Why I Regret Leasing a Mercedes-Benz

In 2007 when our business was doing well, we wanted to get a ourselves a new car. The car would mainly be driven by our son, who went out to business meetings and wanted to create a strong impression. We leased a new Mercedes-Benz C230 sedan, enjoyed the car, but regret the decision. The overall lease deal was fair, but looking back, I wish we had simply bought a gently used car and applied those lease payment towards ownership.

We never had a problem making any of the payments, and the car was a wonderful car to own and drive, truly flawless. But, when the lease ended, we could not really afford to buy the car, so we returned it, leaving us with happy memories, but no vehicle. The car had a residual value at that time of about $20,000, and we just couldn't afford to buy the car, as this was now 2010 and the economy was poor. We were also offered to extend the lease, but at a much higher payment, about $500 a month.

When we leased the car, we put about $4,000 down, it was a 2007 C230 with a retail value at the time of about $35,000. With good credit, the lease was for 27 months at $349 per month through Mercedes-Benz Financial. There are taxes on lease payments, so the payment was about $390 per month.

There were other additional costs with leasing the vehicle. The required insurance levels are higher, you must carry more coverage than the most state's mandated minimum coverage. The full coverage for our son, with a $1000 deductible, and a perfect driving record, was $1400 a year, or $117 a month. The car also takes premium gas to really perform to it's maximum potential, another additional expense. The payment and the insurance came to more than $500 a month.

At that time, instead of leasing a brand new $35,000 car, we should have purchased a $20,000 certified used car. We could have gotten the same car, but 2-3 years earlier, like a 2004 or 2005 model. Our payments totaled about $12,000, plus the $4000 down payment would have only left us a small balance to pay off, had we bought a $20,000 vehicle.

One benefit of leasing a car was the tax deduction. Since the car was used mainly for business purposes, we were able to deduct the appropriate portion of the lease payments.

When you turn in a car at the end of the lease, they will charge you for any damage. We made sure to bring the car in a few months before the end of the lease for an inspection, that way we could fix any items independently. For Mercedes, the process was easy and they gave us quotes as to what the repairs would cost should we wish not to make them ourselves.

We also incurred some excess mileage charges, leases will usually limit you to a certain amount of mileage. We had a 15,000 mile limit, and were charged $0.25 per mile for anything over that. We also had a $600 turn-in fee, so be sure to read the lease agreement carefully for all charges and fees.

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