Leasing a new Mercedes from Napleton's Mercedes-Benz of Rochester is an attractive way of getting into the car or SUV of your dreams for a lot less money. All it takes is a desire, and a good credit rating. But first, there are many questions needing answers before signing on the dotted line.

Here are a few:

How Does Leasing Work:

A lease is very similar to an auto loan, with a down payment, followed by monthly payments for a fixed period of time. Leasing allows you to drive a new vehicle for less-per-month than you would normally pay with an auto loan for the same vehicle. Unlike a traditional car loan, when the lease period ends, you won't own the car unless your contract allows you to purchase it at an end-of-lease price. 

One of the benefits of an auto lease is that your payments are lower than an actual car loan but with the downside of not building any equity as you are making those monthly payments, as you would with a traditional auto loan. Essentially, you are only paying for the privilege of driving it for a set amount of time and miles. These are typically three years and 36,000 miles.

Unlike a car loan, which is typically arranged through a bank, credit union or some other type of lender, a car lease is usually handled through the dealership and the manufacturer's financial services arm or a specialized vehicle-finance company.

At lease termination, you will then return the car to the dealership and walk away from it. You may also sign up for a new lease on a newer car, or finally, you may exercise your right to purchase the vehicle outright for a specified price listed in your lease agreement.

Can I lease a Used Mercedes-Benz Car or SUV?

While some companies allow you to lease a used vehicle that has been reconditioned through a Certified Pre-Owned (CPO) program, a CPO lease program does not exist within the Mercedes-Benz galaxy. Instead, the company offers the ability to purchase retired Mercedes Courtesy Vehicles, which are gently-used loaners that other customers have driven while their cars were in for periodic service. Ask your Mercedes-Benz of Rochester leasing specialist about the very attractive lease rates.

What's the Leasing Lingo?

There are plenty of unknowns in life and in leasing, including the terms and phrases used when discussing your lease plan. Rather than end up uttering the phrase "What we have here is a failure to communicate," let's start by familiarizing ourselves with some of the banter you are likely to encounter from the Finance specialist across the desk. 

Lessor: In most cases, the financial services arm of the auto manufacturer.
Lessee: You, the customer who is signing their name at the bottom of the lease contract, and who will be responsible for the vehicle for the time the contract is active. 

Open-ended vs Closed-ended Leases
There are two types of leases: Open-ended or Closed-ended. It's very important to know the difference.

Open-ended: An open-ended lease is where the vehicle's future value is not listed in the contract. At the end of the lease period, you may receive a refund check if the vehicle is worth more than expected. If it is worth less than anticipated, you may owe the lender, such as Mercedes-Benz Financial Services, additional money before you are free and clear. Such reasons for a decrease in value are the vehicle's condition after an accident and subsequent repair or some other unforeseen change in the car or SUV condition.

Close-ended: A closed-ended lease shows that you have already agreed upon the vehicle's value at lease-end. If the depreciation makes the vehicle worth less than the agreed-upon amount when you turn it back in, you walk away from it with no further financial obligation.

Capitalized Cost: The Capitalized Cost is the value of the vehicle at the start of the lease. It's essentially what the vehicle was worth when new and includes any options, services, and extras that were part of the agreement at lease inception.

Capitalized Cost Reduction: Think of this as the down payment. It's possible to reduce the amount of your monthly payment by applying a capitalized cost reduction. This amount reduces the total amount of the capitalized cost. As an example: Say the capitalized cost of the lease vehicle is $35,000. If you apply a capitalized cost reduction amount of $7,000, that will leave you with a capitalized cost of $28,000, from which your monthly payments will be determined. 

Residual Value: Another way of saying, "the value of the car at the end of the lease." It is an agreed-upon amount that is usually decided between you and the lessor at the beginning of the lease and it will be in the contract. 

Depreciation: The rate your vehicle loses value over time. 

Rent Charge or Money Factor: The largest cost of leasing a vehicle is the rent charge or money factor. With this, you can figure your annual percentage rate (APR). To find out your interest rate, multiply your money factor, which may look like this 0.00150 by 2,400. That gives you 3.6, which turns out to be the annual percentage rate of your lease.

