E55Tuner

I am totally new to the German car world. I have driven 6 cars in the past of which were all Toyota/Lexus, OR Honda/Acura. 95' Prelude, 01' IS300, 03' TL Type S, 04' Scion xB (Work car), 03' NSX, and currently 05' IS300 again...

I originally wanted to get into a 01-03 M5 OR new S4 but after one test drive of an E55, immediately I was sold...

The power on this car is totally raw, like a muscle car, german, and very strong. Really snaps your head back.. I had installed a Turbo Kit on my current IS300 (only 7psi) taking the 215hp engine up to about 350hp. It was fun for a while but then I thought I should try something different. So later today, I will be taking delivery of a new 06' E55 Black/Black...

I was totally upset I missed the lease special last month $999/month. However, I shopped around for a few weeks and this is the final deal I am getting:

06 E55 (black on black, wanted a white one but could not find any)
Premium Package
Lighting Package
Electronic Trunk Closer
(This car does not have keyless Go, or Parktronic, or a panorama sunroof)

Total Drive off: $5500
Term: 36 Months
Monthly Lease payment: $1298 including tax

What do you guys think?

Is this a good deal or just average?

Please give me your honest professional opinions. I will be taking delivery later today, I would love some input from some real pros.

After I take delivery, and get used to the car, I would love to talk about some mods.. but first comes the pricing, good, average, or not good.

Thanks in advance for all the help.

blazinginder

i would say its an average deal because back when E55's were selling for MSRP or near that...it was round 1400 a month...but with big discounts on them now etc I'd expect it to be around 1000-1100...if you can squeeze them down to 1200 flat that'd be a decent deal

RJC

Not a good deal especially with the all new 07 right around the corner!

YYZ-E55

What is the tax rate where you live?

E55Tuner

I'm in California where the tax rate is 8.25%.

I spoke to over 8 dealers in the past couple weeks.. this was the best rate which was offered to me on the options which the car comes with. They showed me on their computer that they were charging $500 over invoice.

The deal is that bad?

When the $999 deal was around last month, including tax, it would come to $1080 ($220 less than my payment), total driveoff would be about $7500 ($2000 MORE than my payment) but that was on a BASIC car with no Premium package, or lighting package... When I see it that way, it looks like I am getting a descent/good deal? no?

jangy

they are sticking you with the lease rate, then. If you are tier 1 credit (~740 and up), then it should be $1100 a month as equipped.

metalica_23

Yeah, I'm not sure what numbers people are using to determine whether you got a good deal, but I don't think they are "completely" sticking it to you on the lease rate, and I don't know what the pricing is like in CA vs. east coast. Here in New England I was able to shop a few states south and get the car for a few grand under invoice. Here's my calcs for your car:

MSRP $89,425.00
Edmunds' Invoice $83,339.00
Est. Advertising, not listed on Edmunds $400.00
Dealer Markup $500.00
Acquisition Fee $795.00
Total Cost $85,034.00
Down Payment $5,500.00
Final Cap. Cost $79,534.00
Term 36
Resid % (36 month) 58%
Resid Value $50,880.50
Monthly Depreciation $795.93
Monthly Finance Fee $403.07
Monthly Tax $98.92
Total Payment $1,297.92
Lease Rate based on above: 0.0030907

Assuming these numbers above look familiar to you the lease rate calcs out to 0.0030907. Considering the lease rate special was 0.00125 (and a 39 month lease at a 36 month resid %) and a new M5 is somewhere around 0.00400 (!), I think the lease rate you got is "ok", but certainly not stellar. I have no idea how to find out what standard MB lease financing rates are at this point to see if the dealer is marking that up. The key is that they should either make money on the car or the lease rate, but not both. If you can dig up what the MB lease rate is, you might have yourself a tool for further negotiations.

Doing some quick math, if you had gotten in on the lease deal, and got the same vehicle pricing I got here on the east coast, that same car you bought would be $899.01/month including CA tax w/ the $5,500 cap cost reduction.

metalica_23

Not sure where you got these figures. But they're not completely accurate. The lease deal of $999 was on a car WITH the premium package (MSRP $87,925). Also, the total drive off was much less than $7,500. It would have been $3,500 cap cost reduction, $795 acquisition fee, and first month pmt (~$1100). So, driveoff would have been about $5,400. This deal was under the assumption that the dealer knocked ~$2400 off the sticker price. If you could get negotiate a better deal than that from the dealer, than the $999/month dropped even lower...

