Mercedes-Benz E-Class Lease Questions

ob995

The standard rate is 0.00275 currently but dealers are free to mark up or down the rate as much as the want. If the mark up the rate from the standard program offered on that car, they get a bigger commission from MBF for getting the customer to agree to a higher rate and if they mark down the rate the commission paid to dealer would be less as well. I have no idea if MBF pays the dealer less based on MSD or not tho and MBF might ding the dealer after 1 security deposit which is why dealers do not advertise or even advise customers of that possibility. And if you credit is above 720 MBF will even waive the security deposit requirement to get "base" rate which is the published rate which on an E Class Sedan is 0.00250

poorprof

substantial loss to them. This is not lip service, they reaally did. So my payment went up a little, but a better deal overall. Ob is absolutely right. MB fiance turned down my contract for the same reason (too low an MF to apply MSD to). The 0.0025 is the absolutely lowest rate dealers have. Beverly Hills MB was very professional about it. They worked out a nice deal for me at substantial loss to them. This is not lip service, they really did. So my payment went up a little, but a better deal overall. Of all the dealers I talked to, they ended up giving me the nest deal and then made up for MB finance. Just ask for their fleet manager.

outie

Thanks guys for all the information. It all makes sense now. Apparently the way MSDs work is very different from BMW and Mercedes. With BMW, you can buy down the MF with their published buy rate. With Mercedes, you can't use MSDs to buy down the published buy rate, but only the hidden standard rate.

I have asked several dealerships and some of the financial departments don't even know about MSDs and some have a substantially marked up rate of 0.0035. The only one that knows some of it is Beverly Hills but even they cannot give me a rate I expected with 10 MSDs (0.00275 - 0.0007 = 0.00205, but BH says they can only do 0.00217). I guess at this point the best option is to wait for May's rate to come out on the 4th.

poorprof

Outie:

The downside of waiting is that the RV may go down. They have held the RV the same for almost 5 months into the production year.

outie

That's true. However, the RV for the new 5 series is 61% for 10k with a .0025 as well. I don't know if that would make MB stay with a higher RV.

I will wait for this dealer to get back to me tomorrow. They are willing to have the finance director to call MBFS to find out more info, which I really appreciated. If they can do the same as BH, I may just go with them since BH does not have the car I wanted, otherwise I will have to wait for May. We'll see & thanks again.

boomboom4

This is the lease that was accepted by my local dealer. Tell me what you think.

2010 e350 RWD/palladium silver/p1/wheel package
MSRP 54895
cap cost 50870
Acq 795
cap cost reduction 2000 loyalty
Adj cap cost 49965
residual 32216
MF .0018
term 39 months
taxMI 6%

594=35.69= 630.49

MSD(10) reduces mf by .007 to get mf of .0018

outie

Are you sure your dealer accepted the 0.0018 mf w/ MSDs? That's the topic I've been discussing with other members in the last few posts. I have asked several dealers here and none of them could reduce the MF from the 0.0025 rate with MSDs. It's simply not allowed by MBFS. Even the dealer that originally accepted it later called poolprof that MBFS rejected it and he had to settle for a higher rate.

Which dealer is this?

outie

Hi ob995, assuming credit is above 720, is it possible to get the .0025 to .0018 with 10 MSDs if no dealer mark up? I read in the M-class forum that car_man said the dealer must be lying if they say can't go down from the special/base rate. Thanks.

ob995

My understanding, I am not a dealer, I just happen to lease lots of vehicles, both personal and company cars for my business is that what ever bank, say MBF sets certain residual and money factor for each car. The dealer is free to mark up or down the money factor as he see fits, except by doing so the commission the dealer earns from the bank is either lower or raised based on the difference between the base rate and the rate you agree.

For example on E-Class Sedan the base rate is 0.0025 and you are required to have a 720+ credit score to obtain that rate without a deposit, if you have say a 705 credit score if you want the 0.0025 MF you will be required to put down a security deposit.

I honestly do not know the effect of putting down multiple security deposit on the dealer commission or if the dealer indeed takes a hit on his commission if you put down more than 1 security or the MF goes below the base rate.

In theory the dealer can do whatever he wants, but at some point, the dealer is going to refuse to do the deal because he will make no money on the deal or might have to pay MBF to write the lease, if the dealer choose to buy down your rate, he free to do so but that will require him paying MBF some money upfront, just like some times the home owner will pay any points associated on mortgage so that the buyer will get the rate in offer so that the home will close.

It could be very possible that the par rate on E-Class Sedan is 0.00240 and at the base rate the dealer makes $500 commission from MBF but for example, if the dealer writes a lease for 0.00230 he has to pay some points to MBF to buy down the money factor, no how many points or how much each points costs as I made up the $500 commission above to show an example and most dealers refuse to pay points to MBF to buy down the rate especially if they are already selling the car invoice as the only profit they are making on the sale is premium paid by the finance company and the trunk money which is normally half as much as the difference between invoice and MSRP.

