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Mercedes-Benz E-Class Lease Questions
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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.
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.
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.
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
Which dealer is this?
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.
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...
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.
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.
@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.
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.
Just call them and ask them to check - better safe than surprised!
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.
Which dealer was this?
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
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.
Thanks for your reply.. Capital reduction is 2397 in this deal. is that good deal? tks
For $4k drive off, if $2397 is toward the cap cost reduction, then I think the acq fee of ($795-$1095) is rolled into the lease.
Without paying any cap cost reduction (save that $2397), your monthly payment should be $684.46/mo + tax with 58% residual, 0.0025 MF. With 2397 cap reduction, it's $617.00. It's a little bit off but it's very close.
If you were to put down 2.4k in cap reduction, you might as well consider applying multiple security deposits. 2.4k is worth 3 security deposits, or a reduction of 0.00021 in mf. Your monthly would be $667.09 without cap reduction.
This is a great deal as long as they are already $2k under invoice. Good luck.
MSRP: $53,425
Invoice: $50,347
USAA no-negotiation price: $48,047 (your dealer should be able to match it)
Assuming no cap cost reduction, acq cost/bank fee (~1095) rolled into lease, drive off only consist of first month and tags, 58% residual, MF 0.0025 (not sure if it's your credit or dealer markup if you were quoted .00275):
$665.85/mo + tax
thanks so much for your valuable inof. My monthly payment is 675 (including tax already) i think it's pretty decent deal. thanks again for your help. Btw, how do I calcute the payment based on 0.0025 and in my case, they did collect multiple security deposit, should I offer that to make payment lower? tks
http://www.leaseguide.com/calc.htm
You'll also need to put in the acquisition fee under "additional costs included the lease".
Did they collect or did they not collect multiple security deposits? If you had the money just sitting around, you should use it to apply multiple security deposits (up to 10 for a total reduction of 0.0007 in mf). You can save 30-40$/mo. It's equilvalent to 7%+ annual return over the course of 39 months. From my experience, not many dealers know about this and even when you tell them about it they don't want to do it. It's a program offered by MB Financial. The dealerships will tell you 0.0025 is their current special rate, but if they looked carefully it is also the base/standard rate which can be further reduced by MSDs. So your mileage may vary.
Which dealer are you working with (or WERE you working with would be more correct)? We're in the Detroit area and have great experience with the dealer that is not owned by the "3 connected" MB dealers in the area. If you would, share which dealer was not such a good experience.
If you ask for the Sales Manager (Ken), tell him you heard some good things about the dealer experience off of this board and he may recognize my user name. Good luck.
24 Month – Residual 61% of MSRP – .00315 Base Rate
36 Month – Residual 56% of MSRP – .00280 Base Rate
48 Month – Residual 47% of MSRP – .00280 Base Rate
60 Month – Residual 39% of MSRP – .00280 Base Rate
Residual is based on 15k miles/year, +2% for 12k and +3% for 10k.
Thanks
Can you share with us the deal that you got from your dealer. I live in NY.
I was offered the following in April
E350 4matic sport
P2
Wheel Package
Metallic Gray
$765/month (including tax)
39 months/10K miles
$3,500 Downpayment (Fees + 1st pmt + cap cost)
No fleet discount and no msd's
MSRP: 59,745
Selling Price: 55,520
I just want to get a feel if there is more wiggle room and hopefully the rates do not change significantly in May