Buy or walk away at end of lease scenario

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jojay
Posts: 148
Joined: Sun Apr 29, 2012 11:09 am

Buy or walk away at end of lease scenario

Post by jojay »

Hi,
Could we please ask for some feedback to ensure we are thinking straight?
In Oct, 2020, we leased a Mercedes C300 for 3 years and 36,000 miles. The lease is due to end in October 2023.

We are well aware that leasing is a very bad way to "own" a car but we did it as a retirement present for ourselves and spouse's overcoming of cancer. It was a treat that we denied ourselves for 40 years. We owned all of our prior vehicles ( Camry, Forrester, etc ) for more than a decade and up to !80k miles in 2 instances. Our lives have changed and we'd like the spouse to drive a nice car; not a slightly dented but perfectly usable Camry anymore.

The original sticker on the MB was about $53k. We have been paying $660 per month since we acquired it. A new lease of almost the exact same 2023 version of the C300 is $1000 per month so we are definitely not going to do that.

The car is in prefect condition and only has 25k miles. Any vehicle we drive will only be driven less than 10k miles per year.

The residual value of the vehicle is about $27k. The KBB estimate is $33k. Our question is " should we buy it"?

We could take the $6k and put it on a new car. Any car we want though is in the $42-$45k range which means ( this is where we need you help ) after putting down the $6k, we would be buying a car for $36k-$39k. Even Certified Pre Owned cars are in the $40k range.

To us, it seems crazy to walk away from the purchase as we would be getting a used car of which we know the complete history. Are we wrong? As we do our car search, we see that C300s very similar to ours are selling for $38k. It seems crazy for us to incur $12k more in car costs for something very similar to ours.

Please offer some insight and feedback.
Thanks.
miket29
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Re: Buy or walk away at end of lease scenario

Post by miket29 »

It's not clear what you're asking since at the start of the post it sounds like you're thinking of buying and keeping the car, but further down buying it and then either sell or trade it in to get the $6K or more difference between the purchase price and current value.

If you're thinking of buying and keeping the car then be prepared for some potentially large expenses ahead. In the past I've owned a BMW and would never do it again, just lease. First off there is the more comprehensive scheduled maintenance that will be coming due as the car gets older. Check with the dealer what these will cost, but it is likely to be hundreds of dollars each time. The other exposure is to repair costs. Anything breaks and you can expect each repair to cost $1K or more. I don't know if Mercedes offers an extended warranty from Mercedes and not a third party; BMW does although dealers try to push you into third-party warranties that are not as comprehensive and don't necessarily pay for repairs using BMW parts. I had BMW's extended warranty on my car and came out ahead even though it was about $3K and that was several years ago. When the warranty was almost over I sold it.

German cars are fun to drive but can be expensive to own. It sounds like your previous cars were Japanese and that's a whole different world of reliability.
delamer
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Re: Buy or walk away at end of lease scenario

Post by delamer »

miket29 wrote: Sat Jun 03, 2023 3:04 pm It's not clear what you're asking since at the start of the post it sounds like you're thinking of buying and keeping the car, but further down buying it and then either sell or trade it in to get the $6K or more difference between the purchase price and current value.

If you're thinking of buying and keeping the car then be prepared for some potentially large expenses ahead. In the past I've owned a BMW and would never do it again, just lease. First off there is the more comprehensive scheduled maintenance that will be coming due as the car gets older. Check with the dealer what these will cost, but it is likely to be hundreds of dollars each time. The other exposure is to repair costs. Anything breaks and you can expect each repair to cost $1K or more. I don't know if Mercedes offers an extended warranty from Mercedes and not a third party; BMW does although dealers try to push you into third-party warranties that are not as comprehensive and don't necessarily pay for repairs using BMW parts. I had BMW's extended warranty on my car and came out ahead even though it was about $3K and that was several years ago. When the warranty was almost over I sold it.

German cars are fun to drive but can be expensive to own. It sounds like your previous cars were Japanese and that's a whole different world of reliability.
I agree that it’s unclear whether you want to buy and keep your leased vehicle vs. buy and use the profit as a downpayment on a new vehicle.

Also, if you return the leased vehicle, what’s your plan?

We had a Mercedes E- class — bought CPO — for 7 years with only one non-maintenance repair. That repair cost us $350. Admittedly, service is more expensive with luxury German cars. Buying the prepaid service coverage was cost effective.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
DoubleComma
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Re: Buy or walk away at end of lease scenario

Post by DoubleComma »

Buy the C300 for the $27k residual. Keep it, don't flip, drive and enjoy.
KESP
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Re: Buy or walk away at end of lease scenario

Post by KESP »

DoubleComma wrote: Sat Jun 03, 2023 3:27 pm Buy the C300 for the $27k residual. Keep it, don't flip, drive and enjoy.
+1
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snackdog
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Re: Buy or walk away at end of lease scenario

Post by snackdog »

Definitely buy the car since the dealer has badly underestimated the residual, assuming you are spot-on with the mileage in the lease (if not, you overpaid but no big deal).

What you do after that is up to you. If you love the car and are willing to deal with the maintenance, keep it. With German cars that is a crap shoot. If it were me, I would sell it and put the proceeds in an equivalent Lexus which in your case is an IS300. A 2020 with 25k miles would be about $33k so nothing out of pocket.
BH Consumer FAQ: | Car? Used Toyota, Lexus or Miata. | House? 20% down and 3x salary. | Vacation house? No. | Umbrella? $1 million. | Goods? Costco.
FellsGuy
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Re: Buy or walk away at end of lease scenario

Post by FellsGuy »

snackdog wrote: Sun Jun 04, 2023 7:33 am Definitely buy the car since the dealer has badly underestimated the residual, assuming you are spot-on with the mileage in the lease (if not, you overpaid but no big deal).

What you do after that is up to you. If you love the car and are willing to deal with the maintenance, keep it. With German cars that is a crap shoot. If it were me, I would sell it and put the proceeds in an equivalent Lexus which in your case is an IS300. A 2020 with 25k miles would be about $33k so nothing out of pocket.
I bought a C300 at an estate sale way under market with 13,000 miles on it it for $12,000 was fun until 40,000 mile then the, what I called, $1500 oil changes started every 3500 miles some other electric part died on and on and on had it towed to lexus bought a certified ES350 for $16000 and drove that to 200K until some idiot rear ended me. Mercedes, Range Rover are for very wealthy people who turn their cars in every 40K and only buy new.
“Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness. | Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”
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pahkcah
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Re: Buy or walk away at end of lease scenario

Post by pahkcah »

I'm in the same situation as you, just a different German car. I leased a 2021 Audi SQ5 at the beginning of 2021 (for 3 years with 10,000 miles per year) with the intention to wait and see what Lexus and other auto manufacturers would be releasing in the EV and PHEV market during the lease term. As it turns out, I will only have about 15K miles on the car at the end of the lease. The dealer also provided a very substantial discount off of the MSRP ($62K), as the lease began just a couple of weeks prior to news of the pandemic became widespread.

The value of the vehicle, considering lack of mileage and like-new condition of the overall car and tires (which are very expensive to replace) pretty much makes it an easy decision to choose the purchase option at the end of the lease. Total repurchase price, including residual taxes and any fees will be $35K, KBB is $45K. It helps that I really like driving it.

I understand that German cars can have issues beyond the initial warranty period. As a result, I will be purchasing an extended manufacturer's warranty. Based on the information you provided, including the fact that you will be driving it less than 10K miles per year, I'd buy out the lease and acquire an extended warranty from Mercedes. Once you own it, you could always sell it or use it as a trade-in on something else down the road. Good luck!
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