Advice on auto loan/lease

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Jul 23rd, 2021 11:33 am

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Jul 22nd, 2021 9:49 am

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 9:49 am

Advice on auto loan/lease

I need some advice for a vehicle I currently have and some suggestions for the future. Here are the facts of my auto loan I currently have:

Brand New 2018 Mercedes C300

Leased on May 28, 2018

$6,600 down

$701.39/month for 48 months @ 0.9%

After 48 months, a balloon amount of $24,811.60 will remain. I can choose to finance this amount further but it will be at higher interest rate due to being financed through a bank whereas for the 48 month term, I was financed in house.

Now I am currently in my 3rd year of having the car. My lease will be up in May of next year and I am now trying to decide how I want to proceed. I want to get out of this lease/balloon option as it was probably not the best choice which my lesson has been learnt on that. Here are some options:

1. After my lease is up, I was thinking of financing the balloon amount further. I was then planning to sell the car privately for more than the loan and pocket the extra, if that is possible.

2.Break my lease early and finance a used car. For me to break the lease early, I will have to "owe" about $2200 on my current car which will be added to the cost of whatever car I choose to finance through the dealership.

I have come here now and am looking for advice. I completely understand purchasing a new car is probably one of the worst things to do but I was younger and didn't know any better. Let me know if you need any additional information or clarification.

The car currently has about 43000 kms. I am in Alberta.

Thank you for your input!

Last edited by Deals4BrwnGuy on Jul 22nd, 2021 9:57 am, edited 1 time in total.

20 replies

Jul 22nd, 2021 9:53 am

lpin14: Deal Addict; Nov 24, 2013; 2347 posts; 1715 upvotes; GTA

Jul 22nd, 2021 9:53 am

What car is it and what's the mileage? If it's a German car, the normal advise would be to get rid of it after the 4 years.

Jul 22nd, 2021 9:56 am

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 9:56 am

It's a Mercedes C300 and it has about 43000 kms on it so far. I'll edit the original post to add this info.

Jul 22nd, 2021 9:59 am

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 9:59 am

Once the new generation comes out later this year, your 2018 could be looking at a further decline in fair value in the used car market. Do remember, the C300 has plenty of them out there as it is a volume based seller for MB.

I would suggest you explore and consider selling now and hopefully, you are not in deep red after paying off the loan.

Jul 22nd, 2021 10:44 am

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 10:44 am

booblehead wrote: ↑ Once the new generation comes out later this year, your 2018 could be looking at a further decline in fair value in the used car market. Do remember, the C300 has plenty of them out there as it is a volume based seller for MB.

I would suggest you explore and consider selling now and hopefully, you are not in deep red after paying off the loan.

Should I ask the dealership what my buyout will be for this car? Would that give me at least the minium I would have to try and sell the car for?

Jul 22nd, 2021 10:49 am

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 10:49 am

You can just call up MBFS to see what is the payout today. After that, take a look at the Autotrader to see what your car is currently going for ... do remember asking price is not the same as sold price. I would think $1500 - $2500 off the listing price would be a fair indication of the possible sold price would be in today $.

Once you have done that, it should give you a better picture of where you stand, in terms of your equity in the car. positive or negative.

Last edited by booblehead on Jul 22nd, 2021 10:51 am, edited 1 time in total.

Jul 22nd, 2021 10:50 am

tim-x: Deal Addict; Nov 8, 2005; 3233 posts; 2833 upvotes

Jul 22nd, 2021 10:50 am

Deals4BrwnGuy wrote: ↑ Should I ask the dealership what my buyout will be for this car? Would that give me at least the minium I would have to try and sell the car for?

I would say get out of that car as soon as you can. After it's all said and done you will have paid 65k for a compact low budget Mercedes.

+1

Jul 22nd, 2021 10:52 am

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 10:52 am

https://www.mercedes-benz.ca/en/financial-services

You can access your account online too ... if you have registered

Jul 22nd, 2021 11:10 am

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 11:10 am

booblehead wrote: ↑ https://www.mercedes-benz.ca/en/financial-services

You can access your account online too ... if you have registered

I had no idea about this. Thank you. My payoff is about 32k and looks like they are selling for about 32 to 35k. Now I atleast know what my buyout is. May end up in the positive or nil depending on what I sell it for.

Do I have to inform MBFS that I am selling the car? Do I need permission from them?

Jul 22nd, 2021 11:18 am

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 11:18 am

Not when you are listing it for sale. You do jnot need their consent to sell. You only have a loan with them as they are lienholder ... you are the actual owner of the car.

