tyrese

Which is a better deal?

Financing: 1.9% for 24-36months, 2.9% up to 66months.

Leasing: On MBUSA website $1089/mo for 48months; $6883 due at signing, with $39,188 purchase option at lease end.

Can anyone here give me some opinions? Thanks.

erichen

what car is that for?

tyrese

Personal use, not business related. Wont be driving a lot of miles on it either.

erichen

I mean, what car model are you referring to for the lease? I am assuming a new SL 550?

erichen

and prices include taxes? in CA the taxes for Lic and Sales are totally almost 11-12% in LA county... Then there is the destination charge... So your monthly likely will be closer to $1200, and that down payment will be more that that too... but, if you are getting an 09 model from the dealer's lot, you can get a much better deal because the "sale price" will be negotiated down quite a bit form the sticker with the MB website use to calculate these numbers. Use internet quote to get bids from your surrounding dealers. They will compete for your business.

tyrese

Yes. A new 2009 SL550. I am trying to figure out if it is better to lease or finance, given current MB offers. I was told that dealers are getting $5K from MB to get people into leases and they will give a larger discount off MSRP. But if I purchase the car, I am able to write off part of the sales tax off my 2009 tax returns. So many variables to it, which is why I am wondering which is the better route to take.

erichen

calculate out your cost basis over the terms of the lease (add all the monthlies incluidng taxes to the down payment) and compare that to monthly payments you will make over the same period of time (48months) + any downpayments, then subtract from (Residual value - any left over owed loan), this would be your cost over the same 48months, and subtract the tax benefit of the sales tax reduction. However, if you have a business, you may be able to dedut part of your lease too.
If you are able to deduct for business, lease is the way to go. The residual value is usually over the market value at the time of the lease termination. I negotiated $6000 off my lease end purchase price. I think with the economy the way it is, the negotiation room is even higher now. And also, the purchase price they use for the lease will be a lot lower but the residual value they use to calculate lease payments usually will still be based off the same percentage of the original MSRP. So, your payments for leases will be less than if you bought at full MSRP (makes sense.) If you are planning on keeping for a long time and you have no business expense/deduction, then purchase at low APR is generally a better option, especially if you can get a really good price.
hope I am not blabbing..

tyrese

You're not blabbing. Thanks for all the advice you have given. I will talk to them and do the math.
Essentially, if I lease for a few years and then purchase the vehicle at the end of it, there's pretty much no difference from having it financed from the very beginning, correct? I just need to see which numbers are better for me?

erichen

well, if you are planning on purchasing it, add up all the cost of the lease payments and then add the residual, compare that to the purchase payments + downpay, then subtract all the tax benefits for both and compare. Do you know what the money factor is for your lease? convert that to APR (I think by multiplying by 2400) and you can see how much interest they are charging you.
Good luck!

tyrese

I dont know what the money factor is for the lease. I just started talking to a dealer about one today. Without any negotiation, I was offered a $106.6K MSRP vehicle for $1296/mo for 36months with a $53.6K residual. All figures are before tax. If my math is correct, thats little over $100K in payments for the vehicle if I decide to buy the vehicle at the end of lease. I believe he said the capitalized cost was $96K or so, after the $5K being offered to the dealer from MB. I am sure he has room to negotiate, but $4K in interest over 3 years doesn't sound too bad to start.

teeth

There's also the intangible of leasing: value protection. In my case, I love the idea of having the option to give back or purchase the car at the end. I understand that the way leasing interest is calculated results in higher costs than buying. But this is not an apples to apples comparison. In my business, it's an unknown where we will be in 4 years. I like the peace of mind of knowing I get to hit the reset button, and move up market or down, every few years.

erichen

So what's his purchase price? and your down payment or cap reduction payment? I agree that lease gives you a way out. Another thing is that god forbid you get into an accident and the car sustains frame damage but is not enough to get totaled, you end up with a severe dimishment of value if you want to resale. It happend to my wife's E550. If it was a lease, you get the car back from repairs, at the end of the lease, you give back to bank and you are done, the bank takes the hit on the now much less valuable car. For the same lease payments, you might consider purchasing a used 07 SL. less hit on the pocket but get essentially the same car for a lot less.
I think if you can get 15-20K off MSRP, it's a good deal. Negotiate the buy price first, then work the lease off that number.

tyrese

Purchase price was $96K, zero down in that example. I think I can get at least $12-15K off MSRP under a lease.

RJC

That is not a good lease...MBUSA had a very similar payment/terms for only 36 mos a few months back...the 09's will be a full 2 model years old in the spring since there are no 2010's...MB has really gotta step it up to move the remaining 09's...wait until Decemebr if you can when the trunk money will be plentiful.

tyrese

RJC, thanks for the heads up. I do think that as winter rolls around, the cars might get even cheaper. I am in no hurry and can wait for a great deal.

tyrese

I just received another quote($107,885 MSRP, sales tax(9.5%) included in numbers this time):

On a 36 month lease your payment including tax will be $1,417.77 with a selling price of $97,141.00 and a residual of $54,358.00.
On a 60 month finance at 2.9% with zero down with a selling price of $102,141.00 your payment would be $2,027.33.

I am pretty sure I can negotiate a better deal than what has been quoted, but based on the numbers above, which looks better so far? The lease or the finance deal?

erichen

both expensive... comes down to how much you will enjoy the car. If you love it, it's all worth it. If you are bothered by residual values... do the lease. If you are keeping the car for >5 years, finance and buy. For these types of cars, no numbers will make financial sense! Nissans and Hyundai's make more sense. If you like it, just go for it. I have spent enough money on my SL to probably lease another one. But, it's like an addiction... just keep doing more and more stuff to it... I think you need to decide if you want to keep it or just drive it for a few years then make up your mind. Then, work on that purchase price. Where do you live? If you are around a big metro area like L.A., there are lots of dealers willing to make a deal. Good luck!

tyrese

I am in San Francisco, so have quite a few dealers willing to make a deal. I do realize that it's a luxury and it will cost me $. For now, I told a few dealers locally that whoever can get me a Black/Diamond White with Ash/Designo Porcelain/Stone at $15K off MSRP on a 2.9% finance deal gets my business. So far, once has offered $13.5K off, but its not a color I want. I figure that if I decide to choose the lease route, I can get part of the $5K trunk money being offered to the dealer from MB, so that would get me to almost $20K off MSRP.
On a side note, I think Black/Ash is my favorite color combo, besides Black/Designo Porcelain(big extra $ premium). Don't see too many Black/Ash cars up here. Mostly stone interiors.

erichen

sounds pretty good so far. Only advice left... I have one regret about my SL purchase in 2003... I should have bit the bullet and gotten the SL55... the SL500 is underpowered... the 550 is much nicer but still... if you like power... this may be one area where you might be left "unsatisfied!" Good luck! You will love the car though! It's still, I believe, the best looking hard top convertible roadster out there...

tyrese

I've thought about it. The SL63s are being offered with big discounts off MSRP. But financing and leasing rates for the SL63 are quite a bit more, so I will stick to the SL550.

boylston

Herb Chambers, Boston, has a preowned 2007 Mystic white designo for $64,500, 13,000 miles.

http://www.herbchambers.com/ou/somer...SL-Class/M5015

tyrese

That's a nice looking car, but I am probably going to get a new vehicle. I do like the designo porcelain interior. I bet it can be difficult to keep clean, though.