of .00156 or 3.74% was correct.

FYI, the 2018 BMW 540i xDrive I wanted had an MRSP of $70,035, residual of $42,721 (61%) and monthly payment of $852 which included NYS sales tax and bank fee: At lease inception I would have had to pay $949. first months ($852) plus NYS registration of $97.

Here is the DOG for 2019 E Class

:)

Now if we can help RBYLAW post the updated DOG as of July, 2018 we will be set!

I think anyone who wants one just needs to send me a PM with their email address. I've been sending to people this way for a few weeks now.

Here is the DOG for the E300 and E450 with revisions through July 3, 2018.

We need to thank rbrylaw for supplying this DOG!

DOG

Very interesting subject. I believe in Europe, or at least in my country, we don't calculate lease rates like that. Never heard of the money factor. But in the end the overall thinking is the same: a game of numbers based on the residual value, the down payment and the lease duration.

I never had a credit for anything. Had the luck, hard work and lack of immediate consumer desire and need that let me to only buy things when I have the full money to buy them and still do not have a big impact on my savings.

But one thing I believe is important to factor in is the cost of opportunity when making a full payment. Even if it is possible to outright by a car it may be wise to lease it since this will free capital that can be put to good use during that time.

In my country lease APRs are high and they seem to present a less better option than that in the US. How ever one tries to play with the variables the total amount payed at the end of the lease period will be higher than the depreciation of the car over the same time. It comes down to get a good discount over the sales price from the start so that it can level the odds of making a good deal. Because after, let's say, 3 years lease one will still not own a car and there will probably another model to go for and the money spent on the lease will cost more than if one had just bought the car in the first place and then sell it after 3 years and take the money and buy again a new one.

In the US things are quite different: The residual amount, 99% of the time is higher than the book value of the car at the end of the lease. That is why over 90% of cars on lease in the US are turned in at the end of the lease: the residual value is higher than the trade in value. For example, on a $70,000 E450 the residual will be 61% ($42,700) at three years with 10K miles per year. However, the trade in value will be closer to $35,000 (50%). So, if you buy, you will immediately suffer a $7,000 loss.

Generally speaking you want to own an appreciating asset, such as a house but rent (lease) a depreciating asset like a car.

Car manufacturers are in the business of selling and buying cars. When you own a car vs. leasing it, you are now competing with the manufacturer when you go to sell your car. IMO, considering the size and "weight" of a car manufacturer you are not in a fair fight.

The general consensus, considering opportunity costs as you correctly refer to, for owning to be more efficient than leasing, you must own the car for more than 5 years, after which time the economics favor ownership. That savings continue until 10 years at which time repairs eat into your savings.

Remember when you go to have your 7 year old MB serviced, the service hourly rate and parts are the same as for a new MB: The difference is that paying $150 hour labor rate on a $70,000 car is high, paying $150 an hour on a 7 year old MB, worth $28,000 is obscene!

The trade off in owning is that you are now driving a six year old car, with six year old safety and technology and less reliability.

There are sound economic reasons why over 70% of E and S class MB are leased rather than bought.

I see. This is not linear indeed.
It makes my head spin having to spend money on a new car every 3 or 4 years because of the lease, but in fact buying instead one is nonetheless losing money with depreciation every year .

Do you have in the US a purchase modality named renting? It is like a lease but where it is included also the maintenance, tire substitution and insurance, besides other services that can be purchased. So one is paying for using a car where all the servicing and administrative stuff is dealt by the seller.

Here in the US the Mercedes comes with 4 years 50,000-mile warranty, whichever comes first. You can also buy from Mercedes a maintenance agreement for the 10,000 and 20,000-mile service for $880 and put that in the lease as well, where you pay 61% of the cost (the maintenance agreement is "residualized”) (BMW comes with 4 years bumper to bumper service and parts. Of course, all of this is built into the price).

