Pre-ordering a 2019 E450: Prices, money factor and residuals
09-13-2018, 08:00 AM
#26
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
First, the day you walk out, the car is no longer worth 60K it is now worth maybe 50K. At the end of the lease, in 99% of the time the car is upside down - has no equity - the residual is substantially higher than its value and is the main reason why most cars are turned in at lease end.
Second, once Mercedes has delivered the car to you they have meet their contractual arrangements. They do not care if you drive the car 30,000 miles or 10 miles. All they care about is that you service the car, make payments, return the car at the end of the lease or buy it. What happens in between is your responsibility. So if you have made upfront payments, you or your insurance company in the event the car is stolen or totaled at the end of the lease have to come up with the residual value.
Second, once Mercedes has delivered the car to you they have meet their contractual arrangements. They do not care if you drive the car 30,000 miles or 10 miles. All they care about is that you service the car, make payments, return the car at the end of the lease or buy it. What happens in between is your responsibility. So if you have made upfront payments, you or your insurance company in the event the car is stolen or totaled at the end of the lease have to come up with the residual value.
09-13-2018, 08:24 AM
#27
First, the day you walk out, the car is no longer worth 60K it is now worth maybe 50K. At the end of the lease, in 99% of the time the car is upside down - has no equity - the residual is substantially higher than its value and is the main reason why most cars are turned in at lease end.
Second, once Mercedes has delivered the car to you they have meet their contractual arrangements. They do not care if you drive the car 30,000 miles or 10 miles. All they care about is that you service the car, make payments, return the car at the end of the lease or buy it. What happens in between is your responsibility. So if you have made upfront payments, you or your insurance company in the event the car is stolen or totaled at the end of the lease have to come up with the residual value.
Second, once Mercedes has delivered the car to you they have meet their contractual arrangements. They do not care if you drive the car 30,000 miles or 10 miles. All they care about is that you service the car, make payments, return the car at the end of the lease or buy it. What happens in between is your responsibility. So if you have made upfront payments, you or your insurance company in the event the car is stolen or totaled at the end of the lease have to come up with the residual value.
If all that you say is actually true, i am quite surprised on this news. haha I will call my insurance company to confirm as we well as now I am very curious for my own knowledge. It just seems really odd to me that when I purchase my policy with my insurance company, there would be a clause stating they will only cover the balance of my lease payments. Will find out for sure now!
09-13-2018, 08:31 AM
#28
i still say (without having done any more research yet), that the insurance company covers the market value of the car. How much you paid up front, has nothing to do with the payout. The difference (whether it be positive or negative, depending on the timing of the incident and brand/model of the vehicle) you have to cover the difference after Benz (in this case) collects their check. This is why dealerships tries to sell you GAP insurance, in case you owe more for the vehicle after the payout from the insurance company,
09-13-2018, 02:22 PM
#30
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
According to my dealer the MF, as I noted above, for the E450 is .00194 and slightly less for the E300. However the residual for the E450 is 59% vs. 58% for the E300, so one pretty much washes the other.
GAP insurance is standard, at least in my insurance policy for the past five years as I live in NY.
Where did you see .00119 and .00063?
This would dramatically change the monthly rate I am being quoted.
FYI, the MF on the BMW 540 is .00166 3.98%.
GAP insurance is standard, at least in my insurance policy for the past five years as I live in NY.
Where did you see .00119 and .00063?
This would dramatically change the monthly rate I am being quoted.
FYI, the MF on the BMW 540 is .00166 3.98%.
09-13-2018, 02:39 PM
#31
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Actually what your insurance policy coves is the market value of your car.
Here is an example: Your cap cost (selling price) is $65,000. When you walk out the dealer and put 1,000 miles on the car the car has depreciated: it is now one year old. Use a value of $58,000. (that is depreciation of 10% which is low, so it will be probably worth less than $58,000) You have made one payment of $900, which is part interest and part depreciation. Assume of the $900, $700 went to depreciation and $200 went to interest.
At this point you have paid $700 towards the value of the car, now reducing it from $65,000 to $64,300. But the value of the car is $58,000 which is what your insurance company will pay. There is a "GAP" there of $6,300. The GAP insurance part of you insurance policy covers the difference.
