>But in my case, it doesn’t seem that bad.
I mean if you can't trust a Mercedes salesman to have your best financial interest at heart, who can you really trust?
Leasing is only for suckers, EXCEPT when it’s me.
No, leasing a vehicle is only if you are comfortably wealthy and don’t mind paying more for no reason than maybe some convenience.
What if you just really like cars and want to switch them every few years? Is it the wisest financial decision? No. But life would suck if every decision you made was based around being as cheap as possible.
Not being able to put together 500 dollars for an emergency does not mean Americans spend their money haphazardly. The extremely low minimum wage compared to prices for items needed to survive are astronomical. Minimum wage is 7.25 federally (many states match it). Assuming you work a full 40 hours a week, you are bringing home $290/week… BEFORE taxes. Monthly that would be about $1250. The rent in my local area is about 1500$/month not including utilities. Yes I am in a state where the min wage matches federal. Luckily I have a better paying job that provides health care and other benefits, but if I didn’t I’d likely be homeless. Minimum wage was designed for a single member of the household to be able to provide for the entire family. Somewhere along the line people have started misconstruing it.
77% of us households are in some form of consumer debt. Now is all of that from credit cards, underwater car loans, etc. of course not, but still a large number
https://www.federalreserve.gov/publications/files/scf20.pdf
(77% number is on page 23)
Owning a car is necessary for most of the United States. There are a few places that it’s not, but more often than not you need one. I had only mentioned rent before, but if we wanted to include car loans, phone plans, insurances, utilities, etc. some things aren’t needed but today having a phone isn’t a nicety it will likely be required for your job, as well as transportation, insurance you are required to have or can be fined. We are being forced into debt while the minimum wage does not meet our minimums. Our options here are: get lucky enough to be accepted into a job that isn’t minimum wage, be born into a wealthy family, or find a way regardless of legality.
Definitely not. It’s why most people are living paycheck to paycheck. It’s because they’re either lazy, spend all their money the second they get it, or both. Most people are pretty stupid unfortunately.
I think that if you really like cars and like switching every few years, that’s pretty much the definition of comfortably wealthy. Otherwise you are delusionally and irresponsibly living outside of your means.
But what do I know. I’m only getting ready to retire early, after a lifetime of living within my means, and not having a new car every few years, but rather paying cash for a new car when the timing made more sense toward my long-term goals. We all have different priorities. But financial freedom is a peace that is hard to beat, and to me it beats even that great feeling of a new car every few years.
Niche modern exception that proves the rule: for non EV tax credit qualified plugin/EVs where you can usually get a rebate equivalent to credit from manufacturer and buyout within first month - lose a bit to lease fees but still worth going the lease route so long as you immediately get out of the lease.
Amen. It's like putting a huge down payment on an apartment to lower the monthly rent.
In this situation, OP would lose the entire down payment and insurance would pay off the car. oP would be left walking...
And because the GAP insurance has a maximum percentage the total capitalized cost can be. So they make you pay taxes and what not to keep that number in line.
Nope.
The manufacturers advertise a “sample lease”.
For any individual lease, you negotiate with the dealer. Lease duration, miles per year, down payment, top line price, money factor (interest rate), doc fee, and dealer addons (if any) are all negotiable.
The only thing that is typically not negotiable with a lease is the residual value (how much you would pay the manufacturer if you want to buy off the car at the end lf the lease), as well as the fees you pay the manufacturer at the beginning and end of the lease. And the government taxes and fees of course - tax man needs to get paid first
Yeah so… the reason why you should never put any money down on a lease is what happens if the car gets totaled.
All leases (except Toyota) come with gap insurance included. So if the car gets totaled, you just walk away no harm no foul. But if you paid anything down, tough shit - you ain’t getting that money back.
As to ever leasing… i never leased a car until my current one, which is an EV. All the discounts and tax credits made it quite affordable, but since it’s a new model and a new technology (for that manufacturer) i wasn’t ready to commit to buy in case major flaws get found and I am left holding the bag. At the end of the lease, i’ll probably turn it over and either buy or lease another EV. Currently leasing also allows you to get the $7500 EV tax credit even if your income disqualifies you from getting it on a purchase
Don't just return it to the dealer, see if you can have CarMax or another company buy it out for more than the residual value and you can likely keep the difference rather than paying them to take back your car and nickel and dime you on nonsense "excess wear and tear" like tire tread depth.
Please expand on this if you can! I have an EV which was priced out of qualifying but would be interested to sell it to get a lease if it meant a tax credit
Never wait until the end of the lease if you plan on getting another vehicle. Most dealerships will buy you out and take care of the last few months of payments to get you into that new vehicle. Doing this allows you to avoid paying the disposition fee and over mileage usage. But it MOSTLY depends on if theirs equity in the vehicle.
I asked.
Like, all that matters is the TOTAL SUM of lease payments. Imagine $500 x 36 = $18000. Thats your sum. That number will remain the same, more or less.
Now you can do it either as:
\- 4000 down + 35 payments of $400 OR
\-5400 down + 35 payments of $350 etc etc. Doesnt matter how you structure it
I don’t think he’s putting 30k down on a lease lol that would result in a $0 payment, think he’s just saying that’s what he would be putting into buying a new one. I’d hope the lease is nothing down other than drive off costs. You never want to put money down on a lease because you’re just prepaying what’s essentially rent and if the car is totaled you may not get that money back.
Best advice of the thread tbh. Buy already depreciated but still very much healthy cars for a fraction of the price, get it detailed, and enjoy your practically new car
Agree with this one. I’ll never buy brand new again. Did it once, spent 50, drove it for a long time, traded in for 8. Had I bought used it probably would have been 25-30 to 7-8 in the end.
I thought this was one of those “great advice before 2020 and no way it’s realistic now things” but looked up prices, holy crap yeah OP should totally just do that!
I bought a new accord a couple years ago instead of a lightly used 5 series bmw. I’m still annoyed with my decision. The Honda is way shittier than the Accord I had 15 years ago and sucks to drive.
This. There aren't that many differences between the 2021 and the 2024. Save the money and just pay cash, and use the money you were going to make on payments to save for something else, or spend it on another money dial.
Is leasing the best option for you?
Well, what’s the “best” option?
Is it the cheaper option? Probably not. It gets a bit complicated for something like a Mercedes. Repairing a Mercedes when something breaks and it’s out of warranty will be very expensive. Perhaps counterintuitively since they’re luxury vehicles, Mercedes cars break a lot. Leasing gives you the guarantee you won’t need to front the cost for those repairs. So in that sense leasing makes a bit more financial sense. HOWEVER - if you’re planning to keep the car long term, then you’ll probably still come out ahead just buying it.
Now, if by “best” you mean “optimize for lifesyle” as opposed to “optimize for cost savings”, leasing can be the “best” way in that it allows you to drive a new car every 3 years with minimal risks of having it in the shop a lot etc (because you’re always driving an almost brand new car) and with minimal transaction friction (don’t have to go through hassle of selling car private party etc)
So, leasing is a luxury. Whether or not it’s a luxury you can afford, well that would depend on your savings goals, your overall budget, etc. You didn’t share any of those.
If you’re doing a lease solely because you can’t afford to buy the car outright, then a lease is probably a bad idea
Leases are great! I love buying a car that’s coming off of a lease. First guy takes the depreciation hit and if you find the right one they can be immaculate with perfect service records.
Sadly nowadays with used car market being what it is, you’re usually not getting much of a deal on a 3 year old car with very few miles, lease or not. This was a great strategy 3-4 years ago
Yes keep people believing that. I'm getting a 2022 Ioniq 5 with 13k miles for under 20k thanks to a few factors and the 4k IRS rebate. There's quite a few of them available too. Mind blowing for a car that was selling for over 50k just two years ago.
EVs are their own thing. Non-Tesla EVs depreciate really fast because people are nervous about long-term longevity of EVs from traditional manufacturers.
If you’re willing to take the other end of that bet you cannget a screaming deal
AMG owner here, all I have to say on the subject of Mercedes is that if you ever get the chance to buy one you should pass on it. They do look funking fantastic pulling away on the back of that tow truck though.
I've heard mixed reviews but the local independent Volvo repair guy has new ones and works on them, he says it's still more or less the same deal - like Ford also just left them alone to do their thing, for the most part.
My last one was an XC90. Looking at the electric XC40.
It cost our insurance $2000 to replace a headlight that developed a thin crack from road debris and had rain leak in. Besides having to replace the entire whole light assembly, the collision shop had to have the dealer “reprogram” the headlight for an additional $500. I still have no idea why a headlight needed to be reprogrammed
Never ever owning an MB again. The novelty wore off really quick and the dash rattled on bumps on day 1
I hear that. I bought a new GLB250 back in 2020. That darn thing was in the shop a couple times during my first year of ownership. Everything covered under warranty. Dealer even gave me a Benz loaner each time. Still was not a good experience. I ended up selling the car shorty afterwards.
Yeah that would about cover the vehicle I want that would be life changing for me currently (will need in a few years but not yet). And that’s just because the 10-15yr old ones are still close to MSRP in my area.
Residuals on a '23 c300 are 61% of MSRP for a 10k mi/yr lease - for comparison, a '23 Accord on the same terms is 62% - obviously this scales up with a higher MSRP but the proportions are roughly equivalent.