When you do have an agreement with a buyer on the sale, then contact MBFS and get a final payout amount and have the loan pay off right then. MBFS will issue you the loan payout receipt so the buyer will have knowledge there is no loan outstanding. The official lien discharge letter will be mailed out in about 2-3 weeks time.

Jul 22nd, 2021 12:18 pm

peteryorkuca: Deal Fanatic; Jul 26, 2007; 6922 posts; 4508 upvotes; Toronto

Jul 22nd, 2021 12:18 pm

Can you find a similar used car as your current car which was owned by you since new for $24k to $32k that wasn't abused or smell used?

You know what the problems and all the maintenance done to yours, what about 2nd hand? Even if you got all the history, there has to be a good reason it's a used, like they didn't take good care of it and wants to get rid of it. Maybe this is why you want to get rid of yours?

Last edited by peteryorkuca on Jul 22nd, 2021 12:20 pm, edited 1 time in total.

Jul 22nd, 2021 12:18 pm

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 12:18 pm

Thank you so much for your help on this. Lol I'll never probably do a lease/balloon again.

Jul 22nd, 2021 12:34 pm

kelaaa: Jr. Member; Oct 22, 2020; 112 posts; 91 upvotes

Jul 22nd, 2021 12:34 pm

Does Mercedes use some sort of different vocabulary? I find it hard to understand whether this is a lease or a financed vehicle.

Jul 22nd, 2021 12:36 pm

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 12:36 pm

peteryorkuca wrote: ↑ Can you find a similar used car as your current car which was owned by you since new for $24k to $32k that wasn't abused or smell used?

You know what the problems and all the maintenance done to yours, what about 2nd hand? Even if you got all the history, there has to be a good reason it's a used, like they didn't take good care of it and wants to get rid of it. Maybe this is why you want to get rid of yours?

Since this was my first brand new car, I definitely put more effort into taking care of it. I stayed up to date on my maintenance as well as the appearance of it as well.

I get what you're saying though. You never know when purchasing 2nd hand if the owner truly took care of it.

Jul 22nd, 2021 1:06 pm

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 1:06 pm

Deals4BrwnGuy wrote: ↑ Thank you so much for your help on this. Lol I'll never probably do a lease/balloon again.

well, people do this "balloon" is pretty well committed to buy and own for a long while. The low interest rate is certainly attractive but if you deviate from your plan, then it can literally cost you a lot more in the short run.

Jul 22nd, 2021 1:08 pm

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 1:08 pm

kelaaa wrote: ↑ Does Mercedes use some sort of different vocabulary? I find it hard to understand whether this is a lease or a financed vehicle.

No. OP is just worded incorrectly. "newbie"

Jul 22nd, 2021 1:13 pm

pentiumvi: Deal Addict; Dec 3, 2009; 1079 posts; 684 upvotes; Vancouver

Jul 22nd, 2021 1:13 pm

I'm a little confused to be honest, the OP talks about the car as being leased, then goes on to mention the "balloon".

A payment plan with a "balloon" payment at the end is not a lease is it? I thought this was basically a finance plan, with lower monthly payments, in return for a balance that needs to be paid off at end of term?

Also, I thought MB allows for financing of the balloon with MBFS, instead of needing to go to a bank?

+1

Jul 22nd, 2021 1:24 pm

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 22nd, 2021 1:24 pm

pentiumvi wrote: ↑ I'm a little confused to be honest, the OP talks about the car as being leased, then goes on to mention the "balloon".

A payment plan with a "balloon" payment at the end is not a lease is it? I thought this was basically a finance plan, with lower monthly payments, in return for a balance that needs to be paid off at end of term?

Also, I thought MB allows for financing of the balloon with MBFS, instead of needing to go to a bank?

When I spoke with the sales person the other day, he said it would be through the bank. I will ask though about being financed through MBFS.

Jul 22nd, 2021 1:30 pm

booblehead: Deal Expert; Jul 30, 2007; 32388 posts; 19792 upvotes; Toronto

Jul 22nd, 2021 1:30 pm

as far as I believe, mbfs does not offer any due amount to be refinanced. If they do (now), then I guess you can expect something like 4.99 or higher, which would be fairly consistent with bank lending rates or even Unsecured LOC.

Jul 23rd, 2021 10:54 am

Deals4BrwnGuy [OP]: Newbie; Nov 22, 2020; 11 posts

Jul 23rd, 2021 10:54 am

Yeah the sales rep mentioned it would be something similar to that. Thanks again for your help.

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