Until today, I blindly assumed that all leases, on all new cars, would be competitive, relatively equal, and that the Money Factor would probably work out to roughly 0.00167 (4%/2400), 4% being a not bad financing rate, I felt. I realized, of course, that Residuals would vary based on lease length, miles, model, etc. But I was just told today, and kind of confirmed on these forums from last year's posts, that E-Class MFs (Money Factor, get anything else out of your mind) are higher than many/most other Mercedes, and Wagons higher still. That sounds incredible, to me; any difference in costs, profit, availability, etc. ought to be taken into account in the MSRP, discounts, that kind of stuff. It doesn't make sense to me that an E450 Wagon should /lease/ at a much higher % than an C300 Sedan, when the /purchase/ % is probably the same!

So, it sounds like I'm going to have to shop leases for my ordered wagon, to be received in December. As a start, I was wondering if anyone had fairly recent Money Factors and Residual % that would apply to my 2020 E450 Wagon? I saw last year MF of 0.00225 mentioned for E wagons vs .00194 for E Sedans, and 10k mileage residuals of 57% for 36 months and 46% for 48 months quoted. Would those be the same today? Does anyone have actual, recent MF or residuals that would help me?

Have you that have recently leased E-Class sedans gotten the lease through MB, or found other, possibly more affordable, options?

 

This forum will give you the answers you need -

https://forums.edmunds.com/discussio...als-and-prices

Essentially, you are negotiating the price of the car, which roughly becomes the capitalized cost "cap cost" and then using the residuals published by the leasing company (ideally MB Financial, I would not lease through a third party bank...) and the you are holding the line on markups to money factor, acquisition fee and doc fee. So - there's plenty to negotiate and significant differences between dealers in terms of where you land on a lease...

 

Thanks so much for that! Wow! Using the example of an E450 Sedan vs Coupe, I just calculated the difference in payment and interest (lease cost) between them, and the Coupe buyer will pay just about 1/4 the interest during those 3 years that the Sedan buyer will! This all makes no sense to me! :-(
I've negotiated the price of the car, and it's ordered from a specific dealer, so that will make it difficult to impossible to do a lease with another dealer. Document fee has been stated, and I have no idea what the acquisition fee will be. I guess I don't see where I can negotiate, on the lease, with MB Financial, if MF & Residuals are fixed. Why would you not lease through a third party bank?

 

I have been leasing for over 30 years and here is my experience:

The MF is set by the leasing company, ideally MB Finance: Assuming two potential buyers have the same credit score and the lease terms are the same, length and mileage, then the MF will be the same and so will the residual.

MF and residual vary from model to model: when I leased my E450 the MF on an E300 was different than on an E450, but the residuals were also different so they basically leased out the same: not the same monthly payment but the difference in MF was offset by the difference in residual.

At different times of the year the MF and residual can also change: but each dealer will have the same MF and residual.

The dealers do not control either the MF or residual: What the dealer controls is the selling price which in a lease is the cap cost. Each dealer has a different selling price. I believe you have achieved a 12% discount which is excellent.

Going to another dealer to try to get a different MF or residual, imo, will not result in a better monthly lease rate:

 

Agree, JTK, but dealers do try and mark up the money factor. They cannot change the residual, but they can increase the money factor and acquisition fee if the customer isn't vigilant. My dealer tried to mark up the money factor from .00081 to .00181 - a huge markup and when I called them on it, they acted like they "typed it in wrong." Also, I believe the standard MB Financial acquisition fee is actually $795, but every dealer I have been to marks it up to $1095.

When I work a lease I bring my own worksheet that uses the same calculation as the dealer uses - as long as I am within about $2 a month of their calculation, then I am good to go - at least I understand the underlying math. If I cannot get to their math (or they can't get to my math), I don't do a deal. This approach is how I caught the attempt to mark up the money factor on my recent E450 lease.

 

I just leased a loaner 2019 E450 Wagon and here's my experience:

1.Started with the sub forum on edmunds.com and requested MF/residual for the car in my zip code.
2. used the leasehackr.com calculator during the negotiations (there are some forums posts on E450 wagons that were not totally relevant but good to read)
3. The dealership was using a higher MF than what edmunds.com gave me - I figured it was maybe $750 extra over the cost of the lease and used that as part of the negotiations. The residual was what edmunds.com said it would be.
4. acquisition fee was $1095. There was nothing that was tacked on that was odd.
5. After all this, I got pressured into buying the tire/rim warranty that added $30-ish a month to the lease - folks say maybe I will need it.

