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Prices Paid: Buying & Leasing Experiences Mercedes-Benz S-Class Lease Questions
134 messages, Last post on Sep 30, 2009 at 8:43 AM
You are in the Prices Paid: Buying & Leasing Experiences Forum. Your Hosts are car_man & kyfdx
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As I indicated, my data collection involves the use of a variety of sources; KBB is just one of many. The idea is to secure reliable and accurate data. KBB does not necessarily reflect how anyone car dealership arrives at its pricing and so I'll have to disagree with you. Automobile sales is highly competitive and mimics a perfectly competitive market structure. Pricing publications like KBB and edmunds provide only estimates... nothing is etched in stone. MSRP's can change very quickly and often do. As any economist will tell you, pricing is a dynamic that is dependent upon the market driven forces of supply and demand. And although KBB was founded by Lester Kelley, owner of the Kelley Kar Company in the 1930's, I take strong exception with your suggestive hint that KBB pricing strategies may be biased toward dealerships. That simply isn't true. In fact, that can actually be tested using a valid statistical sample. If there were sufficient statistical evidence to suggest that KBB was biased in their pricing, they would lose credibility and be out of business in a heartbeat. They're simply not going to take that risk. Would you? My approach saves time, money, and aggravation. I refuse to spend more than one hour from start to finish with any dealership. Unless you want to test drive a car, I see no reason to visit a dealership other than to sign documents and pick up the keys. It minimizes your exposure to dealership personnel and eliminates a lot of unnecessary conversation. I don't have the time nor the desire to sit on my hands talking about how the Cleveland Browns are going to do this season (I predict no better than 6-10 lol). I'm not much for games like "can you beat this" that involves two dealerships competing against each other. However, it's not uncommon for people and even corporations to use the bidding process. It's been around for centuries and has been very effective. But, it can be very time consuming and costly. So one must weigh the cost-benefit of engaging in such a strategy (i.e., time spent v. money saved). Afterall, time is money. And, for those that bill their time at $350 per hour, it doesn't seem to be a prudent strategy. And so, my strategy may be very appealing for self employed people earning high wages. This is a Mecedes-Benz forum and it's a pretty good bet that a large number of Benz owners earn a pretty good wage. As long as you perceive that you got a good deal, that's the most important thing. And, as far as our approaches being parallel, I agree as they share nothing in common (parallel lines never meet). They are two totally different approaches that use different philosophies. I'm not saying that your's is wrong. On the contrary, as long as each approach follows rationally, there are no right or wrong approaches. Each of us must to do what is best and use that approach with which we're most comfortable. Best of luck to you. John
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Replying to: delta737h (Aug 14, 2007 4:25 pm)
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Replying to: mlroberts55 (Aug 16, 2007 11:04 am) Here is how it works. First, ask the dealer what the excess prepaid mileage charge is (one of the few things they can't lie about because it's itemized in the lease contract). Let's suppose that it's $0.15 per mile and that you're considering a 3 year lease. The pre-paid excess mileage charge is computed as follows... $0.15 x (20,000 - 15,000) x 3 = $2,250.00 Second- Yes, this charge is deducted from the residual. So, if the residual = $20,000, then... Adjusted Residual = $20,000 - $2,250.00 = $17,750.00 The adjusted residual is used to computed your payment. The $20,000 residual is based on 15K miles per year (res. factor x MSRP) and so it must be adjusted downward to account for the additional mileage. Because you're putting an additional 15,000 miles on the vehicle (assuming the benchmark is 15,000 miles... which, I believe it is), it depreciates an additional $2,250.00 over the term of the lease and so the residual is adjusted downward by this amount. One thing to consider... If you don't use all your pre-paid mileage, be sure that any unused mileage is credited to you at lease end. Many fund providers will not do this. Also, if your state charges sales tax, you will most likely have to pay tax on any pre-paid mileage charge. That tax can either be paid upfront or rolled (i.e., capitalized) into the lease. Another possibility is that a few fund providers might lower the residual factor by a few percentage points to account for the additional mileage. I've never seen or heard of that being done but I suppose that is a possibility. Hope this helps. John
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Replying to: delta737h (Aug 16, 2007 12:46 pm) Of course, you can't get any of that back, if you don't use it... regards, kyfdx |
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Replying to: delta737h (Aug 16, 2007 12:46 pm) John |
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Does anyone know the current Mercedes money factor and residuals for either a 2008 S550 (the one I'm looking at is MSRP at $102,515 with a sell price of $7,500 off) or an '08 S63 (MSRP at $140,090 with a selling price right about that). Thanks, Michael
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Replying to: qpmicro (Aug 30, 2007 4:37 pm) Can anyone help? |
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Replying to: delta737h (Aug 14, 2007 7:17 pm) Re: sales people's intelligence. I don't agree that the typcial sales guy should understand discounted cash flow analysis and I wouldn't trust his analysis anyway. But how about acquiring some basic product knowledge? Most of the ones I have met have never, ever, even "built" a car on the manufacturer's web site and have little grasp of which options are available for which model, etc. Call 10 Audi sales guys and ask if the performance seats are availalble as a stand alone option. Few know. Re: Julius' store in Greenwich. They have chosen a low profit margin path. This defeatist strategy is not my problem. Apparently, from what Julius says, they sell about 6 times as many low margin new units as high margin used cars. Why? I'm convinced that new car dealers sell far more new than used not only because of factory pressure but also because the average sales guy can't sell a USED car and so the store doesn't even try to hire anyone but willing new car order takers. Wiscasset Ford in ME is probably the biggest Ford dealership in New England. How do they sell so many new cars? Well, they are in a very rural area with low wages. Their new car sales guys are literally just $10-12 an hour order takers which saves the dealership money. They have almost no used cars.
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Replying to: blckislandguy (Sep 23, 2007 5:22 pm) Julius |
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Replying to: blckislandguy (Sep 23, 2007 5:22 pm) I agree with you 100%. The cheapest way to acquire a car is to buy a two or three year old unit and run it until the wheels fall off. I'm writing a textbook on car leasing which is the main reason for my participation in these forums. I love to help others as well as learn from them. I've learned a bundle just by reading a lot of posts not only from very knowledgable and experience people but by the inexperienced folks as well. It is actually the inexperienced people with very little leasing knowledge that often ask very good questions that really forces one to think (and sometimes drink). You also make a very good point regarding sales people and product knowledge. In fact, you hit the nail squarely on the head. It's product knowledge that really matters most. Regarding new v. used; it seems to me that there is a world of difference between the two. Used car sales is tough. One has to be able to properly appraise used cars and financing is some what more complicated. As such, I think used car sales people should be better compensated than the new car folks. I have no clue what the difference in profit margins is for new v. old. If I had to guess, I'd say that new car sales provides the larger profit margin and so it comes as no surprise that there are many more new car salesmen than used car salesmen. John
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