Purchase at Lease End or Buy a 2020 SL450?
 

The lease on my 2017 SL450 expires this December [2019], and I am now facing a dilemma -- do I purchase my vehicle for approximately $73,000 (including sales tax, etc.) at the end of the lease or do I order its 2020 model year replacement? Here are the pertinent facts: (1) I drive the car approximately 300 miles per month, so by December the odometer will show around 10,800 miles; (2) the car is in perfect condition, both in appearance and in performance -- it is the antithesis of a "lemon"; (3) I will be 73 in December; (4) if I were to get a 2020 version, it would be an exact copy in engine, paint color, interior and options (including Magic Sky and ABC); and (5) since I want a sporty two-seater hardtop convertible and cannot afford a Ferrari Portofino, there aren't any other options viable for me.

Usually when I have acquired a new vehicle, the major part of the inducement for its purchase has been its new features, enhanced performance, etc. In this case, the reason for its purchase would be solely to have a vehicle with three years' newer parts. On the cost side of the analysis, I can obtain a 48 month loan @$1,658/month; I'll own the 2017 outright in four years. Alternatively, I can lease the 2020 replacement for three years at around $1,600/month, but after three years, I'll have nothing (i.e., no equity) for all those payments.

My own sense is that, since I am very happy with my current SL450, I should simply purchase it at the end of its lease and refinance rather than lease a new one. Am I missing something?

73k is quite high for a buy out on an SL450, no?
I'd wait for the new 2021 model.

The last thing in the world I want is another four-seater soft-top convertible -- shades of the 1958 Thunderbird to me. As for the price being too high, upon its purchase I have to pay 8-1/4% sales tax, which is around $5,500, as well as the purchase price.

For me that scenario would be a 'no-brainer' decision....I would definitely just buy the current 2017 SL450!

I bought my 2015 550 at lease end. It was a bit over market but I didn't care. I decided I wanted an SL for the long term and wanted off the wheel, had rolled out of a 2013 SL previously. No regrets. If you like the car buy it.

I'll turn 72 this summer and purchased my 2017 SL550 CPO this past November; could not be more satisfied with the car. I have never enjoyed a vehicle this much in my entire life. Personally, I'd buy out the lease, with the knowledge you know every mile your current car has been driven. Sure it's a bit aggravating to pay over the current open market value but that is common on almost any lease. In four years, you'll own this car that you enjoy so much and you'll never even think about the price you paid to buy out the least.

Jonathan,

I'm in exactly the same situation as you, including the fact that I'm 73 years old, and my '17 SL450 is a leased car. I took delivery in May of 2017 and have exactly one year left on the 3 year lease. The car is perfect in almost every way. I replaced: the run-flats with some Michelin sport tires; added an amplifier for the rear speakers; added a Race Chip tuning module; and a few weeks ago had the car ceramic coated. I put on about 1000 miles a month, as I drive it throughout the year, except during rain or snow. My buyout, which is what I plan to do, is about $56,000. I couldn't be happier with the car, and intend it to perhaps be my last ride. Of course I'll probably sell my '68 Porsche, because I'm just getting tired of it, after owning it for the past 40-something years.

I would definitely consider the buyout if you love the car but DON'T treat the residual as your buyout price. This is a new sale. I doubt they will get 72 for it if they sell it so negotiate a price based on what the car is worth. The fact that MB gave you a high residual (in order to get a lower payment and sell the car) at the start should have nothing to do with this completely new transaction between you and the dealer. Decide on a price that it's worth to you, and offer them that.

Just my 2 cents.

Jake

When my wife’s 2016 E350 Sedan was coming to the 36 month lease end, I got the dealer to “CPO” the car. In effect, the dealer took it in as a lease return, gave it the big CPO inspection, serviced it, replaced two tires and a few incidental items and then sold it back to us, at a price several thousands less than the residual, and we got an additional year of warranty to boot! The dealer made money, we saved money, it was a win/win situation. You might look into it, if you decide to keep the car.

That is the exact way to go! We used to negotiate direct with MB but now the dealer is the middle man.

Have'nt done the math, but might it have been less expensive to have bought/financed the car instead of leasing and, then, buying at lease end?

Probably, but leasing gives one better options down the line. I leased mine. I doubt I will return it at lease end, but you never know. What if the new SL is just too good to resist? I doubt that it will be, but if it is, I’ll be ready to pounce.:D

well, I'm certainly in a different price range than you gentlemen that buy/lease new, but I've never seen the appeal of leasing. had I leased my wife's 2015 C300 (purchased with cash, new), I'd have been faced with a decision last year: buy it at the price they ask or turn it in, pay fees, and replace it. Instead, the 3rd (and 4th) anniversary of purchase passes without notice and we can keep, sell or trade....

If you can afford it (in the current market) it is generally always better to pay cash.

Your money in the bank is probably making a lot less interest than what they will charge you to finance a car.

Unless you are going to release equity from a good portfolio that is making more interest than you will pay the dealer it is a no brainer to pay cash.

My son always buys on a lease with a balloon payment - dealers give a good deal on the purchase price because they think they are going to make money on the finance - he then settles the car in full after a couple of months and only has to pay one month interest a penalty.

You like the vehicle, would just replace with a newer version; both IMO constitute reasons to negotiate the purchase process with the dealer. MB does not really want the car back, see diminishing sales numbers in this forum; so the value is to get it off the books. They should accept a lower price; and if you can do what SL suggests, get it rolled into a CPO, all the better with the warranty coverage. Good luck with the purchase!

When I turned in my 2015 last year, there was absolutely zero room to negotiate. The residual was over market value. Even though it got hit in an accident, it was a really rare color combo, Mars red with Titanium Pearl Designo leather. I might have bought it at the right price. It was properly repaired. MBFS was completely unmovable.