Now lets use your example and prepay $32,400 ($900 times 36 months) part will be interest and part towards depreciation. Using the same $700 for 36 months that is $25,200. That reduces the $65,000 to $39,800. As the car is "worth" $58,000 you have "equity" in the difference, $18,200. That is what the insurance company will give you back.
But you paid $32,400 ($900 times 36 months).
So your loss is the difference between what you paid $32,400 and what the insurance company will pay you $18,200, $14,200 plus some part of the interest component of the monthly payment.
As you can see prepaying the lease up front, in the event of total loss or the vehicle is stolen, is not an efficient way to lease a car.
Here is an example: Your cap cost (selling price) is $65,000. When you walk out the dealer and put 1,000 miles on the car the car has depreciated: it is now one year old. Use a value of $58,000. (that is depreciation of 10% which is low, so it will be probably worth less than $58,000) You have made one payment of $900, which is part interest and part depreciation. Assume of the $900, $700 went to depreciation and $200 went to interest.
At this point you have paid $700 towards the value of the car, now reducing it from $65,000 to $64,300. But the value of the car is $58,000 which is what your insurance company will pay. There is a "GAP" there of $6,300. The GAP insurance part of you insurance policy covers the difference.
Now lets use your example and prepay $32,400 ($900 times 36 months) part will be interest and part towards depreciation. Using the same $700 for 36 months that is $25,200. That reduces the $65,000 to $39,800. As the car is "worth" $58,000 you have "equity" in the difference, $18,200. That is what the insurance company will give you back.
But you paid $32,400 ($900 times 36 months).
So your loss is the difference between what you paid $32,400 and what the insurance company will pay you $18,200, $14,200 plus some part of the interest component of the monthly payment.
As you can see prepaying the lease up front, in the event of total loss or the vehicle is stolen, is not an efficient way to lease a car.
09-13-2018, 04:03 PM
#32
Actually what your insurance policy coves is the market value of your car.
Here is an example: Your cap cost (selling price) is $65,000. When you walk out the dealer and put 1,000 miles on the car the car has depreciated: it is now one year old. Use a value of $58,000. (that is depreciation of 10% which is low, so it will be probably worth less than $58,000) You have made one payment of $900, which is part interest and part depreciation. Assume of the $900, $700 went to depreciation and $200 went to interest.
At this point you have paid $700 towards the value of the car, now reducing it from $65,000 to $64,300. But the value of the car is $58,000 which is what your insurance company will pay. There is a "GAP" there of $6,300. The GAP insurance part of you insurance policy covers the difference.
Now lets use your example and prepay $32,400 ($900 times 36 months) part will be interest and part towards depreciation. Using the same $700 for 36 months that is $25,200. That reduces the $65,000 to $39,800. As the car is "worth" $58,000 you have "equity" in the difference, $18,200. That is what the insurance company will give you back.
But you paid $32,400 ($900 times 36 months).
So your loss is the difference between what you paid $32,400 and what the insurance company will pay you $18,200, $14,200 plus some part of the interest component of the monthly payment.
As you can see prepaying the lease up front, in the event of total loss or the vehicle is stolen, is not an efficient way to lease a car.
Here is an example: Your cap cost (selling price) is $65,000. When you walk out the dealer and put 1,000 miles on the car the car has depreciated: it is now one year old. Use a value of $58,000. (that is depreciation of 10% which is low, so it will be probably worth less than $58,000) You have made one payment of $900, which is part interest and part depreciation. Assume of the $900, $700 went to depreciation and $200 went to interest.
At this point you have paid $700 towards the value of the car, now reducing it from $65,000 to $64,300. But the value of the car is $58,000 which is what your insurance company will pay. There is a "GAP" there of $6,300. The GAP insurance part of you insurance policy covers the difference.
Now lets use your example and prepay $32,400 ($900 times 36 months) part will be interest and part towards depreciation. Using the same $700 for 36 months that is $25,200. That reduces the $65,000 to $39,800. As the car is "worth" $58,000 you have "equity" in the difference, $18,200. That is what the insurance company will give you back.
But you paid $32,400 ($900 times 36 months).
So your loss is the difference between what you paid $32,400 and what the insurance company will pay you $18,200, $14,200 plus some part of the interest component of the monthly payment.
As you can see prepaying the lease up front, in the event of total loss or the vehicle is stolen, is not an efficient way to lease a car.
