Hello all,

Its pretty exciting to wait about 8 months and finally be able to drive home in the car of our dreams for several years now. I was previously driving a 2015 S63 sedan with almost every option and about 47k miles. The used car market is on fire so the dealership paid me very fairly.

On my G63, I wanted to get some feedback to see if I got raped on my lease.

$184k MSRP
$25k markup
60 month lease
$6500 total drive off
$3500 per month including tax, maintenance, wheel tire package.
$79k purchase price at lease end.

Please let me know your honest thoughts.

Much appreciated.

 

Why did you do a lease instead of a purchase with current financing rates so low? Can't do a lease vs. buy comparison without more information. Is this a business related lease?

 

Sure. After speaking to my accountant he advised it would be a more efficient tax write off when depreciated as a lease.

Other important factors:

Car can always be purchased and turned into a purchase without any loss.

G-d forbid, in an accident or any other major circumstance which will have an impact on the car’s history, I will not be personally liable and won’t take a hit when trying to sell the car. If I decide to purchase the car after 5 years, I’ll be at a loss of about $40k versus the option of financing it outright for 6 years. I made the choice of taking a $40k hit spread out over 6 years to be able to sleep better.

what do you guys think?

did we go the right route? Did we do ok on the lease numbers?

 

I'd trust my accountant before listening to guys like me with nothing more important to do than read and reply to car forum posts (lol).

 

lol.

I would just like to know if I did ok with my lease numbers.

 

In my opinion you're over paying, here's why:

Vehicle msrp 184k + 25k mark up = 209k. California tax is what 7.5% so taxes out the door with interest after putting zero down at say 3% interest would give you a 60 month payment of roughly $4,000 a month. The vehicle cost at the end of the term (60 months) to you is $242k and change.

Now on your lease you're paying $3500 x 60 months = $210k + the 6500 drive off cost (3500 was first months payment) so its really 3k extra makes it $213k for term end lease cost.

242k (financed cost) - 213k (lease cost) = 29k.

The g63 after 5 years will definitely be worth more then 29k.

Also what did you do with the money the dealer paid you for your 2015 S63?

 

For the S63 we handled it as a different transaction, they bought it from me for $54k and my payoff was $48k so they said I will receive a check for the difference.

There is no penalty to purchase the car at anytime correct? If that’s the case, you think I should turn around and finance the car now? The very attractive part about leasing is not having to worry about the selling aspect of it and the fact that G-d forbid an accident would always follow me around whereas on a lease you would repair the car, turn it in and move on. Also there are benefits to writing off the lease payments if you own your own business.

what do you think?

 

Excellent breakdown simply made. Expensive deal. So own for 4k or lease for 3.5K, easy choice. If I pay 213K for anything I want to own it.

Personally I won't lease anything more than 30/36 months. Anytime you go 4-5 years plus owning always better IMO. With the current market, G ownership is the way to go.

As for your accountant, not sure what he meant by "depreciated as a lease". If for business use you can write off the entire lease if the vehicle is 100% business which is fine, however if purchased you can write off 100% of the value through IRS section 179 year one assuming its all business. Thats a hell of a write down.

 

The numbers seem high at initial glance but if you are using it as a tax write-off for a business then it makes more sense.

Granted I've never leased but after looking at these numbers I can guess why most G63 drivers purchase over lease.

Assuming there's a decent mileage restriction on the vehicle, I imagine it'll be worth more than $79k at the end of the lease so you could potentially buy it back and make some money then?

 

For me personally I'd purchase the G just because of how well they hold their value, and that you can sell/trade it in anytime you want.

With your lease you have it for 5 years which is pretty long for a lease TBH. Like another poster said I wouldn't do anything over 36months.

 

I fundamentally agree with this analysis. Money is cheap right now, and at 2%, your monthly payments on a purchase versus on a lease are not much different. At the end of 5 years, you probably have at least $100K of equity in the vehicle versus negative $79K on the lease. If your accountant can make this up in tax write-offs, please send me his/her business card!

 

You are correct. I have never leased any car over 36 months. And purchasing the G does make more sense for sure but the main reason I leased is due to G-d forbid a negative event like an accident which would tarnish the history and potentially the title of the car not follow you. Is this not worth the premium I paid?

