Leasing new 2020 GLE 450
 

Hi All, I am currently considering my first ever 3yr lease on a first ever 2020 Mercedes GLE 450. Going to put down my current car as trade in (~25k value) - keep reading that it's insane to put so much cash towards the lease, on the other hand it does significantly lower monthly payments and saves on interest. I will only pay ~ $700 CAD per month vs $1,600 CAD

1) What have I got wrong? Is it perhaps indeed better to finance? I never had any experience with Mercedes and seems lease is less headache on such an expensive vehicle. In case it gets into some serious accident and its trade in value drops as a result. Lease in the contrary would not have such a risk - you generally know very well what you are getting into paying set fees and dropping off the car at the end (plus some lease return fees / excess wear and tear etc.)
2) Here in Canada MB has 5.9% lease rate - pretty high I'd say (I also noticed finance quote I got was using 4.9% rate while lease had 5.9%). Is it negotiable, anyone ever succeeded in lowering it?

I really don’t have much to add except for a few reasons I don’t care for leases on a vehicle with good resale value. For people short on down, a business or maybe some specialized equipment it makes more sense. Loans for people with good credit should be available from multiple sources at good rates.
1. You lose any upside in the value at the end of the lease. My guess is the GLE will have some.
2. You are locked into a fixed term. If you want to get out early or stay in longer it’s a disadvantage financially! With a loan you can get out at your choosing and with your downpayment (tirade value) will always have equity.
3. You will have no equity at the end so your next lease won’t have a low payment. Or you will have to put cash down to get a loan.
4. There are no special lease incentives for the 2020 GLE.


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Hi AustinV,

Here's some info on leasing, hope this helps:

1. It is a bad idea to put any money down on your lease, the reason being if you total your car, you will not receive any of this money back. You are better off doing 0 down and making Multiple Security Deposits (MSD) These are returned to you at the end of a lease and are not tied to your vehicle condition, just don't miss any payments.

2. I'm not sure if MSDs are allowed in your area but they effectively lower the MF rate of the lease which reduces your payments significantly (MBFS allows 10 MSDs at a 0.00007 MF reduction per MSD). Where I'm at (Midwest US), 2020 GLE450s are currently leasing for 0.00193MF (4.632%) with a 61% RV for 12/36. With 10 MSDs, it would drop to 0.00123 (2.952%) which is still high to me but being a brand new model this year, its hard to get any better until end of the year.

And like Ron mentioned above, there is no lease incentives currently out on this car so lease deals are not too attractive right now. If you have to have it, then try to negotiate as much as you can off MSRP and make sure they are not marking up the MF on your paperwork.

All makes sense thanks everyone! A bit of clarification on: "It is a bad idea to put any money down on your lease, the reason being if you total your car, you will not receive any of this money back." Wouldn't in such case your regular car insurance replace the car and then you continue driving it until the end of the lease making the same monthly payments? Sorry it might sound naïve, I don't have much experience in the car leasing field, I financed / paid cash for all my previous cars and think will end up doing the same here.

No worries, basically, if the car is totalled, your insurance would cut the leasing bank the cost of the car and you walk away from the contract. Your 25k down however would be gone so its usually considered best practice to do 0 down as it lowers the risk and also makes it easier to back calculate lease costs.

Mercedes Canada does not offer multiple security deposit. BMW Canada, however, does.

The car insurance does not "replace" the car. It will pay off anything you owe to the mercedes finance. So you won't owe anything, but you won't get anything back either.
Your 25k trade-in value would be gone. Your lease payment for your next new vehicle would be significantly higher.

The answer here is no. You insure the vehicle, but it is owned by Mercedes Financial. If the car is totaled, your insurance co will pay the actual cash value of the vehicle at the time (minus any deductible) to the vehicle's owner, which is MBFS. MBFS and BMWFS include GAP insurance in their leases so that would make up the difference if the ACV is less than the payoff on your contract. Once it is paid off, the contract is fulfilled and you now have to start over getting yourself a new car. Same as if it were financed, totaled, and the insurance co paid off the loan.

Regardless if you put down $0 or $10,000, your total lease obligation remains the same, simple formula of the selling price (that you negotiated) minus the residual (percentage of msrp set by MBFS) plus interest (and tax in some states) divided by the # of months of the lease contract. There's an actual formula but that's the basic idea. By making a large down payment (cap cost reduction on your contract), you are effectively just prepaying part of that lease obligation which is why it looks like you're lowering your monthly payment. When the insurance co pays it off, you do not get that back. Best to do MSD's as mentioned above, or put that extra amount into an account and just withdraw from it monthly. In the OP's case w/ a large amount of equity in their current vehicle, they should have it treated as 2 separate transactions. Selling the dealer the current vehicle and having them cut you a check, then starting fresh w/ the new vehicle. You preferable want $0 cap cost reduction and only pay your startup costs up front (doc fee, acquisition fee, registration, etc).

Check the Edmunds forums for the current month's money factor and residual for the specific vehicle you're looking at, in your area, for your desired term (ie: 2020 GLE450 4Matic, in zip code 02115, 3yr 36k mi). The mods over there usually answer very quickly. The lease programs (MF, residual, and incentives) change monthly. Look at the MBUSA website or even your local dealer's website at the fine print for the lease specials/offers. They both clearly state the acquisition fee as $795. Many dealers mark this up to $1095 so check your paperwork carefully. You can get out of a lease at any time by paying the payoff amount which you can get by logging into your MBFS account. However, that amount is usually higher than market value so generally makes sense to follow through to the end. MBFS often offers pull-ahead deals where they'll cover the last 3 or 5 payments if you go into another vehicle and the disposition fee also gets waived.

If you buy a new one then you can trade in your current car and (here in states) reduce your tax burden by the sale price less trade value...
Which if $25k value can be nice chunk of change with high tax rates.

Also with lease you have to watch the mileage so you do not go over else you pay penalty...
And in 3 years you have to get a new car.. again

so if you lease the next one it is never ending car payments...

I prefer to buy and keep car for many years and keep my money.
If the car is a crappy lemon then I can trade it in for another one without issues.

To each their own.

IF you have business then leasing can be attractive for tax reasons.

I never understood the argument about the miles being a negative against leasing. You're the one that picked your mileage allotment at the outset of your lease. If you normally purchase and over the past few years drove 15k miles per year, why would you sign a lease contract for only 10k? And then get upset about the charge for excess miles? I even had a friend that went over her miles, and went into another lease w/ the same mileage allowance. Mind boggling! The only time it makes sense to sign for less miles than you know you are going to use is if the program for the lower is so strong (residual inflated) that even w/ the excess mileage charge, you still pay less than if you got the amount you really needed. For example, a few years ago BMW's residual for 10k was a good bit higher than for 12k and they also let you buy miles at a discounted rate of .16 cent/mile if you did it before the lease was over. The .16/mile for 6k miles was less than the difference in payment for the 10k vs the 12k over the 36 months.