As such a high proportion of MB, BMW and Audi's are leased, the manufacturer realizes at the end of the lease they are getting back most of the cars, they want to make sure they are being serviced properly: Hence the "free" service built into the price. (If most cars were purchased outright as in Europe, then the owners would have an incentive to service their cars at regular intervals. But with such a high percentage being leased, there is no incentive to service our cars. Hence the "free" service built into the price)

The best leases, with the highest relative residuals and lowest payments are for 36 months, either 10/12.5 or 15,000 miles per year. Beyond 36 months the residuals take a hit and the monthly payment starts to go up. Similarly, for less than 36 months the monthly payments are higher. The 30,000/45,000 mile lease is the "sweet spot" in that under normal conditions you will not have to replace either the tires or brakes and do major services.

@JTK44 BMW cut the service to 3 years. The warranty remains at 4 years.

I always purchase my cars for cash and sell them privately instead of trading.

Same here because sales between individuals is not subject to tax

True, but then you pay the full amount of tax on the new car. On a trade, you only pay the tax on the difference between the trade value and new car. So you need to ensure the private sale yields more than the trade value.

When the buyer goes to register the car he bought from you, he will pay sales tax. When you buy from a dealer he collects the tax on behalf of the state. Either way there will be sales tax: but if you trade you pay tax on the difference between sales price and the trade in, so there is a sales tax savings by trading in.

I have sold cars privately, and will not do it again, especially a high end car: You advertise the car and get responses: you set up an appointment and the buyer does not show a waste of your time; of the buyer shows and you immediately realize what a mistake - he could never afford your car and you wonder is he there to case out your home, or he offers you 30% less for cash - as if cash is somehow better than a certified check. Or the guy who comes and you agree on the price and he then tells you he first has to have a loan approved, or the guy who wants you to drive the car to his mechanic for inspection and the stories go on and on and on.

It is one thing to sell a 3 year old Honda Accord for $15,000 and totally another thing to sell a 3 year old E Class for $40,000!

With leasing all the problems associated with selling a high end car do not exist!

Yep! All the reasons I'm not going to try to sell a car outright. If I lose a little by trading in my car, I gain so much more in less hassle and never have to fear for my personal safety.

I think that poster was probably in Arizona. They have different sales tax laws. Some states are set up where if you buy the car from an individual you don't have to pay the sales tax when you register it. Most other states make you do that.

As for tire kickers, if it's priced too high, you tend to get those not serious people. If you price it to sell, you'd get both so you stack multiple people at the same time and it just sells.

I never advertise when selling a car privately. My cars are in top condition with very low mileage (3k-4k miles per year). I have several acquaintances who buy my cars. I don't sell to someone I don't know.

For years I believed in the purchase not lease strategy for the same reasons others stated above. After experiencing the hassles of selling a car (as others mentioned above), and then understanding the true costs of ownership v. leasing, Ive fully converted to the lease not buy camp. First, in year 4 of ownership you have a 4 year old car (as opposed to a brand new car if you leased), your car is out of warranty (you new lease is under warranty), and you experience higher service charges as things start breaking down (not the case for a lease in fact many manufacturers (like BMW) include service during your lease term), and then eventually you will need to sell that old car (hassle city and you likely take a bath on the sale), not to mention the limitations on tax deductions if you own. When you lease, you always have a new car, under warranty, with little to no maintenance expense, you never need to sell a used car, and IF the car is used in your business THEN you get a deduction based on the full lease payment (times your business use percentage) as opposed to being limited by IRC 280A. I crunched the numbers several times comparing my old purchases to lease and the cost of ownership really is about the same. Sometimes one deal might be slightly better or worse than the other, depending on the car, but overall the costs are about the same. So, for me, if the costs are virtually identical, then I prefer the "never have to sell a used car and always have a brand new car" option. These benefits would be offset if purchasing brought a substantial cost savings, but it doesn't. Same cost, older used car needing service that you need to sell on the used car market some day (or trade in which is preferable to me but the trade values are so low its almost not worth it).

