Leasing isn’t rocket science, but it continues to be one of the subjects that readers of the Dave Knows Cars Blog are most interested in and have the most questions about. It’s also one of the most common Google searches that lead people to Daveknowscars.com in the first place, so I’m writing a quick analysis of the Mercedes-Benz “Sign and Drive” lease advertised by Mercedes-Benz nationally for the month of September 2010. I’ve also included links to the two most detailed articles I wrote earlier this year about leasing below.

I paste links to these articles into emails for customers and people interested in learning more about leasing all the time. If you haven’t read them have a look, you may find them helpful in clearing up some common questions about leasing and figuring out if it is right for you or not.

The first day or so of each month Mercedes-Benz releases programs for that month to their dealer network. We all clamour around to get our copies of the interest rates, lease deals, customer cash amounts, whatever they may be featuring that particluar month. Programs do change monthly, so the sale person who says to you at the end of the month “I don’t know if this interest rate will be available tomorrow” is being straight with you, and they never release the new programs until the previous month is really finished.

It’s the beginning of a new model year for most of our models. The 2010s are essentially gone, all we have are 2011 models inmost cases, which is actually good if you’re interested in leasing. The 2011 that you lease today will be worth more at the end of its lease period than the same car you will lease in say, 6 months… which means you pay less depreciation over the life of your lease.

The advertised “SIGN AND DRIVE” lease on the new 2011 Mercedes-Benz C300 4matic Sport for September 2010 breaks down like this:

MSRP of $40,360 (Premium 1 Package car, Automatic Transmission, 4matic All Wheel Drive, in Mars Red, Black or Arctic White)
27 month lease
10,000 miles per year
$0 due at signing, NOT EVEN FIRST PAYMENT*
$455 / month 

*So, what’s with the asterisk? You must pay tax, title, license to the state at the time of signing. Sorry, that’ just how it goes… but it’s probably  probably less than a total of $1500 in MN. Or I suppose you might be able to wrap that into your payments and put truly NOTHING down, but you might need extremely good credit to do that, and even then, the bank may not even let you. You should be prepared to pay that up front, and that’s smarter anyway.

This is a great time to lease because residual values are high… meaning, the car will be worth a lot at the end of your lease, and all a lease really is is you paying the depreciation of the car during the period you have it. It’s a relatively short lease period, interest rates are low, it’s a new model year car.

If you want to get into a new C300 with more equipment, say you want the multi media package, you’re going to add about $2,700 to the MSRP which will increase your payment by about $25 – $30 per $1000 the MSRP goes up. So, it will cost you about an extra $80 per month to have navigation, the 6GB music register, voice control, etc. If you don’t need the Multimedia Package but would like the big Panorama Sunroof the MSRP increases about $1000, sending your payment up to about$490.

If you need 12,000 miles instead of the 10,000 avertised the payment will go up a bit too, how much will depend upon the MSRP of the car you’re looking at, but it’s not crazy, usually between $30 and $50 per month.

As I’ve said in previous columns… it’s very unusual for someone to walk in and say… “I’ll take that lease I saw on TV.” Customers inevitably add some equipment, needs more miles, maybe they want less miles, want a car with metallic paint which adds $750 to the MSRP or are comfortable putting $2500 or $3500 down in order to keep thier monthly payment at a lower level.

That brings up a good point, and an often hotly contested one. People often go on the offensive when I ask them how much money they’re comfortable putting down, “Hey, don’t back me into a corner” (I don’t back people into corners, I give them options, escape routes even!).

Let me put it this way, it costs X to lease a car. You can put $20,000 and have a $100 a month payment, or you can put nothing down and have a $800 a month payment. Money down just pays what you would pay monthly, up front. These sign and drive leases are so great because they require minimal cash out of pocket, and that seems to be what most people are into these days, and the monthly payments are very reasonable considering what you get to drive for the next 2+ years.

When you see lease deals advertised, no matter the manufacturer, they’re usually really low, in fact, Mercedes-Benz often advertises a lease that’s something like $379 a month with $3000 down. While it looks good on TV, I often find it counterproductive on the showroom floor. The fine print on leases like that says…. on a base car, PLUS tax, title, license, fees, and first month’s payment, etc. etc. So when someone comes in all excited that they’re going to get a Mercedes-Benz with navigation and a panorama sunroof and illuminated door sills for $379 a month I have to say “Perfect sir, I’ll get you that $379 a month lease, but I’m really gonna need more like $10,000 down from you today to get you to that payment.” Then the mood changes and I’m the bad guy.

That’s why I like the current sign and drive deal from Mercedes. It’s a decent P1 car, perfectly respectable… add an iPod kit and pano roof and you’re only going up about 50 bucks a month. Minimal money down and you’ve got a nice ride, probably only two oil changes during the whole lease period of 27 months. It’s a fine way to go.

Remember… the keys to leasing…

1) As MSRP goes up monthly payment goes up (about $25 – $30 per $1000)
2) As $ down goes up, payment goes down ((about $25 – $30 per $1000)
3) As miles go up, monthly payment goes up (amounts depend on the specific car)
4) Most advertised leases are on fairly basic cars, but good ones on solid cars exist (like this months $455 / month sign and drive / P1 C class)
5) Tax, title and license are generally NOT included in advertised leases or even in the money down amounts advertised.

That’s how I would sum it all up… I didn’t know anything about leasing cars a couple of years ago, it didn’t make sense to me. If you plan to change cars, or even think there’s a chance you will change cars within 3-5 years of buying it… leasing is you best bet! Or get ready to take a bath on your trade in.

