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2013 and earlier-Mercedes-Benz S-Class Lease Questions

CarMan@Edmunds[email protected] Posts: 38,515
edited January 2014 in Mercedes-Benz
Hi everyone. Please use the following discussion to post any questions that you have about leasing a Mercedes-Benz S-Class. Thanks.

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  • The MBUSA site has the following lease info for the 2006 S350 with cd changer:
    $64900 MSRP
    $61627.05 cap cost (incl. destination charge)
    $39663 Residual value
    39 months
    due at signing:
    $699 first month
    $3999 Cap Cost Reduction
    $795 acq fee
    $699 monthly

    This is intriguing to me and as I am not too familiar with the money factors (etc) involved with leasing, I was wondering if it a good deal? Edmunds incentives shows that $2000 is available to the consumer if financed thru MB but it isn't clear whether these figures include that or not.
    According to my one and only MB dealer, they currently have 6 or 7 S350's to pick from so I am hoping this deal may be negotiated even further.
    Any insights would be appreciated! :D
  • Greetings theloungeboy. I am not sure what the selling price that you were quoted on this car is like in relation to its invoice price, but given the $2,000 bonus on leases of the 2005 S350 Sedan through Mercedes-Benz Credit right now I would not be surprised if you were able to lease one for less than dealer invoice.

    The first thing that jumps out at me about this deal is the huge down payment. I always advise consumers against making any sort of down payment when leasing. I do so for two main reasons. The first is if your vehicle is totaled in an accident or stolen during your lease, your insurance company pays off the bank that you were leasing it through and your down payment essentially disappears. The second main reason is that down payments on leased vehicles do nothing to reduce their lease-end purchase prices. So your lease-end purchase option price for your S-Class would be exactly the same, regardless of whether you had put $4,000 down, or had made absolutely no down payment at all.

    I just calculated a sample lease payment using Mercedes-Benz Credit's actual lease program and the information that you provided in your post and I came up with a 39 month, 12,000 miles per year zero down, pre-tax monthly payment of around $844. With a $3,999 cap cost reduction, the payment for an otherwise identical lease would drop to around $731. As long as the selling price is below invoice, the payment that you were quoted looks good to me.

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  • Thanks Car_man!
    The cap cost reduction bothered me too. I always thought one of the reasons to lease was low out of pocket costs.
    Thanks for your input, you've given me something to ponder. :)
  • nvbankernvbanker Posts: 7,285
    I NEVER put money down on a lease - if it's required, it's no deal. I agree with the host entirely on this matter. Besides, it flies in the face of leasing to begin with! The reason I'm leasing, is to keep my cash in my wallet, and amortize the depreciation of the car over a period of time with monthly payments. If I'm going to decap the lease, I should buy, then at least, my down would count as equity in the car.
  • You're very welcome theloungeboy.

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  • If you could afford to purchase a MB S500 and you would be willing to keep the vehicle 4+ years, does make sense to lease the vehicle. I have heard that you shouldn't purchase any vehicle that costs more than $50,000 (you should lease it instead). I am not sure whether that is accurate. Does anyone know of a rule of thumb for this query?

    Thank you!
  • Do you have any money factors and residuals for an '06 S 500? Thank you.
  • Hi ferrast. Regardless of how expensive a car is, I would never personally lease it if it had a terrible lease program. Mercedes-Benz is not currently providing any lease money factor support on the 2006 S-Class. As a result, if you were to lease one through Mercedes-Benz Credit, you would have to use its standard lease money factors. Its current buy rate lease money factor for a 36 month lease by an individual who qualifies for its top credit tier and pays a security deposit is .00320. This is equivalent to an interest rate of around 7.7%, which is not very good. I personally would probably decide to finance rather than lease this car. Whatever you decide to do, make sure to take the dealer cash that is currently available on the 2006 S-Class into account when negotiating its selling price. There is currently a whopping $7,000 on the '06 S350W, S430V, and S430V4 and $10,000 on the S500, S600, and S65!

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  • Hello ferrast. I have seen the lease program for the car that you are interested in. Its specific money factor and residual value depend upon how long you lease it for and how many miles per year you need to be able to drive it. For now I will assume that you are interested in a 39 month lease with 15,000 miles per year. Let me know if you want something different. If you were to lease a 2006 Mercedes-Benz S500 through Mercedes-Benz Credit right now for 36 months with 15,000 miles per year, its buy rate lease money factor and residual value should be .00320 and 49%, respectively. When negotiating the capitalized cost for your lease, don't forget to take the dealer cash that I mentioned in my previous post into account.

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  • Thank you for the information. My local MB dealership offered me an $18k discount to the MSRP. I would have purchased one; however, I am currently leasing an '03 E320 until the end of August of '06. I mistakenly thought that MB Credit would allow me to get out of that lease since I would be getting into a more expensive MB - they didn't care.

    How could I research the money factor, residual value and the conversion of the money factor into an interest rate?