So at the end of the day, your financial damage is the same, whether you have the money to float it or it becoming a debt - that is the only difference.
Last edited by jhpmbusa; 09-13-2018 at 04:04 PM. Reason: adding more info
09-13-2018, 04:19 PM
#33
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
No:
If you pay $900 a month and during the first month with 1,000 miles on the car your car is stolen or destroyed: With GAP insurance you have no further liability under the lease. Nothing Nada!
The insurance company settles with MB Financial and you are out of the lease.
All you are liable for is what you have paid: $900 - nothing else!
Again in NY State GAP insurance is standard for all leased cars.
So again, in the event of a total loss or the car is stolen, money put down to reduce the monthly payments and any and all taxes paid up front, are lost.
That is why bank fees and taxes should be rolled into the lease and you should not make a down payment to reduce the monthly payment.
Of course if nothing happens to the car during the lease and you turn it in at the end, then prepaying or paying monthly - it is the same.
I am only talking about when the car is either totaled or stolen.
If you pay $900 a month and during the first month with 1,000 miles on the car your car is stolen or destroyed: With GAP insurance you have no further liability under the lease. Nothing Nada!
The insurance company settles with MB Financial and you are out of the lease.
All you are liable for is what you have paid: $900 - nothing else!
Again in NY State GAP insurance is standard for all leased cars.
So again, in the event of a total loss or the car is stolen, money put down to reduce the monthly payments and any and all taxes paid up front, are lost.
That is why bank fees and taxes should be rolled into the lease and you should not make a down payment to reduce the monthly payment.
Of course if nothing happens to the car during the lease and you turn it in at the end, then prepaying or paying monthly - it is the same.
I am only talking about when the car is either totaled or stolen.
09-13-2018, 08:25 PM
#34
No:
If you pay $900 a month and during the first month with 1,000 miles on the car your car is stolen or destroyed: With GAP insurance you have no further liability under the lease. Nothing Nada!
The insurance company settles with MB Financial and you are out of the lease.
All you are liable for is what you have paid: $900 - nothing else!
Again in NY State GAP insurance is standard for all leased cars.
So again, in the event of a total loss or the car is stolen, money put down to reduce the monthly payments and any and all taxes paid up front, are lost.
That is why bank fees and taxes should be rolled into the lease and you should not make a down payment to reduce the monthly payment.
Of course if nothing happens to the car during the lease and you turn it in at the end, then prepaying or paying monthly - it is the same.
I am only talking about when the car is either totaled or stolen.
If you pay $900 a month and during the first month with 1,000 miles on the car your car is stolen or destroyed: With GAP insurance you have no further liability under the lease. Nothing Nada!
The insurance company settles with MB Financial and you are out of the lease.
All you are liable for is what you have paid: $900 - nothing else!
Again in NY State GAP insurance is standard for all leased cars.
So again, in the event of a total loss or the car is stolen, money put down to reduce the monthly payments and any and all taxes paid up front, are lost.
That is why bank fees and taxes should be rolled into the lease and you should not make a down payment to reduce the monthly payment.
Of course if nothing happens to the car during the lease and you turn it in at the end, then prepaying or paying monthly - it is the same.
I am only talking about when the car is either totaled or stolen.
Also, the only reason people do one time payment is because its saves a lot of money. There is no interest at all. When I got my car it changed the payments around $100 less a month.
Last edited by jhpmbusa; 09-13-2018 at 08:28 PM.
09-13-2018, 08:54 PM
#35
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
jhpmbusa wrote:
Using the $900 per month for 36 months, total of $32,400: The opportunity cost at just 5% per year for 3 years is $4,860. That is $135 per month.
So you saved $100 per month on the lease payment, but gave up $135 a month on the opportunity cost or use of money if you invested this same $32,400 at just 5%: If you earned more than 5% than your use of money or opportunity costs would be greater than $135 per month.
Check with your insurance agent: I believe GAP is now standard when you lease a car.
"Also, the only reason people do one time payment is because its saves a lot of money. There is no interest at all. When I got my car it changed the payments around $100 less a month."
Using the $900 per month for 36 months, total of $32,400: The opportunity cost at just 5% per year for 3 years is $4,860. That is $135 per month.
