chadwick

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So as some of you know, my slk should be arriving by July, and I still haven't decided if I'm going to buy or lease the car.

I've talked to numerous car dealers and they all recommend that I lease, but I've also talked to a bunch of friends and they all say that I should buy.

It seems that car salesmen WANT you to lease (because it's more beneficial for them, obviously), and even though it may be better for certain situations they seem to want to push it on everyone as the "better" deal, regardless of personal circumstance.

My friend calculated that if my lease payment is over 700 a month, I should buy the car. The only benefit I can see with leasing is being able to upgrade to a later model in 2 or 3 years. But some of the downsides are that you're restricted to a certain mileage, and the biggest problem is that during the worst winter months you cannot really drive the vehicle and so you end up paying for time that you aren't even using the car. Whereas, if you're buying, you will end up owning the car in the end anyway so it doesn't matter.

If I WERE to lease, it would probably be 3 years. Thing is, I have no idea how much mileage would be adequate to put on there so that I don't go over the miles, and I'm assuming that to get a 3 year lease I would end up losing more money than just buying the vehicle.

One of my friends also told me that he thought he was going to only keep his BMW for 2 years, and he's ended up having it for nearly 6. He said it's just too much of a hassle having to worry about constantly getting the new one.

If I were to buy, how long should I keep the vehicle for it to be worth buying?

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Interesting questions. I wish I could help, but I've never leased a vehicle. I don't like the concept and restrictions. Regardless, if we were all smart, we'd drive cheap used cars and save the difference. However, that's no fun, so we indulge ourselves with expensive shiney toys that makes us feel good about getting up in the morning and going to work. Someone here will answer your questions.

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--------SLK 55 ///AMG---------
THE MON55TER ON THE BLOCK

DansSlk

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If your planning on keeping the car more than a year or two then buy it, a lease is wonderful in the short term but it will bite you in the ass as time goes by.

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gblansten

Since I lease through my business the decision is easy. If you can do that then it is a nice advantage.

dsb

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Do you know what the current money factor and residuals are for the SLK300? If so, I can help you decide what's the best move. At 36 months, that could go either way.

If you're unaware, ask Tarry here:
http://forums.roadfly.com/forums/financing/

If you don't understand all this, I'm happy to help but we need this data first.

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chadwick

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Atually, I don't! Thanks for offering assistance! Do I just register there and then ask Tarry what the residual is for the slk300? Problem is, I dont' think there is an official price for buying posted yet so I can't figure out how he'd be able to tell me. Unless he has inside information?

Thanks again for offering to help. I want to make the BETTER stupid decision.

mtiede

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Why not? I drive mine all winter. Maybe your roads don't get cleared as well as in Western New York?

On the lease thing, I have always saved my money till I could afford to buy the car with cash. FWIW.

chadwick

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I guess I'm just not familiar with driving rear wheel cars during winter. Our roads seem to get cleared pretty well.

I COULD buy it with cash if I wanted to, but I'm kind of wanting to make more than one payment so I can build my credit better. I'm also trying to buy a house right now... It sucks that they don't go by income as much as credit history.

dsb

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I already posted the request. Now we wait. Once Tarry responds, I can help work out the figures.. at least on a 08 model.

Watch that link for a response.

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dsb

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Tarry has already replied. Here are the details. Note, they are not that great of a lease deal.

Chadwick, what is the msrp of the model/options you're researching? If unknown, equip a similar version in both the current SLK280 and 350 model. I can then work out some figures.

