freakinfreak

My sister was in the market for a CLK500 cabrio (MSRP $67,200), but the lease payment is $940/mo (Tax included). Am I wrong in thinking the payment on a base SL500 would be not too far off that? If you could post your lease deal on your SL, that would be appreciated. Thanks!

LAMAY123

If you think $500 is not big of a difference, than u r not too far.

My monthly lease is $1599. The MSRP of my SL500 is about $98,900

SLfanDC

If you go to the mbusa.com website and build your own SL500, it also allows you to explore financing options. It looks like a 36 month lease, with 12,000 miles annually and a 10% down payment is going to be about $1500 as LAMAY123 said. You can reduce the monthly payment if you make a larger down payment, but that's not something that is typically suggested on a lease.

You might also check out the "balloon" type loans offered by MB Credit. I purchased a 2004 SL500 for $97K, and the monthly payment is $1300.

AirBenz919

Last time we checked a 2004 SL500 with Sport and Comfort with 12K miles, and $10K down comes close to $1400.

tiggerfink

Those lease payments seem high. I am financing 100K for 5 years and my monthly payment is $1,821.62. My rate is 3.4%. Go to www.bankrate.com to get great interest rates.

pilot20

I'm simply amazed that people go into debt to the tune of 100K for 5 years in order to buy a car.

SLfanDC

As the saying goes "to each his own"

tiggerfink

I was just pointing out to the folks here that they should look at www.bankrate.com to see if they can get better financing. Some folks here just can not put out 100K cash for a car. If they did they would get a lecture from their financial adviser. I got one when I decided to pay off my house. Yes, paying off you house before you pay off your car is a bad ideal, but the interest on my house was not enough to be a tax write off. Look at the numbers below and then decide which way is better for you. I have an excel sheet that will calculate the monthly interest, payments, and length of the loan by adding extra to your payments. If you want it just PM me.


Loan 100K 36 month lease...........60 month loan
down payment ............10,000...............0
Monthly payment............1,400..............1,821.62
36 months of payments..50,400............65,578.32
36 months + down.........60,400............65,578.32

At the end of a 36 month lease, the person with the loan would pay about 5,178.32 more than the person with the lease. But the person with the loan would be able to recover the 5,178.32 and get more if they decide to sell the car at the end of 36 months. On a lease, you would have to give back the car or refinance the remaining balance in the contract.


Also by paying an extra 20,000 in the first two years of the loan, you can reduce your loan to about a little more than 3 years.

Talos

Sure, but the person with the loan would be making payments of $1800+ per month for SIXTY months, while the person with the lease would be making payments of $1400 per month for THIRTY-SIX months. That's an extra $400 per month for an extra two years, which is significant. If you want to compare apples to apples, compare someone with a 60-month loan + resale value of the vehicle to someone with a 60-month lease.

tiggerfink

I forgot sales tax on the lease at 7%. Since I did my sale tax on the purchase at 7%. In my state you pay 7% tax for the entire value of the sales price. In the past, we used to pay 7% for the first 1,600 and 2% for the balance. Do not get a loan at your dealer or bank, unless you check with bankrate.com. You could get 1% to 3% better than the dealer's best rates at www.bankrate.com with no extra service fees.

Loan 100K 36 month lease...........60 month loan
down payment ............10,000...............0
Monthly payment............1,498..............1,821.62
36 months of payments..53,928............65,578.32
36 months + down.........63,928............65,578.32
resale value at 36 months $51,000

I would believe folks would pay an extra 200 a month than a $10,000 down payment.

A 60 month loan would be ahead of a 60 month lease by $19,000.