I'm sure I could have prob been a little bit more aggressive on the price but it was difficult to find comps. maybe ~20% off for a year old car isn't terrible.
Hope this helps, all the best!

 

Lanzz,

What is an acceptable money factor mark up?

 

Just $.02:

When I lease, I always ask both the residual and the MF. We have over 15 MB dealers within 50 miles. At least with me no dealer ever played games with either the MF or the residual: Each dealer's MF and residual were the same.

Ditto with the bank fee or as some call it the acquisition fee.

In this area competition is too keen for dealers to play games by marking up either the MF, residual or acquisition fee. If a dealer did, word would get around very, very quickly.

 

I would say zero! It's a published value that MB is supposed to use. As far as the Acquisition fee goes, I've only leased 2 cars, but never paid an acquisition fee. In fact, with the lease on my Acura, they /paid/ me $1500 to lease the car, rather than buy it outright, which is what I had planned. But as the $1500 negated the lease interest, I went with a single payment lease instead.

Man, $599 to /sell/ you the car, and $795 to $1095 to /lease/ you the car, in addition to the lease interest... I'm surprised they even let us buy these cars.

 

I've been looking at realcartips.com/leasing and other sites, looking at leasing calculations and such, and while, when leasing, they mention the ACQUISITION fee (to begin a lease), the don't seem to mention the DOCUMENTATION fee (to buy a car). Do I pay for BOTH of these when leasing, or does the Acquisition fee replace the Documentation fee?

 

One fee is the bank fee which you are calling the acquisition fee. That is set by MB Financial.

At the end of the lease, depending on the lease there may be a fee if you do not buy the car and turn in at the end of the lease or a fee if you buy the car. Each lease is different.

Having said that, my MB lease had an acquisition fee of $495 (bank fee) and a fee if you buy the car, $150. There is no fee if at the end of lease I turn the car in.

One thing you mentioned above which I strongly urge no one to do: Single payment lease.

It is absolute rule of leasing that you put down as little as possible when signing a lease: Everything possible should be rolled into the lease including the acquisition (bank) fee, and sales tax. Nothing should be put down to lower the payments:

The reason for this is quite simple: If during the lease, something happens to your car, for example it is stolen or totaled, you insurance company is only liable for paying off the balance of the lease payments plus the residual. Any and all money you have put down is gone: that includes sales tax or money put down to reduce your monthly payment: PUFF INTO THE AIR!

So by making a single payment, if something happens to your car during the term of the lease, you lose everything: crazy as that seems that is what is going to happen. Your insurance company is only liable for the remaining lease payments and since there are none to be made, they pay nothing: you do not have a car and you are out the money you paid upfront.

There is an exception to this. Certain states allow you to pre-pare 8 to 10 months which will reduce the MF significantly. This can be a significant savings in the monthly payments. However, NY is not one of those states.

This has been discussed in other threads dealing with leasing.

 

Good point. While I saved a couple thousand on my Acura with single payment, you're right: if it had been totaled shortly after purchase, I'd been out a lot.

On that note, is the insurance company really only obligated to pay the residual and any remaining payments? Wouldn't they pay what the car is /worth/, which may or may not be as much as the residual plus payments? I mean, it shouldn't work both ways: If the car is worth less than you owe (residual plus payments), normally you'd be screwed for the difference, although Acura and others have insurance to make up the difference. Likewise, in my case with the single payment, I'd the car is worth MORE than I'd owe. Wouldn't I get the difference? I thought insurance companies would only pay what the car is worth, no more, no less, regardless of what you owe. Not so?

 

Okay, I've been doing a lot of comparison and calculations, making spreadsheets etc. (I'm a retired engineer; I can't say "good morning" without a spreadsheet). And this playing around with money factors and residuals is really unfair to some buyers, in particular, ME! As far as the lease (only) is concerned, there may be little difference in what you pay for your new $80k Sedan or a Coupe. But in my case, my intention was to BUY the car at the end of the lease. The purpose of the lease was simply to make sure I like the car, that it's not going to be a money pit, and that it's worth close to what they say it should at the end of the lease. But playing around with MFs & RVs will probably make that impossible. I'll give an example:

New E450 Sedan and Coupe comparison, each costing $80,000 MSRP, with say an 8% discount, leased for 36 months, with zero down, but paying any taxes and fees upfront:

The Sedan has a MF of 0.00196, RV of 59%, and leases for $970.10/month, total lease cost $34,924.

The Coupe has a MF of .00053, RV of 53%, and leases for $928.15/month, total lease cost $33,413 or $1,511 less than the Sedan. Not TOO bad or TOO different.