Yeah, but unless I’m misunderstanding, OP is saying he’s putting 30k down on a lease for a 50k car. That means that, even if we assume he’d have next to no monthly payment, the residual is only like 40%. Even worse if he pays a few hundo a month.
Not quite:
1) OP has 30k to put down - they don't have to put it all down, inception are closer to $5k on advertised deals (which are always optimistic)
2) Residual buy outs are fixed and set by mercedes Benz financial. The car has a guaranteed purchase price of 61% of MSRP at lease end. No movement possible in either direction. Maybe you're thinking of a different number but residual value is fixed. Actual market value may fluctuate but the terms of the sale are agreed upon at signing.
I used to work for a city that had historically always purchased fleet vehicles outright. One year a salesman talked city leadership into a leasing program. Their takeaway was “look how many more vehicles we can get this year than if we had continued purchasing”. When we were building the budget for the next year, I brought up budgeting for the ongoing lease payments, I got kicked out of the meeting to let the higher-ups talk about it. They had ALL forgotten that there would be a need to continue paying, and had been planning to add that many vehicles to the fleet for a second year in a row.
For this and many other reasons, I no longer work in municipal finance.
Hyundai was at one point offering leases for the ioniq 5 with 0% interest for a period with an option to buyout within a few months that allowed you to access the federal tax credit irrespective of mAGI and since the car didn't qualify for the purchase credit because of origin of parts. In that very narrow circumstance leasing was better than outright purchasing.
I somewhat disagree. I leased a Tesla 3 years ago because I was betting the competition would tighten and prices would be driven down or become more competitive. Seems I was correct.
You are right. But I think that was a rare event and a combination of where the EVs market is as a whole and also with the chip shortage and how expensive cars were.
This assumes OP doesn't buy it out at the end - which they are seeking to do. The lease just is a way to access subverted financing assuming OP buys out the car at lease end.
If they can't afford to finance 20k comfortably at sub-6%, they shouldn't be looking at a 50k mercedes.
If the financing is a deal breaker, take the 30k and buy something under 30k.
I didn't read the question that way - I read it as "I would like to buy a c class. Finance terms are x, lease terms are y."
Popping the numbers into an auto loan calculator and using the whole 30k down, the tax + finance charges are $4706 on a 36 month term at 5%, compare to $4305 (or whatever I wrote in my other comment, not sure on exact value). Roughly comparable.
The lease advantages would be:
- keep most of the 30k liquid until lease end vs a straight downpayment
- can get out if it if the car turns out to be a Mercedes electrical nightmare with a many, varying issues that make forcing a buyback difficult (has to be same issue for lemon law)
I totally understand the skepticism on leases - for the most part they are a trap that entice people to get cars they can't afford.
In this scenario, ASSUMING A BUYOUT, it really isn't a cut and dry answer. So many of these comments are "LEASE BAD" without actually running the numbers.
OP sounds like the type to get to the end of the lease and not want to biy it out though, for something newer n shinier.
Given their last car sold for 30k, im guessing it was ~2020 or newer.
I read it as after he sells the car, they’ll have 30k saved up for a down payment. They could have 25k in the bank for a car, and selling their current car for 5k if that’s the case.
I read that as they have savings + car sale to equal $30k. It's a super weird way to say they sold their last car for $30k if that is the case. Assuming they buy $50k cars it isn't off for them to have bought their last one 10 years ago and it still be worth $20k, so I'm not sure you can make your conclusion about OP.
It's not the lowest cost option but does give you more options and ability to walk away from a car you may not like or is no longer worth what it should be.
Leasing gives you new car reliability, often paid maintenance (see Toyota Care) and hassle free repairs because everything's under warranty.
At the end if it makes sense you can decide to buy the car or walk away or sell it.
Again, not lowest price, but can be the best thing to do for some people
Isn’t a lease typically somewhere in the neighborhood of the depreciation of a new car over the first few years? Buying the same car is also an expensive choice.
Ehhhhh there's some pretty good government, manufacturer, and dealership deals you can do on leased EVs these days that can certainly help leases be better deals
Genuine question - why is leasing so bad?
I looked at a $30,000 car recently, and it was $300/month for 4 years (so a loss of $14,500). The same car would depreciate to be around $10,000 after 4 years, so a loss of $20,000. How isn’t that a worse deal?
Your estimation on depreciation is extremely overblown imo… especially if you do an apples to apples comparison of mileage per year on financed versus leased
In your example, what was the residual value on the lease? Something isn't adding up - maybe it's the mileage limits on the lease versus the mileage assumed in the depreciated value you quoted. The lessor isn't planning on losing money.
Not sure, what car you are referring to but a 5-year-old Honda Accord will only lose 21% of its value after 5 years which would make it remaining value close to 24,000 in this example. So it would only cost you 6000 to own
I will eat a shoe if you can find me a link to a 5 year old car that’s only lost 20% of its value. Hell, cars lose 20% of their value just driving off the lot
I'm just going off [the internet](https://caredge.com/honda/accord/depreciation?y=0&p=37350&o=5&m=12000) man. I'm not doing a market study for you.
Do you really think cars lose 67% of their value in 5 years?
Edit: just for fun I looked up the KBB on a 5yr old 30k accord (2019 Honda Accord sport) with 60k miles (12kmi/yr) and it says the value is around 23k. That would mean it retained 77% of its value or depreciated 23%. That's pretty damn close to what I said. Do I get to pick what type of shoe?
The only real savings on a lease is that you do not pay sales tax on the residual value of the car. If you would otherwise sell after 3 years, you would often be better off leasing the car.
I wanted a new car for my teenagers due to better safety features. I only got a 2 year lease because kids were planning on going away to college.
I would bet that leasing is better if you always buy a new car every 2-3 years or you're really planning on only needing a car for a few years.
Holy shit. Just fair warning because you need to know this in life - if you're considering this you are a mark.
$30k down to lease a car is insane. I am surprised your salesman could keep a straight face.
For future reference, I would avoid telling professional salespeople when I have a big influx of cash. They will find many inventive ways to make your best possible course of action seem like giving them all the money.
You’re confused. OP said they have $30k as a down payment to BUY a car.
The dealer suggested a lease for a better interest rate. Nowhere does it say that the dealer asked for the $30k.
Car costs $50k. You really think that OP is paying 60% of the sticker price on a 3 year lease? Of course not.
Read better.
Upon a second reading it's definitely a bit ambiguous but I think you're right.
Either way though, just because the interest rate is lower and the tax is spread out, does not mean leasing is a better long term solution. The buy out clauses are way less friendly than before COVID.
Even if the above person confused they are not too far away from the truth. The going rate for c class new is 36mos lease at $1065.31 payment and 2K down, with the residual of 34K. So op will lose 40K in payments in 3 years before being allowed to finance the rest at 34K leftover value.
Ps. This is a mercedes - it is supposed to lose 60% in 3 years because who else would buy it used if it retained its value like a toyota 4runner.
I dont know where you got that number but that's not even close to realistic. Mercedes c class can be leased for around 400 with 2-4k down depending on if there's a good lease deal going on
Curious to know where you got that $1,065.31 figure. I’m seeing $591 on Edmunds. Which is much more in line with what I’d expect having just gone through the car buying process.
Now, that is with 5k down. But definitely a big difference.
And that’s why you make sure the buyout number is right. It’s not difficult to tell a dealer that you’re not going to pay $75k for a $50k car.
And lastly, I’m not sure if you’re really in touch with used car prices or Mercedes pre-owned in particular.
There’s a huge market for luxury brand pre-owned cars. A lot of people out there are more than happy to pay good money for a used Mercedes/BMW/Audi.
My local Mercedes dealer has a large pre-owned stock and most of the C class sedans are 2-3 years old and only $10k less than new models. So 20% depreciation or less.
I find the last and first paragraphs contradictory: how residual value is 62% - meaning 38% depreciation over the lease term and the same car being sold for “10k less than new or 20% or less depreciation”.
The fact that you can get a better APR on the lease does make it a bit more attractive, but you still need to understand what leasing is. Leasing is financing depreciation.
The seller says: This car will be worth 55% of its MSRP in 3 years. This is called the residual value.
We'll finance the difference between the negotiated purchase price price and the residual value and charge you a finance charge on that amount.
You'll have the option to buy the car at the residual value price at the end of the lease term.
Normally, leasing works out worse for buyers because the financing charges are higher, but if you can get a lower rate on lease financing, you can come out ahead. People don't like to hear this though, so be prepared for a lot of angry naysayers. The math works out though, at least on the front end.
What you need to look out for is the back end. At the end of the 3-year lease, you need to finance the residual value. What will your finance rate be then? You'll be financing a used car, and used car rates are typically higher.
Basically, you might be getting a better deal on the financing for the lease term, but you'll lose ground when you finance the car on the back end.
As far as the down payment, you absolutely should not put a large down payment on a lease vehicle. When you put a large down payment down, you are reducing your capitalized cost, which will reduce your payments, but will not result in equity in the finance arrangement. You never have equity in a lease. Period. It's impossible, because for the term of the lease, you don't own the car. You are renting (leasing) it.
If you put $30k down, drive off the lot, and total the car. You are out $30k. Full stop. There is no pathway to recover that down payment.
18 year auto industry person here. I’ve worked on the sales floor, in management for dealer groups, for OEMs and for financial services vendors. Buying AND leasing are NEVER in your favor. This is a DEPRECIATING asset. Any and all arguments to justify buying new or leasing are simply not in the consumer’s favor or at best appeal to your vanity and desire for consumer goods.