Talos

Ahead?

thedeveloper

hi guys,
every once in a while i feel compelled to talk to individuals regarding their respective financial matters because i like to see people reach their financial potentials and goals they seek in life. this is especially true to bright motivated individuals who work for me, so here's my $0.02. trust me it is the right advice...
ok buying or leasing cars.. the answer is never lease unless your capable of taking a deduction towards cost of runing your business or the net operating income of an investment. as we all know there are good cars on the market from 10k to 10million. always buy cash and the best your money can buy. i was not always in good fortunes to buy nice cars but i do remember buying my first mercedes for 7500. it felt and feels great not having a car payment, and for those of you out there in similiar situations you know what im talking about. i am not being critical of people who take out monstrous loans for 100k, 200k cars, but if you did the research you would find that most buyers of cars in that category typically never take a loan. the loan/lease payment is relative to what you make and if it is anywhere near 8-10% of your net monthly take home, well its monstrous in my humble opinion.
further research from friends in the lending business have brought up the fact that the median annual income for people who do decide to burrow against cars over $100k hover over $440k and fall in the less than 5% of all car loans paid out.
the point is if you can afford to lease a $1500 for a sl, well buy a convertible half the value, enjoy it and put the rest of what you would have paid into t-bills or annuities. you'll appreciate that after the ridiculous lease term and all penalties associated with it you would have enough to buy a ferrari when it was over !

Brav

actually, not quite right. you have to compare equal time periods, and total costs over same time, assuming equal actions at the end of that time period.. in this case, turning the car back in, regardless of lease or buy. and yes, sales tax was not mentioned as an up front cost on the purchase option.

MB leases are terrible, as they have higher residuals (good for payment, bad for buyout), which any savings is ofset by a very high (relative) money factor. So in the end your "payoff" on the lease is higher, while you could have had the same monthly payment with a lower residual, and lower moneyfactor (like most other cars). Its a tossup, and would really depend on your goals, how long youre keeping it, and current car-financing market. Also, when you get a discount on the price of a leased car, it has a more dramatic effect on monthly payment than no a purchase.

Brav

I would have to advise against paying cash for a car unless you were going to keep it for a long time, or you are just that filthy rich and its convenient. But most of us aren't making mid-upper 6-figs. I personally think its foolish to own a depreciating asset outright, and have talked to many people about it. A co-worker (founder of our bank) has several million liquid, and he still leases his cars. Given he gets a new one every 3 years and doesnt like keeping them, he's found it still makes sense given his scenario. Obviously many variables, one being on specific financing terms available, and what kind of discount you can get on the car itself.

Juice it

I think its foolish to pay cash for an expensive car. If you have the cash to pay for the car, there are plenty of places you could put that money to work for you rather than sinking it into a depreciating asset.

pilot20

Lets cut through the crap. There are two reasons to lease a car: one is if you want a new car every 2 or 3 years, drive relatively few miles and can deduct the lease payments as a business expense. These are the "wealthy" people who lease.

Most people who lease, however, do so because they can't afford to buy them outright. Your monthly cost is less (although your ultimate cost is more) if you lease.

You will be ahead by quite a bit of money by paying cash for your cars. Sure you could theoretically invest the money and the difference bewteen your (taxable) return and the lease rate would yield you a net profit but for most people no way. Not with the way the stock market has been over the past 3-4 years. And anyway who has every last dime invested and no liquid assets in short term instruments that can be tapped to pay cash for your vehicle?

In my opinion if you lease a car BECAUSE you can't afford to buy it then you are spending your money foolishly and living beyond your means.

By, hey, that's your problem.

Chris 45971

As one of the previous posters said "to each his own". However, I must say that I disagree with the "sinking your money into better things" statement from an enjoyment standpoint. Sure, there are better places to put your money if are looking to invest it; but I believe that many people including myself pay cash for the car for the satisfaction of owning it and the enjoyment of driving it.

For those that are seriously in the market for this car I ask, what are you saving for? If you already have hundreds of thousands or millions of dollars, why wait until you are 60 years old to buy the car (you can probably buy 4 or 5 at that time) and then constantly say to yourself "I wish I had this car when I was 25"? I believe that money should be spent for enjoyment in ones life. After all, we only live once (I think). Whether it be cars, houses, vacations, stip clubs, whatever. Why save so much money so that when you are 60 you can have or do whatever you want times 10. If you are in the market to pay for a car like the SL, you are likely to have anything that you will ever want providing you don't spend reclessly.