    Thanks again and Happy New Year!!
  • Hi Car_Man -

    My wife's pregnant with our first child and we have two sports cars, so one has to go to make room for a 4-door. We has almost decided to buy an E500 used until I saw an eBay ad from a company called Dick Dyer MB in SC that was selling S500's for about $16,500 off the sticker.

    That was yesterday. Today, the $10,000 MB money seems to be gone. Since you are an expert on leasing and seem to know a lot about MB USA programs, do you think they will introduce a new lease program or offer more cash to help dealers unload the 2006 S-Classes before the new S550's start to hit the lots?

    Yesterday a $90,300 car was $73,800. Today its $83,800. I wish one of the MANY MB dealers we were talking with over the past two weeks would have told us about the $10,000. Not a single dealer tried to move us up from a $66,000 E500 to an S500.

    I did a spread sheet on buying the S500 and it looks like my net cost to own the car would be something like the following. I'm trying to figure out if leasing is better than buying. If I look at keeping the car for 3 years, it would cost me about $1,350 a month is a dealer would sell the car for $1,500 over invoice. But with the extra $10,000 my cost goes down to under a $1,000 a month.

    What would a lease run?


  • You're very welcome, ferrast. I see that you have found out that it is not that easy to get out of leases early. You are absolutely right, banks don't care how much nicer the new car you are getting is. If you want to get out of your current lease eight months early, you are most likely going to have to pay.

    I am not aware of any resource that provides information on banks' lease money factors and residual values to the general public. I should be able to give you an idea of what these numbers should be like for this car though if you let me know how long you want to lease it for and how many miles per year you need to be able to drive it. You can convert lease money factors into approximate money factor equivalents by multiplying them by 2400.

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  • Congratulations, Bill! I know the feeling about having to switch cars when a new arrival comes. When I had my son, I switched from a coupe with a manual transmission to a sedan with an automatic :D.

    You're in luck, Mercedes-Benz is still providing $10,000 dealer cash on the 2006 S500 Sedan in January. If I was in the market for one though, I personally would probably lean towards financing it through leasing it through an independent bank or credit union because Mercedes-Benz is not currently providing any sort of lease money factor support on it.

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  • rayngrayng Posts: 70
    Thanks, Car_man for the discount info on the '06 S500. Any idea which Southern California dealerships are good to work with? From what I've heard from other posters, I'm leary of going to Rusnak. Hey Bill, check out the $17k discount off an '06 S500 from carsdirect. I'm sure an dealer should probably beat that price.
  • I've got an order down on an S550, and should arrive within 3 months. Here are my questions:

    I understand that newly-intro'd models typically have some sort of incentive or special lease rate. What can I expect to pay? The car will be sold at MSRP, so I know what the cost will be.

    What would the typical residual value be, percentage-wise?

    If the dealer gets the car I ordered, and they try to gouge me with a really high money factor or low residual value, what are my options if I walk? Will they then sell/trade the car to another dealer that I CAN strike a deal with? I don't want them to think they have me over a barrel since they'll have the exact car that I want.

    Thanks for your help!
  • No problem, rayng. I am not personally familiar with which dealerships are and are ont good in your area. Sorry.

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  • Hi jadmiral. I'm not sure where you heard that brand new models usually have some sort of incentives available on them, but the opposite is usually true. Manufacturers want to ride brand new or redesigned models without any support for as long as possible. Similarly, dealers are much less willing to provide substantial discounts on brand new models. Consumers who want to be the first on the block to have a new vehicle have to pay extra.

    I'd be happy to give you an idea of what you will have to pay to lease this car, but Mercedes-Benz has not published a lease program for it yet. Most manufacturers do not publish their money factors and residual values for vehicles until right before they are scheduled to arrive on dealer lots. I may be able to give you an idea of what this car's lease program is like if you check back with me right before you are scheduled to take delivery of it.

    The dealer that you ordered your car from cannot force you to take delivery of it if you are not satisfied with your deal. However, if back out of a deal on an ordered vehicle you will likely have a hard time getting any sort of deposit that you made back, even if it was supposedly fully refundable. It is a lot easier to get your money back if you made it with a credit card because you can always dispute the charge. They probably will not let you back out of a deal with them and trade your vehicle to another dealer that you can work with.

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  • rayngrayng Posts: 70
    Last week, I accompanied a friend to pickup an '06 s350 for roughly $13k off MSRP at Penske. After purchasing 2 Lexuses and one Bimmer, I have to say I'm not impressed by the professionalism and lack of honesty of local MBZ dealers.

    By the way, the lowest price I received is $57500 otd with cd at downtown.

    My question is how will huge discounts on '06s affect risiduals for the '05s or earlier? Doesn't that lower the new s's residuals as well causing high initial lease payments? What were the incentives or discounts like when the w220s first bowed in 6 years ago?
  • domain123domain123 Posts: 6
    Just stopped by a dealership yesterday to get some ballpark pricing on a new S550. The MC Credit residual offered was 61% however the money factor calculated to a 9+ percent interest rate!