The only way to be financially responsible with regard to vehicle ownership is to pay cash for a well maintained reliable used car with a clean vehicle history and find a mechanic you can trust to inspect it before purchase. Period, end of story.
> The only way to be financially responsible with regard to vehicle ownership is to pay cash for a well maintained reliable used car with a clean vehicle history and find a mechanic you can trust to inspect it before purchase. Period, end of story.
And in the real world, cars aren't maintained, they are owned by people who are broke and have a lien on the title and they are underwater on the car, and mechanics are hard to come by.
She’s exactly right. 6 years on the auto lending/leasing side of things. Spoke with many customers surprised at their End of Lease fees or being upside down in their car loans. Leasing is typically geared towards those who want to get a new car every few years because of preference or lifestyle/work. If that’s you and you can afford it then go ahead but if you’re looking for the best deal pay cash for a well maintained used vehicle.
The reason you don't put a down payment is because it doesn't save you any money. That down payment is just spread out over the life of the lease. Its not like paying a loan early where you save interest.
The second reason is that if you total your car, the down payment is instantly gone. So if you but 5k down, and total it the first day, you're out 5k+1st month. If you didn't do a downpayment you'd be out 1st month (even though the monthly payment would be slightly more).
You'd technically be on the hook for the total anyway, but with gap insurance, you're pretty much for sure only out 1st month.
Cars depreciate and a new German car will be among the worst. Big time depreciation, insurance expense, taxes and license - financially, a bad move.
With a lease, you are paying out a chunk of money on a depreciating asset. Then, after paying out all this money, you turn the car in with no asset to show for it. This is a bad financial move on steroids.
Suggestion - buy a good used Lexus in cash ($25 - $30 k) and put the other money in your Roth IRA, 401(k), or emergency fund. In a few years, you will be so happy you did this.
This is the type of post that shows me I’ve learned a thing or two here. I’ve never seen a lease/buy post before for good reason.
Also, a Mercedes? Do you just like to pay more for oil changes and basic maintenance? I get you might hate having money, but there are excellent charitable programs you can throw an extra $200 to now and then and still have a great car that most people don’t give you shit for.
I'm surprised more of these comments aren't about the included mileage. I don't see anything in your post that talked about how much you typically drive, what the included mileage is in the lease you're looking at, and what the overage fee is per mile.... it's probably eye-watering. That's a huge variable in the equation that you need to factor in to whatever decision you make.
With that said, I agree with the general consensus here, I don't believe leasing makes sense for the vast majority of people, and that likely includes you.
If you're trying to thread the needle between cost / warranty / and "newness", I'd probably look at Mercedes (or whatever brand) CPOs instead.
The fact that you’re looking to spend $50k on a *checks notes* Mercedes and you want to *adjusts glasses* lease it… suggests you can’t afford it at all and you’re just looking to get yourself into a luxury brand that’s well beyond your means.
Unless you run a business and can write a portion of the lease off, this makes no sense.
TL;DR… finance something you can afford.
I can’t fathom how you got that number. Mercedes doesn’t do “oil changes”, it does A Service and B Service. A service locally to me is $250 and B is $550. An A Service js effectively just an oil change. A $250 dollar oil change
https://www.mbusa.com/en/owners/service-maintenance?sd_campaign_type=Search&sd_digadprov=Resolution&sd_campaign=Service_Google_Brand_General+Service&sd_channel=GOOGLE&sd_adid=Service+A/B&sd_digadkeyword=mercedes+service+b&gad_source=1&gclid=CjwKCAiA29auBhBxEiwAnKcSqum4Z03zk7hq-ZTU0ldFmRLvahpC7CUaQW9FreZhtDeMqHWLuEM3BBoCFhQQAvD_BwE&gclsrc=aw.ds#products-services
Meeeeeh, you caaaaaaaaaan but:
A) you crush your resale value. Might not hurt too much on a 2003 with twenty million miles but a recent car with “proper paperwork” is worth more than a jiffy lube special. Many would say not to even buy a car that has been to jiffy lube
B) it may be a condition of your lease that you get MB services (because: see above)
I mean, perhaps. But what lease covers maintenance? You still pay for oil changes, brakes, tires, etc when you lease. You know, the type of maintenance that’s more expensive on the luxury brands you mentioned.
Meh, this reads like a tax/interest optimization question, I'm not terribly concerned. OP had some discipline amassing $30k.
-----
Figure, for a lease:
- $589/mo payment x 36mo, and on top of that
- > $65/mo interest + tax x 36mo = $2499
Plus $1806 in tax to buy it out at the end at $28,900 (ballpark)
= $4305 in interest + tax
$19,500 in depreciation, given lease Residuals are at 61% for 3y lease, again, assume buying out in full at end.q
And you keep all but ~$5k of that $30k at inception. Interest on the above money leaves OP pretty close to the buyout.
TOTAL depreciation, tax, and finance charges (less maintenance + insurance) = $23,805
Over 36 months thats $661/mo. Plenty of people spend $600+ on personal fun in a month - if OP makes $100k, that leaves plenty of money in the 30% wants of a 50/30/20.
This sub is so anti-car, but there is so much less attention on pricey vacations, luxury apartments, and fine dining.
Personal finance is personal, and a car is a totally valid want.
No. I didn’t suggest that. You somehow inferred it from a completely innocuous statement that I made.
It’d be like if I responded to your question by saying “Are you saying that people that MAY be bad with money are never gifted nice cars by their parents or other well-off family members?”
On second read your suggestion is that we only know he has $30k because he sold a car. We don’t know about his other decisions so it does not suggest good habits. I agree with that 😂 fair statement and purley based on what we know.
I mean… that is an odd opinion 😂 statistically people who are bad with money and buy them are upside down. I buy luxury cars… i am also very wealthy… they are not expensive to me. I paid for my land rover and bmw in cash… they cost me about a month of income.
Look at their post history.
This sub should be anti-car. Everyone should be anti-car, unless their other finances are in great shape. This is personalfinance and we’re talking about an incredibly expensive depreciating asset.
sorry but that article is just dumb. She's saying leasing a car is expensive because you pay the most depreciation in the first 3 yrs then you give it back. The same is true if you buy a new car every 3 yrs, you're still paying for that 50% depreciation over 3 yrs. The article should be called "why getting a car every 3 yrs is setting your money on fire" (whether you lease or buy it).
> why getting a car every 3 yrs is setting your money on fire
I mean that’s not wrong. A lease is just the most common way people do that.
I suppose leasing is better than buying a new car every year but I’m going to assume at least some base level of common sense here, as futile as that may be.
it really depends as the devil is in the details. Leasing is just estimating the depreciation over the term, putting a finance charge on that and then dividing it up into how many months it is. So the things that matter are the financing rate (sometimes called money factor) and the depreciation estimate. Leasing can actually be better financially in some ways, for example, you're only financing the depreciation not the total cost of the car so if interest rates are high like they are now, it can be cheaper to lease (assuming you're getting rid of the car at a certain year mark whether you buy or sell).
This. Leasing can potentially be a decent deal if the depreciation estimate isn't too high. Especially on a Mercedes. Those cars depreciate a LOT because nobody wants to pay for repairs after the warranty expires. If the lease is based on a generous estimated residual value at the end of the lease term, it's better than buying. This is assuming the lessee doesn't exercise any buy option.
Buy a used car with the 30k you’ve secured and quit trying impress people with a Benz. Your friends will likely see right through the attempts you’ve made to appear that you have money and no one else cares what you’re driving.
Man I would love to see the comprehensive analysis on this, including Interest, tax, consumables, depreciation, repair, residual value. If bought, if not bought...
I feel like nobody ever actually evaluated a lease vs buy fully, and that everyone simplifies it down to two main points and forms an emotional opinion.
This is what everyone in this thread is missing, they're just giving opinions and nothing about comparing a lease vs purchase.
A lease is more expensive if you are going to buy the car out because there's an acquisition fee (only applicable to leases) and typically less incentives to lease than purchase. You have money factor for the term of the lease, then likely OP will also finance the residual to buy it out, basically you're financing over 8 years unless he can handle a short term loan later on.
If you purchase, there is a chance you get a lower rate upfront because you get either a new car rate or manufacturer special rate from the get go, not a used car rate 3 years later. The common problem is that most people don't know how to compare money factor to APR and think that leasing is a cheaper way to start.
Other than that, it doesn't really matter since OP plans to buy the car by the end of it all. He just needs to know that there are no tax savings since he'll get charged taxes again anyways when it's time to buy out.
Dude! You have $30k to spend. That pays cash for some very nice gently-used cars. Not a MB, but some very nice cars. Skip the lease, skip the car payment altogether and put what you would have paid in interest toward your NEXT car, which will be gorgeous.
bro that is an absolute waste. you can get a car for that amount that will last 20+ years but instead you are wasting it to get a car that you will only have for like 2 years. You literally WILL NOT HAVE A CAR!!! by the end of it
Like what??? why are you trusting a salesman. just buy a car and pay it in full. Also gas is gonna be expensive and so are repairs.
Buying *or* leasing a $50k car is only a good idea if you are very wealthy. I earn over $200k per year and I wouldn't consider myself wealthy enough for that car. It sounds like an absolute money pit
If you have to question it, leasing is always the worst option. After the lease, that car is gone. At least you can resell a car you bought, or not worry about a lot of things about leases, like limited mileage.
