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Mercedes-Benz R-Class Lease Questions

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  • My 1st MB. I have owned BMW, Volvo and Land Rover. Just picked up a R350 MSRP-$62K $3700 down $499 monthly 12k per year. I will never BUY a luxury car again. My wife is hauling around 2 of my 3 kids all the time and she loves the R350. For me, it's a nice drive and that's it. I can't think of anything better or safer for the same $. Thanks for all the info everyone. Cheers!
  • martinfmartinf Posts: 121
    Thanks for the detailed info! How much off the MSRP were those lease prices based on? It looks as if the $7000 factory to dealer cash has been extended, but I do not know about Money Factors or residuals. What were the best dealerships that you shopped in Southern CA. I appreciate your input!! These forums have saved me (and some friends) a bundle on our last several cars.
  • if someone would let us know asap whether the factory to dealer cash has changed for sept (and residuals/rates) it would be much appreciated.

    i assume the cash incentive does not/did not apply to 2007 Rs....
  • martinfmartinf Posts: 121
    Factory to dealer cash is still $7000. I don't know about residuals and MF's.
  • I confirmed with Caliber Motors in Anaheim, CA on 9/1/06 that the MF and residuals are the same as Aug for 12K mi/yr for 27 mth lease. They still have 40+ R's in stock, so does Fletcher Jones in New Port Beach.

    Best in $ would have been Fletcher Jones on 8/31/06. The sales manager was willing to sell any R class with 11% off MSRP +$7000 off. This would have been right at or below 5.5% holdback. Of course, they had over 70 R's when I visited.them. If you are in Orange County, it would've been foolish not to buy from them. But I live too far from their dealership.

    Downtown LA has been known for their low prices and they came very close to Fletcher for me. Obviously DTLA's dealership does not have the same ambiance as Fletcher, and Fletcher will wash your car once a week for the life of your car.

    Southbay was also very willing to go at 4.5% into holdback.

    Keys Mercedes has a very smart, friendly, but intelligently intimidating sales manager. Keys didn't willing to dig into holdback for the one-of-a-kind-optioned R350.

    Penske was very friendly but extremely busy internet department. We were there Tuesday night and most of the sales person were signing papers. The internet mamager gave us the keys and let us look at the vehicle by ourselves (no driving of course). There internet pricing was above others.
  • martinfmartinf Posts: 121
    Thank you for the input! You have definitely saved us all a lot of time and money! Have a great weekend and thanks again!
  • can anyone point me towards Mb dealers with large R inventories in the midatlantic (anywhere on east coast if they are large very large and dealing deep into the holdback).
  • I just got back from a dealer in Boston, and got the September rates. I am not sure if I should believe what they have given me is truth or not, (they played so many games by changing the numbers many times) but here they are:

    2007 R Class MF: 0.00165
    2006 R Class MF: 0.00295

    Residual Values:

    2006 R350 24/27 months: 66%
    2006 R350 36/39 months: 56%

    2006 R500 24/27 months: 65%
    2006 R500 36/39 months: 55%

    2007 R350 24/27 months: 67%
    2007 R350 36/39 months: 57%

    2007 R500 24/27 months: 66%
    2007 R500 36/39 months: 56%

    I also got the GL 2007 just for giggles:

    2007 GL Class 36/39 months RV: 61%
    2007 GL Class MF for 36-51 months: 0.00320

    Gent
  • If you tried Fletcher Jones, you should try Mercedes Benz of Laguna Niguel. They really hate to lose business to one another. Its like USC vs UCLA.
  • if residual values are always based on full MSRP and monthly lease payments are based on a lower negotiated "purchase price", if you decide to buy at lease end arent you losing the benefit of the factory cash back and dealer discount (in this case as much as $12k)??? (of course this assumes that the factory wont negotiate the buy out price at lease end)
  • MSRP with options $70,075 (trim, amg, lighting, park, keyless, entertain, 864 rear entertain)

    hypothetical $15k discount ($7k factory + $5050 discount to invoice + $2950 [4% of the 5.5% holdback])

    selling price $55,075
    money factor .00295 (why is '07 more heavily subsidized???)
    27 mos
    12k per yr
    resid 67% (65% +2% for 12k)
    no sales tax
    no tags or acq fee

