Last post on Sep 03, 2012 at 12:17 PM
You are in the Prices Paid - Buying & Leasing Experiences
What is this discussion about?
Mercedes-Benz R-Class, Mercedes-Benz R63 AMG, Car Leasing, Wagon, SUV
#238 of 803 Re: I need to know "how" to do it....I'm ready! [leasemama]
Sep 24, 2006 (1:39 pm)
I have learned more on leasing on this car than my previous 6 leases (3 mercedes, 2 bmw's, and a land rover). This may be a long post! The basics of leasing are this: You are only paying for how much the car depreciates during your lease term (affected by the number of miles you drive) and the interest rate (money factor) on your "loan." What determines the depreciation cost is the manufacturer's estimate (a residual percent) of how much the vehicle will be worth at lease end, based on the MSRP not the selling price of the vehicle. What makes the 2006 R class deal so attractive is that it is a relatively high MSRP that is discounted in the range of $12,000 to $15,000. Using round numbers, a $60,000 2006 R 500 can be "bought" for about $47,000. Using a residual value of 67% (24 or 27 month lease, 12,000 miles per year), Mercedes is calculating the car to be worth about $40,200 at the end of the lease (major wishful thinking). Consequently, your "depreciation cost" is only $6800. You are new to leasing, but I will tell you that is a minimal depreciation cost. Add to that the subsidized financing, even on the 2006 model of .00295 money factor (multiply by 2400 to get the interest, 7.08%), you have a finance/interest cost of only about $5000 to $6000 over the course of the 27 months. If you have the cash, you can lower your money factor to .00185 (interest rate 4.44%) by doing a "one pay" lease, wherein you simply pay all the payments at the front end of the lease. It will save you about $2500 over the 27 months or about $90 month amortizing it over the 27 month period. Worth it if you can swing the $13,000 in one lump. The 2007 models are not going to have the same residual benefit as the 2006's, however. They have a lower MSRP (by $5000) and the discounts are not flowing under invoice as they are on the 2006's. Some of that is made up for by a lower money factor (.00165 or 3.96%), but you would have no further advantage with using the one pay on that vehicle. I still think the 2006 is the better deal, but only if you have no intention of buying the vehicle at lease end. I have learned that the lease-end buyout figure is negotiable, so that may still be workable if the price is right. I think most people who lease these vehicles have no intention of buying at lease end. I think Mercedes is going to have a rude awakening about 24 to 27 months from now when these cars come off lease and glut the market, so I am holding off my decision to buy the car based on what kind of deal I can swing at lease end. I hope this helps a bit. Please post what kind of deal they give you prior to signing on the dotted line and at least one of us can tell you whether the deal is good or not. In brief, you want about 11% off MSRP plus the $7000 factory to dealer cash off of the MSRP, a total of about $12,000 to $14,000 depending on MSRP. Go for the 27 month vs the 24 month lease because you only pay additional interest with no further depreciation expense. Your net cost for the 27 months should total about $13,000 to $14,000 if you do a one-pay and about $2500 more if you pay monthly. Good luck and thanks to everyone who has helped me!! What goes around comes around!!
#239 of 803 Re: Need Your Experts' Advise! [eugez]
Sep 24, 2006 (1:45 pm)
I am in California, so I don't know your local climate. Your 2006 deal sounds high. I don't think you are getting more than about $10000 off MSRP on that car. I would check other dealers for 2006 models. The leases are more attractive for reasons discussed in my previous post. Always try to get the dealer to give you the "selling price" of the vehicle and the residual value per cent. With those figures you can use a real simple lease calculator on cars.com to calculate the payments. If you find a 2006 R that you like, you might want to consider the one-pay lease. It will save you about $2500 over the 27 month period. If you go with the 2007, the money factor/interest rate is already so low, there is no advantage to the one pay on those vehicles. Good luck. I have the R500 and it has been great!
#240 of 803 Re: Need Your Experts' Advise! [martinf]
Sep 25, 2006 (9:27 am)
Thank you very much for your reply!!!
I have a question to you.
I'll still work under the 2 variants(2006 and 2007), but...
let's say I'll go for 2007, how much below the MSRP has to be my TARGET?
What lease period is more preferred (from your point of view)?
What will be the best possible deal, based on 49K MSRP (or 53K)?
#241 of 803 Re: Need Your Experts' Advise! [eugez]
Sep 25, 2006 (1:39 pm)
1. I do not have a feel yet for the pricing on the 2007's. The Mercedes sponsored leasing program suggests a selling price of $47,160.59 based on an MSRP of $48,700 for the 2007 R350 27 month lease, but suggest a selling price of $45,494 on a $54,175 2006 R350 (about $9700 off MSRP)which is still about $2000 to $3000 higher than what dealers are really letting the vehicles go for. We will have to wait to see what others are getting on the 2007's to know. Let's hope others join and participate in this forum!
