Hi there, today I’m going to answer a question that’s been on everyone’s mind, and, that is, should I buy or lease a car?

And I’m going to use this particular car as an example. It’s a 2019 Mercedes E-Class that actually belongs to my parents, but prior to that they’ve had a 2013, 2015, and 2017. So what I thought I’d do is add up the total cost of leasing these four different E-Classes over eight years, and compare it to how much it would’ve cost if they bought the E-Class in 2013, kept it for 8 years, and sold it today.

E-CLASS #1: 2013 E350 BlueTEC

We will start with E-Class #1, a 2013 E350 BlueTEC, to see whether it was cheaper to OWN this car for eight years, or to lease a NEW one every two years over the same period.

E-Class #1 is the car that arguably started it all. I helped negotiate this deal, and it was from this lease that I realized that leasing could be a great option, that if you played all the cards right, you could get a fancy car for a lot less than you’d think. Without this car, there might not have been Leasehackr.

On this deal, I was able to get 17% off MSRP. The two-year residual value was a whopping 74%, which means the depreciation expense was miniscule. (I think Mercedes-Benz Financial Services was a bit too optimistic about the residual value of this model -- so thanks, Mercedes!)

Including all taxes, E-Class #1 was $315 per month, with $1,235 drive-off, plus a security deposit and registration fees. The total cost of the lease, over the course of two years, was $8,480.

Now, had my parents bought this exact same E-Class back in 2013, assuming the same discount, it would have cost them nearly $54,000, plus registration fees and INTEREST, if they were getting a loan on the car.

E-CLASS #2: 2015 E350 Sport

E-Class #2, a 2015 E350, was a more expensive lease. The discount was similar, but this time, Mercedes set the residual value a bit lower: 69% instead of 74, meaning more depreciation.

The lease was $476 per month, with $1,576 due at signing including all taxes, plus registration fees.

The 2015 came with a few upgrades, like automatic emergency braking and better headlights, so while E-Class #2 did cost more, there were also some benefits with the newer car. The total cost of the lease, over the course of two years, was $12,524.

E-CLASS #3: 2017 E300

E-Class #3 was the all-new W213 generation, a big upgrade from the previous car.

I found this deal on the Leasehackr Marketplace. It was posted by a broker and I snatched it up as soon as I saw it.

The car was heavily discounted because it was a former loaner -- it had about 9,000 miles on the odometer. It was also located at a Northern California dealership; I’m in Southern California. But it was such a unicorn of a deal that I decided to fly there and drive it home.

Including taxes the car was $335 per month, with $1,396 drive-off, plus a security deposit and registration fees. The total cost of E-Class #3, over the course of two years, was $9,101.

E-CLASS #4: 2019 E300

E-Class #4 was also a loaner, also from a Northern California dealership. I had found a few similarly-discounted cars across the state, but this one in particular was equipped really well. It had Distronic Plus, kind of like an Autopilot system, and that was something I was really curious about and wanted to test.

After negotiating, the deal ended up at $429 per month, with $1,157 drive-off including all taxes, plus security deposit and registration. The total cost of E-Class #4, over the course of two years, was $10,420.

SO WAS IT CHEAPER TO LEASE FOUR NEW CARS -- OR BUY?

Alright, so at this point, it’s just simple math.

As I said earlier, buying the first E-Class would have cost about $54,000!

After eight years, that 2013 E-Class is worth $12,500 today -- and that’s with today’s crazy high used car prices, due to the microchip shortage!

That’s over $41,000 in depreciation, equal to $429 each month, and we’re not even accounting for the maintenance and repairs on an 8-year old car, or the opportunity cost of capital, or any interest charges that will be paid on a loan.

As for the lease?

Well, let’s add up the cost of leasing these four different E-Classes. The total cost, over the course of 8 years, is just over $40,500.

So, in this particular scenario, it was actually cheaper to lease a new car every two years, than it was to keep one for eight years. And, aside from cost, there was also the benefit of having a newer car with all the latest safety and tech improvements.

FINAL THOUGHTS

I’m not saying here that it’s ALWAYS cheaper to lease than to buy. Far from it, lots of people get truly terrible lease deals.

But what I’m trying to share from this anecdote is that leasing can be a reasonable option -- it could even be cheaper, if you play all your cards right. In return, you get perks like a newer, safer car with zero repair costs because it’s covered by a warranty.

As we often point out, when you lease, you’re letting the finance company, in this case, Mercedes-Benz Financial Services, take on the risk of depreciation. To boost sales, Mercedes might set their posted residual values higher than reality. In other words, ACTUAL depreciation might exceed the depreciation you pay on your lease.

As always, the key is to be an informed shopper. Read up on our Leasing 101 articles. Use the Leasehackr Calculator to create a target deal for yourself before talking to any dealer. Pose your questions to the Leasehackr community on our forum. And, browse the Leasehackr Marketplace for the latest deals posted by dealers and brokers.

And, on that note, Happy Leasehacking!