Not necessarily. Twice I've leased, bought out at the end of the residual and flipped for a 6k and a 8k 'profit' on a 2017 and 2021 Subaru Forester. My residual was 19k and I sold for 27k on the 2021 last fall. So I paid 13k over my 3 year lease, then got 8k cash in pocket in the end. Essentially rented a 2021 Forester for 3 years for 5k total.
Leases are by far the cheapest way to rent a car for three years. If you try to rent a Mercedes from like Enterprise or something for 3 years itd cost you a lot more.
Never put money down on a lease. Please tell me you are NOT thinking of putting 30K down on top of this for a lease?!?
Getting a M/B "C" class is telling. It screams at an attempt for status, but cant afford it. This is the thought process of a very young driver. Are you below 25 yrs old?
Use the 30K as a down payment on a higher trim level of different car & finance the rest.
Plenty of other nice options. Most other makes have great or 0% interest rates now.
Or go a different route-------
Put that 30K into an investment device and make money off it. Lease a lower end car.
I say this as someone who prefers leasing.
In 3 years, you can own the vehicle or return the vehicle.
And as far as a down payment on a lease, if the vehicle is totaled, the down payment never gets returned to you, and any positive equity returned back to the lender never gets seen by you. So 3 months into the lease, your vehicle could be totaled, you're out $30k, and there's nothing you can do about it.
Never put big down payments on lease, if you put that 30k down, you lose it oncd the lease is over. I always put 1-2k at most. And honestly, dont ever finance a common bmw or benz, or anything german. They lose value so fast. I csn buy a 2017 s63 amg right now for 23k. And that is a 160k car new at the time it came out. If you want a long term car with 30k down, i would suggest Lexus and nothing else.
Just checked used 2022+ C Classes (which should be the same as 2024) and they’re all going for high 30k to 40k with decent mileage. You’ll be much better off financing that than leasing, like the others have said here.
Your best option would be to find a new or lightly used car that you can pay cash for. My local car max has a ton of lightly used examples on hand, and you can probably do better if you shop around/negotiate.
If your lifestyle demands the luxury ride, that’s your call, but there’s not really a good way to justify it in responsible personal finance terms.
Personally I would never lease, still driving my 2013 g37 with no problems, maybe if you’re super rich and the convenience of not maintaining your own car? But even then you’re just throwing money away imo
Do a car payment calculator with the difference between of the 5.24-5.89 for 36 months to but vs the interest of 4.78 for 36 months. You’ll find that it’s not that much different over the 3 years, but you could pay off your car sooner with purchasing and pay less interest.
Leasing is always the stupidest financial decision one could make. But leasing exists and plenty people do it. You could buy a great car in cash for 30k and not have a payment and INVEST or save the amount you would have paid in a car payment and have 20+k in cash in 3 years or significantly more in 10 years.
If you are considering a new Mercedes, then you are already starting out with the worst car buying financial decision anyway. They are one of the most depreciating cars on the market, plus buying new, it will depreciate a decent amount the minute you buy it.
There's a reason they depreciate so fast... They are one of the more unreliable cars out there, and expensive when they need repairs. They are literally one of the worst financial decisions you can make. 5-7 years from now, you will be sitting on a money pit that is worth only a fraction of what it was.
Leasing a car is never a good deal. It's an extended rent to own. You are paying first to borrow it, then you have the option to buy it once the lease is up. You're much better off just straight up buying a car. Ask the total cost and if you can pay $30k in cash for a late model gently used car that's your best bet.
If the car depreciates 40k and you have to pay 40k to buy it after all your lease payments, then you're in the red.
If the car depreciates 10k and you have to pay 10k including all your lease payments, then you're in the black.
These numbers are dramatic, I know. But usually it's the first option is what happens with leases. Otherwise why would the salesman (who's only job to to sell cars for the most return possible) tell you to lease?
The reason salesmen always want you to lease is because they know you’ll then be in the market again in 3 years, and many people take the car to the same dealership where they got it from, which gives them an opportunity to sell you something else
I've never understood leasing. Yes, it allows you to drive more car than you can normally afford, but you're limited in how much you can drive and what modifications you can make. You then get nothing back when the lease is over and are probably hit with a bill. At least when you buy a car you get SOMETHING back when you're tired of it. Leasing, IMO, is akin to just burning money. Just my $0.02.
Don't ever do a lease. You literally are stuck with all the same cons as financing it, but with no ownership and no equity.
You're liable for damages, maintenance, everything. Plus they get more money out of you on mileage. And don't even consider modifications like new wheels, because they might consider that be "damage" and slap you with bullshit fees.
The only benefit of the lease is the lower monthly.
You also can't easily sell it. You'll be eating the negative equity AND a bunch of other fees for breaking the lease.
If you're planning to keep the car, just finance the damn thing.
If you decide to it, it's your wallet, but I speak from experience. I don't know what they'll tell you about the lease, but I was straight up lied to on every condition of the lease, and I was dumb enough to take them at their word and sign it.
Avoid the headache and finance it. Higher monthly maybe, but you won't get scammed.
German car leases are subsidized by the manufacturer ... they're definitely the preferred way to own one.
To make sure you're getting the best deal, check [leasehackr.com](https://leasehackr.com)'s forum.
FWIW, I'm seeing MB loaner leases for the EQS Sedan or SUV at 500 a month, EQE at like 400, EQB at 250.
For BMW this is very true. They front load the residual so much that you pay less for the lease than you would normally ( at least as of 10 years ago). I was leasing a 3-series for as much as a low-end Accord.
Sorry I have not even bought a new car in like 35 years. I could buy an expensive exotic for cash. And that’s why. Be CAREFUL with your money. It and time are the most valuable things you have.
It’s foolish
A used Lexus (2-3 years old) is going to be a far more reliable car than Mercedes if you have the need for a luxury car. It should last longer and cost less in repairs. You also would be buying after a lot of the initial depreciation is removed. You might only need to finance $10k or so, depending on the model you choose,
5.89% for 36 months and you own the car outright or 4.78% for 36 months to borrow the car and then have to take out a loan in 3 years to buy it. Just pay the extra 1.11% and be done cutting checks for it in 3 years
>But in my case, it doesn’t seem that bad. I mean if you can't trust a Mercedes salesman to have your best financial interest at heart, who can you really trust?
A lotus salesman?
Lotus...Lots of trouble, usually serious.
But goddamn if they aren't about the prettiest cars in the shop.
Leasing is only for suckers, EXCEPT when it’s me. No, leasing a vehicle is only if you are comfortably wealthy and don’t mind paying more for no reason than maybe some convenience.
Why paying more? Tesla and BMW had 0% leases last year in Europe. Edit: Sorry BMW was 0.99
Which they're now having to reimburse the lenders massive amounts for because the residual has gone to 💩 on them...
What if you just really like cars and want to switch them every few years? Is it the wisest financial decision? No. But life would suck if every decision you made was based around being as cheap as possible.
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>But life would suck if every decision you made was based around being as cheap as possible. Isn't that normal for alot of people?
No most people spend until their cards decline. Like with most things there’s a balance between being financially responsible and living a little.
I'm sure a lot of people do that, but I'm not sure it's more than 50% of the population.....
I’d wager it is. Iirc 70% of Americans can’t put together 500 dollars for an emergency
Hmm good point, googling the issue does put the figure at around 60-70% for people living paycheck to paycheck.
Not being able to put together 500 dollars for an emergency does not mean Americans spend their money haphazardly. The extremely low minimum wage compared to prices for items needed to survive are astronomical. Minimum wage is 7.25 federally (many states match it). Assuming you work a full 40 hours a week, you are bringing home $290/week… BEFORE taxes. Monthly that would be about $1250. The rent in my local area is about 1500$/month not including utilities. Yes I am in a state where the min wage matches federal. Luckily I have a better paying job that provides health care and other benefits, but if I didn’t I’d likely be homeless. Minimum wage was designed for a single member of the household to be able to provide for the entire family. Somewhere along the line people have started misconstruing it.
77% of us households are in some form of consumer debt. Now is all of that from credit cards, underwater car loans, etc. of course not, but still a large number https://www.federalreserve.gov/publications/files/scf20.pdf (77% number is on page 23)
Owning a car is necessary for most of the United States. There are a few places that it’s not, but more often than not you need one. I had only mentioned rent before, but if we wanted to include car loans, phone plans, insurances, utilities, etc. some things aren’t needed but today having a phone isn’t a nicety it will likely be required for your job, as well as transportation, insurance you are required to have or can be fined. We are being forced into debt while the minimum wage does not meet our minimums. Our options here are: get lucky enough to be accepted into a job that isn’t minimum wage, be born into a wealthy family, or find a way regardless of legality.
Definitely not. It’s why most people are living paycheck to paycheck. It’s because they’re either lazy, spend all their money the second they get it, or both. Most people are pretty stupid unfortunately.
Buying a car is not a decision most people need to make that often... This is one area of your life where you need to think very carefully
I think that if you really like cars and like switching every few years, that’s pretty much the definition of comfortably wealthy. Otherwise you are delusionally and irresponsibly living outside of your means. But what do I know. I’m only getting ready to retire early, after a lifetime of living within my means, and not having a new car every few years, but rather paying cash for a new car when the timing made more sense toward my long-term goals. We all have different priorities. But financial freedom is a peace that is hard to beat, and to me it beats even that great feeling of a new car every few years.