This is just the way I feel. For me, this is "right" and nobody can tell me differently. Whatever you think for yourselves is "right too" just the same. Just my opinion

Brav

you can't put a price on happiness, I guess. It really depends a lot on options. Options you have for investment, options you have for financing the car, and options you have for leasing. These can obviously vary to a great degree. When rates are so low, its tough to say. If I could comfortably write a check for a 100K car and not feel guilty, I'd probably do it. Just to have that satisfactoin, like I think Chris is talking about. Personally I'm not very close to that situation, hopefully one day. For now, I'll concentrate on the best use of my funds (real estate investment mentality) and the return thereof. I like getting a new car every 2-3 years (more like 1 year, historicaly), so it wouldnt make sense to finance or pay cash as you will be paying sales tax up front everytime, and with financing, paying about 50% more in payment; my E w/67K sticker is 800/mo incl tax, or 1257/mo financed. So I would have paid 457 x 36 = $16,452 more over the term. Residual on lease is about 40K and after 3 years i would have paid down the car to about 35K. So net difference is about 11,500. In my case it was obvious what to do, but each situation will vary. Also I incorporated, so lease is a write off.

thedeveloper

i think you hit the nail on the head with "In my opinion if you lease a car BECAUSE you can't afford to buy it then you are spending your money foolishly and living beyond your means."

tiggerfink

Paying out right for a car, leasing, and getting a loan depends on what you want to do with your money. My financial adviser talk me out of paying out right for a car because I can make about 10% to 12% on other funds. I was able to get a 5 year loan on the same interest rate of a 36 month loan. So the total interest is about $8K for the 5 years. I am able to get a little over $10K a year on a $100K investment. So the extra money that I made was put into my car loan to reduce it to little over 3 years in just 5 months of getting my loan. That saves me about $3K of interest. My finical adviser was pist, but he will get over it.

We did the math and determined that if I own the car for 6 years, I would be ahead about $19K over two consecutive 3 year leases. If I sold the car in 6 years, I would be more ahead. Those are very conservative numbers.

I have a friend that leases and he feels that cars do not last over 3 years. He invests his money in other areas. My other friend thinks he is crazy for leasing. Leasing and loans are all about the time value of money. The question is, can you make more money than paying for a car out right. In my case, I was able to make more than the total car interest in 1 year with the $100K.

pilot20

Lets see now: You make 10% on your money then pay 40% in taxes which leaves you with a net return of 6% and then you pay a nondeducible 8% interest on your loan leaving you 2% in the hole.

Time for a new accountant.

tiggerfink

I made that since April 2004. I have 4 more years left to make money on my investments. My my car interest rate is 3.4% not 8%. I am making about 10% per year on my investments. So pilot20 redo your numbers and you will see I have a good deal.

pilot20

If the point is that you are ahead financially IF your (after tax investments) have a greater yield than the interest you are paying on a loan then, of course, its a no brainer. Most people, however, are not making an annualized (12/5)*10 = 24% return on their money like you are.

I used 8% interest as an approximate number. As I always pay cash for my cars I really wouldn't know what the going interest rate is exactly. Offhand 3-4% seems like a very good deal.

At a 3.4% interest rate and a 40% tax bracket you would have to have at least 3.4/0.6 = 5.7% return on your money just to break even. I'm not getting that in CDs or even mutual funds nowadays.

Quite apart from financial considerations I feel better not carrying any debt. YMMV.

pilot20

Lets think about this a little more. People who claim that they can get a bigger return on their investment than what they pay in a car loan are implying that they are always fully invested. They have no liquid assets (earning little if any return) that can be tapped to purchase the car.

I find this hard to believe.

sarb

Another option for leasing is if you have the money to make your lease payment big as possible thus a write off through your business if you have one and cash in on the residual value after you sell the car.

Idea is this a regular lease on a sl500 maybe about 1300 per month. Switch it to 2300 per month for three years instead. With the residual buy out at 30% instead of the expected 58%. This would mean, I would at the end of my lease buy the car for personal use at $30000 out right, the ramaining value on the car from the lease. The cars value will be about $55000 or so.

So what you have done is wrote off a bigger amount for the term of the lease if you need the write offs, then post lease sold the car pocketing 25000 or more. Since this a personal sale, cash is tax free.

Just a thought.

It is working well with me.

SARB