 

IMO it is not. Proper insurance can compensate for diminished value in case of an incident.

 

Not sure I understand this. While the VIN, registration and driver are all linked through insurance, accident reports and DMV registration, this information is not generally available to the public. If you have an accident, insurance pays for the repairs and if you're at fault, you'll be cited regardless of how the car is titled. A Carfax report will identify and describe the repairs, but doesn't reveal the owner or driver. Your DMV driving record will identify and describe all your driving infractions, but not necessarily the vehicle identity unless material to the infraction. Even when you "own" a vehicle that's being financed, the lender has possession of the title in its name (otherwise, a repo would be theft), until the loan is paid off and the title gets passed through DMV for reissue in your name. So I don't understand what you're trying to isolate or why.

 

If you're able to go back to them and buy out the car without any extra cost then I'd do it but I don't know how that would work. Seems like a bad deal with the lease though.

 

i think what he means is that if he leases the G and it gets in an accident, the carfax report showing that it's been in a previous accident would not be his responsibility. as long as he gets it fixed in mercedes recognized shop, he wont have to compensate the dealer for any diminished value. since the dealer will take the car back no matter that and it'll be their job to sell it. i know some states payout for diminished value due to accidents but a lot of states dont.

however, in this case, even with diminished value taken into account, i still think leasing is not a good idea as it doesnt cost much more to finance.

 

I'm still confused about this explanation. A Carfax report identifies an owner only as "Owner 1", "Owner 2", etc. If the OP (Owner 1) has an accident that appears in a Carfax report, it's not difficult to take the VIN, accident date and accident venue to the local PD and pull the accident report, which identifies by name and address all involved parties (regardless of who titles and who registers the vehicle). Even Tiger Woods who was driving a loaner vehicle (that was neither titled nor registered to him) was identified, and the misinformed cop who said accident details were not being released due to a privacy issue was read the riot act. When you choose to drive on public highways, there is no right to privacy when you're involved in a traffic incident (as multiple celebrities have discovered). If the OP is concerned about some legitimate privacy issue simply related to ownership, he/she can title and register the vehicle to his/her business, which will add one additional layer of anonymity, but is still discoverable by a determined investigator and must be revealed in any legal proceeding. All this being said, I don't see the advantage of leasing over purchasing when the ownership and financial circumstances at the end of 60 months is considered. Nevertheless the OP's accountant may have some financial maneuvers in mind that substantially negate my opinion. (Personally, I never get frisky with the IRS.)
Regarding an accident that diminishes the surrender value of the vehicle at the end of the lease, this potential indemnity is either already accounted for in the lease payments directly or by the lessor's insurance that's being paid for via the lease payments. No lessor is going to let a lessee walk away from a lease, and absorb losses caused by the lessee's malfeasance.

 

Is the op asking if he should get gap insurance if the vehicle is purchased vs leased? This is the way to cover a car that becomes upside down in “street value” vs debt owed. “Diminished value” as part of a plan is exceedingly rare and hard to get acceptable comps for.

gap insurance is not very expensive and should allay your fears that I think you are expressing.

Think about the true opportunity cost of owning vs leasing this vehicle for the next ten years. It will have a relatively high value for the next twenty. We are talking how hundreds of thousands potentially.

 

I also wouldn’t have purchased the tire and wheel insurance. I don’t buy any of that stuff the finance guy is selling.

 

I've purchased wheel and tire and can say it paid for itself on almost every vehicle. Depends on your road conditions.

 

Roads aren’t that bad around here, you still need to watch for potholes. I haven’t taken my GT3 out of the garage yet because of the roads.

 

You essentially financed 130k for 60 months @3500/ month. You spent 210k for 130k loan plus a markup of 25k? Man I wish I had something you were interested in buying.

 

Holy hell...IMO you got raped but maybe thats just how bad it is in the States for this car right now?
Even with my purchase history at my dealership, I have to wait 2 years for a new G63 here in Canada but at least Im getting it for MSRP.
Would never pay over MSRP out of principle regardless of the market for this car.

 

The markup isnt the worst part. The money factor has to be at least 10%, probably $60k more in payments than necessary. Leases are fine, but get yourself educated first.

 

In summary, if you can buy out the lease without penalty and if you can find 60-72 month financing at 2%, jump on it.