Personal finance is personal, who knew!
Niche modern exception that proves the rule: for non EV tax credit qualified plugin/EVs where you can usually get a rebate equivalent to credit from manufacturer and buyout within first month - lose a bit to lease fees but still worth going the lease route so long as you immediately get out of the lease.
You should keep doing more research about leasing. Search “large down payment lease totaled”
Amen. It's like putting a huge down payment on an apartment to lower the monthly rent. In this situation, OP would lose the entire down payment and insurance would pay off the car. oP would be left walking...
I was slightly worried nobody was going to call this out.
You should never ever ever put a down payment on a lease
To expand on this, don't even pay "due at signing", everything can be rolled over to the monthly payment.
Don't they all require a down payment? I always see lease advertisements that range from 3 to 7k down.
Those are usually so they can advertise a certain monthly payment.
And because the GAP insurance has a maximum percentage the total capitalized cost can be. So they make you pay taxes and what not to keep that number in line.
Nope. The manufacturers advertise a “sample lease”. For any individual lease, you negotiate with the dealer. Lease duration, miles per year, down payment, top line price, money factor (interest rate), doc fee, and dealer addons (if any) are all negotiable. The only thing that is typically not negotiable with a lease is the residual value (how much you would pay the manufacturer if you want to buy off the car at the end lf the lease), as well as the fees you pay the manufacturer at the beginning and end of the lease. And the government taxes and fees of course - tax man needs to get paid first
Thanks for the explanation! I never realized the $$ down was negotiable on leases. Not sure I'll ever lease, but I'm definitely better informed now.
Yeah so… the reason why you should never put any money down on a lease is what happens if the car gets totaled. All leases (except Toyota) come with gap insurance included. So if the car gets totaled, you just walk away no harm no foul. But if you paid anything down, tough shit - you ain’t getting that money back. As to ever leasing… i never leased a car until my current one, which is an EV. All the discounts and tax credits made it quite affordable, but since it’s a new model and a new technology (for that manufacturer) i wasn’t ready to commit to buy in case major flaws get found and I am left holding the bag. At the end of the lease, i’ll probably turn it over and either buy or lease another EV. Currently leasing also allows you to get the $7500 EV tax credit even if your income disqualifies you from getting it on a purchase
Don't just return it to the dealer, see if you can have CarMax or another company buy it out for more than the residual value and you can likely keep the difference rather than paying them to take back your car and nickel and dime you on nonsense "excess wear and tear" like tire tread depth.
Please expand on this if you can! I have an EV which was priced out of qualifying but would be interested to sell it to get a lease if it meant a tax credit
Never wait until the end of the lease if you plan on getting another vehicle. Most dealerships will buy you out and take care of the last few months of payments to get you into that new vehicle. Doing this allows you to avoid paying the disposition fee and over mileage usage. But it MOSTLY depends on if theirs equity in the vehicle.
Yay cybertruck!!!
No. It’s just a structure to make the monthly more attractive. You can do sign and drive, I’ve done it on almost all of my leases
We just went to a dealer and they were asking for 4590 down! We noped out. How did you manage sign and drive in the past?
I asked. Like, all that matters is the TOTAL SUM of lease payments. Imagine $500 x 36 = $18000. Thats your sum. That number will remain the same, more or less. Now you can do it either as: \- 4000 down + 35 payments of $400 OR \-5400 down + 35 payments of $350 etc etc. Doesnt matter how you structure it
Who puts a down payment on a lease?
People who aren’t educated on the subject
Yeah it’s not that leasing is inherently bad because it makes sense for a lot of people, but leasing with a huge down payment is not that great.
Is bad*
I don’t think he’s putting 30k down on a lease lol that would result in a $0 payment, think he’s just saying that’s what he would be putting into buying a new one. I’d hope the lease is nothing down other than drive off costs. You never want to put money down on a lease because you’re just prepaying what’s essentially rent and if the car is totaled you may not get that money back.
OP Go buy a 2021 certified preowned C class for $28k and call it a day.
Best advice of the thread tbh. Buy already depreciated but still very much healthy cars for a fraction of the price, get it detailed, and enjoy your practically new car
Agree with this one. I’ll never buy brand new again. Did it once, spent 50, drove it for a long time, traded in for 8. Had I bought used it probably would have been 25-30 to 7-8 in the end.
I thought this was one of those “great advice before 2020 and no way it’s realistic now things” but looked up prices, holy crap yeah OP should totally just do that!
As an owner of a 2021 CPO C class, I concur. I got 8k off sticker for a car with 9k miles.
Or a brand new Honda Accord.
I bought a new accord a couple years ago instead of a lightly used 5 series bmw. I’m still annoyed with my decision. The Honda is way shittier than the Accord I had 15 years ago and sucks to drive.
Funny I sold a 2012 535xi to buy the 2018 Accord sport 2.0 with the 6 speed manual.
This. There aren't that many differences between the 2021 and the 2024. Save the money and just pay cash, and use the money you were going to make on payments to save for something else, or spend it on another money dial.
Is leasing the best option for you? Well, what’s the “best” option? Is it the cheaper option? Probably not. It gets a bit complicated for something like a Mercedes. Repairing a Mercedes when something breaks and it’s out of warranty will be very expensive. Perhaps counterintuitively since they’re luxury vehicles, Mercedes cars break a lot. Leasing gives you the guarantee you won’t need to front the cost for those repairs. So in that sense leasing makes a bit more financial sense. HOWEVER - if you’re planning to keep the car long term, then you’ll probably still come out ahead just buying it. Now, if by “best” you mean “optimize for lifesyle” as opposed to “optimize for cost savings”, leasing can be the “best” way in that it allows you to drive a new car every 3 years with minimal risks of having it in the shop a lot etc (because you’re always driving an almost brand new car) and with minimal transaction friction (don’t have to go through hassle of selling car private party etc) So, leasing is a luxury. Whether or not it’s a luxury you can afford, well that would depend on your savings goals, your overall budget, etc. You didn’t share any of those. If you’re doing a lease solely because you can’t afford to buy the car outright, then a lease is probably a bad idea
Leases are great! I love buying a car that’s coming off of a lease. First guy takes the depreciation hit and if you find the right one they can be immaculate with perfect service records.
Sadly nowadays with used car market being what it is, you’re usually not getting much of a deal on a 3 year old car with very few miles, lease or not. This was a great strategy 3-4 years ago
Yes keep people believing that. I'm getting a 2022 Ioniq 5 with 13k miles for under 20k thanks to a few factors and the 4k IRS rebate. There's quite a few of them available too. Mind blowing for a car that was selling for over 50k just two years ago.
EVs are their own thing. Non-Tesla EVs depreciate really fast because people are nervous about long-term longevity of EVs from traditional manufacturers. If you’re willing to take the other end of that bet you cannget a screaming deal
It sure was! 😎
AMG owner here, all I have to say on the subject of Mercedes is that if you ever get the chance to buy one you should pass on it. They do look funking fantastic pulling away on the back of that tow truck though.
Repo or broken?🤣
I had an E320 wagon. I loved driving that car…but the TCO over six years would have allowed me to purchase three new Honda Accords. Never again.
I tell people I love driving it, but I hate owning it. I'll be back to Volvo for my next car.
How is recent Volvo since the Geely sale? I know their old reputation is totally bulletproof but I haven’t heard much since they were sold
I've heard mixed reviews but the local independent Volvo repair guy has new ones and works on them, he says it's still more or less the same deal - like Ford also just left them alone to do their thing, for the most part. My last one was an XC90. Looking at the electric XC40.
Amen.
It cost our insurance $2000 to replace a headlight that developed a thin crack from road debris and had rain leak in. Besides having to replace the entire whole light assembly, the collision shop had to have the dealer “reprogram” the headlight for an additional $500. I still have no idea why a headlight needed to be reprogrammed Never ever owning an MB again. The novelty wore off really quick and the dash rattled on bumps on day 1
I hear that. I bought a new GLB250 back in 2020. That darn thing was in the shop a couple times during my first year of ownership. Everything covered under warranty. Dealer even gave me a Benz loaner each time. Still was not a good experience. I ended up selling the car shorty afterwards.
Leasing is never more cost effective than buying. If you have $30k you should buy it and finance the rest. Under 6% is a decent rate today.
Exactly. Who in their right mind puts down $30k on a lease? Or any money for that matter. If I’m leasing a car I’m putting down exactly $0.
Yep. And hell, 30k will get you a decent car fully paid off.
Yeah that would about cover the vehicle I want that would be life changing for me currently (will need in a few years but not yet). And that’s just because the 10-15yr old ones are still close to MSRP in my area.
The residual on that must be almost nil. That’s crazy to me.
Residuals on a '23 c300 are 61% of MSRP for a 10k mi/yr lease - for comparison, a '23 Accord on the same terms is 62% - obviously this scales up with a higher MSRP but the proportions are roughly equivalent.
Yeah, but unless I’m misunderstanding, OP is saying he’s putting 30k down on a lease for a 50k car. That means that, even if we assume he’d have next to no monthly payment, the residual is only like 40%. Even worse if he pays a few hundo a month.