Regarding the discussion about sales taxes paid on a private party used car transaction, yes you are correct in that in AZ there is no sales tax on a private party sale. Big difference most of the time.

the selling phase is the biggest problem indeed. a lot of hassle and time spent. in my country there is no tax for private sales. so one can get a better sales price than if the car is returned/sold to a car dealer (because they will have to ask for tax when they sell and they have to add their profit margin).

my issue is spending money on a recurring basis, like every 3 years, in case of a lease and never own anything. but it is probably kind of illusion. unless the car is hold for about 7 years then a owner will always be sending money out of the window thru depression and maintenance costs.
and this idea results from my habit of keeping my cars for years. I had one for 4 years, then another for 7 years and now one for 12 years.

but now I am moving to an upper league, for a high ticket car. So, owning an expensive car does not seem a valued proposition even if i keep it for 7 years. expensive cars take a lot of depression and their absolute magnitude is off course bigger. spending 30k on a cheaper car and having it for 7 years and loose 20k is different than spending 100k and loosing 70k, even if percentage wise the depreciation is more or less similar.

i opted for buying the E63 S just because i could get a heavy discount, otherwise i would lease it, loose 40-50% in depreciation in 3 years and then decide to take another one, a new model or simply downgrade again to a cheaper car.

That's great for you and maybe many others. For me, I have no intention of renting my car. Will I lose money, yes. It's a given that car ownership is a losing proposition. But it's my money to lose and I have no intention of renting my car. I pay cash up front and know at the end, I will have lost money.

I find this discussion interesting. I suggest people do what makes the most sense for them and I have no reason or interest in telling anyone what they do is less or more right.

I've never leased or financed a car (or been in debt). I deplore any kind of debt even for big ticket items such as a house. It's true that one can come out ahead by investing at a higher rate than the cost of renting/financing, but there is a psychological cost in knowing that one is beholden to the powers that hold your debt.

i have the same opinion, but unfortunately not everyone can escape debt. most don't.
and in fact, debt can be good, even to people who don't need it. in my country the game is all about debt. big fat dogs take loans from banks to buy cars, houses, stocks while having their own money secured at a bank locally or offshore and if there is a problem paying back, the problem is with the bank. more fairly, it can also be a means to have something while freeing capital to generate more capital. there are still risks.

That refers to leverage. Here with a lease, you're basically getting money at a low rate and with the S&P 500 at record highs, if you can borrow money at 3-4% and get a 8-12% return on you money, you'd make the difference so it can be worth the risk. But it's still a gamble. If you already have the money burning a hole in your pocket, then just drop the whole thing on a car and not worry which way the market is going to go.

I'm always surprised by people who claim that they need to get rid of theirs either because they're lost their job or are retiring. They never could afford it in the first place if that's the case.

i hear you.
here the "car bug" is unbelievable. the average salary is $900 USD per month but Audi, BMW, MB and even Porsche sell like crazy. people go in considerable debt to pay expensive cars on these brands (expensive for the purchasing power here but also in absolute terms. these are expensive brands in most countries).
and it is not like something that could be paid with a one year's salary. it's about people that have 0 savings or have some savings to make a living but if they lose their jobs they will be bankrupt in a few weeks. If I have to spend more than 10% of my savings on a car I don't like the feeling...
the problem with these debt waves is they struck too many people and affect the overall economy, so even if one plays rationally this will have a toll on us (bank failures, less consumers to your products, less jobs, ...).
but i digress.

I have compared lease vs. purchase many times. Here are my conclusions in my humble opinion
Lease makes sense if one or combination of these conditions exist -
Want to replace cars every 3 to 4 yrs
Car companies are offering phenomenal MF rates with great residual values
car is used for business and hence can write off lease payments as business expense

Purchase cars if you keep them for long time 6 plus years
Don't have to worry about miles on car
Trade in your old car for new car every 6 or 7 years

I think the paper math of earning 5% on your capital sounds good but is all timing dependent and at risk of loss (think of markets in 2008 - 2012 or since last winter to now)

apologies but i am not familiarized with the term "MF rates". What does that mean? Are you referring to lease interest rates?