So you saved $100 per month on the lease payment, but gave up $135 a month on the opportunity cost or use of money if you invested this same $32,400 at just 5%: If you earned more than 5% than your use of money or opportunity costs would be greater than $135 per month.
Check with your insurance agent: I believe GAP is now standard when you lease a car.
09-13-2018, 09:13 PM
#36
hmmm so gamble a solid savings of $100 a month to make $135. thats a difference of $35.00 before being taxed and the chances of actually losing the money or going thru a rollercoaster ride. haha i rather save the solid $100. but hey, its whatever that works for you and let's you sleep better at night 
To each his own. Oh and by the way, I didn't do the one time payment,just saying that was the difference i was quoted. I went with MSDs instead, which saved me 80 a month =) So I coughed up like 6k (10 payments rounded up to the nearest 100 i think it was) instead of 32k (in your example) but still got some whopping savings. At least i feel this way.
To each his own. Oh and by the way, I didn't do the one time payment,just saying that was the difference i was quoted. I went with MSDs instead, which saved me 80 a month =) So I coughed up like 6k (10 payments rounded up to the nearest 100 i think it was) instead of 32k (in your example) but still got some whopping savings. At least i feel this way.
09-13-2018, 09:28 PM
#37
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
I am only giving you the calculations. I suspect that most people have their money invested in either CD's, bonds and/or stocks and expect a minimum return of 5%.
BTW, that $35 a month for 36 months is $1,260 - like getting a month's plus lease payment free!. (assuming $900 per month)
As to paying taxes: Of course you pay taxes on the earnings and I suspect that the money paid up front was after tax dollars, so this is a wash.
So there is a savings in paying monthly and a huge savings paying monthly vs. paying up front 100% in the event the car is stolen or totaled.
As to your paying $6,000 up front to reduce the monthly by $80:
1) I calculate $6,000 divided by 36 is $166. That should have been the minimal savings per month. Can you explain why you received only half that amount - $80?
2) As I pointed out, in the event of either the car being stolen or totaled, you have lost the entire $6,000
BTW, that $35 a month for 36 months is $1,260 - like getting a month's plus lease payment free!. (assuming $900 per month)
As to paying taxes: Of course you pay taxes on the earnings and I suspect that the money paid up front was after tax dollars, so this is a wash.
So there is a savings in paying monthly and a huge savings paying monthly vs. paying up front 100% in the event the car is stolen or totaled.
As to your paying $6,000 up front to reduce the monthly by $80:
1) I calculate $6,000 divided by 36 is $166. That should have been the minimal savings per month. Can you explain why you received only half that amount - $80?
2) As I pointed out, in the event of either the car being stolen or totaled, you have lost the entire $6,000
09-13-2018, 09:37 PM
#38
I am only giving you the calculations. I suspect that most people have their money invested in either CD's, bonds and/or stocks and expect a minimum return of 5%.
BTW, that $35 a month for 36 months is $1,260 - like getting a month's plus lease payment free!. (assuming $900 per month)
As to paying taxes: Of course you pay taxes on the earnings and I suspect that the money paid up front was after tax dollars, so this is a wash.
So there is a savings in paying monthly and a huge savings paying monthly vs. paying up front 100% in the event the car is stolen or totaled.
As to your paying $6,000 up front to reduce the monthly by $80:
1) I calculate $6,000 divided by 36 is $166. That should have been the minimal savings per month. Can you explain why you received only half that amount - $80?
2) As I pointed out, in the event of either the car being stolen or totaled, you have lost the entire $6,000
BTW, that $35 a month for 36 months is $1,260 - like getting a month's plus lease payment free!. (assuming $900 per month)
As to paying taxes: Of course you pay taxes on the earnings and I suspect that the money paid up front was after tax dollars, so this is a wash.
So there is a savings in paying monthly and a huge savings paying monthly vs. paying up front 100% in the event the car is stolen or totaled.
As to your paying $6,000 up front to reduce the monthly by $80:
1) I calculate $6,000 divided by 36 is $166. That should have been the minimal savings per month. Can you explain why you received only half that amount - $80?
2) As I pointed out, in the event of either the car being stolen or totaled, you have lost the entire $6,000
Also if I make 35$ a month, lets say capital gains, or whatever type of gains, you are taxed on it. So its like making $20.00 bucks. Very rough calc here, will depend on your bracket and how you earned it etc etc
09-13-2018, 09:58 PM
#39
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
This is the first I have heard of Multiple Security Deposit (MSD). If accurate, a MSD of $6,000 that gives you a savings of $80 a month, equals interest paid to you by MB at the rate of 16%. ($80 a month for 12 months is $960. $960 divided by $6,000 is 16%) I think this strains credulity.