From Tarry:
2008 Mercedes SLK280 Convertible
24 Month – Residual 58% of MSRP – .00365 Base Rate
36 Month – Residual 50% of MSRP – .00330 Base Rate
48 Month – Residual 44% of MSRP – .00330 Base Rate
60 Month – Residual 40% of MSRP – .00330 Base Rate

2008 Mercedes SLK350 Convertible
24 Month – Residual 60% of MSRP – .00365 Base Rate
36 Month – Residual 53% of MSRP – .00330 Base Rate
48 Month – Residual 46% of MSRP – .00330 Base Rate
60 Month – Residual 42% of MSRP – .00330 Base Rate

2008 Mercedes SLK55 AMG Convertible
24 Month – Residual 58% of MSRP – .00365 Base Rate
36 Month – Residual 52% of MSRP – .00330 Base Rate
48 Month – Residual 45% of MSRP – .00330 Base Rate
60 Month – Residual 41% of MSRP – .00330 Base Rate

Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms

Use the following formula to calculate a lease payment:
(Cap Cost – Residual Value) / Term = Depreciation
(Cap Cost + Residual Value) X Money Factor = Interest
Depreciation + Interest = Base Monthly Payment

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chadwick

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Wow, thanks so much for all your help DSB. So assuming the BASE MSRP for the SLK300 is 45,000 (Just slightly higher than the 280) and 51,000 for the 350, I will now add all of the option packs minus the lighting package.

For the slk 300 it comes out to be around 55,000 and for the slk 350 it turns out to be around 60,000.

*tries to figure out the calculation*

Problem is, I don't know what the lease payments would be for 36 months assuming 15k miles a year.

gblansten

http://www.leaseguide.com/calc.htm

Your monthly payment including your 7.5% sales tax and at a $2000 discount off msrp (realistic I think) would be $1063 for the 300 and $1118 for the 350.

I assumed around $500 for lease processing, etc. Those in the know correct me if I'm wrong on this.

chadwick

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So that's how much it would be for me to lease a 300 or a 350 every month respectively?

gblansten

Yes. 36months/15k miles assuming $500 lease fees and 7.5% sales tax and that you negotiate $2000 off msrp.

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easyone. buy AMG, lease 350.

dsb

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Yes, using today's rates, the 350 is the better lease deal.

Here's the math.

MSRP =$60000
Capcost =$58500 (assuming buying for $2000 below msrp and a 500 bank fee)
Residual =$33000 (msrp * 55%; this is a 36 month/12k mile per year lease, best value)
Monthly depreciation =$708 ($58500-33000/36)
Monthly interest =$302 (58500+33000*.00330)

Total monthly payment with 7.5% tax = $1086

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^^^^
All that said, here's some food for thought. Let's do some math based on a purchase.

Assume purchase price of $58000 plus 10% for tax, license etc.
New loan ($63800, 60 months at 6.0%)
Monthly Payment = $1233 (assuming this is feasible)

At month 36, you would have spent $44388 in payments.
You would still owe $27830.
If you could sell it for $33000, you would recoup $5170 making your 3 yr ownership cost $39218.

So, here's the comparison...
Leasing for 3 years =$39096 (1086*36)
Owning for 3 years =$39218

Pro's / Con's
Leasing
+Car is under warranty the entire time.
+No worries trying to sell it afterwards, simply return it
+Possible write off for a business
-Costly if you decide to keep the car.
-Mileage may be limited

Buying
+ownership good if you keep beyond 3 years
+drive it as much as you want
-out of warranty at some point
-doubtful you could sell it for 33000 at the end of 3 years. read stressful

So, what sounds better to you?

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If all those numbers don't mean much, think of it this way.

When leasing, you pay for two things: depreciation and monthly interest.

The less it depreciates over the term of the lease, the lower that portion of the payment.

The lower the money factor, the lower the monthly interest. Note, to convert money factor into an understandable interest rate, simply multiply it by 2400. In case of the SLK350, it would make the money factor of .00330 x 2400 = 7.92% Obviously, not the best interest rate out there but common with MB.

The best leases are vehicles that have high residuals and low money factors. When we leased my wife's X3, the end result on a $43000 vehicle was a payment of only $509. Details below. So, as you can see, the X3 had a very strong residual even with 15k miles a year while having an interest rate of only 3.6%. This is part of the reason so many BMW's are leased. They have strong residual values and BMWFS often has killer money factors.

MSRP $42995, I paid $500 over invoice
Payments $509 month 3 years
15K miles/yr, 65% residual, .00150 Money Factor
*Money factor & Residual was the best ever on an X3

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found all the above most interesting an