Dealerships are not a charity, they are a business just like any thing else, so if they are already selling the car at invoice they need to make money somewhere on the deal, ie financing and trunk money and they are going to give you that money too just to move the cars, as selling car for no profit at all means they will not have jobs for much longer so their is only so much of a discount you can get from the dealership before they tell you to take a hike.

Hope that makes sense to you.

outie

Thanks for the explanation. I totally understand where you are coming at regarding the dealer buying down the rate.

However, I was under the impression that the MSDs program is offered by MBFS, so the dealer does not need to buy down the rate. I do believe that there exists some commission between MBFS and the dealer and it's affected by MSDs. This is why none of them is willing to do it. They are not buying it down and they are making money by selling the vehicle, so it's really hard to understand why they don't want to sell it with at least some profits on the sales side. Maybe the finance manager will get the ding by doing it, who knows?

As a previous and returning BMW owner, it's been straightforward to deal w/ their lease program. You can easily buy down their MF w/ MSDs even when the car is sold at invoice and a base MF of 0.001xx, no question asked. I am having so much difficulties with Mercedes...

ob995

The dealership needs to pay salesman, rent, light bill, etc, maybe they expect to make X amount per car sale otherwise the sale is not worthwhile. Lets assume to get that X number, they are able to sell the car at invoice but need to keep 100% of the trunk money and get their commission for financing the deal. If MBF dings the dealer for MSD's on their commission is not hard to understand why most dealers refuse to do it. Lets assume by doing 10 MSD the dealer end up getting $0 commission from MBF then the only money they made on the deal was the trunk money. On a E350 Sedan the trunk money is less about $1.5k. If their fixed cost are more than $1.5k they are loosing money selling the car. Yes they made a profit selling the car over what they paid for it, but that does not mean they made any money on the deal after factoring in their other expenses. Remember let say a dealer gets 30 E-350 Sedan and sell them all, they can not order another one if they are run as they are allotted cars based on last year sales. So by selling you a car for loss which they think they can otherwise sell either at break even or a small profit is hard for them sallow as car business is not like TV where if you sell one, you can call your local distributor and get another one in 2 days.

I know when ever I bought a car, leased or with a car loan, the dealer always ask how I plan to pay for the car. The reason they do that is because they are taking into account the commission they will make for getting you the loan or lease. I lease and purchase lots of cars, the company I work for does not have a full on fleet department as we have 9 leased and 4 company owned vehicles and because of my knowledge and contacts I have made by acquiring of those cars for work, most of my family and friends normally ask me to help them purchase cars.

The how do plan to pay for it always comes up no matter the manufacture. The difference I found varies between banks really. I have had some dealers tell me that they can give me a much bigger discount by using their financing over what I could get own my own some times which makes the slightly higher rate a non issue. So the commission paid to the dealers must be significant.

Recently when I helped a friend purchase an E350 Coupe last month. My friend got pre-approved for BOA 60 month car loan at 3.2%. The fleet manager I normally deal with offered to give my friend an extra $1k off the car if he agree to use Chase 3.5% for 60 month and showed us the difference in the interest over 5 years was about $385 so that my friend was still saving just under $700 by getting Chase loan over using his pre-approved BOA loan. So I assume the dealer makes more than $1k in commission from Chase or paid a higher % based on volume of loans they send to Chase etc which made it worthwhile to the dealer to offer us a bigger discount for getting a loan via him.

I am not defending MBF, MB or the dealer in their car practices at all. I think they are all crooks when it comes to leases as they all work the deals backwards. All the way from MB and MBF on the programs down to the dealers when dealing with customers. MF should always be comparable to what you can get a car loan for as the cost of money is the same both. Currently many leases programs have rates 1-3% higher than what you can get car loans rates at which is a joke. That is because all the manufactures make their lease programs so that they cost about the same as what their car competitors do, so even if the car you happen to leasing has a good residual they just jack up the MF so make the payment higher vs cars with bad residual drop the MF likes crazy to make up for the low residual. It seems the consumer is one getting screwed today on leases.

poorprof

I am puzzled too by the gentleman from MI who had his MF reduced to 0.0018. I have an auto credit score of 860 and left the dealer on Friday thinking I had bought down my MF 7 points from 263 just to get my contract called back because MBF turned it down. We leased two cars, the other a C Class, so they stood to lose two deals. I am sure they weren't bluffing.

When I leased my last car from Infiniti, I bought the MF literally down to zero (0.0009) with MSD of 0.0001 for each deposit. We started at the special rate. Infiniti dealer NEVER mentioned MSD either till I brought it up.

