Is this lease a good deal?

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Petrocelli
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Is this lease a good deal?

Post by Petrocelli » Sat Feb 07, 2009 12:34 am

I leased a Mercedes C280 for 39 months, with a payment of $585 a month, with no money down other than first payment and license fees. I get 15,000 miles a year. My lease runs out in October, but I am almost at my mileage limit, since the car has 49,500 miles on it.

The dealer offered me a new lease on a Mercedes C300 with a sticker price of $38,070.

I could buy out the last 8 lease payments for 3 lease payments. Stated differently, the dealer will pick up 5 payments.

Based on a sales price of $38,070, I will get a new lease for $635 a month, which is based on a residual of $18,700, and an interest rate of 3.96%. I put no money down, other than the first payment and license, and about $1,800 for the 3 lease payments. I pay 20 cents a mile for every mile over 48,500 miles.

I figure this is a good deal because I have exceeded my mileage now, so I am paying 20 cents for every mile I drive for the next 8 months.. If I turn the car in, I can start over.

I tried to haggle a little on price, but the salesman pointed out he is giving a lot of concessions by buying out the lease early, and waiving the mileage overage. Note that this will be the third car I have gotten from the same salesman.

As an aside, I use my car alot for business, and save my mileage checks. I have about $5,000 set aside in an account from mileage money.

Any thoughts on whether this is a good deal?
Petrocelli (not the real Rico, but just a fan)

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White Coat Investor
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Post by White Coat Investor » Sat Feb 07, 2009 1:25 am

20 cents a mile seems pretty expensive. Even if it's not quite a good deal, how much is that new car smell worth? You have to add something in for the value to you of having a brand new one. That said, 5 waived payments are nothing to sniff at if you were planning to lease a new one in 5 months anyway.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Petrocelli
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Post by Petrocelli » Sat Feb 07, 2009 10:18 am

I am not that concerned about the 20 cents a mile. It was 30 cents on my prior lease.

I am wondering whether not budging off the sticker price is fair. As I said, I am getting 5 lease payments free and avoiding excess mileage costs.
Petrocelli (not the real Rico, but just a fan)

Ron
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Re: Is this lease a good deal?

Post by Ron » Sat Feb 07, 2009 10:34 am

Petrocelli wrote:I have about $5,000 set aside in an account from mileage money.
Isn't that the cash for your new watch?

- Ron

tjwolf
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Post by tjwolf » Sat Feb 07, 2009 12:12 pm

I looked up the KBB pricing structure on the C-300 in MN. It is about 7% mark-up over "Invoice Price". So you Dealer cost is somewhere around $ 35,900, on your unit. Your options package and manufacturers rebates, sales incentives, year end goal achievements, delivery, etc, will all affect his true final cost.

It looks as if the forgiveness of the lease would more than off-set the discount you could normally expect($4,800 forgiveness/2800 normal discount). I think I would compare dealers though. With the slow sales and inventory build-up of unsold units, MB might be offering additional great programs to the dealers.

Tom
Tom

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Petrocelli
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Post by Petrocelli » Sat Feb 07, 2009 5:50 pm

Thanks for the help. I am off to the dealer to negotiate and will let you know how it turns out.
Petrocelli (not the real Rico, but just a fan)

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Petrocelli
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Post by Petrocelli » Sat Feb 07, 2009 11:47 pm

Negotiated down from $635 to $595. The car is in the driveway. It drives much better than the C280, and my payment is only $10 a month more.

The 3.96% interest rate, and the 5 months of forgiven payments sure helped make the deal easy.
Petrocelli (not the real Rico, but just a fan)

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