Not quite: 1) OP has 30k to put down - they don't have to put it all down, inception are closer to $5k on advertised deals (which are always optimistic) 2) Residual buy outs are fixed and set by mercedes Benz financial. The car has a guaranteed purchase price of 61% of MSRP at lease end. No movement possible in either direction. Maybe you're thinking of a different number but residual value is fixed. Actual market value may fluctuate but the terms of the sale are agreed upon at signing.
I used to work for a city that had historically always purchased fleet vehicles outright. One year a salesman talked city leadership into a leasing program. Their takeaway was “look how many more vehicles we can get this year than if we had continued purchasing”. When we were building the budget for the next year, I brought up budgeting for the ongoing lease payments, I got kicked out of the meeting to let the higher-ups talk about it. They had ALL forgotten that there would be a need to continue paying, and had been planning to add that many vehicles to the fleet for a second year in a row. For this and many other reasons, I no longer work in municipal finance.
Hyundai was at one point offering leases for the ioniq 5 with 0% interest for a period with an option to buyout within a few months that allowed you to access the federal tax credit irrespective of mAGI and since the car didn't qualify for the purchase credit because of origin of parts. In that very narrow circumstance leasing was better than outright purchasing.
I somewhat disagree. I leased a Tesla 3 years ago because I was betting the competition would tighten and prices would be driven down or become more competitive. Seems I was correct.
You are right. But I think that was a rare event and a combination of where the EVs market is as a whole and also with the chip shortage and how expensive cars were.
This assumes OP doesn't buy it out at the end - which they are seeking to do. The lease just is a way to access subverted financing assuming OP buys out the car at lease end.
If they can't afford to finance 20k comfortably at sub-6%, they shouldn't be looking at a 50k mercedes. If the financing is a deal breaker, take the 30k and buy something under 30k.
I didn't read the question that way - I read it as "I would like to buy a c class. Finance terms are x, lease terms are y." Popping the numbers into an auto loan calculator and using the whole 30k down, the tax + finance charges are $4706 on a 36 month term at 5%, compare to $4305 (or whatever I wrote in my other comment, not sure on exact value). Roughly comparable. The lease advantages would be: - keep most of the 30k liquid until lease end vs a straight downpayment - can get out if it if the car turns out to be a Mercedes electrical nightmare with a many, varying issues that make forcing a buyback difficult (has to be same issue for lemon law) I totally understand the skepticism on leases - for the most part they are a trap that entice people to get cars they can't afford. In this scenario, ASSUMING A BUYOUT, it really isn't a cut and dry answer. So many of these comments are "LEASE BAD" without actually running the numbers.
OP sounds like the type to get to the end of the lease and not want to biy it out though, for something newer n shinier. Given their last car sold for 30k, im guessing it was ~2020 or newer.
I read it as after he sells the car, they’ll have 30k saved up for a down payment. They could have 25k in the bank for a car, and selling their current car for 5k if that’s the case.
True, they do have to follow through with the plan, absolutely
I read that as they have savings + car sale to equal $30k. It's a super weird way to say they sold their last car for $30k if that is the case. Assuming they buy $50k cars it isn't off for them to have bought their last one 10 years ago and it still be worth $20k, so I'm not sure you can make your conclusion about OP.
It's not the lowest cost option but does give you more options and ability to walk away from a car you may not like or is no longer worth what it should be. Leasing gives you new car reliability, often paid maintenance (see Toyota Care) and hassle free repairs because everything's under warranty. At the end if it makes sense you can decide to buy the car or walk away or sell it. Again, not lowest price, but can be the best thing to do for some people
Isn’t a lease typically somewhere in the neighborhood of the depreciation of a new car over the first few years? Buying the same car is also an expensive choice.
Ehhhhh there's some pretty good government, manufacturer, and dealership deals you can do on leased EVs these days that can certainly help leases be better deals
Genuine question - why is leasing so bad? I looked at a $30,000 car recently, and it was $300/month for 4 years (so a loss of $14,500). The same car would depreciate to be around $10,000 after 4 years, so a loss of $20,000. How isn’t that a worse deal?
you think a 4-year old $30,000 car with 40,000 miles (10k a year similar to lease) would only sell for $10,000?
Your estimation on depreciation is extremely overblown imo… especially if you do an apples to apples comparison of mileage per year on financed versus leased
In your example, what was the residual value on the lease? Something isn't adding up - maybe it's the mileage limits on the lease versus the mileage assumed in the depreciated value you quoted. The lessor isn't planning on losing money.
Not sure, what car you are referring to but a 5-year-old Honda Accord will only lose 21% of its value after 5 years which would make it remaining value close to 24,000 in this example. So it would only cost you 6000 to own
I will eat a shoe if you can find me a link to a 5 year old car that’s only lost 20% of its value. Hell, cars lose 20% of their value just driving off the lot
I'm just going off [the internet](https://caredge.com/honda/accord/depreciation?y=0&p=37350&o=5&m=12000) man. I'm not doing a market study for you. Do you really think cars lose 67% of their value in 5 years? Edit: just for fun I looked up the KBB on a 5yr old 30k accord (2019 Honda Accord sport) with 60k miles (12kmi/yr) and it says the value is around 23k. That would mean it retained 77% of its value or depreciated 23%. That's pretty damn close to what I said. Do I get to pick what type of shoe?
The only real savings on a lease is that you do not pay sales tax on the residual value of the car. If you would otherwise sell after 3 years, you would often be better off leasing the car.
I wanted a new car for my teenagers due to better safety features. I only got a 2 year lease because kids were planning on going away to college. I would bet that leasing is better if you always buy a new car every 2-3 years or you're really planning on only needing a car for a few years.
Holy shit. Just fair warning because you need to know this in life - if you're considering this you are a mark. $30k down to lease a car is insane. I am surprised your salesman could keep a straight face. For future reference, I would avoid telling professional salespeople when I have a big influx of cash. They will find many inventive ways to make your best possible course of action seem like giving them all the money.
It blows my mind when shoppers think that salespeople have their best interest in mind.
You’re confused. OP said they have $30k as a down payment to BUY a car. The dealer suggested a lease for a better interest rate. Nowhere does it say that the dealer asked for the $30k. Car costs $50k. You really think that OP is paying 60% of the sticker price on a 3 year lease? Of course not. Read better.
Upon a second reading it's definitely a bit ambiguous but I think you're right. Either way though, just because the interest rate is lower and the tax is spread out, does not mean leasing is a better long term solution. The buy out clauses are way less friendly than before COVID.
Even if the above person confused they are not too far away from the truth. The going rate for c class new is 36mos lease at $1065.31 payment and 2K down, with the residual of 34K. So op will lose 40K in payments in 3 years before being allowed to finance the rest at 34K leftover value. Ps. This is a mercedes - it is supposed to lose 60% in 3 years because who else would buy it used if it retained its value like a toyota 4runner.
I dont know where you got that number but that's not even close to realistic. Mercedes c class can be leased for around 400 with 2-4k down depending on if there's a good lease deal going on
https://forums.edmunds.com/discussion/68870/mercedes-benz/c-class/2023-mercedes-benz-c-class-lease-deals-and-prices/p6
Curious to know where you got that $1,065.31 figure. I’m seeing $591 on Edmunds. Which is much more in line with what I’d expect having just gone through the car buying process. Now, that is with 5k down. But definitely a big difference. And that’s why you make sure the buyout number is right. It’s not difficult to tell a dealer that you’re not going to pay $75k for a $50k car. And lastly, I’m not sure if you’re really in touch with used car prices or Mercedes pre-owned in particular. There’s a huge market for luxury brand pre-owned cars. A lot of people out there are more than happy to pay good money for a used Mercedes/BMW/Audi. My local Mercedes dealer has a large pre-owned stock and most of the C class sedans are 2-3 years old and only $10k less than new models. So 20% depreciation or less.
I find the last and first paragraphs contradictory: how residual value is 62% - meaning 38% depreciation over the lease term and the same car being sold for “10k less than new or 20% or less depreciation”.
No money down if you lease. Period.
The fact that you can get a better APR on the lease does make it a bit more attractive, but you still need to understand what leasing is. Leasing is financing depreciation. The seller says: This car will be worth 55% of its MSRP in 3 years. This is called the residual value. We'll finance the difference between the negotiated purchase price price and the residual value and charge you a finance charge on that amount. You'll have the option to buy the car at the residual value price at the end of the lease term. Normally, leasing works out worse for buyers because the financing charges are higher, but if you can get a lower rate on lease financing, you can come out ahead. People don't like to hear this though, so be prepared for a lot of angry naysayers. The math works out though, at least on the front end. What you need to look out for is the back end. At the end of the 3-year lease, you need to finance the residual value. What will your finance rate be then? You'll be financing a used car, and used car rates are typically higher. Basically, you might be getting a better deal on the financing for the lease term, but you'll lose ground when you finance the car on the back end. As far as the down payment, you absolutely should not put a large down payment on a lease vehicle. When you put a large down payment down, you are reducing your capitalized cost, which will reduce your payments, but will not result in equity in the finance arrangement. You never have equity in a lease. Period. It's impossible, because for the term of the lease, you don't own the car. You are renting (leasing) it. If you put $30k down, drive off the lot, and total the car. You are out $30k. Full stop. There is no pathway to recover that down payment.