Additional leasing articles I’ve written from months past:

My Leasing article from April 12, 2010
“Mercedes-Benz: Why Lease?”

Another leasing article from May 5, 2010
But What’s the Catch? Mercedes-Benz Sign and Drive Lease

This 2008 E350 4matic in Flit Grey Mettalic with black interior has just had its price reduced to $29,989. I’ve posted the original window sticker of this car below so you can see the options on the car, original MSRP was $58,180. It’s got the Panorama Sunroof, Premium 1 Package, even rear folding seats which are fairly rare in an E class.

It’s a Certified Pre Owned E class with just over 48,000 miles. It is a one owner lease return that we have fully inspected and serviced. It’s as close to a new car as you’re likely to find. Feldmann Imports Stock# P8910.

September 2010 Certified Pre Owned Special Finance Rates continue to be aggressive. Here are the special finance rates from MB Financial for this month. (2007 / 2008 models):

The Mercedes-Benz Certified Pre Owned Program includes the balance of any factory warranty on the car (4 years or 50,000 miles), once that warranty expires the Certified Pre Owned Warranty begins which is one more year, or up to 100,000 miles, whichever happens first.

Here it is! The first 2011 R class we’ve received at Feldmann Imports. This is the redesigned R class with a more upright front grille (a nod to the SLS AMG and a stylilng cue you’ll see across all MB products soon), different front and rear lights, a new wheel design, in fact, there are many changes to the new 2011 R class.

This is a very well equipped car, so well equipped, that instead of trying to list all the features here, I’ve just included a jpg of the original window sticker / option list of this particular vehicle. It’s nice to finally see Mercedes calling the R class a “Cross Over” as opposed to a ‘wagon’ or ‘SUV’. It’s suffered a bit because nobody is sure how to categorize it, but to those who have them, whatever you want to call them is fine. They’re one of the roomiest, most comfortable people movers Mercedes-Benz makes.

They’re available now and will continue to arrive into our regular stock. Call today for availibility.

As the last of the 2010 model year vehicles disapear, so do subsidized finate rates for new most 2011 models. Here are the special finance rates for specific models through MB Financial, all other models and terms are governed by regular bank rates.

1.9% up to 36 months
E class (E350 Sedans)
C class (C300, C350)
R class (R350 gas)
GLK class

2.9% up to 66 months
C class (C300, C350)
R class (R350 gas)

This 2006 Nissan Xterra was just traded in on a brand new Xterra at the end of last month. The Xterra actually made AutoWeek Magazine’s “Ten Best Cars of the Decade” which I thought was interesting. The comment the automotive writer made was that in a ‘category of posers, the Xterra is the real deal.’ It’s a very capable off road vehicle, it’s not built on a car platform, it’s the genuine article and it packs the veteran V6 engine that Nissan has used for many years, it’ reliable, tough and perfect for the Minnesota Winter.

This particular example has just over 64,000 miles on it. It is a local car that was just traded in here on a new Xterra. Priced right to sell today for $16,964. Feldmann Import’s stock# N5777A.

Here is the other E class wagon that was traded in over the weekend. 2008 Mercedes-Benz E350 4matic Wagon, 31,246 miles. Color is pewter with cashmere interior. This is also a local one owner car, it was traded in on a new 2011 E350 4matic sedan. It’s got the Premium 1 Package and an iPod kit, window sticker / option list is below.

This car was originally priced at over $60,000, it’s available today, Certified Pre Owned, with extended Mercedes-Benz warranty for $39,851. Feldmann Imports Stock# M9780A.

This 2009 Black on black Mercedes Benz E350 4matic wagon was just traded in over the weekend on a new 2011 E350 wagon. This car only has 15,800 miles on its odometer, it is a one owner car, the guy just decided he needed the new body style, so he bought the new 2011 that was sitting on our show room floor.

This is a local one owner car. The 2009 model E classes have all the electronic goodies including a 40GB hard drive based system that runs the Navigation system, you can use 4GB as a music register to rip CDs and other music into the car’s memory, it’s got an iPod kit… all the options are below in the screen shot of the original window sticker / option list.

Originally over $61,000, it’s available today as a Certified Pre Owned car with extended Mercedes-Benz Warranty for just $45,662. Feldmann Imports Stock# M9611A.

Here are some photos and the window sticker of this 2011 SL63 AMG . It just arrived on a transporter today and is currently getting cleaned up in the detail shop, it will be on the show room floor by days’s end. It’s the first 2011 SL63 AMG I’ve seen, and the first SL63 I’ve ever seen with the AMG Performance Package. Believe it or not, there is the ‘regular SL63 AMG’ and then there is the additional AMG Performance Package option for that car, a $12,900 option package.

The AMG Performance Package ads the following items to the standard SL63 AMG. 19″ AMG Twin 5-spoke Forged Wheels, AMG Performance steering wheel, AMG Limited Slip Differential, AMG Compound Braking System, AMG Track-Calibrated Active Body Control (ABC) Suspension System, and an increased Top Speed rating of 186mph. 

In addition to the AMG Performance Pacakge this car is loaded with options like Distronic cruise control, Parktronic, a Panorama sunroof and more. Equipped in this manner, you’re looking at a rare car… it’s not for the feint of heart, or pocketbook with a top speed of 186mph (electronically limited) and an MSRP price tag of $164,065. I’ve attached a photo of the original window sticker below.