If that were the case, you (or anyone else) could make a MSD of $66,000, which would give you a credit of $880 a month which would cover you lease payment of $900 per month. Do not think this is going to happen!
If you did this, made a MSD of $66,000, the use of money on the $66,000 at 5% for three years would be $9,000. So in effect by making a MSD of $66,000 you would be paying $250 per month, $9,000 divided by 36. If accurate everyone would do this!
Taxes: Yes you pay taxes on the earning: But your MSD is after tax dollars: so to make a $6,000 MSD, assuming a 30% tax rate you would have to earn $8,571. ($8,571 before tax is $6,000 after paying taxes at 3)%) That is why I said it was a wash:
If that were the case, you (or anyone else) could make a MSD of $66,000, which would give you a credit of $880 a month which would cover you lease payment of $900 per month. Do not think this is going to happen!
If you did this, made a MSD of $66,000, the use of money on the $66,000 at 5% for three years would be $9,000. So in effect by making a MSD of $66,000 you would be paying $250 per month, $9,000 divided by 36. If accurate everyone would do this!
Taxes: Yes you pay taxes on the earning: But your MSD is after tax dollars: so to make a $6,000 MSD, assuming a 30% tax rate you would have to earn $8,571. ($8,571 before tax is $6,000 after paying taxes at 3)%) That is why I said it was a wash:
Last edited by JTK44; 09-13-2018 at 10:00 PM.
09-13-2018, 10:09 PM
#40
There is a limit of how many MSDs you can put down haha depending on the car/program - sometimes its only 5 mths if the interest rate is low on the car already. All you are doing is buying the pts down. But I like the way you think But yes, MSDs are like magic! You should definitely ask how much it can help you out. Seriously, to me I dont even understand why they would do it, but as long as they are doing it, I will take the savings!!! just hope they dont do away with it.
still confused about the taxes washing out, as if i paid taxes for the money i would invest and if the money i invested made a profit i would still be taxed on it? so its like 2 rounds of taxes..... unfortunately like anything else....
But yes, MSDs are like magic! You should definitely ask how much it can help you out. Seriously, to me I dont even understand why they would do it, but as long as they are doing it, I will take the savings!!! just hope they dont do away with it.still confused about the taxes washing out, as if i paid taxes for the money i would invest and if the money i invested made a profit i would still be taxed on it? so its like 2 rounds of taxes..... unfortunately like anything else....
09-13-2018, 10:13 PM
#41
This is the first I have heard of Multiple Security Deposit (MSD). If accurate, a MSD of $6,000 that gives you a savings of $80 a month, equals interest paid to you by MB at the rate of 16%. ($80 a month for 12 months is $960. $960 divided by $6,000 is 16%) I think this strains credulity.
If that were the case, you (or anyone else) could make a MSD of $66,000, which would give you a credit of $880 a month which would cover you lease payment of $900 per month. Do not think this is going to happen!
If you did this, made a MSD of $66,000, the use of money on the $66,000 at 5% for three years would be $9,000. So in effect by making a MSD of $66,000 you would be paying $250 per month, $9,000 divided by 36. If accurate everyone would do this!
Taxes: Yes you pay taxes on the earning: But your MSD is after tax dollars: so to make a $6,000 MSD, assuming a 30% tax rate you would have to earn $8,571. ($8,571 before tax is $6,000 after paying taxes at 3)%) That is why I said it was a wash:
If that were the case, you (or anyone else) could make a MSD of $66,000, which would give you a credit of $880 a month which would cover you lease payment of $900 per month. Do not think this is going to happen!
If you did this, made a MSD of $66,000, the use of money on the $66,000 at 5% for three years would be $9,000. So in effect by making a MSD of $66,000 you would be paying $250 per month, $9,000 divided by 36. If accurate everyone would do this!
