brabus benz

Not following you Dave. Every bank in the world could go under and capital markets could implode and nothing would change with that lien on your vehicle. You would still owe that monthly payment even if the financial institution that lent you the money went under. And you would still get the pink slip once you've paid off your loan regardless of what happens to the world's financial markets. If my mortgage lender goes under, that doesn't mean I lose the title to my house nor does it mean I'm absolved of my mortgage payments. My situation is exactly the same.

Now if you were lending money that would be a different scenario, but the scene that you're imagining is absolutely not possible.

And I agree with you about protecting yourself, but you're looking at it the wrong way. You protect yourself against catastrophe by having cash in hand; that's exactly why I'd rather have $100k cash with me rather than tied up in two tons of steel. That goes for any emergency, not just a financial crisis. I could get accused of murder tomorrow and need to pay a $100k retainer for a good lawyer. Or my customers don't pay their invoices on time and I need to lend my company cash to meet payroll. Or I could come across a great deal on a business opportunity or a foreclosure or what have you and I need to close quickly and efficiently. Cash is your best friend in any of these situations. Yes these situations may be rare, but they're no more rare than the next Great Depression you're protecting yourself against.

MuffinFlavored

If you don't mind me asking, how old are some of you guys and what is your net worth/income?

I'm very young and not quite that rich yet and am highly attracted to cars of this caliber.

I'm assuming a $100k car isn't your entire life savings, but I don't clearly understand just how little of an investment this is for you guys.

Why are multiple security deposits not being mentioned here?

My money factor on my Lexus lease is .00001 for what it is worth.

C400Driver

If you don't understand now... You will never young lad... One dollar might not be anything to you... But the world to someone else... Now scale that sum and apply that to high net worth individuals... Most Automobiles are a depreciating asset not an investment (rare/hyper cars are the exception to this rule).. So when someone purchases a car at this price point... You have to assume they have their finances in order in most cases... Lol...PS it is rude to ask someone how much income they generate...

MuffinFlavored

How high of net worth are we talking? That's all I'm really wondering. Is $100k/year salary S-class material or not typically?

There has to be a common trend at least in the numbers. I want to see where the bottom really is, so I can aim for there at least!

C400Driver

I believe the purchase price of a car should be between 20 - 50 percent of your annual income... Correct me guys if I'm wrong... So since the s class base price is in the mid ninties you should make at a minimum 200k annually

MuffinFlavored

Would the numbers be lower for a person closer to retirement age? For example an old man who made $75k his entire life takes out a $100k chunk of his $700k retirement money or so and buys an S-class cash as a bucket list kind of craving.

C400Driver

I mean you could... Is it wise to spend 100k cash on a depreciating asset?...no.... That 100k could be earning interest somewhere else...especially if you only have 700k to live off till you die..lol...you could always lease to make the numbers work

MTrauman

In the order guide for the 2014 S Class, MB listed demographics of S Class owners as:


61 years old
$371,000 year income (in US $)
76% male
83% married
28% with kids in household

MuffinFlavored

Is it safe to say that every 2013+ S-Class I see on the road belongs to a driver that is in the top 1% of salary brackets then?

MuffinFlavored

I guess I knew that all along it was unwise to acquire an asset that depreciates at least $1k/month whether you lease it, finance it, or buy it used. I just wanted to know when it starts to make at least enough sense to actually do it.

I honestly don't believe that any of the S-classes I see belong to anybody who makes more than $150k/year. I see them all over the place. How common is a $200k+ salary yearly?

TomS

To state the obvious, $371K is average. For every $700K earner, there is a $100K earner at least statistically. That average just means for those that make at least the average, it confirms they have arrived. Of course, if you make below the average, well then the numbers are suspect. Or you lease! Just kidding. I couldn't resist.

I have a simple test for affordability. If you do not have to change a single thing about your life because you have a car payment, then you can afford it. If you find yourself juggling bills to pay your $2000 payment, then you have too much car. Obviously, any of us that own an S550 are transactors in that we carry no debt other than maybe mortgages and cars. I could not imagine someone owning an S550 and carrying a credit card balance for example.

MuffinFlavored

I am actually kind of relieved you made that joke. I haven't been around enough wealthy people to understand what influence you are trying to reference.

People who shouldn't lease S-classes still lease them? They aren't caught by some sort of trap along the lines of the journey from a 3-series to an E-class?

What if somebody making $40k/year has no mortgage/rent payment? They could swing a $1.5k car payment. Pretty stupidly, but also pretty easily.

5634MG

My take would be a lease. To be fair, it makes no sense taking on the depreciation of the car 3 years later. If you own a company, lease the car as a company car and write off the payments as an expense. Take a S63 for example, 156k base, 5.9% over 36 months with 50% residual, 18k km a year, with zero down, your payments would be approximately 2800 a month. That would equal to 100800 over 36 months. With corporate income tax rates at 26% in BC, the car will essentially have only cost you 74.5k over the three years - a great deal in my opinion. Charge your monthly payments to your amex and rake in points and you've gotten yourself even better value. There's no way that they would purchase 3 year old S63 with over 50k km for 81.5k off of you, at least here in BC that is. My dealer usually throws in free maintenance over the duration of the lease as well so none of those expenses come into play.

shortspark

I don't think you can read too much into a person's financial situation by what they drive, at least not until you get to the super cars, and even then it varies considerably. No more than you can ascertain with any degree of certainty their motive for purchasing such a car. I would venture to say that most S class owners lease and most of those are business related where a lease makes even more sense.