It turned up about 5 months later, after being passed around the wholesale auction circuit, at a local used car lot that specializes in higher-end cars. It was easy to spot, not many Mars Red SL400 - with dark interiors. I spotted it driving by. LOL, it was indeed, my old car. It was being advertized for $22k less than the residual. So you know the used car lot got a deal at auction. It also sat on that lot for months. No one wants an SL with an accident on the Car Fax. It had only about 800 miles more than I turned it in with, had never been sold since turn-in, according to Car Fax. The goofy car lot put "AMG" emblems all over it. Crooked too. LOL, I don't get it.

I do miss the SL though, a lot. Shopped them a lot prior to turn in, but they dropped Mars red, leaving only the Designo Cardinal, which I didn't care for. Also really hard to find one in anything other than black, silver/grey or white. Never have figured that out. It looks so awesome in Mars Red.

Bought a used 2011 911 Cabrio, which has also turned out to be a really great car. Very different than the SL, which I was really happy with.

Sadly, this is a numbers deal. If you can buy the same car, for less than the residual, then do it and turn yours in. I got a killer corporate deal on mine. My net out of pocket for the entire lease was minimal, even in light of the high residual. Or heck, you never know, your car may turn up in used inventory in a few weeks after turn in for a better price.

Great story, and I would have enjoyed it even more if you had bought the car back! Of the 8 MBs I've owned, I bought 6 of them at auction. When I found my SL the CarFax told me it was an auction car and I searched local auction records, unsuccessfully, to learn what it had sold for. It's incredible how much less MBFS will accept at auction than they try to charge lessee at lease end, and I have a theory as to why: the dealer and MBFS have a vested interest in keeping buyers/leasers of NEW MBs paying top dollar. I think dealers (and maybe some new MB buyers/leasers) look down their noses at secondary market buyers (like me). CPO cars not only retail for more money, but also keep customers at dealer service departments, the real profit center.....

I know it's a fundamental debate of buying vs leasing, new vs. used or CPO but there is not one solution for all as each of us have different priorities. Buying a car after lease end; the cars can typically be had for less than the posted lease residual but it requires a good dealer relationship. They ground the car and look at the internal purchase price (unknown to customer). If there is enough of a spread for them and you to make money, it's a deal. This could mean $5-$10k off the known residual.

Btw, I just looked at our old lease again. It wasn't a great deal because it was the first facelift custom-ordered SL and it was getting late into the summer (wife not being happy without a drop top) but even then the cost of having the car was less than $300 a month. This is the non-depreciation component of the lease. With zero risk on depreciation, this is crazy cheap! Price of a dinner :)

Not quite following your "less than $300 a month" calculation....Care to elaborate on that?

Duplication Error....Deleted!

Sure. I am disregarding registration, taxes, fees for simplicity...

A lease is mainly consists of two sections; 1. the cost of depreciation of the car and 2, the rent charge - this is the markup that you pay for actually using the car.
Unlike a purchase, the depreciation of the car is decided upon by the manufacturer. They will tell you how much the car is worth after a defined time/mileage period. Example: 3 years at 15k miles equals 56% residual value. Depreciation is 44%.

So even if the lease interest would be free, a $100k car would cost $44k over 3 years.
Now comes the rent charge; this equals the interest (Money Factor). This is the $300 I mentioned (actually $281 in our example)

What most people don't understand in a purchase, wether new or used, is that you will not know the depreciation of the car until you sell it or trade it. Most just think about the discounted selling price and interest rate and that is how they rate "the deal"
In most cases, the purchase depreciation is dramatically higher (even on CPO vehicles) than a lease vehicle, so even a cash purchase without financing may end up to be a higher cost for the duration.

My SL was the only car I've ever leased. I don't regret it. Like I said, it was under a corporate partner discount. I signed my name and drove out with it, paying only some initial fees for registration. Had I bought it for cash (and I would never lease a car that I could not do so) and rode out the risk, I'd have taken a much, much bigger hit on the value at 3yrs due to being rear ended. I had it repaired as nicely as possible by a great shop. Pretty hard hit too.

I'd probably have leased or bought another, had Mars red or similar been available. No idea why they all seem to black, grey/silver or white.

I still don't get it. You calculate that the car "cost" you $281/mo because the other $1222/mo was, what, inevitable? My last car was my 2009 CLK550, bought 4 years old for $24,520. I sold it almost 6 years later for $9900; THAT was about $225/mo....

Absolutely, depreciation is inevitable and most leases have higher residuals than ACV. On a luxury car for sure. Guess how much a 3 year old SL550 with 45k miles today goes for today? $70k?

I don't know the new price of the CLK but at 4 years the owner likely took a bigger bath then if leased. I assume low sixties new? After 4 years the cars depreciation was more than 60%. You had it for another 6 years where it lost another 60%. If the first owner leased the car, he would have paid less than taking the hit at 4 years...

And as Nutktopia points out, even the smallest record on CarFax/AutoCheck you might as well take out another 20-30% in value. On a lease, who cares. Ordered a car with an unpopular color but you loved it? Zero impact...

That $300 per month number you threw out there seem like nothing but 'voodoo math' to me!

Obviously, the cost to drive a new SL includes all aspects of the acquisition, not just the 'rent charge' or 'money factor' you have suggested above. You can't simply ignore the built-in depreciation cost when calculating the actual costs to buy/own the car.

In reality, nobody ever gets by paying just $300/month as you suggested. That's ludicrous. Depreciation is a 'real cost' that is passed along to the Buyer. Luxury cars like the SL, have very rapid rates of depreciation which of course, is very well-recognized by the MB Dealers. As you pointed out, the Dealer sets the depreciation costs the Buyer must pay at the start of the lease.