    ONLY $602month.

    is this right??
  • martinfmartinf Posts: 121
    You have hit the nail on the head (twice!). First, the best possible lease is one based on a low interest rate (no surprise there) AND a highly discounted purchase price (no surprise there) plus a HIGH MSRP (upon which the residual value is based - maybe a bit of surprise there). Since your lease expense is largely the sum of the "depreciation" (the difference between the MSRP and the "residual" value - sometimes artificially low - like with the R class) and the interest expense, the most favorable "perfect storm" for the potential lessee is the situation we have with the R class, particularly the 2006 model. With a $70,000 MSRP, your residual value will be high ($46,900 at 67% residual) and the difference between what you really pay, let's say $56,000 to be conservative, you will really only pay $9100 in depreciation for the first 27 months. Combine that with a low interest rate (lower by .00110 or 2.64% if you do a single payment lease) and you can lease one of these 2006 R classes for not much more than a far lesser vehicle.

    At lease end, there is no way I would want to pay $46,900 for a 27 month old, 27,000 mile R class, when I could probably buy a new one for not much more. You know that, I know that, and Mercedes will certainly know that in 27 months. Until I started reading these forums, I had no idea that you could negotiate the lease-end buy-out or even negotiate very favorable lease extension terms (less than your original lease monthly payments - makes perfect sense that it would be cheaper to lease a 27 month old car than a new one). If you are inclined to want to buy the vehicle at lease end, you will absolutely need to negotiate a far more favorable buy-out than what is in your original contract. If you pay the original lease contract price, you are absolutely losing the benefit of the factory to dealer cash and the dealer discount.

    Thirdly, where did everybody else go? Is no one else still buying and/or negotiating on R classes?
  • martinfmartinf Posts: 121
    I ran your numbers using the lease calculator on cars.com, but they only calculate for common terms like 24 and 36. However, it looks like for a 24 month lease, using your numbers, you come to $639/month. I am pretty sure that your $602 figure is either exact or quite close for the 27 month lease. What website are you using for your lease calculations and what dealerships have you seen with $15,000 discounts. The best discounts I have seen have been the "$12,000 coupon" discounts from Mercedes of Walnut Creek in Northern California. By the way, mbworld.com and benzworld.com have also had lively and informative threads regarding R class leasing and pricing, if you care to check those forums. Good luck!!
  • I guess many folks bought the R class in August and contributed to MB's all-time record month! I certainly did. $15000 discount is very possible, especially in So. Cal. where some dealers (see my privious posts) still have many 2006 R's in stock. 4.5% into holdback is very likely, especially my salesperson told me that 9/06 will be a tougher month for them.

    For 9/06, after I found out that the MF for 07's were much lower than 06's (though the residuals were the same), I re-calculated my lease vs. an '07 equally equipped and found that an '07 is about $2,400 more for one time pay. Not bad for an '07 but like most everyone said here, '06 R's are great deals.

    Martinf, and everyone else here, how about starting a forum discussing the "perfect storm" leases that are currently out there? This will save a lot of our time, not mentioning $$$. Start the blogs, folks.
  • My lease on ML320 will end on 10/25/06. I am looking into
    leasing an R350. Any good deals in the dealers in Southern
    California for R350? Who has the most inventory? I have
    been quoted $399+tax 3k drive-off 12k/yr for 27 MO (MSRP $58k).
    How does that sound? Just don't like the color they have.
  • See my post #219. Right now, the '07 are here and '06 are still around with the $7k incentives. Color may have to be compromised, but it's still a great deal.

    Base on my calc, $58k MSRP (assuming $54k invoice), your total payment should be a hair shy of $14K for 27 MO 12k mi/yr including sale taxes and lease inception fees. This is assuming your dealer is willing to give you 4.5% of the 5.5% holdback.