But, if you want to BUY the car you lease, you have to pay for each:

Sedan: 80000 x .59 = $47,200 plus the lease cost already paid of $34,924, or a total of $82,124 (for a car with discounted cost of $73,600).

Coupe: 80000 x .53 = $42,400 plus the lease cost already paid of $33,413, or a total of $75,813 (for a car with discounted cost of $73,600). That's $6,310 LESS than the same-priced Sedan!

The Sedan buyer is paying over $6,000 more in interest than the Coupe buyer. The higher residual keeps the Sedan lease from being TOO bad, but by buying the car at the end, that full extra interest cost is paid in full as well.

The Wagon I want to buy is even worse, with a 0.00225 MF and 57% residual. For leasing then buying a wagon of the same price as a coupe, I end up paying $7,442 more the coupe.

That is DEFINITELY not FAIR!

 

Think of it this way:

At the end of the lease here is what MB Financial expects:

• Payment of all all lease payments under the lease.
• The car returned or you buy it: the residual value

As the car has been totaled or stolen the car cannot be returned. Then MB wants the residual - what you would have paid for it at the end of the lease.

The fact that the car has been totaled or stolen is of no concern to MB Financial. They want all of the lease payments due under the lease.

I have had two Toyota RAV 4's: One was stolen and one was totaled: In both cases, the residual was lower than the actual value of the car at the time it was totaled and the second one stolen. The stolen one was later recovered, but that is not relelvant.

In both cases, after paying off the remaining payments under the lease, there was equity and I received a check.

This was highly unusual: All Mercedes residuals are much higher than the market value: (Subaru may be another exception) there is no equity. That is why 90% of all Mercedes (and most cars) are returned at the end of the lease.

But to answer your specific question, if there is equity in your lease, the residual is lower than the market value, and the car is totaled or stolen, you will receive a check from the insurance company representing the equity in the car. So in theory making a single payment, if early in the lease the car is stolen or totaled, you will get back some money but expect to lose a great deal.

Hence the better way is to put no money down and roll everything into the lease including acquisition fee and sales tax.

 

Of course it is fair!

Two cars with same payment, but one has a much lower residual, is by far the cheaper car, as at the end of the lease you may have equity in the car.

So the car with the lower residual may be attractive to buy at the end of the lease while the one with the higher residual will almost always be "under water".

When I leased my E450 both the wagon and the coupe leased out much worse and AMG models were terrible. (Do not understand how with the same MSRP you found the monthly payment on the coupe cheaper than the sedan. I found the opposite) I think this reflects the reality of the real world: basic cars" sedans", hold their value as compared to both the coupe and wagon which are essentially the same but have substantially higher MSRP. The lower residuals reflect the higher MSRP as compared to the sedans. Similar MF means the monthly payments on both the coupe and wagon are much higher.

The AMG is basically a sedan with a lot of extras. When you are talking about a 3 to 4 year old car, (end of lease) in the used market, those extra do not bring anywhere what they cost and hence the lower residuals on the AMG that reflect that reality in much, much higher lease payments.

If you go to the S Class the residuals are even lower and hence they lease out worse than the E Class.

 

But I'm retired. And I need a car. I can afford to buy a car, although I'd much rather lease for reasons previously mentioned. I can afford the lease, for a while. But at SOME point I need/want to not have any more payments. I'd like a car to show for all those years of payments. For some reason, MB is making that difficult, or at least much more expensive, to lease and buy some cars over others. Why should it cost so much more to lease then buy different cars of the same price? I understand about the high residuals, but you'd think they'd at least be /consistently/ high across all models (like 10% higher than they should be). But inconsistency is basically what I'm complaining about. The interest rate should not vary depending on what you are buying or leasing. Loans don't work that way, and leases are just a different kind of loan.

Anyhow, I can't imagine banks, credit unions or leasing companies changing interest rates depending on model and trim of car, which is one reason I think I really need to be talking to them. Leasecompare.com supposedly will give you 5 lease quotes for any car, even if you've found or ordered it, so I'm thinking that might be the way to go.

 

The Money Factors and Residual Values determine it. And this is for identical MSRPs and discounts, as mentioned previously. For LEASING only:
Using the same selling price in the example of $73,600 ($80,000 - 8%) for each:

Sedan: (73600 - .59 x 80000)/36 = $733.33 = the Depreciation portion + .00196 x (73600 + .59 x 80000) = $236.77 = the Interest portion, total of $970.10

Coupe: (73600 - .53 x 80000)/36 = $866.67 = the Depreciation portion + .00053 x (73600 + .53 x 80000) = $61.48 = the Interest portion, total of $928.15

 

When I got my car, the MF was insanely high. AMGs are always higher than non-AMG MBs for some reason. You'd think that this would be reflected in the residual, period, but you take a big hit on the MF also. I wound up financing.

