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2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Originally Posted by cetialpha5
You buy a 2 service pack and if it's rolled into the MSRP and you have a 50% residual, it means you only paid 50% for the pre-paid maintenance instead of the entire amount. But when you turn in the car at the end of the lease, you would have used up the entire package but you only paid 50%. If you roll it into the loan, you pay the full amount. You're thinking they roll the package into the monthly payment, but when they roll it into the MSRP, you're only paying a percentage due to the residual, not the full amount.
That is correct: However if you have a two year lease at 10K per year it would not make sense to get the PPM which covers both the A service at 10K miles and the B service at 20K miles, as you would have turned in the car before the B service.
Putting the PPM into a loan makes no sense: the full MSPR of the PPM will be in the loan and you will be paying interest on the cost.
With coupons readily available, IMO, unless you lease and put the PPM into the lease, it makes no sense to buy the PPM. There is just not enough of a savings:
Plus, there is always the chance that you will trade in the car, it will be in accident or even stolen: if that happens the money you spent on the PPM will be lost.
You buy a 2 service pack and if it's rolled into the MSRP and you have a 50% residual, it means you only paid 50% for the pre-paid maintenance instead of the entire amount. But when you turn in the car at the end of the lease, you would have used up the entire package but you only paid 50%. If you roll it into the loan, you pay the full amount. You're thinking they roll the package into the monthly payment, but when they roll it into the MSRP, you're only paying a percentage due to the residual, not the full amount.
that sure sounds like a incentive for the lease customers, I wonder if this is still the case now that Mercedes took away most of the lease incentives.
as far as price for prepaid maintenance for new cars vs buying when the car is a few years old, below is a thread on a Mercedes owner who wants to buy a 3 year prepaid plan after his 4 year prepaid expired and the year 5,6 and 7 plan cost twice as much than the original 4 year plan.
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Originally Posted by The G Man
that sure sounds like a incentive for the lease customers, I wonder if this is still the case now that Mercedes took away most of the lease incentives.
This is nothing to do with "lease incentives": It is the nature of leasing:
When you order a car with options. those options are part of the lease price. This is opposed to dealer add on options such as pin stripping, paint sealer, etc which are not part of the lease price The PPM is considered a factory ordered option and is part of the lease price.
Leases are made up of two components: depreciation, residual and interest, which is expressed as a money factor. In my lease for example, the residual after 3 years, 30K miles is 58%. That means that over 3 years the depreciation component of my lease if 42% (100 less 58 = 42). So in effect anything that is in the lease, I pay 42% of the cost.
From memory, when I leased my car, the PPM for 2 years was $980. Therefore my cost was 42% of this, or $412. At the time of purchase the A service was about $200 and the B service about $700, total $900 with coupons less.
That is why I posted that the only time it makes sense to get the PPM is when you lease and can put the PPM into the lease.
In my opinion, PPM is not an option, its an add on. To be able to add the PPm into the value of the car is something Mercedes know of and using it to sell more PPM to lease customers.
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Originally Posted by The G Man
In my opinion, PPM is not an option, its an add on. To be able to add the PPm into the value of the car is something Mercedes know of and using it to sell more PPM to lease customers.
You are entitled to your opinion.
However, what is important is how Mercedes treats PPM in their leases. Mercedes decided a long ago time and continues to date that the PPM in a lease is residualized - so why not take advantage of it!
Remember that Mercedes has your money up front, and the service of course does not cost anywhere what the dealer charges for A and B. So this is extra profit for Mercedes, as without PPM you can also go to an independent shop.
In Mercedes eyes "half a loaf is better than none!".
However, what is important is how Mercedes treats PPM in their leases. Mercedes decided a long ago time and continues to date that the PPM in a lease is residualized - so why not take advantage of it!
Remember that Mercedes has your money up front, and the service of course does not cost anywhere what the dealer charges for A and B. So this is extra profit for Mercedes, as without PPM you can also go to an independent shop.
In Mercedes eyes "half a loaf is better than none!".
Hope this clarifies!
I have another theory, PPM at half price, Mercedes is not going make much if any money. I think what they are trying to go after is the large profit margin of the lease cars to CPO market. In order to keep their future CPO cars in good shape and have the proper paperwork to show for it, Mercedes is willing to sell the PPM at a deep discount to lease customers. Mercedes can sell a factory maintained vehicle much faster and for more money than a vehicle that is maintain by a independent mechanic.
2019 E 450, 2016 E350 4matic (retired), 2018 Ford Edge Sport, 2008 Porsche Boxster
Just checked my local dealer:
They have prepaid service at 30K, 40K and 50K.
Not advocating, but just pointing out that the prepaid covers the cost of spark plug change:
and for 30K and 40K miles:
I think the 30K and 40K (2 year plan) is overpriced.
The 20K, 40K and 50K (3 year plan) is more reasonable.
Keep in mind that if you kept the $1,750 invested for 2 1/2 years, at just 5%, it would have earned over $200, so your actual cost is not $1,750 but over $1,950. That amount I think is also overpriced.
JTK44, I guess the dealer really wanted to push the 3 year maintenance plans, there is a $550 difference in discount offered. The 2 year plan, $1200 for 2 oil change, 1 brake fluid and 1 cabin filter is not a good deal. 2 oil change is around $600, brake flush $300 and cabin filter $250, total $1150 and there are coupons online now for $50 off = $1100. The 3 year plan add one more oil change and spark plugs. $300 for oil change, $800 for plugs on a 4 cylinder plus the 2 year plan a la carte cost of $1150 = $2250 which makes it a better deal.
08-24-2022, 05:52 PM