writing off lease payments in cars used for business has been shielded by the IRS on my country. If the car is a "light passengers car" (i don't know if you have this kind of distinction in the US. there are light passengers cars - less than 3 tons and without cargo area, besides the usual trunk space - , light commercial cars - less than 3 tons and with cargo area -, heavy passengers car - typically, public transports - , etc.) then one is subject to autonomous taxes based on the value of the car and CO2 emissions. you have to show a relevant activity on your company and justify the need for such car. the tax man realized that many people were using small companies and placing their personal cars in the name of those companies to be able to write off lease and other expenses...

I also agree with you regarding the non-linearity of being able to get returns over 5%. i believe we have enter a new era where there will be less opportunities for that kind of compounding. i believe we already have the first generation that sees their future being less promising financially than the previous generation, since WW2. but i digress again...

MF refers to Money factor. Samuel Jackson uses a different meaning for MF.

https://www.investopedia.com/terms/m/money-factor.asp

If you look at the returns of the an index fund like the Vanguard Index 500 in the US, the returns have averaged about 10.5 to 16% over the last 10, 5, 3 year range. We've been in one of the longest bull market and it's still going, year to date returns in that fund is up to 9.61%.

MF = money factor. It is number that is plugged into the lease program to determine the interest portion of the lease payment. To convert MF to interest, multiply by 2400. To convert interest rate into money factor, divide MF by 2400.

You have to check with your accountant to determine whether or not a monthly lease payment is a deductible expense.

Use or money or opportunity costs: As there is an interest rate component in the lease payment, IMO you must also consider opportunity costs or use of money when you shell out over $70,000 for a MB. Unless you have $70,000 sitting in your mattress, I assume it is invested somewhere earning something. This is then comparing "apples to apples".

However, if you feel 5% is too high then substitute a lower number, but in all events give recognition to use of money when comparing the total cost of leasing vs. the total cost of buying.

Here is another way to look at it: If you financed the purchase (not saying you would or should) the monthly payments would be principal plus interest. So, when you purchase a car for cash it is the purchase price plus use of money for the period of ownership.

thanks to both. i did not recall the meaning of money factor. i was introduced to this concept in this forum. in my country i believe there is no reference to that. just APR and stuff like that. but it will all come to the same.

yes, that's precisely my idea. cost of opportunity. i believe the rational thing to do on (high ticket) cars generally is to lease. not only is a depreciating asset but there is also the lost opportunity of having most of that money be invested and get more returns.
in any case, never go into debt. the worst case scenario should be one not be able to get more money from the disposable capital and pay an interest in the lease that will lead the car in the end to cost a bit more.

the opportunity thing is a relevant question however since i believe we are reaching a tipping point across the world. the last decade has been fueled by mass money injection that has risen almost every asset. probably the asset that will be more profitable in the next immediate years will be cash. and investing in this kind of environment can lead to losing money, the worst scenario of all. so again, the best course of action is to lease, and park the money for sometime and then wait for a good opportunity to invest. timing is very important now. be fearful when everyone is greedy.

another question to you guys in the US and other countries: the lease model implies that the car be in good shape for return upon the lease term?

in my country the car cannot be damaged or else one has to pay for its fix. so you just can't lease a car and by not being really yours you cannot go around hard riding and bumping the car and then in the end return the vehicle.

I doubt it's any different anywhere. When you lease a Mercedes, you are expected to take care of the car as though it was your car and if you damage the car, you are expected to fix it. At turn in, if there is damage larger than a credit card will cover, they'll charge you the cost of repairing the damage.

how hard is that enforced? i'm thinking on the usual door scratches and dents, or wheels scratches.

You're speaking of minor wear and tear, which is generally forgiven. They call it the Credit Card test. If you can cover the ding or scratch with a credit card, it's forgiven. If it's like a huge dent, you have to pay to have it fixed. But then that's what you have insurance for. You have to insure a leased car, just like you have to insure one you purchase.