Lease vs. Finance

Unsure whether to lease or finance your next Mercedes-Benz vehicle? Explore the differences below.

Lease

An agreement between the lessor and lessee for the use of the vehicle for an agreed upon number of months and miles. Lessee does not own the vehicle. A lease offers flexible terms and variable mileage options.

Payments

Monthly payments are usually lower than financing and pay for the portion of the vehicle used during the lease agreement term, including expected depreciation, rent charge, taxes and fees.

Locked into making payments for the duration of the lease - no option of paying it off early.

Costs

Upfront costs due at lease signing may include first month’s payment, down payment, taxes, registration, lease acquisition fee, and other fees and charges.

Insurance premiums are usually higher for a leased vehicle.

If vehicle is driven over specified number of miles, you are charged an extra fee per mile.

A lease may have tax advantages if the vehicle is used for business purposes.

Mileage/Excess Wear and Use

The lease agreement limits the annual mileage and wear and use on the vehicle.  Lessee can negotiate a higher mileage for a fee.  If the miles driven exceed the mileage limit specified in the lease, an additional per mile fee will be charged.  Additionally, a lessee is responsible for excess wear and use charges.  Additional mileage fees and excess wear and use charges are due at lease-end.

Early Termination

Lessee may have to pay an early termination fee if elects to end the lease early.

Ownership

At lease end, lessee may either purchase the vehicle for the purchase price stated in the lease agreement, or pay any lease-end fees and charges and return the vehicle to any authorized Mercedes-Benz dealership.

At end of lease, you can either buy the vehicle outright, or turn it in and enter into another lease for a new Mercedes-Benz.

Finance

A simple interest retail installment loan for the purchase of the vehicle.

Payments

Monthly payments are usually higher compared to leasing.  Buyer is paying the entire purchase price, plus interest and finance charges, taxes and fees; however, payments provide equity toward ownership.

You're not locked into a fixed ownership period.

Costs

Upfront costs due at contract signing may include down payment, taxes, registration, and other fees and charges.

No mileage penalties

Mileage/Excess Wear and Use

Buyer can drive an unlimited number of miles, but higher mileage can result in excess wear and affect resale or trade-in value.

Early Termination

Buyer can pay in full at any point during the contract term without penalty.  Buyer must pay the pay-off amount to end the financing contract early.

Ownership

Once all of the retail installment contract obligations have been satisfied, the customer owns the vehicle.  

Vehicle can be sold at any time, under any terms.

Balloon Finance

A simple interest retail installment loan for the purchase of the vehicle, with a large lump sum balloon payment due at the end of the term. (Not available in all states).

Payments

Lump sum balloon payment at end of finance term results in lower monthly payments than standard financing.  Final balloon payment must be paid in full by cash payment or financing arrangement.

The entire amount is not paid off over the life of the loan, so the remaining balance is due in one large lump sum to the lender.

Costs

Upfront costs due at contract signing may include down payment, taxes, registration, and other fees and charges.

No mileage penalties

Good for drivers interested in tax depreciation.

Mileage/Excess Wear and Use

Buyer can drive an unlimited number of miles, but higher mileage can result in excess wear and affect resale or trade-in value.

Early Termination

Buyer can pay in full at any point during the contract term without penalty.  Buyer must pay the pay-off amount, including the final lump-sum payment, to end the financing contract early.

Ownership

Once all of the retail installment contract obligations have been satisfied, including payment of the final lump-sum, the customer owns the vehicle.

Vehicle can be sold at any time, under any terms.

Lease Finance Balloon Finance
An agreement between the lessor and lessee for the use of the vehicle for an agreed upon number of months and miles. Lessee does not own the vehicle. A lease offers flexible terms and variable mileage options. A simple interest retail installment loan for the purchase of the vehicle. A simple interest retail installment loan for the purchase of the vehicle, with a large lump sum balloon payment due at the end of the term. (Not available in all states).
Payments

Monthly payments are usually lower than financing and pay for the portion of the vehicle used during the lease agreement term, including expected depreciation, rent charge, taxes and fees.

Monthly payments are usually higher compared to leasing.  Buyer is paying the entire purchase price, plus interest and finance charges, taxes and fees; however, payments provide equity toward ownership.

Lump sum balloon payment at end of finance term results in lower monthly payments than standard financing.  Final balloon payment must be paid in full by cash payment or financing arrangement.

Locked into making payments for the duration of the lease - no option of paying it off early.

You're not locked into a fixed ownership period.

The entire amount is not paid off over the life of the loan, so the remaining balance is due in one large lump sum to the lender.

Costs

Upfront costs due at lease signing may include first month’s payment, down payment, taxes, registration, lease acquisition fee, and other fees and charges.

Upfront costs due at contract signing may include down payment, taxes, registration, and other fees and charges.

Upfront costs due at contract signing may include down payment, taxes, registration, and other fees and charges.

Insurance premiums are usually higher for a leased vehicle.

If vehicle is driven over specified number of miles, you are charged an extra fee per mile.

No mileage penalties

No mileage penalties

A lease may have tax advantages if the vehicle is used for business purposes.

Good for drivers interested in tax depreciation.

Mileage/Excess Wear and Use

The lease agreement limits the annual mileage and wear and use on the vehicle.  Lessee can negotiate a higher mileage for a fee.  If the miles driven exceed the mileage limit specified in the lease, an additional per mile fee will be charged.  Additionally, a lessee is responsible for excess wear and use charges.  Additional mileage fees and excess wear and use charges are due at lease-end.

Buyer can drive an unlimited number of miles, but higher mileage can result in excess wear and affect resale or trade-in value.

Buyer can drive an unlimited number of miles, but higher mileage can result in excess wear and affect resale or trade-in value.

Early Termination

Lessee may have to pay an early termination fee if elects to end the lease early.

Buyer can pay in full at any point during the contract term without penalty.  Buyer must pay the pay-off amount to end the financing contract early.

Buyer can pay in full at any point during the contract term without penalty.  Buyer must pay the pay-off amount, including the final lump-sum payment, to end the financing contract early.

Ownership

At lease end, lessee may either purchase the vehicle for the purchase price stated in the lease agreement, or pay any lease-end fees and charges and return the vehicle to any authorized Mercedes-Benz dealership.

Once all of the retail installment contract obligations have been satisfied, the customer owns the vehicle.  

Once all of the retail installment contract obligations have been satisfied, including payment of the final lump-sum, the customer owns the vehicle.

At end of lease, you can either buy the vehicle outright, or turn it in and enter into another lease for a new Mercedes-Benz.

Vehicle can be sold at any time, under any terms.

Vehicle can be sold at any time, under any terms.