    Base on your deal, the total with sales taxes is $14,661, which means he is at about 3.5% into holdback. Not a bad deal.
  • martinfmartinf Posts: 121
    What is the selling price of the vehicle that you are considering? It would help to know if they are going $10,000 vs. $12,000 vs $14,000 off of MSRP. If you do not have a significant cash flow situation, Mercedes Financial offers a .00110 Money Factor discount (4.44% vs 7.08% for those of us who do not speak lease language) for a single pay lease. It would lower your effective monthly costs by about $80 to $100 per month, not insignificant. Look at pureautomobile's previous posts on So Cal dealers. He has been very informative. You may also want to look at benzworld.org and mbworld.org for similar threads. Finally, please drive the R500 before settling on the R350. Although the horsepower difference is small (302 to 268), the torque difference is great (about 339 to 258) as are the 0-60 times (6.7 vs 8.1). All those numbers are fine, but you may really notice the power difference in the R500. The epa estimates are 13/18 on the R500 and 16/21 on the R350. There are several posts from R350 owners who regret not getting the more powerful R500. Good luck! Both vehicles are great and are great deals right now.
  • Hello - I have a simple question for you all:

    I can get the R350 or spend an extra $222 per month and get the R500. Should I spend the extra money for the R500?

    All opinions are wecome. Thanks
  • martinfmartinf Posts: 121
    The R500 is a significantly more powerful vehicle and is probably worth more money. With a list price difference of about $7000, and residual values about 65% to 68% depending on miles, you should expect to pay only about $100 per month more for the R500 (Here is the math: $7000 x 35% = $2450, $2450 divided by 27 months = $90/month + additional interest on the $7000 approximately $20/month for a total of about $110 per month difference). You could mitigate some of the difference between the R350 and R500 by getting a slightly less equipped R500. Drive them both at the same visit to your dealer and see if you can appreciate the difference. I personally was originally favoring the R350, but I was quite impressed with the R500 in comparison. Both 2006 R vehicles are great and represent unique values in the car leasing arena. You won't go wrong with either, but check out the forums at benzworld.org and mbworld.org. Many R350 owners complain about a lack of power in the R350. I think your dealer is playing you on the differential of $222/month. Provide the MSRP's for the two vehicles, the "selling prices," the residual values he is quoting you, the miles you need, and the length of lease that you are considering and I would be happy to run the lease calculations on cars.com calculator for you, or you could do it yourself. I really think the $222 difference is way high
  • Can anyone out there help me out with figuring out the lease speak on a R-class. I am a first time leasee and I am ready to go and get one of the deals everyone is talking about but where do I begin?
    Help!
  • Hi, experts.

    Last week I've started looking for the deals on the R350.(Test drove it and liked it)...

    The dealer here (in Bergen county, NJ) sent me email 2 days ago, saying that he has a 2006 car with
    MSRP $59K 3K drive-off 12K/year for 27 Mo - $609 (includes all)...

    Yesterday, when I came to see it, he said the car is gone and no more 2006.
    Ge gave me price for 2007 - basic with Premium 1 package -
    MSRP $49K 3K drive-off 12K/year for 39 Mo - $619.

    Any advises?
    Thanks in advance!
  • martinfmartinf Posts: 121
    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!!
  • martinfmartinf Posts: 121
    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!
  • 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)?

    Thank you
  • martinfmartinf Posts: 121
    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%)
  • martinf,

    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
    where
    DEPRECIATION cost = SELLING PRICE - PRICE AFTER LEASE
    6800 = 47K - 42000(MSRP * RESIDUAL value (60K * 0.67))
    and
    LOAN FEE = INTEREST * LOAN
    6000 = (MONEY FACTOR(.00295)*2400)= 7.08%) * SELLING PRICE
    Is it correct?
    What is the 2400?

    Thank you.
  • eugez:

    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.
  • 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?)
  • 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....
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