Anyway.... The technology on the E needs much improvement, so I will be back at in 39 months. Lane keep works so so (compared to Infiniti M class). Voice command is clunky with few direct commands. Great car and superior to the M class and BMW, but a work in progress.

dannye350

Congrats on the car. i am also from michigan. Where did you purchase your car from?

boomboom4

They are tracking down the car, color and options that I am interested in. I had read the previous posts before I put my offer in and was somewhat surprised they accepted it. It has not gone through MBF yet so I am curious what will happen . I will let you know. My father is purchasing my off lease 2007 e350 from the same dealer in a separate transaction this week and this may have been helpful in my securing of this lease price. When I first brought up MSD a month or so ago my salesman acted like he didnt know what that was. Yesterday he also wanted to make sure that I wanted to do that so it must cost the dealer some money Quite frankly, I got tired of screwing around with the salesman and emailed him what I was willing to pay. I was and am willing to walk away from the deal if they do not honor it.

outie

Please keep us posted. The MF is the only factor stopping me from moving forward. On a side note, I think that's a pretty good deal if it all works out.

@ob995: totally makes sense. I think the whole point is profit margin. If I push for $2k+ under invoice and still want the MSDs to go in, they are barely making any profit and it becomes not worthwhile to sell me the car. I appreciate all your insights in this topic. It's been very helpful.

jwilliams2

MBF has never (to my knowledge) allowed the use of MSDs off of any special rates. Only the standard rates. And MFs vary due to competitive situations and availability by model.

Keep in mind that finance rates are charges for the cost of money, and once the loan is satisfied, that's the end of it.

With leasing, the expense and exposure is much greater, as at lease end the car company usually gets the car back. And then has the expense of re marketing and faces potential losses due to the spread between residuals versus actual end of lease wholesale values.

outie

Good news! I just got another dealer to take 0.0018 with 10 MSDs. I made sure that is doable and he confirmed again and again w/ both the financial manager and MBFS by calling them to make certain. MBFS said NO PROBLEM. He also got me a great price $2k+ under invoice without any negotiation. I will post the details when the deal is finalized tonight.

poorprof

Does anybody know if the liability limits for insurance for an E 350 is 50k-100k or 100k-300k?

poorprof

Dont mean to alarm you Boomboom, but it looks like your dealer has not checked with MB Finance. It looks like it REALLy is their policy to only offer MSD on the higher standard rate. So your payment may go up by a $100 a month.

Just call them and ask them to check - better safe than surprised!

vrmm

Great, I will try same and let you know if I'm successful. Why are they offering $2K under invoice, and how do they make money that way?

outie

I was able to get 0.0018:

E350W Palladium Silver, P2, Panorama roof
MSRP: $57,615
Invoice: $54,144
Selling: $51,844
Acq cost: $1140 rolled into lease (yes marked up but I am willing to)
MF: 0.0018 with 10 MSDs @ 750$ each
Residual 59%
No loyalty/fleet discount.

Drive off: $8977.38 including $7,500 MSDs, $1.4k title/license/fees/1st month
Monthly: $643.5 + 9.75% tax = $706.24/mo

He showed me their April lease paper which has all the rates. He said sure the special is 0.0025 but it is also the base rate. There was no problem to take that down to 0.0018. He confirmed w/ MBFS personally (not like other dealers I dealt with who just rely on their financial manager). It was a breeze to deal with him. We got the deal done within hours through emails.

poorprof

Congrats!! great deal!

Which dealer was this?

outie

Thanks & I appreciate all your helps. Got it from Long Beach.

boomboom4

I spoke with the dealer yesterday and they have tracked down the car I am interested in but it is in another state. They want 900 to ship it to MI. I am not real surprised that they had trouble locating a RWD in the midwest as most are AWD. I told him to let me know what other cars,colors,options are available without the shipping. I have not heard back. He reiterated that the mf of .0018 was not a problem(that always worries me when they say that). I am glad to see that another member got the same mf although I don't know how he got 2k south of invoice. Definitely a better negotiator than me. I found truecar.com to be very helpful. I will keep you informed. This forum has been very helpful. Thanks to all.

jplending

Hi I just got the 2010 Eclass today. can anyone help me to take a look?
E350 Palladium silver/premium 1/para sunroof
39 months lease with 39,000K mileage
4000 drive off (including 1st payment, dmv and bank fee)
monthly 620.69 or 675 after tax

They told me it's 2450 under invoice but not sure it's good deal or not. thanks

jds10

Hi everyone,

This is the "best" offer I've gotten, but it doesn't sound like a deal to me:

E350 black/black premium 1
Sticker $53,425
Selling price $51,500
39 months 12k miles per year
$3800 drive off all in
RV 58%, $ factor .00275
Monthly of $791 (including tax).

Stupid robust Texas economy.

outie

$4000 drive off for 1st month, dmv, and bank fee only? It looks like there could be some capital reduction (~$1.5k).

outie

I do not know how competitive is the market in Texas, but that selling price is above invoice. There may be still room for negotiation.

jds10

That's correct on the cap cos reduction estimate. Going to keep leaning on them with the sale price as well. Thanks!

jplending

Hi Outie

Thanks for your reply.. Capital reduction is 2397 in this deal. is that good deal? tks