Last post on Dec 10, 2013 at 9:11 PM
You are in the Prices Paid - Buying & Leasing Experiences
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Mercedes-Benz E-Class, Car Leasing, Sedan, Wagon
#585 of 3263 Re: $569 - $0 drive off - 27 mos lease ? [peteropny]
May 14, 2008 (4:11 pm)
You don't say if this is a 10k, 12k or 15K lease but a simple calculation says that the dealer is selling you the car for his invoice and there is no interest on the lease. Mercedes is currently offering an extra $2000 downpayment which they apply to the lease bringing the capitalized cost down to 51000 or so.
You aren't going to do any better than that.....you just have to decide if you want to buy the C or lease the E. I would suggest that you drive them both before deciding (and drive the 4wd...not the 2wd).
#586 of 3263 Re: $569 - $0 drive off - 27 mos lease ? [ghstudio]
May 14, 2008 (4:40 pm)
Oops - knew I forgot something - its 10k miles - we use the car just under 10k miles a year. Thanks!!
#587 of 3263 Re: E350 Lease [madmarlin]
May 14, 2008 (10:10 pm)
The following formula is known as the constant yield method and is the industry standard when calculating lease payments.
You'll need to understand what each term is before calculating:
Capitalized Cost (Cap Cost) - The agreed upon price or selling price.
Residual Value - The projected wholesale value of the vehicle at the end of the term. It is expressed as a percentage of the of the total MSRP of the vehicle when new.
Term - 24, 27, 33, 36, 39, 48 months etc.
Money Factor - A decimal number which represents a leasing company's usage fee. It's basically the equivalent of an interest rate when purchasing. Simply times the money factor by 2400 and you get ~ an APR equivalent.
Depreciation - The difference between the cap cost and the residual value.
(Cap Cost – Residual Value) / Term = Depreciation
(Cap Cost + Residual Value) X Money Factor = Interest
Depreciation + Interest = Base Monthly Payment
#588 of 3263 Re: E350 Lease [ocautoseeker]
May 15, 2008 (4:51 am)
Got you covered ocautoseeker. I knew all of the terms, just wasn't sure on the overall calulation. Got it now. Knew I was missing somehting. Thanks for the info. I appreciate it.
#589 of 3263 Re: E350 Lease [ocautoseeker]
May 15, 2008 (5:44 am)
Quick question OC.
In your explanation, you say to multiply the MF by 2400 to get an approx. interest rate. On the Bluetec Diesel for March it was posted as .00225, which would equate to an approx. interest of 5.4%. If I do the calc based on the March info and assume a cap cost of $52,000 and a term of 36 months I get:
52,000 X 55% = 28,600
52,000 - 28,600 = 23,400
23,400 / 36 = 650
(52,000 + 28,600) X .00225 = 181.35
650 + 181.35 = 831.35
Now, If I were to assume that I could make a lump sum for the depreciation of $23,400 and amortize over 36 months at 5.4% (the approx rate) I come up with a payment of only $705.53. To get to the payment of $831.35, the actual assumed interest rate is approx. 16.75%. That is based on amortizing the depreciation of $23,400 over 36 months (Assume you were to bouy a car for $23,400 and pay it off over 36 months, to equate to a monthly payment of $831.35, you would basically be getting charged 16.75% by the bank). Is there something amiss in the above calulcation?
At a payment of $831.35, you are paying a total of $29,928.60 when you are theortically using $23,400 of the value of the car. Total interest is $6,528.60. At $705.53, you are paying a total of $25,399.08, so total interest is $1,999.08.
#590 of 3263 Re: E350 Lease [madmarlin]
by kyfdx@Edmunds HOST
May 15, 2008 (7:10 am)
In your comparison, you are paying the depreciation in one lump sum.. What you fail to do in that scenario is account for financing the residual amount ($28,600).
When you lease a car, you are borrowing the whole amount, not just the depreciated portion... Even if you paid the entire depreciation upfront, you'd still owe a finance charge each month.. In this case:
$28,600 (cap cost) + $28,600 (residual) X .00225 MF = $128.70 per month...
Hope that helps..
#591 of 3263 Re: E350 Lease [kyfdx]
May 15, 2008 (5:18 pm)
i understand what you are saying. the one fundamental problem I've always had with leases is the concept of paying interest on the residual. The residual theoretically represents the value of the car at the end of the lease. When you turn it in, that should represent what the dealer could then sell it for to a new buyer. At that point, they would then charge interest on that value to the new buyer. By also charing interest to the lessee, they have, in effect, double charged the interest and recorded more profit. That is whay the actual interest rate I arrived at is 16.75% when you strictly look at the value the lessee is supposedly deriving from the car over the term of the lease.
Not saying leasing is bad, by any means. there are deals to be had and you can always work a better one. there are other factors, too, that make leasing more attractive than buying. But the rates can be a bit harsh when viewed pragmatically in comparison to the value derived.
With all that said, i still want to try to work a lease deal on a new Bluetec, potentially. We'll see what happens.
#592 of 3263 Re: E350 Lease [madmarlin]
by kyfdx@Edmunds HOST
May 16, 2008 (3:48 am)
Leasing is simpler than that...
First... the dealer does nothing but sell the car to a bank.. what happens when the lease is done really has no effect on your deal.
In essence, you are taking out a loan for the full amount of the selling pricee, and paying the loan down to the residual, at which time you sell the car for what you owe on it (actually turning it in, but the same concept).
There is no double interest or additional profit. It is no different than if you bought the car, then sold it to a private party after 3 years.
But, leasing isn't for everyone!
#593 of 3263 Is $2000 apply only for lease?
May 16, 2008 (9:42 pm)
I am considering E350 lease or purchase. I see a couple of people mentioned about $2000 lease money but in Edmund incentive section, it also lists $2000 marketing support apply for all E classes. Since MB also offering 0.9%APR, would it be better to lease or buy the car? I drive only 10k annually.
#594 of 3263 Re: Is $2000 apply only for lease? [mynextcar]
May 16, 2008 (11:56 pm)
How long do you "realistically" want to keep the vehicle?