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Old 11-24-2014, 05:30 PM
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lease questions

Hey Guys,

I have three questions.

1. I know that for example they set the residual value of $51,909 after 3 years on the S with the starting price of $94,400. If you add say $40k worth of options do they automatically set the residual value higher?

2. On the W221 models where the residual values typically higher or lower than the market rate for the car after 3 years. (or very close)

3. I tend to notice with the used market of the s class the options don't seem to change the price much when dealers are CPOing them. Any reason for this?

Thanks!
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Old 11-24-2014, 05:45 PM
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Originally Posted by icebeam View Post
I tend to notice with the used market of the s class the options don't seem to change the price much when dealers are CPOing them. Any reason for this?
Correct, you get very little back for the $ spent on the used market unless you find the buyer who really wants your exact build (rare).

Most used car buyers are price conscious and don't necessarily need Magic Body Control and Night View, so if your S new is $30K more than stock, 3 years later on the used market you might get a $5k premium.
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Old 11-24-2014, 05:52 PM
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Originally Posted by jenz View Post
Correct, you get very little back for the $ spent on the used market unless you find the buyer who really wants your exact build (rare).

Most used car buyers are price conscious and don't necessarily need Magic Body Control and Night View, so if your S new is $30K more than stock, 3 years later on the used market you might get a $5k premium.
What a deal on the used buy. It's also tough though when going through auto trader to tell what the car has. You end up having to call and waste a lot of time.
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Old 11-24-2014, 06:49 PM
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Residual is based on msrp. So if you have $110k car with $16k in extras with a residual of 60%, the residual is $66k. They don't treat options at a different residual rate.
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Old 11-24-2014, 07:16 PM
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Originally Posted by emilner View Post
Residual is based on msrp. So if you have $110k car with $16k in extras with a residual of 60%, the residual is $66k. They don't treat options at a different residual rate.
I don't believe it is based upon MSRP. I think it is based upon capitalized lease cost which may or may not be MSRP.
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Old 11-24-2014, 07:57 PM
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Originally Posted by LovinMercedes View Post
I don't believe it is based upon MSRP. I think it is based upon capitalized lease cost which may or may not be MSRP.
It is based on msrp.

Msrp X residual % = residual

(Capitalized cost - residual)/term in months = monthly depreciation

(Capitalized cost + residual) X money factor = monthly finance cost

Monthly depreciation + monthly finance cost = lease payment (assuming taxes and fees paid out of pocket)

Let's say you have a 100k car sold for 95k with a 60% residual. 36 months MF = .0024

100k X .6 = 60k

95k - 60k = 35k/36 = 972.22

95k + 60k = 155k X .0024 = 372

972.22 + 372 = 1344 per month plus tax and fees.
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Old 11-24-2014, 09:30 PM
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Originally Posted by emilner View Post
It is based on msrp.

Msrp X residual % = residual

(Capitalized cost - residual)/term in months = monthly depreciation

(Capitalized cost + residual) X money factor = monthly finance cost

Monthly depreciation + monthly finance cost = lease payment (assuming taxes and fees paid out of pocket)

Let's say you have a 100k car sold for 95k with a 60% residual. 36 months MF = .0024

100k X .6 = 60k

95k - 60k = 35k/36 = 972.22

95k + 60k = 155k X .0024 = 372

972.22 + 372 = 1344 per month plus tax and fees.
I appreciate the clarification. I have always thought of it as coming from the capitalized lease cost but apparently that is not correct. Not sure where I got that from but also confirmed with the dealer that you are correct.

Again, sorry for the misinformation and thank you for pointing this out.
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Old 11-24-2014, 09:36 PM
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Originally Posted by icebeam View Post
What a deal on the used buy. It's also tough though when going through auto trader to tell what the car has. You end up having to call and waste a lot of time.
Having just gone through this trying to score a used E-Class w/Distronic Plus, it's not actually THAT difficult, but don't expect the dealers' websites to be helpful. Some will list options, others won't. Sometimes you'll even see the options you want listed, call up the dealership, have them SWEAR the car has it...then get them to send you photos and see the car obviously doesn't.

So... If you sign up for a FREE account for Mercedes' EPC (Electronic Parts Center), you can punch VIN#s in and get a build sheet. MUCH better than dealing with the dealerships.

Beware though: Well-optioned cars seem to be held onto for long periods of time, at least in my experience. 10+ months of trying to find an E w/Distronic and I ultimately said the heck with it and ordered a custom-build E350.
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Old 11-25-2014, 12:11 PM
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Originally Posted by emilner View Post
It is based on msrp.