2. In my opinion, the 27 month is the sweet spot. Although you have to pay one more year's registration, the residual value for 24 and 27 months has been the same. What that means is that you only pay interest and no depreciation for the last 3 months of your lease (i.e., the last 3 months are about "half price."
3. On the 2007's expect a "money factor" of .00165 (3.96% in English language)for a monthly pay lease. I advocate the one pay only if there is a money factor savings to justify it. With the 2007's, it does not pay. With the 2006's, the one pay lowers the MF from .00295 to .00185 (7.08 down to 4.44%)
#242 of 803 Re: Need Your Experts' Advise! [martinf]
Sep 26, 2006 (7:01 am)
Thanks again for your help and detailed explanation.
Issue with the 2006, that it's very few left on market (at least what I see). Anyway I'll try to find a deal, if not on 2006 than on 2007.
1. Any ideas what could be the target price in case of 2007 (MSRP 49K), how lower from the MSRP?
2. About time period. I understand that you prefer 27 months (and I see why). What about 39 months?
3. I got your point about advantage of "one pay", thanks.
Also, I have a question about your lease calculation. Based on your email I have a formula -
LEASE price = DEPRECIATION cost + LOAN fee
DEPRECIATION cost = SELLING PRICE - PRICE AFTER LEASE
6800 = 47K - 42000(MSRP * RESIDUAL value (60K * 0.67))
LOAN FEE = INTEREST * LOAN
6000 = (MONEY FACTOR(.00295)*2400)= 7.08%) * SELLING PRICE
Is it correct?
What is the 2400?
#243 of 803 Re: Need Your Experts' Advise! [eugez]
Sep 26, 2006 (12:43 pm)
Make sure you shop this vehicle hard! There are dealers out there that are selling the R 350 at $5000 UNDER invoice on the 2006 and $1000 UNDER invoice on the 2007. It is a CA dealer, but you can have it shipped to NJ for 800 to 1000. You are looking at a close to 10K off MSRP on an 06 and 5K on an 07.
#244 of 803 offer/counteroffer
Sep 26, 2006 (2:57 pm)
In Seattle area I made an offer to the dealer on an R350 w/ $58605 MSRP as follows:
$47000 Purchase price
27m/ 10k yr w a MF .00295 Res 65% (I think those are the right numbers still)
He countered at $48500 purchase price, which is basically invoice - $7k. Any thoughts on this?
Also, can anyone explain if the 5.5% holdback comes from MSRP or sales price? Or if it works differently? Otherwise, I don't understand where the $12-15k off MSRP that I see people using on this board comes from. (MSRP is only 4k over invoice plus the 7k incentive gets me to 11k. Is the dealer getting another 4k in holdback?)
#245 of 803 Re: offer/counteroffer [zorogris]
Sep 26, 2006 (3:19 pm)
MB walnut creek is advertising on their website "at least $12k off MSRP" any '06 350 or 500. the higher the sticker, the more mark up to msrp and thus more discount available.
dealers are going below invoice (and of course the $7k factory cash) into their 5.5% holdback.
MBWC has 16 350s and 21 500s in stock.....and the 07s are arriving....
#246 of 803 Re: offer/counteroffer [zorogris]
Sep 26, 2006 (4:00 pm)
5.5% of holdback is from MSRP and giving away to the customer 4.5% is very real. I just received an email from Santa Monica W.I. Simonson Mercedes in So Cal, and they are discounting (advertised) $13,500 off MSRP of $60,630 (2 available) on 2006 R500 with options: 18in Wheels, Comfort Pkg,Trim Pkg, Entertainment Pkg, Sunroof Pkg. Not the greatest in options but very decent deal. Base on the invoice of $56,441 (Edmunds) with $7K incentive and $3,334.65 holdback, the dealer is making $1023.65 on paper.
The dealer is giving away 4% of their holdback without even negotiation. This is the perfect storm that MartinF mentioned. Get the R before MB put the brakes on production.
#247 of 803 Re: offer/counteroffer [pureautomobile]
Sep 26, 2006 (6:30 pm)
Well, I wish the dealers in Seattle area were willing to play ball. I spoke with 3 dealers today and none of them are willing to go into their holdback! Greedy bast*rds! I may drive one up from NorCal since I am down there occasionally on business but an unnecessary pain in the rear if you ask me. If someone in the NW gets a dealer to play ball please post it!