Taxes: Yes you pay taxes on the earning: But your MSD is after tax dollars: so to make a $6,000 MSD, assuming a 30% tax rate you would have to earn $8,571. ($8,571 before tax is $6,000 after paying taxes at 3)%) That is why I said it was a wash:
09-13-2018, 10:20 PM
#42
works really well on cars with bad programs and high msrps. I think there was a GLS550 deal where the MSDs helped like 150 a month, granted the payments in general are over $1000+ but then again you are locking up like 10k. so etc etc etc
09-13-2018, 10:25 PM
#43
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
I did a google search for Multiple Security Deposits:
Here is what I found:
1) When they do exist, do not know if they exist now, they lower the money factor (MF)
2) When they exist they are limited to 7 to 10 payments
3) With a lower money factor savings can exceed a rate of return of 10%.
Here is a link that explains this: https://www.leasemorecarforlessmoney...deposits-msds/
Attached is the article: Please note:
1) according to the article MSD are not allowed in New York State: Probably why I never heard of them;
2) Directly from the article:
"I NEVER recommend putting money down on a new (or used) car lease.
A car almost never appreciates. So we want to rent it. Instead, we should invest in assets that appreciate (like a business or index funds).
Even worse, a down payment is not protected if our car is either stolen a considered a total loss. Because any prepayment gets forfeited in a total loss. So even if we have GAP insurance, the leasing company raids our down payment first, then gets the balance from the insurance company."
Notwithstanding the article I will check to see if MSD exist in New York. If they do, I will report back to this forum and set forth the savings and projected rate of return.
But clearly this is something that should be considered and I thank jhpmbusa for bringing it up!
Here is what I found:
1) When they do exist, do not know if they exist now, they lower the money factor (MF)
2) When they exist they are limited to 7 to 10 payments
3) With a lower money factor savings can exceed a rate of return of 10%.
Here is a link that explains this: https://www.leasemorecarforlessmoney...deposits-msds/
Attached is the article: Please note:
1) according to the article MSD are not allowed in New York State: Probably why I never heard of them;
2) Directly from the article:
"I NEVER recommend putting money down on a new (or used) car lease.
A car almost never appreciates. So we want to rent it. Instead, we should invest in assets that appreciate (like a business or index funds).
Even worse, a down payment is not protected if our car is either stolen a considered a total loss. Because any prepayment gets forfeited in a total loss. So even if we have GAP insurance, the leasing company raids our down payment first, then gets the balance from the insurance company."
Notwithstanding the article I will check to see if MSD exist in New York. If they do, I will report back to this forum and set forth the savings and projected rate of return.
But clearly this is something that should be considered and I thank jhpmbusa for bringing it up!
Last edited by JTK44; 09-13-2018 at 10:32 PM.
09-13-2018, 10:44 PM
#44
oh you are absolutely right, you just reminded me. NY does not allow MSDs, not sure if this for BENZ or for all brand..., but ill let you in on a little secret - that why NY brokers deal with NJ dealerships when they want to apply MSDs.
Like I direct messaged you about. Let me know when you want some help. I can help you out on the BENZ, and the quote was before MSDs, was fun today - stay in touch haha
Like I direct messaged you about. Let me know when you want some help. I can help you out on the BENZ, and the quote was before MSDs
, was fun today - stay in touch haha
09-13-2018, 10:55 PM
#45
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
I did a google search for Multiple Security Deposits:
Here is what I found:
1) When they do exist, do not know if they exist now, they lower the money factor (MF)
2) When they exist they are limited to 7 to 10 payments
3) With a lower money factor savings can exceed a rate of return of 10%.
Here is a link that explains this: https://www.leasemorecarforlessmoney...deposits-msds/
Attached is the article: Please note:
1) according to the article MSD are not allowed in New York State: Probably why I never heard of them;
2) Directly from the article:
"I NEVER recommend putting money down on a new (or used) car lease.
A car almost never appreciates. So we want to rent it. Instead, we should invest in assets that appreciate (like a business or index funds).
Even worse, a down payment is not protected if our car is either stolen a considered a total loss. Because any prepayment gets forfeited in a total loss. So even if we have GAP insurance, the leasing company raids our down payment first, then gets the balance from the insurance company."
Notwithstanding the article I will check to see if MSD exist in New York. If they do, I will report back to this forum and set forth the savings and projected rate of return.
But clearly this is something that should be considered and I thank jhpmbusa for bringing it up!