Msrp X residual % = residual

(Capitalized cost - residual)/term in months = monthly depreciation

(Capitalized cost + residual) X money factor = monthly finance cost

Monthly depreciation + monthly finance cost = lease payment (assuming taxes and fees paid out of pocket)

Let's say you have a 100k car sold for 95k with a 60% residual. 36 months MF = .0024

100k X .6 = 60k

95k - 60k = 35k/36 = 972.22

95k + 60k = 155k X .0024 = 372

972.22 + 372 = 1344 per month plus tax and fees.
Thanks for explaining this. So basically you are paying 372 bucks interest. But how often is that monthly? Yearly? or the total for the lease.

Last edited by icebeam; 11-25-2014 at 12:30 PM.
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Old 11-25-2014, 12:23 PM
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Originally Posted by icebeam View Post
Thanks for explaining this. So basically you are paying 372 bucks intestest. But how often is that monthly? Yearly? or the total for the lease.
That is per month and in this particular scenario using a .0024 money factor. Money factors change all the time based on models/ monthly promotions...
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Old 11-25-2014, 12:48 PM
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Originally Posted by BeachBunny View Post
Having just gone through this trying to score a used E-Class w/Distronic Plus, it's not actually THAT difficult, but don't expect the dealers' websites to be helpful. Some will list options, others won't. Sometimes you'll even see the options you want listed, call up the dealership, have them SWEAR the car has it...then get them to send you photos and see the car obviously doesn't.

So... If you sign up for a FREE account for Mercedes' EPC (Electronic Parts Center), you can punch VIN#s in and get a build sheet. MUCH better than dealing with the dealerships.

Beware though: Well-optioned cars seem to be held onto for long periods of time, at least in my experience. 10+ months of trying to find an E w/Distronic and I ultimately said the heck with it and ordered a custom-build E350.
I got to play around with this. You have to give your credit card even though the account is free but once in I was so happy. I can't believe they let anyone use this tool. It's great I simply punch in a VIN click the car icon and it gives me a list of everything it has plus the color the car is.

Where can I find a list of every option number and what option that is. That way I could have a master list to compare cars to. Looking for a list for 2015 S550.

Last edited by icebeam; 11-25-2014 at 12:50 PM.
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Old 11-25-2014, 10:43 PM
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Originally Posted by BeachBunny View Post
Having just gone through this trying to score a used E-Class w/Distronic Plus, it's not actually THAT difficult, but don't expect the dealers' websites to be helpful. Some will list options, others won't. Sometimes you'll even see the options you want listed, call up the dealership, have them SWEAR the car has it...then get them to send you photos and see the car obviously doesn't.

So... If you sign up for a FREE account for Mercedes' EPC (Electronic Parts Center), you can punch VIN#s in and get a build sheet. MUCH better than dealing with the dealerships.

Beware though: Well-optioned cars seem to be held onto for long periods of time, at least in my experience. 10+ months of trying to find an E w/Distronic and I ultimately said the heck with it and ordered a custom-build E350.
tried to run MB EPC on my Macbook Pro, unfortunately it only runs on Windows
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Old 11-26-2014, 09:53 AM
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Originally Posted by Steinhart View Post
tried to run MB EPC on my Macbook Pro, unfortunately it only runs on Windows
Do you know how to install a windows VM?
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Old 11-26-2014, 10:24 AM
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Originally Posted by icebeam View Post
Do you know how to install a windows VM?
yes, good idea, used to run that, I'll reinstall, thanks
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Old 11-26-2014, 10:09 PM
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Originally Posted by emilner View Post
It is based on msrp.

Msrp X residual % = residual

(Capitalized cost - residual)/term in months = monthly depreciation

(Capitalized cost + residual) X money factor = monthly finance cost

Monthly depreciation + monthly finance cost = lease payment (assuming taxes and fees paid out of pocket)

Let's say you have a 100k car sold for 95k with a 60% residual. 36 months MF = .0024

100k X .6 = 60k

95k - 60k = 35k/36 = 972.22

95k + 60k = 155k X .0024 = 372

972.22 + 372 = 1344 per month plus tax and fees.
That's the clearest explanation of a lease payment I have seen. Thank you for taking the time to post this!
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Old 11-27-2014, 12:59 AM
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Originally Posted by WEBSRFR View Post
That's the clearest explanation of a lease payment I have seen. Thank you for taking the time to post this!
Thanks. Can't tell you how many finance guys I've sat in front of who freaked out because I calculated the payment before they could! The variables are the taxes and fees. The calcs work fast when you pay them out of pocket. Otherwise you have to adjust the cap cost to reflect what being rolled into the payment.
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Old 11-27-2014, 01:24 AM
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Originally Posted by emilner View Post
It is based on msrp.

