335X-ray

Hey all,

Just wanted to check and see if anyone has any different or better info.

Going in to get car tomorrow and am most likely going to purchase but like to have all my options.

My dealer is swearing that the very best lease rate on the E63S for November for a 36 month lease with 10k miles is 61% residual and 0.00215 MF if I use autopay. Without auto pay it is 0.00225.

They have been pretty straight forward with everything so far and I am just trying to confirm or refute that the BEST MF is really 0.00185 with autopay as some have reported received last month and Vic is telling me. I don't want to not believe Vic .


Thanks,
X

Vic55

Ok you are now officially paranoid!!!!!!!!!!!!

Ill confirm later today but in October .00225 was tier 1---- .00195 is the auto approval rate. This is based off your fico score on TransUnion and some other factors internally to MBFS. Let me make sure the auto approval rate is the same.

ManhattanSpin

Hey Vic, I'd be curious too as I am going to be finalizing my lease this week I believe (s-model sedan).

Was thinking 36 months or less (30?27?24?) and 7.5k miles.

335X-ray

I know!

Incidentally, got approved for 1.79% financing for 60 mo through one of the banks the dealership works with so am going to do that

X

Vic55

I confirmed .00195 is auto approval rate and .00225 is tier 1.

ManhattanSpin

What is the difference between auto approval and tier 1 exactly? Also, any idea what residual is for 36 month and 7.5k miles? If you happen to have rates for 30, 27 and 24 months too that would be super helpful. Thanks Vic!

Vic55

I dont have the current residuals sorry.

Auto approval is exactly that- a submission of your info and the deal structure which meets the MBFS criteria for their best std rate. I hear you have to be over a 760 fico with TransUnion. Now some people qualify for the auto approval tier but their structure on the lease does not allow the system to approve it (probably due to negative equity) causing it to be reviewed by an analyst and then it would be a tier 1 IF approved.

This is all supposition as Im not an employee there. But I know a few things

ManhattanSpin

Thanks for the explanation. I wonder what their formula is....

Vic55

It definitely involves an internal scorecard based probably on their current open portfolio along with the fico score being the common starting point. I hear that you have to have leases under or at 48 months to get auto approved as its very hard to get a longer term lease approved with their best rate.

Obviously credit depth (time on the bureau) along with a certain amount of trade lines including previous comprehensive autos would be the smart approach. Homeownership wouldnt hurt as well along with lighter debt loads and limited to low amounts of credit inquiries and relatively no new added debt.

ace10

I'm simply not going to allow you to buy money at rates north of 5%. You are hereby forbidden.

These MF's are crazy. Literally insane. I saw the same sort of numbers back in September... I actually pointed and laughed.

You can borrow money on a traditional looooooooong loan for mid 1.X% All. Day. Long.

Paying 300 or 400 basis points above that for a short term lease is just crazy.

IMO

ManhattanSpin

Well, sort of at the mercy of MBUSA...and since I don't want to buy and be stuck with a car (hard to resell in Manhattan, logistically) - sometimes you have to pay a littl eof a premium

ace10

Upwards of $10K in additional interest over a 3 year period. Cash flow basis, ignoring possible tax consequences. Plus additional lease origination and dispo fees.

That's a bunch of cheese in my book.

ManhattanSpin

ignoring tax consequences...important there because if you can deduct a portion of the lease (as opposed to a sale), there are additional savings. That's my plan.

ManhattanSpin

Also, how is it upwards of $10k? My lease is only $48k over 3 years...I expect to pay a few grand in interest for the ability to get out at end of term without consequence.

ace10

The contract's money factor applies to entire Capitalized value of the lease, not just the depreciation.

I can borrow on a 60 or even 72 month loan at 1.49%. Let's call it 2% to be safe. MBFS quoted the effective APR of 6% for the 36 month lease (with a terrible resid I might add). That's a 400 bip delta on the amortizing loan/lease principal over the 36 months. If we're borrowing $100K for the car, that's high $3K in additional finance charges the first year, low $3K the second and high $2K in the third year. I could do the exact math, but we're just chatting on the car forum here.