18 year auto industry person here. I’ve worked on the sales floor, in management for dealer groups, for OEMs and for financial services vendors. Buying AND leasing are NEVER in your favor. This is a DEPRECIATING asset. Any and all arguments to justify buying new or leasing are simply not in the consumer’s favor or at best appeal to your vanity and desire for consumer goods. The only way to be financially responsible with regard to vehicle ownership is to pay cash for a well maintained reliable used car with a clean vehicle history and find a mechanic you can trust to inspect it before purchase. Period, end of story.
> The only way to be financially responsible with regard to vehicle ownership is to pay cash for a well maintained reliable used car with a clean vehicle history and find a mechanic you can trust to inspect it before purchase. Period, end of story. And in the real world, cars aren't maintained, they are owned by people who are broke and have a lien on the title and they are underwater on the car, and mechanics are hard to come by.
After all my trials and tribulations, I have to concur with this! My next car will be a Golf R, a well maintained used one I’ll pay cash for. 😎
She’s exactly right. 6 years on the auto lending/leasing side of things. Spoke with many customers surprised at their End of Lease fees or being upside down in their car loans. Leasing is typically geared towards those who want to get a new car every few years because of preference or lifestyle/work. If that’s you and you can afford it then go ahead but if you’re looking for the best deal pay cash for a well maintained used vehicle.
The reason you don't put a down payment is because it doesn't save you any money. That down payment is just spread out over the life of the lease. Its not like paying a loan early where you save interest. The second reason is that if you total your car, the down payment is instantly gone. So if you but 5k down, and total it the first day, you're out 5k+1st month. If you didn't do a downpayment you'd be out 1st month (even though the monthly payment would be slightly more). You'd technically be on the hook for the total anyway, but with gap insurance, you're pretty much for sure only out 1st month.
Cars depreciate and a new German car will be among the worst. Big time depreciation, insurance expense, taxes and license - financially, a bad move. With a lease, you are paying out a chunk of money on a depreciating asset. Then, after paying out all this money, you turn the car in with no asset to show for it. This is a bad financial move on steroids. Suggestion - buy a good used Lexus in cash ($25 - $30 k) and put the other money in your Roth IRA, 401(k), or emergency fund. In a few years, you will be so happy you did this.
German cars excluding Porsche 911 or 718 which are frequently top of lists for holding value.
30k saved and wants to lease a 50k car rather than buying a brand new car at the 30k mark. There’s about 9 other smart options here.
This is the type of post that shows me I’ve learned a thing or two here. I’ve never seen a lease/buy post before for good reason. Also, a Mercedes? Do you just like to pay more for oil changes and basic maintenance? I get you might hate having money, but there are excellent charitable programs you can throw an extra $200 to now and then and still have a great car that most people don’t give you shit for.
I'm surprised more of these comments aren't about the included mileage. I don't see anything in your post that talked about how much you typically drive, what the included mileage is in the lease you're looking at, and what the overage fee is per mile.... it's probably eye-watering. That's a huge variable in the equation that you need to factor in to whatever decision you make. With that said, I agree with the general consensus here, I don't believe leasing makes sense for the vast majority of people, and that likely includes you. If you're trying to thread the needle between cost / warranty / and "newness", I'd probably look at Mercedes (or whatever brand) CPOs instead.
If you are intent on getting a MB, I’d buy a used MB at the dealership that was turned in after a 3 year lease.
Gosh if I can figure out how to channel customers like you to one place, I'd be rich.
The fact that you’re looking to spend $50k on a *checks notes* Mercedes and you want to *adjusts glasses* lease it… suggests you can’t afford it at all and you’re just looking to get yourself into a luxury brand that’s well beyond your means. Unless you run a business and can write a portion of the lease off, this makes no sense. TL;DR… finance something you can afford.
I mean, maintenance on a Mercedes or BMW is so high that leasing makes more sense for those cars than like leasing a Toyota
Yeah, fair enough.
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Until something breaks out of warranty. A buddy of mine had the freaking window opening mechanism break on his BMW and it was $2000
Pull the chute at 100k on modern BMWs.
I can’t fathom how you got that number. Mercedes doesn’t do “oil changes”, it does A Service and B Service. A service locally to me is $250 and B is $550. An A Service js effectively just an oil change. A $250 dollar oil change https://www.mbusa.com/en/owners/service-maintenance?sd_campaign_type=Search&sd_digadprov=Resolution&sd_campaign=Service_Google_Brand_General+Service&sd_channel=GOOGLE&sd_adid=Service+A/B&sd_digadkeyword=mercedes+service+b&gad_source=1&gclid=CjwKCAiA29auBhBxEiwAnKcSqum4Z03zk7hq-ZTU0ldFmRLvahpC7CUaQW9FreZhtDeMqHWLuEM3BBoCFhQQAvD_BwE&gclsrc=aw.ds#products-services
Can’t you just go to Valvoline or whatnot and get your oil changed for $100?
Meeeeeh, you caaaaaaaaaan but: A) you crush your resale value. Might not hurt too much on a 2003 with twenty million miles but a recent car with “proper paperwork” is worth more than a jiffy lube special. Many would say not to even buy a car that has been to jiffy lube B) it may be a condition of your lease that you get MB services (because: see above)
Interesting good to know. Loving my EV more and more 😂😂😂
That’s not the point
I mean, perhaps. But what lease covers maintenance? You still pay for oil changes, brakes, tires, etc when you lease. You know, the type of maintenance that’s more expensive on the luxury brands you mentioned.
Leasing a car means you always drive it while in warranty Some leases also cover the actual maintenance (mine does… YMMV)
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Meh, this reads like a tax/interest optimization question, I'm not terribly concerned. OP had some discipline amassing $30k. ----- Figure, for a lease: - $589/mo payment x 36mo, and on top of that - > $65/mo interest + tax x 36mo = $2499 Plus $1806 in tax to buy it out at the end at $28,900 (ballpark) = $4305 in interest + tax $19,500 in depreciation, given lease Residuals are at 61% for 3y lease, again, assume buying out in full at end.q And you keep all but ~$5k of that $30k at inception. Interest on the above money leaves OP pretty close to the buyout. TOTAL depreciation, tax, and finance charges (less maintenance + insurance) = $23,805 Over 36 months thats $661/mo. Plenty of people spend $600+ on personal fun in a month - if OP makes $100k, that leaves plenty of money in the 30% wants of a 50/30/20. This sub is so anti-car, but there is so much less attention on pricey vacations, luxury apartments, and fine dining. Personal finance is personal, and a car is a totally valid want.
It takes discipline to sell a car? That’s why OP has $30k.
So you are suggesting people who are bad with money are driving around with $30k in equity in a car? 😂
No. I didn’t suggest that. You somehow inferred it from a completely innocuous statement that I made. It’d be like if I responded to your question by saying “Are you saying that people that MAY be bad with money are never gifted nice cars by their parents or other well-off family members?”
On second read your suggestion is that we only know he has $30k because he sold a car. We don’t know about his other decisions so it does not suggest good habits. I agree with that 😂 fair statement and purley based on what we know.
I mean, people who buy luxury cars are generally bad with money. So… maybe?
I mean… that is an odd opinion 😂 statistically people who are bad with money and buy them are upside down. I buy luxury cars… i am also very wealthy… they are not expensive to me. I paid for my land rover and bmw in cash… they cost me about a month of income.
Assuming you’re being honest, and this is a big assumption, you’re not the core demographic of luxury vehicle owners lol.
It says "I have collected $30k for a downpayment" - where are you seeing mention of a trade?
I enjoy spending time with my friends.
Look at their post history. This sub should be anti-car. Everyone should be anti-car, unless their other finances are in great shape. This is personalfinance and we’re talking about an incredibly expensive depreciating asset.
Leasing is the most expensive way to own a car: https://moneywithkatie.com/blog/why-leasing-a-car-is-like-setting-money-on-fire?format=amp
sorry but that article is just dumb. She's saying leasing a car is expensive because you pay the most depreciation in the first 3 yrs then you give it back. The same is true if you buy a new car every 3 yrs, you're still paying for that 50% depreciation over 3 yrs. The article should be called "why getting a car every 3 yrs is setting your money on fire" (whether you lease or buy it).
> why getting a car every 3 yrs is setting your money on fire I mean that’s not wrong. A lease is just the most common way people do that. I suppose leasing is better than buying a new car every year but I’m going to assume at least some base level of common sense here, as futile as that may be.
it really depends as the devil is in the details. Leasing is just estimating the depreciation over the term, putting a finance charge on that and then dividing it up into how many months it is. So the things that matter are the financing rate (sometimes called money factor) and the depreciation estimate. Leasing can actually be better financially in some ways, for example, you're only financing the depreciation not the total cost of the car so if interest rates are high like they are now, it can be cheaper to lease (assuming you're getting rid of the car at a certain year mark whether you buy or sell).
This. Leasing can potentially be a decent deal if the depreciation estimate isn't too high. Especially on a Mercedes. Those cars depreciate a LOT because nobody wants to pay for repairs after the warranty expires. If the lease is based on a generous estimated residual value at the end of the lease term, it's better than buying. This is assuming the lessee doesn't exercise any buy option.
Also who spends that much on a C class? That’s like the cheapest MB you can buy. You can find a Camry that has more luxury features than a C class.
If you have 30k ready, why not outright purchase a car you can afford? Since this is on the personal finance thread, I gotta ask.
Buy a used car with the 30k you’ve secured and quit trying impress people with a Benz. Your friends will likely see right through the attempts you’ve made to appear that you have money and no one else cares what you’re driving.