Here is what I found:
1) When they do exist, do not know if they exist now, they lower the money factor (MF)
2) When they exist they are limited to 7 to 10 payments
3) With a lower money factor savings can exceed a rate of return of 10%.
Here is a link that explains this: https://www.leasemorecarforlessmoney...deposits-msds/
Attached is the article: Please note:
1) according to the article MSD are not allowed in New York State: Probably why I never heard of them;
2) Directly from the article:
"I NEVER recommend putting money down on a new (or used) car lease.
A car almost never appreciates. So we want to rent it. Instead, we should invest in assets that appreciate (like a business or index funds).
Even worse, a down payment is not protected if our car is either stolen a considered a total loss. Because any prepayment gets forfeited in a total loss. So even if we have GAP insurance, the leasing company raids our down payment first, then gets the balance from the insurance company."
Notwithstanding the article I will check to see if MSD exist in New York. If they do, I will report back to this forum and set forth the savings and projected rate of return.
But clearly this is something that should be considered and I thank jhpmbusa for bringing it up!
09-13-2018, 11:02 PM
#46
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Just checked a BMW Board: as of April 2017 BMW discontinued MSD.
Also, if you lease from an out of state (not NY) dealer you may be able to make a MSD. This will not only lower the monthly payments (lower MF) but also the tax due to NY when the car is registered in NY where I live: In NY the sales tax is on the total of monthly payments.
TAX: When you make a MSD you are paying with after tax dollars: To make a MSD of $6,000 you must earn $8,571: $8,571 after paying taxes at the rate of 30% equals $6,000. You mentioned that the savings of $35 a month after taxes is $20. - which is correct. My point is that the MSD is also made with after tax dollars so there is a wash.
Tomorrow I will contact both BMW and MD Financial to see if the MSD program is still available and if so, in what states.
Also, if you lease from an out of state (not NY) dealer you may be able to make a MSD. This will not only lower the monthly payments (lower MF) but also the tax due to NY when the car is registered in NY where I live: In NY the sales tax is on the total of monthly payments.
TAX: When you make a MSD you are paying with after tax dollars: To make a MSD of $6,000 you must earn $8,571: $8,571 after paying taxes at the rate of 30% equals $6,000. You mentioned that the savings of $35 a month after taxes is $20. - which is correct. My point is that the MSD is also made with after tax dollars so there is a wash.
Tomorrow I will contact both BMW and MD Financial to see if the MSD program is still available and if so, in what states.
The following users liked this post:
CarFan1 (09-15-2018)
09-14-2018, 09:44 AM
#47
Just checked a BMW Board: as of April 2017 BMW discontinued MSD.
Also, if you lease from an out of state (not NY) dealer you may be able to make a MSD. This will not only lower the monthly payments (lower MF) but also the tax due to NY when the car is registered in NY where I live: In NY the sales tax is on the total of monthly payments.
TAX: When you make a MSD you are paying with after tax dollars: To make a MSD of $6,000 you must earn $8,571: $8,571 after paying taxes at the rate of 30% equals $6,000. You mentioned that the savings of $35 a month after taxes is $20. - which is correct. My point is that the MSD is also made with after tax dollars so there is a wash.
Tomorrow I will contact both BMW and MD Financial to see if the MSD program is still available and if so, in what states.
Also, if you lease from an out of state (not NY) dealer you may be able to make a MSD. This will not only lower the monthly payments (lower MF) but also the tax due to NY when the car is registered in NY where I live: In NY the sales tax is on the total of monthly payments.
TAX: When you make a MSD you are paying with after tax dollars: To make a MSD of $6,000 you must earn $8,571: $8,571 after paying taxes at the rate of 30% equals $6,000. You mentioned that the savings of $35 a month after taxes is $20. - which is correct. My point is that the MSD is also made with after tax dollars so there is a wash.
Tomorrow I will contact both BMW and MD Financial to see if the MSD program is still available and if so, in what states.
09-14-2018, 03:19 PM
#48
MBWorld Fanatic!
Thread Starter
Join Date: May 2018
Location: Long Island, NY
Posts: 1,945
Received 556 Likes
on
419 Posts
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Just spoke to MB Financials. Every state, except New York and Puerto Rico participates in the MSD program. I am now inquiry to see if there is a significant savings to bother to go out of state to get my E450.
The following users liked this post:
CarFan1 (09-15-2018)