Use tax: The Use tax usually takes the place of a sales tax since you are not actually buying anything. Rather, you are using it. State legislators made a law governing use tax, just for people who decide to use rather than buy. Get it?

Guaranteed Auto Protection (GAP) Coverage: Some lessors may require GAP insurance coverage which covers the difference between the amount you owe on your lease and the actual value of the vehicle if it is damaged or stolen.

Early Termination Fee: Your lease is an agreement that you will pay a fixed amount for a certain amount of time. If you find the need to end the lease early, you may be required to pay an early termination fee. Your lease agreement will detail the amount, in advance, so there are no surprises.

Only when you know what the lease officer is referring to when he/she mentions cap cost, disposition fee and the likes you'll be able to tell if you're getting a good deal and whether leasing a vehicle makes sense for you or buying it is the way to go. 

So, what is leasing? Leasing is the rental of a vehicle (car, truck, SUV, minivan, sports car, or electric car) for a predetermined period of time. Leasing is the preferred way for businesses to acquire new vehicles and for a good reason. Usually leasing a vehicle costs less than buying it. However, leasing a car comes with restrictions, such as mileage limits. Still, going the lease route makes a lot of sense for some people.

With that out of the way, here are some answers to our most frequently asked questions. 

  1. Does leasing a car make sense for me? If you prefer to pay less a month for the same vehicle, not worry about maintenance costs or how to sell it when you want to get a new car then it's worth looking into lease offers.

  2. Leasing a Mercedes-Benz or buying - what's better? Both have their pros and cons and for that reason the short answer is "it depends." It all comes down to personal preferences. Do you intend to drive the same car for a long time? Do you drive a lot of miles annually? Do you like the car selling process? If you answered no to the above questions you should consider leasing a car, not buying one. For more details, check out our Buying vs Leasing article. 

  3. What's the cost to lease a Mercedes-Benz? It all depends on the model you have chosen and your payment and credit histories. You can lease a Mercedes-Benz with $0 down but be prepared for higher monthly payments. Just like financing a car, the more you pay upfront, the less you pay monthly. The good news is that often times manufacturers that want to increase their number of leased vehicles offer special incentives and rebates that lower the monthly payments. 

  4. Can I buy the car I lease? Yes, if you like the Mercedes-Benz you've been leasing, you can purchase it (most leasing contracts have buyout clauses). If you don't want to wait until the end of the lease period, you can speak with a leasing manager to purchase the vehicle before that. It's certainly possible just keep in mind that you'll have to pay early termination fees. 

  5. Is the security deposit refundable? Security deposits are refundable at the end of the lease given that all lease contract specifications have been met. At the same time, some lease agreements require non-refundable deposits, so read your Mercedes-Benz contract carefully and ask questions. And last but not least, there's a difference between paying a security deposit or a down payment. The latter is not refundable. 

  6. Does my credit score need to be perfect to lease a Mercedes-Benz? Not necessarily. However, credit score below 619 is considered "subprime," meaning you'll have to pay higher interest rates and monthly payments. At the same time leasing a car can help you improve your credit score given that you make your monthly payments on time.

  7. Can I lease a Mercedes-Benz with $0 down? Yes, you can but that means higher monthly payments. Keep in mind that often times when you see lease offers with $0 down it means a $0 down payment but you still have to pay license, tax and registration fees before you are handed the keys. 

  8. Can I return my leased Mercedes-Benz to a different dealership at the end of the lease? Yes, you can return your leased vehicle to a different authorized dealership of the same brand. It goes without saying but in order to return the car, your lease contract obligations must have been fulfilled.

  9. Is maintenance included with my Mercedes-Benz lease? One of the main reasons people prefer lease to buying is that maintenance is covered during the lease period (specifics vary within individual lease contracts). 


>> Have a Mercedes-Benz Lease Related Question? Call (507) 322-7150 to Speak with a Lease Specialist at Mercedes-Benz of Rochester <<
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