Msrp X residual % = residual

(Capitalized cost - residual)/term in months = monthly depreciation

(Capitalized cost + residual) X money factor = monthly finance cost

Monthly depreciation + monthly finance cost = lease payment (assuming taxes and fees paid out of pocket)

Let's say you have a 100k car sold for 95k with a 60% residual. 36 months MF = .0024

100k X .6 = 60k

95k - 60k = 35k/36 = 972.22

95k + 60k = 155k X .0024 = 372

972.22 + 372 = 1344 per month plus tax and fees.
Why are you paying interest on the capitalized cost plus the residual?
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Old 11-27-2014, 07:15 AM
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Originally Posted by LovinMercedes View Post
Why are you paying interest on the capitalized cost plus the residual?
http://www.leaseguide.com/lease08/
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Old 11-27-2014, 09:28 AM
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Originally Posted by jenz View Post
I agree with the words in this explanation. I just don't understand how the formula is what the words say.

For example,it says that you are paying interest on both the depreciation and residual (total of which is the negotiated selling price of the car). I get this perfectly.

I understand the example of the residual in the formula, but I don't understand how the Net Cap Cost is the depreciation. That is where I am confused. Also it says you are not double counting. As I understand formula, the Net Capitalized Cost is what you paid for the entire car, and then there is the residual at the end of your lease period. How is this not double counting?

I understand the article says exactly what you are saying, I just don't understand how the words used to explain the formula, actually equate to the formula.

Last edited by LovinMercedes; 11-27-2014 at 09:54 AM.
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Old 12-09-2014, 03:45 PM
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Originally Posted by emilner View Post
It is based on msrp.

Msrp X residual % = residual

(Capitalized cost - residual)/term in months = monthly depreciation

(Capitalized cost + residual) X money factor = monthly finance cost

Monthly depreciation + monthly finance cost = lease payment (assuming taxes and fees paid out of pocket)

Let's say you have a 100k car sold for 95k with a 60% residual. 36 months MF = .0024

100k X .6 = 60k

95k - 60k = 35k/36 = 972.22

95k + 60k = 155k X .0024 = 372

972.22 + 372 = 1344 per month plus tax and fees.
We now know that the money factor today for the S class is .0013. If we were to put this money factor into the formula above, the monthly payment would go down by $170.50 to $1,173.72. For 36 months that is a savings of $6,138.

If the dealer were charging the .0024 for the 36 months and you paid that extra money over the 36 months, what does the dealer get at the beginning of a lease that represents the profit he is making from marking up the buy rate of .0013 to .0024. The lessee pays an extra $6,138 over 36 months but what does the dealer get.
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Old 12-09-2014, 04:46 PM
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Originally Posted by LovinMercedes View Post
We now know that the money factor today for the S class is .0013. If we were to put this money factor into the formula above, the monthly payment would go down by $170.50 to $1,173.72. For 36 months that is a savings of $6,138.

If the dealer were charging the .0024 for the 36 months and you paid that extra money over the 36 months, what does the dealer get at the beginning of a lease that represents the profit he is making from marking up the buy rate of .0013 to .0024. The lessee pays an extra $6,138 over 36 months but what does the dealer get.
From my understanding, the dealer gets the whole difference between Buy/sell rate as his profit margin. There maybe a small admin fee but that's about it.

If a dealer needs to move inventory fast, they will go as low as the buy rate.
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Old 12-09-2014, 04:48 PM
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Originally Posted by Wolfman View Post
From my understanding, the dealer gets the whole difference between Buy/sell rate as his profit margin. There maybe a small admin fee but that's about it.

If a dealer needs to move inventory fast, they will go as low as the buy rate.
Upfront, present valued?
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Old 12-09-2014, 05:05 PM
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Originally Posted by LovinMercedes View Post
Upfront, present valued?
Don't know, but upfront payment wouldn't make any sense for MBFS. Present value? Of course, the value determined at signing stands throughout the life of the lease.
Maybe it's handled as an annuity or is applied against payables.

Since it's hard to imagine that any dealer would share that info, this is just speculation on my end.
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