The only reasonable MF I ever got was on a 2006 S65. No idea why that one then was competitive, but that was the last car I leased. 6 AMGs since were all purchased. It's very annoying.

 

As I posted AMG vs. standard E class sedans do not hold their value.

You know that and so does Mercedes.

Therefore the residuals on the AMG as compared to the standard E sedans are less and the MF might also be the same or higher but not lower.

Relative to the E sedan the AMG not only cost more initially, but depreciates faster. Worse of both worlds!

 

Agree completely. But I think the fair way to reflect that is with lower residuals. Getting another pound of flesh in the MF doesn't seem right.

 

rraisley - one thing to keep in mind is that captive lenders like MB Financial and others use money factor and even residuals to influence the actual transaction price of the vehicle to help sales. As others have said, residuals are almost always higher than the actual value of the vehicle at the end of the lease, and as the residual declines over any given model year, the money factor is often reduced in later months to try and keep the car in the same approximate payment range so as not to suppress the desirability of leasing in later months of the year. Captive lenders only exist to "move metal" so - their decisions on interest rates (for loans) and money factors and residuals on leases is driven often by sales considerations as much as anything else.

Also - if you truly wanted to buy your car at the end of the lease, I believe you can work something with the dealer to buy it for less than the residual - they have "first dibs" on it when you turn it in and they won't pay anywhere near the residual amount and you can sometimes work a deal where even with a reasonable markup for them you are under the residual value - I wouldn't bother trying this but I know people who have.

I always figured the higher MF on AMG and other high demand models ( I am with JTK on this - MB coupes usually lease terribly as well...) is where captive lenders make a profit - they have to be aggressive with volume models so that financial terms don't inhibit sales, but in cases where someone is looking at a special car like an AMG, they may be less sensitive to the higher MF, so the lender makes money where they can...

 

There is also a risk factor. Banks charge higher rates for higher perceived risk. Loans on cars that are not as popular carry a greater risk when things do not go as planned. Thus different money factors for different model vehicles with the same MSRP.

 

Right. Residuals are what they are, or should be. Money Factor is simply interest rate, and today should be under 4% (.00167) for most anything. That would keep lease vs buy decisions on an even plane at least.

 

I thought that too. Although I've read elsewhere in the forums that they're really hard-headed about that (because they REALLY want you to lease again), and don't want to discount it from the residual. However, logic says they'll simply turn around and sell the car, at "some price", and I can't believe I wouldn't be able to buy it. There's just no assurance, as to its availability or price, 3-4 years from now, and I'm making the decision today. Maybe a frank talk with the manager, who gave me the original (good) deal on purchase, will help.

 

Here are the facts:

15 years ago the residuals were negotiable. That is no longer true.

The reason is simple: The car is owned by MB Financial not the dealer. MB Financial has taken "gap insurance" on the difference between the residual and what the car will bring at auction. That gap insurance is built into the lease price - whether it is residual or MF.

If a car comes in with low mileage the dealer may have an interest. Usually not, as they have plenty of used cars from their loaner fleet and trade ins. If the dealer has an interest he can make a deal with MB Financial and take title to the car. He then must CPO the car before he can sell it whether to you or someone else. By the time all this happens the CPO price is pretty much the residual which we know is too high. Hence except in rare instances once you turn the car in from lease it is gone.

Lanzz is 100% correct when he says that leasing is just another way to move cars which is what MB wants to do.

I have gone to a dealer and have seen their book with the MF and residuals for every model in the Mercedes lineup. The MF vary, or may be for similar modes, but basically these are calculations done by MB to best maximize their sales.

I agree that leasing, if you are uncertain as to whether you want to own the car, is an excellent way to go. But the way the leases today are structured very rarely will it ever pay to buy the car at the end of the lease. The exception will be where your lease is for 36 months, 30,000 miles and at the end of the lease your car has only 6,000 miles, the car has given you no mechanical problems and you love the car. Therefore to you it might be worth the residual.

Other than that, you will be hard pressed to buy at the residual which might be $5,000 to $8,000 over it book (wholesale) value plus tax, knowing that the minute you take title the car you paid for example $48,000 is now only worth $40,000. For me that $8,000 loss in value will be hard to swallow.