SoxFan

Well, to begin with, we know from the discussions on this board that the CA dealers are considerably higher priced than the East Coast dealers, so you have to out this questions in context in terms of a good deal for CA.

It still seems a little high, based on everything we've heard.

As for the lease rate itself, you should check to make sure that the lease factor being utilized is the true MB USA published lease factor which was .0038 for May (it may be better in June?).

BTW, $5,500 in cap reduction is "worth" about $165/month in lease savings (figure about $30 oer $1,000). It's all just numbers...put down nothing, and you'll get the higher payment. You can play with the numbers yourself at:

http://www.leaseguide.com/calc.htm

metalica_23

The CA people may be able to respond to this (or any of the brokers out there). Even hitting end of the month and closing in on the E63, is there still a lot of markup on this car? Also, it'd be up to you, but it may work out significantly in someone's favor to just have a car shipped from the east coast. The transportation cost may be a lot less than the premium you'd pay to purchase the car in CA.

abalto

Unless you are really a payment buyer, the real deal is getting a 2005 left over for $15,000 to $20,000+ off of list. There are a few left. They are the same as the '06 cars and you can save big. If they have been punched (warranty started), negotiate with the dealer and have them do a Star Mark warranty for you. This is basically a CPO warranty that WILL BE transferable to the next owner when you sell the car. Many people do not know that when they buy a "punched car" they are viewed as the 2nd owner (at least by Mercedes-Benz) and the original factory warranty does not transfer when they sell the car (to the 3rd owner). Be carful, the dealer will try to screw you.

SoxFan

There's 12.25% profit/mark-up.

So, theoretically, there's $10-12K of potential profit "on the table", and many dealers on the East Coast have been dealing quite liberally in the $7-8K discount range, with a few better deals out there.

I also know of 2 new loaded 2005s which are available from dealers in the Northeast for $12-15K off MSRP ($90-91K): the less expensive black one ($75K) was punched in December (warranty started in December); the more expensive silver with pano one ($79K) is not-punched (warranty starts when you buy it).

achaar

Metallica,

Your info is correct but not complete. Drive off would also have to include taxes. Pretty hefty in CA.

a

metalica_23

Wow, so you pay taxes twice? Once on the initial "purchase" and then every month on the lease payments? What is the tax that's paid up front and what percent is it?

SoxFan

Looks like a pretty good deal to me, given the current high lease rates (9.12% interest rate). Here are the numbers I get:

MSRP: $89,545
MSRP for Lease RV Purposes: $87,770
Capital Cost/Selling Price: $80,770
Residual: 57% (assumes 12,000 miles/year, add 1% for 10,000 miles/year)
Downpayment: $5,500
Lease Factor: .0038 (9.12%)
Term: 36 months
Tax: 8.75%
Monthly Payment: $1,280.

Now, there are a few other costs, like title, registration, and application/porcessing fees, that would make the montly costs a little higher, but it looks like you got about a $7,000 discount, which is about 8% off (you have to subtract out the gas guzzler tax and the destination changes to calculate the discount, because the dealers don't make a profit on those charges).

Is there concievably another few thousand dollars on the table from the most aggressive of dealers? Maybe, but this sounds like a pretty decent deal...if you saved another $3,600 in purchase price and got the car close to true cost, you'd only be paying about $100/month less, so it's not like there's a much better deal out there.

The big problem is: (i) the lease factor is SO high right now; and (ii) your tax rate is very high.

You can't do anything about the tax rate, but I'd be tempted to wait for the new lease rates in June...you can't get much worse than a 9% interest rate?

achaar

In MD, we pay 5% of total price up front, just like a purchase. That can be rolled back into lease though. I believe E55Tuner said that his tax rate is 8.5%.

a

SoxFan

A big savings with leasing that's not really discussed too much is that -- in most states -- you don't have to pay tax on the full value of the car, just on the amount of value you "use".

Therefore, you only pay the tax on the lease payment -- i.e., the amount of the car you are using -- which turns out to be a big savings vs. a sales tax on the full purchase price.

In MA, where the tax is 5%, on an $80,000+ car, this benefit translates into a savings of about $2,500 assuming a 60% residual: in other words, you're only paying tax on 40% of the value of the car.

I can't imagine in CA that you'd pay taxes BOTH upfront and on every lease payment, as that would be a big penalty. The worst I've heard about are states -- it sounds like MD is one of them -- where the sales tax is added to the cap cost, so you pay the tax in full upon acquisition (not monthly, although that cost can be financed into your lease), just like with a purchase.

metalica_23

Right. I already included that.