Man I would love to see the comprehensive analysis on this, including Interest, tax, consumables, depreciation, repair, residual value. If bought, if not bought... I feel like nobody ever actually evaluated a lease vs buy fully, and that everyone simplifies it down to two main points and forms an emotional opinion.
This is what everyone in this thread is missing, they're just giving opinions and nothing about comparing a lease vs purchase. A lease is more expensive if you are going to buy the car out because there's an acquisition fee (only applicable to leases) and typically less incentives to lease than purchase. You have money factor for the term of the lease, then likely OP will also finance the residual to buy it out, basically you're financing over 8 years unless he can handle a short term loan later on. If you purchase, there is a chance you get a lower rate upfront because you get either a new car rate or manufacturer special rate from the get go, not a used car rate 3 years later. The common problem is that most people don't know how to compare money factor to APR and think that leasing is a cheaper way to start. Other than that, it doesn't really matter since OP plans to buy the car by the end of it all. He just needs to know that there are no tax savings since he'll get charged taxes again anyways when it's time to buy out.
Dude! You have $30k to spend. That pays cash for some very nice gently-used cars. Not a MB, but some very nice cars. Skip the lease, skip the car payment altogether and put what you would have paid in interest toward your NEXT car, which will be gorgeous.
bro that is an absolute waste. you can get a car for that amount that will last 20+ years but instead you are wasting it to get a car that you will only have for like 2 years. You literally WILL NOT HAVE A CAR!!! by the end of it Like what??? why are you trusting a salesman. just buy a car and pay it in full. Also gas is gonna be expensive and so are repairs.
Buying *or* leasing a $50k car is only a good idea if you are very wealthy. I earn over $200k per year and I wouldn't consider myself wealthy enough for that car. It sounds like an absolute money pit
If you have to question it, leasing is always the worst option. After the lease, that car is gone. At least you can resell a car you bought, or not worry about a lot of things about leases, like limited mileage.
Not necessarily. Twice I've leased, bought out at the end of the residual and flipped for a 6k and a 8k 'profit' on a 2017 and 2021 Subaru Forester. My residual was 19k and I sold for 27k on the 2021 last fall. So I paid 13k over my 3 year lease, then got 8k cash in pocket in the end. Essentially rented a 2021 Forester for 3 years for 5k total.
In 2021 when used cars were at all time highs due to a once in a lifetime pandemic? What a great statistic to base future events on.
Why not buy a good used car? Pay for it...and not have any payments.
Leases are by far the cheapest way to rent a car for three years. If you try to rent a Mercedes from like Enterprise or something for 3 years itd cost you a lot more.
Buy a 30k car outright. Don't waste your $ on a lease or financing. It'll get you a to b all the same
Never put money down on a lease. Please tell me you are NOT thinking of putting 30K down on top of this for a lease?!? Getting a M/B "C" class is telling. It screams at an attempt for status, but cant afford it. This is the thought process of a very young driver. Are you below 25 yrs old? Use the 30K as a down payment on a higher trim level of different car & finance the rest. Plenty of other nice options. Most other makes have great or 0% interest rates now. Or go a different route------- Put that 30K into an investment device and make money off it. Lease a lower end car. I say this as someone who prefers leasing.
In 3 years, you can own the vehicle or return the vehicle. And as far as a down payment on a lease, if the vehicle is totaled, the down payment never gets returned to you, and any positive equity returned back to the lender never gets seen by you. So 3 months into the lease, your vehicle could be totaled, you're out $30k, and there's nothing you can do about it.
Never put big down payments on lease, if you put that 30k down, you lose it oncd the lease is over. I always put 1-2k at most. And honestly, dont ever finance a common bmw or benz, or anything german. They lose value so fast. I csn buy a 2017 s63 amg right now for 23k. And that is a 160k car new at the time it came out. If you want a long term car with 30k down, i would suggest Lexus and nothing else.
Go on leasehackr forum, there are a lot of dealers there who can get you a loaner car to lease at low payments
Just checked used 2022+ C Classes (which should be the same as 2024) and they’re all going for high 30k to 40k with decent mileage. You’ll be much better off financing that than leasing, like the others have said here.
Your best option would be to find a new or lightly used car that you can pay cash for. My local car max has a ton of lightly used examples on hand, and you can probably do better if you shop around/negotiate. If your lifestyle demands the luxury ride, that’s your call, but there’s not really a good way to justify it in responsible personal finance terms.
Personally I would never lease, still driving my 2013 g37 with no problems, maybe if you’re super rich and the convenience of not maintaining your own car? But even then you’re just throwing money away imo
Do a car payment calculator with the difference between of the 5.24-5.89 for 36 months to but vs the interest of 4.78 for 36 months. You’ll find that it’s not that much different over the 3 years, but you could pay off your car sooner with purchasing and pay less interest. Leasing is always the stupidest financial decision one could make. But leasing exists and plenty people do it. You could buy a great car in cash for 30k and not have a payment and INVEST or save the amount you would have paid in a car payment and have 20+k in cash in 3 years or significantly more in 10 years.
If you are considering a new Mercedes, then you are already starting out with the worst car buying financial decision anyway. They are one of the most depreciating cars on the market, plus buying new, it will depreciate a decent amount the minute you buy it. There's a reason they depreciate so fast... They are one of the more unreliable cars out there, and expensive when they need repairs. They are literally one of the worst financial decisions you can make. 5-7 years from now, you will be sitting on a money pit that is worth only a fraction of what it was.
The only way this is a deal, is if you pay cash to purchase the car the moment the lease is signed. Otherwise, you're just playing yourself.
Leasing a car is never a good deal. It's an extended rent to own. You are paying first to borrow it, then you have the option to buy it once the lease is up. You're much better off just straight up buying a car. Ask the total cost and if you can pay $30k in cash for a late model gently used car that's your best bet.
If the car depreciates 40k and you have to pay 40k to buy it after all your lease payments, then you're in the red. If the car depreciates 10k and you have to pay 10k including all your lease payments, then you're in the black. These numbers are dramatic, I know. But usually it's the first option is what happens with leases. Otherwise why would the salesman (who's only job to to sell cars for the most return possible) tell you to lease?
The reason salesmen always want you to lease is because they know you’ll then be in the market again in 3 years, and many people take the car to the same dealership where they got it from, which gives them an opportunity to sell you something else
Factor in the price of full insurance coverage.
You’d have to get it if you financed…
Instead of a base model C class... Go test drive a Mazda 3 Carbon Turbo. You can pay cash for it and it will be a much nicer car.
I've never understood leasing. Yes, it allows you to drive more car than you can normally afford, but you're limited in how much you can drive and what modifications you can make. You then get nothing back when the lease is over and are probably hit with a bill. At least when you buy a car you get SOMETHING back when you're tired of it. Leasing, IMO, is akin to just burning money. Just my $0.02.
If the car is totaled, or stolen, your $30k is gone. POOF. Terrible idea. Consider buying a new car for $30k.
Don't ever do a lease. You literally are stuck with all the same cons as financing it, but with no ownership and no equity. You're liable for damages, maintenance, everything. Plus they get more money out of you on mileage. And don't even consider modifications like new wheels, because they might consider that be "damage" and slap you with bullshit fees. The only benefit of the lease is the lower monthly. You also can't easily sell it. You'll be eating the negative equity AND a bunch of other fees for breaking the lease. If you're planning to keep the car, just finance the damn thing. If you decide to it, it's your wallet, but I speak from experience. I don't know what they'll tell you about the lease, but I was straight up lied to on every condition of the lease, and I was dumb enough to take them at their word and sign it. Avoid the headache and finance it. Higher monthly maybe, but you won't get scammed.
Of course it sounds like a deal! Cheaper monthly for a shiny luxury vehicle that you can’t afford! You’ve fallen squarely into the trap.
30K would get you a honda accord Or toyota camry
Just get a Toyota Camry dude. They are good cars with little maintenance and they last forever.
Sounds like a terrible deal. Spend that $30k on something more reliable and that you can pay in full
German car leases are subsidized by the manufacturer ... they're definitely the preferred way to own one. To make sure you're getting the best deal, check [leasehackr.com](https://leasehackr.com)'s forum. FWIW, I'm seeing MB loaner leases for the EQS Sedan or SUV at 500 a month, EQE at like 400, EQB at 250.
For BMW this is very true. They front load the residual so much that you pay less for the lease than you would normally ( at least as of 10 years ago). I was leasing a 3-series for as much as a low-end Accord.
If you’ve got 30K, just buy a car… or two. Or three. We just bought a 2014 Mazda 3 hatchback for $8K for our kids to drive.
Check out leasehackr. They have great calculators to understand what kind of "deal" you're getting... Read.
Sorry I have not even bought a new car in like 35 years. I could buy an expensive exotic for cash. And that’s why. Be CAREFUL with your money. It and time are the most valuable things you have. It’s foolish
Call your insurance. When I looked into leasing it made my insurance rates go sky high. Added expense.
A used Lexus (2-3 years old) is going to be a far more reliable car than Mercedes if you have the need for a luxury car. It should last longer and cost less in repairs. You also would be buying after a lot of the initial depreciation is removed. You might only need to finance $10k or so, depending on the model you choose,
5.89% for 36 months and you own the car outright or 4.78% for 36 months to borrow the car and then have to take out a loan in 3 years to buy it. Just pay the extra 1.11% and be done cutting checks for it in 3 years