Currently, I own an ML350 but am considering an S class for 2016 when the ML's warranty runs out. A "typical" Mercedes owner seems to be like me in some ways and some ways much different. I was fortunate to retire shortly after my 46th birthday (I will soon be 66). I bought a house (cash) on a golf course, have no wife, no children or heirs to speak of and have not owed a dime to anyone since well before the day I retired. Credit cards are paid off immediately as a matter of honor more than necessity or common sense. Most of my investments are (and have been for years) stock related with only a quarter of my net assets in cash (yes, even at my age because that is all I would require to live out my life). I dabbled in real estate investments early on in life but no more. Not very exciting I admit but that is the extent of it.

The bottom line is I can't spend all my money and end up donating freely to causes close to my heart. I am not cheap by any means but neither am I excessive or extravagant because I remember the hard times when my parents came to this country from Italy after WWII. We only had one bedroom for our family and we struggled for years renting with two other families a small house in NY. Ten years later we moved to our first real home and you would think we struck gold, an indeed we did! You remember that kind of experience no matter how well and lucky your own life turns out. Do I now consider myself wealthy? Of course, but only when compared to how I grew up - that is the only point of reference that has any real meaning to me in that regard. Everything else is superficial. To those naive enough to think true "wealth" should be compared in terms to others, well, to a man living in a box under a city bridge I suppose I am "wealthy". To a man like Perot, Gates or Forbes, I am mere pocket change. When compared to others "wealth" really is all relative, isn't it? It becomes truly meaningful only when you compare your own situation with your past and what you have achieved in your own life, not in comparison to what others have achieved.

I fall into that fairly small percentage of people who won't fool with leases not because it does not make sense from a strictly financial sense (it might, it might not depending on how the figures fall and other collateral factors) but because of the lessons learned in life and what those lessons taught. Simply put, I was taught you work hard and save until you have enough to buy what you want - and that it is far better not to owe than it is to owe, at least as a general rule and real estate notwithstanding.

Financial advisers will cringe at these notions because of a mind set that says you can do more with your money investing with them. Again, maybe, maybe not. Nonetheless, most people would be far better off if they would adhere to that general rule.

DaveVY

If someone has had the financial discipline to get to the place of having no housing payment with only $40k a year (and is not living off someone else) that mentality would never spend this type of money on a car unless everything else is financially prepared (retirement, family cared for, etc) - spending this type of money on a car with that $40k income would be foolish IMO.

IMO you need to be in a place where you won't miss the money, where it won't have a material impact on you.

AppleFan1

Shortspark, I love your post and I agree with everything you stated. When I think of where I was as a young lad and where I am now, it is like night and day. I was not fortunate enough to be able to retire at a relatively young age as you did, but I agree with your philosophy.

AppleFan1

Tom, you hit the nail on the head in that paragraph.

MuffinFlavored

5.9% is the money factor of the lease? Can you do multiple security deposits on a car like this?

What would $2,800 a month equate to in American Express points? What value would that translate to?

> There's no way that they would purchase 3 year old S63 with over 50k km for 81.5k off of you

I don't understand that part. Who is they? The dealer? The dealer won't buy the car from you for the residual value agreed upon at the beginning of the lease?

MuffinFlavored

Ok. That's a very well-thought out response. Thank you very much.

Where does the situation change though? Somebody on $40k needs to be frugal and would miss such a huge chunk of their income on a $2k/month car payment.

What about $75k? Is it more feasible then?

DaveVY

Where does it become more feasible? I think TomS said it very well...

5634MG

Sorry I wasn't clear. What I meant was that had I purchased instead of leased, there would be no way that I could be able to trade in an S63 with 54k km to the dealer for over 81k.

Regarding to your first question, yes you can do multiple payments at once, you can pay off your entire lease at the beginning and you do get some incentives. I'd rather pay monthly as it balances the monthly payroll better.

Also, by charging it to amex or other charge/credit cards, I can basically redeem a free first class ticket from Vancouver to Hong Kong and business class ticket back at the end of the lease, another 8k in savings right there.

All in all, if my plan is to have that car with the idea of upgrading/replacing after 2 or 3 years, why should I spend more than I have to?

MuffinFlavored

TomS may have said it well, but look what DaveVY said:

It doesn't necessarily apply to all situations in which it is possible.

If there is no statistical, concrete answer, where does the happy median lay in your opinion?

schuk

I see where you coming from: no wife, no kids, no bills, living in an apartment/parents basement ? I`d say $40K way to low; $75-90K - sure, if you really want it, go for it and enjoy. However, once you marry forget about your expensive toys until your next big promotion.
I`m making a little over $200K (for right now) but reading some of the threads on this forum sometimes start feeling myself very poor I know I can afford new S but sometimes feel on a fence when realizing this is the stupidest expenditure. I realize that my emotions played a big part in owning an S-Class.
Where my wife likes shopping therapies, I call it "S-Class therapy".

nyca

It depends on what part of the country you live in. NY, DC, LA, SF/Silicon Valley - its very common.

MuffinFlavored

Without making this too personally focused towards you and without derailing this thread to an area it should never venture out to, do you mind if I ask you a few questions?

For how long have you been making $200k? What were you making before? Do you feel extremely lucky to be making that kind of money?

Last but not least and almost most importantly, could you please give me a rough draft of how your expenses at $200k income would leave you with anything *less* than *at least* $100k discretionary income yearly?