I think CA might be just like MA where instead of an upfront tax charge you pay a tax on your monthly "usage" charge. I thought you were suggesting there might be an upfront AND a monthly tax...

metalica_23

Ah, but looks can be deceiving. The dealer quoted him at $500 over invoice, which is only a ~$4,500 discount. That means to bring the payment down the dealer was offering a reduced lease rate with an MF of ~0.00300 (7.2%). It's likely they have access to lease companies with better rates than MB financing can offer. I'm guessing your lease is not directly through MB?

Anyway, the point is that if they have a cheaper lease rate at their disposal, that should work to your benefit, not theirs. This means that there's still room to discount the car at least another $2,500 (give or take). Again, of course, we go back to whether you can get that type of deal in CA. Or if it's worth the $$ to have the car shipped over from the east coast...

SoxFan

Yes, but the lease rate you came up with is too low. The actual current MB USA lease rate on the E55 is .0038 not .0031.

That's why I calculated that in order to get a monthly payment of $1275 or so, he must be buying the car for something like $7K off MSRP.

But, E55Tuner, all you have to do is ask...they'll tell you everything: what the discount is/cap cost, lease factor, fees, taxes, etc.

SoxFan

I missed the part in his follow up post that he said he was paying $500 over invoice. Yes, looks like he is getting a non MB lease...everythinbg could be different...even the residual.

But yes, now that I see it, based on a selling price $500 over invoice, or about $5,500 off, he could probably get a car back here for $8K off, or more.

metalica_23

That's not necessarily true. The dealer quoted him specifically $500 over invoice. In order for the rest of the numbers to work, the lease rate HAS to be .0031. When you do your math with .0038, you can't back into the proper selling price that's being offered by the dealer.

That's why I suggested above that the lease isn't actually through MB, but likely through another company. On top of that, the dealer is probably making $$ by offering .0031 when someone is willing to lease out at 0.0029 or something else. So, they're making $3-$4k on the car, plus whatever kickback they're getting from the private lease company.

E55Tuner

After consulting with a few friends and family members and reading your informative posts, I have come to a decision. You have all been very helpful in guiding me in the right decision: To NOT go with this lease. I forgot to mention, the dealer told me that the car sat in their lot for less than 3 weeks. However, when I had another MB dealer do a check to verify that was true, they advised me that this car has been sitting in the lot since September 2005! Wow, what a liar this dealer was. I assume, this is what you mean by "punched".

In addition to this, after I calculated, the amount I would have paid ($1298/month X 36 months + $5500 to start) totaling $52,228 and comparing that to a car around the $50k-$60k price range, I made up my mind. I KNOW I am comparing apples to oranges and there is NO WAY to compare the 06 GS430 to the E55 and the E55 will blow it away no doubt, and that the GS430 is better compared to the E500. I thought it may be a better decision to pay about $66k for a fully loaded GS430 with Navigation Package including tax and financing over 48 months and have a similar monthly payment. I will own a $30k car at the least after 48 months instead of paying $52k and enjoying a german muscle car. Yes, the 5.5L Supercharged MBZ will outperform Toyota's N/A 4.3L with no hesitation but for me, this is the smarter and more efficient way to go. I guess I wont be getting into the German car scene afterall.

Thanks again for all your help, it really made a difference.

metalica_23

I wouldn't be too upset. The Lexus is a great car. At some point practicality has to kick in, for me (since I have a couple of kids) it's sooner than some others on this board. Of course, that just means I own three cars and not ten.

Anyway, seems like you made a perfectly sound decision to me.

Now, not to add fuel to the fire, but did you consider the 450H or maybe waiting for the GS460 (this fall?)? It's a few grand more for the 450H, but you get a nice boost in HP AND MPGs! I think the 0-60 times drop by 0.5 second (5.2 vs. 5.7)! All that, and you still get to claim that you're "saving the environment"!

No matter what you decide, good luck...

metalica_23

BTW, this is also a little misleading. The part that gets lost is that you have the option to trade in your used car to a dealership and knock that off the price of the new car. You then only pay sales tax on the "new" sales price after your trade-in. So, you essentially get a "refund" on the "unused" portion of your car's value. It's certainly not as good as a lease, since you have to drop the whole bomb upon purchase, but it's not nearly as bad as people think it may be.

Of course, if you sell the car outright, you lose this benefit. But if you're too impatient and lazy to sell your own car, like I am, then trading it in gets you a similar (albeit delayed) tax savings.