    Does this sound right or should I be looking for better residuals / money factors?
  • Hi domain123. Mercedes-Benz's lease program on the 2007 S550 is pretty bad right now. It is not currently providing any sort of money factor support on this car. As a result, if you were to lease one through Mercedes-Benz Credit right now, you would have to use its standard lease program. The last time that I saw it, MBC's buy rate standard lease money factor for a 36 month lease was .00380. As you mentioned, this is equivalent to an interest rate of around 9.12%! You might be able to do a little better than this by leasing through an independent bank, but I personally would not lease this car right now.

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  • juice1220juice1220 Posts: 27
    You are actually a little off on the money factor. But your close. And dont forget an independant bank may give you a better money factor, but a worse residual, and the 2 go hand in hand to the final number that the customer will pay.
  • juice1220juice1220 Posts: 27
    There is also one key subject that everyone forgets to keep in mind. The basic rule of retail. Supply and demand. With the new 4 matic s class coming out, dealers are going to make as much as they can on the vehicle and the reserve, becuase if you want to be the first have one, that is the price. If you want a deal, you will have to wait until the vehicle is no longer "hot", and get one when it is just average. This rule not only applies to vehicles, but everything in the retail industry, from video games, to home appliances, and even in the clothing industy. Thank you and enjoy.
  • Car man can you tell me a little about the balloon financing option from MB Credit. I can't seem to find any answers, and it looks to me like an open ended lease. I'm considering this for a CL600 certified preowned which has already taken massive depreciation, and for which the Balloon option costs a lot less than the lease option in their calculator online. I don't really understand balloons from mercedes at all and would like to know if you can give me some of the pros and cons or point me at any descriptive info online?

    FYI details:
    asking price (not negotiated) 42370 monthly payment 524 balloon payment 32340 at 7.5% interest over 24 months. Car is an 02, can buy an extra year of warranty for a total of 2 (and probably at the same price), can't imagine the car being worth much less than 32K in two years (it was like 140K new after all and is already insanely depreciated).

    the equivalent 24 month lease would be 790 a month (they obviously are betting on a much poorer residual)

  • in a nutshell, balloons are the combination of lease and finance. You are restricted to miles wear and tear, etc... At the end of the term you have the option to buy the car at the balloon payment or turn the car back in. I have been with Mercedes for a while, and have yet to do a balloon. Balloon is also registered to the buyer and not the bank, so the bank has no real responsibility to the vehicle. So Gap insurance is not included, in a balloon. That is something you definitely need to buy, to be on the safe side. Also find out what is the disposition fee on a balloon, if you decide not to buy the car, or if you are stuck with buying the car at the end.
  • Thanks so much for your response. I know you haven't done one of these balloons at benz yourself, but I did have two more questions, as my last 3 mercs I did cash buys and the only car i've ever financed is my mother's audi, 0% financing, but I really like the idea of pre-tax dollars from my business paying for this:

    Do I assume downside risk, say the car is worth less than the balloon payment and I want to turn it in, do I have any obligation to pay the difference between the balloon payment and the determined market value? (Aside from any disposition fees)

    Because the car is titled in my name (or ostensibly in the name of my business), do I get to write down the whole monthly payment less inclusions or do i have to write down depreciation? Since I'm only financing and paying for the amount used, is it still a lease as far as the IRS is concerned?
  • My dealership is suddenly offering $1,000 over invoice and buy rate (currently 00375)for a lease. This seems to be a good deal...? Dealer claims it's just because times are tough, but does anyone know if something different is planned for the 08 model years? Does this sound like a good deal?
  • Does MB offer leases on used S500s? Does MB extend original warranty for the duration of the lease?
    How much should i expect to pay for 2004 S500 on a 0 down 36 months 10K miles lease?
    Thank you
  • I want to lease a 2007 S550 and understand that a number of leasing companies offer prices that are lower than MB leasing. Has anyone had any experience with these companies?
  • topspin628topspin628 Posts: 373
    I was looking at 05-06 cpo S classes and trying to make the math work out. Some help please? I usually lease but CPOs don't lease out well. So, if one were comparing a 60 K 5 series or E Class, the lease would be around 900 per month tax in the payment for 36 months and 15,000 miles per year. You'd have to finance the 55-60 K CPO car, pay all of the tax (not just on your payments) and probably put in some service money (new tires? brakes- not a certainty but should be budgeted). So let's est monthly payments at about 1700 per month with interest. At the end of the 3 years (without service) you paid in about 29 K more than for the lease and you have a 5 year old car that's probably worth maybe 30K? So if my numbers are close and please correct if not, you would wash
    out but you would have the risk that the car could be worth less and you would most likely have had to put in 1-2K for repairs of wear items not covered by the cpo warranty. So I'm guessing that to buy the 60K cpo S class is a more expensive prop than to lease a new 60K E class. I would welcome and clarification and correction. If so, then, cpo selling and leasing needs to change a bit for me to take part.
  • juice1220juice1220 Posts: 27
    The lowest monthly payment is not always the "best" monthly payment. I am a dealer and thats all the help I will give.
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