Yes, you get the privilege of dumping the car at the end. But you're paying for it. Through the low (IMO) residual value, the additional finance charges and the lease fees.

This E63 is my business car, but it didn't make sense for me to lease through MBFS.

335X-ray

Yes boss!

I know, the numbers don't make any sense. If they were a bit closer, I would think about it but with a finance rate of 1.70% I am just going to do the purchase. Will buy the MB ELW (extended warranty) in case I want to keep the car long term and if I want to sell, it gives the buyer the option of the warranty making the car more appealing. If they don't want it, you can get a full refund if the warranty period has not started (yes, you gave MB a $4k+ free 3 year loan but alas...)

I appreciate all the feed back and discussion. We have to look out for each other because the dealers sure aren't going to.

X

Vic55

Leasing isnt for everyone no doubt; buying a 100k car in Cali means 8k in sales tax up front vs only paying sales tax on each payment for the term of the lease. Im not an accountant and I dont write off my cars purchase or lease so it all depends... but if one likes to get in and out of cars fast then leasing allows this because even with a MF that translates to a higher apr the short term lease offsets the higher up front sales tax that is paid on a purchase.

Oh no bank leases AMG's better than MBFS. US Bank wont even lease the cars over 100k and 99% of the MB dealers only use MBFS for leasing their cars. MBFS has a creative approach: bump the residuals and money factor so the payments are still fair yet no one can trade out early because the payoff is well above ACV. No one has a 61% residual on a 10k E63 (non S)- no one.

Shellbmb

Does MB have an owner's choice program like BMW in a state where you have to pay sales tax up front? I guess if you want to buy the car at maturity, you don't have to pay sales tax again.

Vic55

You wouldnt pay double tax no matter what--- in a non upfront state (where taxes are only due on the pmts per lease term) you would only pay tax on the residual if you bought the car at end of term. In an upfront state you are paying tax on the payments up front but not the residual. No double taxation.

ace10

In Virginia, a lessee pays the state sales tax (on behalf of the lessor) on the full agreed-upon price of the auto. Not the sum of the lease payments. The lessor may collect this tax in installments via the monthly payment or as a lump sum.

If one were to lease a $100K car, there is a sales tax due to the Commonwealth of $4000.

At the end of the lease, if the lessee decides to "buy out" the car from the finance company, this is treated as another transaction on the title, and the sales tax of 4% would again apply on to the residual or other agreed-upon selling price.

http://www.dmv.virginia.gov/vehicles/#leased.asp

Double taxation FTL
.

Vic55

Now thats what we call super up front LOL---- at least you only have 4% tax whereas we have 8% in cali.... its all dependant on where one needs to work and live along with family so I get it....


did you see this in the link you posted?

ace10

Taxpayers get porked one way or another....

But I'll counter your 8% sales tax, with our annual Personal Property Tax, which in my county is 4.2% of book value. I think you pay something annually, but it's only a fraction of that....

I actually pay more in Personal Prop Taxes than I do in Real Property taxes.

Vic55

We pay about 1.25% of our home values (price paid) plus some school tax ... so on my 1.5mm home taxes are circa 19k annually paid in two installments. And I deduct every penny LOL.

Oh I read your link to the VA DMV and found a blurb that "appears" to avoid double taxation, is that correct? I posted it above.

ace10

Could be. I haven't leased a car in many, many years. I think the last one I did was an S2000 and I considered buying it out, but Honda wouldn't budge on the value and there were definitely unfavorable sales tax issues.

Here's another gem: If we "trade" a car in on another, we still pay sales tax on the full value of the new car, not the net.

Real Property tax in my county is 1.205% right now. It changes annually. As do our assessments.

Vic55

Same here- cash price is the taxable amount not the net of equity in trade.