Mercedes Personal Lease/Finance question Help Appreciated

[selfemployed]

Hi,

First of all hello to everyone

I was wondering if there will be a few owners or experienced members out there who could help me a little in the situation im in...

I'm a young chap 20 years old who is self employed doing well for himself I looking for a new car to buy but I didn't want to pay a big deposit or have large monthly repayments but I came across personal leasing...

I found a c250 amg spec which is great as im after a family car for mum/dad to use as well etc the monthly is amazing at £250 with only an initial payment of £2000... 10,000 a year mileage limit on a 24 month contract.

So heres me thinking great! I can afford that lets ring up, while the person was great to help he said I would need a guarantor as im young and not been self employed for a very long time (9-10 months) guarantor is not a major problem as I can use a family friend (dads credit history is not amazing as he has had a rough patch in 2010-2011)

The problem is I checked my credit history its not strong... Don't have a mortgage, live at home, no debt, no major finance before, 1-2 credit cards had 2-3 late payments which have been settled so have no outstanding overdue payments etc

What are my likely chances of being accepted? I know the saying you will not know till you apply but at the same time do not want it to be on my credit finance saying "credit declined" etc

I have read that Mercedes have some kind of limit using credit scores to determine finance E.G if your score is 600 plus they will consider you but if below its a decline is this true?

I would really appreciate it if someone can shed some light on the dark path lol... if you have applied through lease let me know your experience? did you have bad credit too etc?

Please no horrible or unrelated comments just pure good hearted advice will be very appreciated!

SE

 

[V6Matty]

the credit score isn't your biggest problem, you will find proving your income to the hardest thing to proove, they will more than likely require accounts for as long as you have had them. remember that that option will be for business users and not personal otherwis eyou will need to pay VAT on top of that price.

 

[selfemployed]

the credit score isn't your biggest problem, you will find proving your income to the hardest thing to proove, they will more than likely require accounts for as long as you have had them. remember that that option will be for business users and not personal otherwis eyou will need to pay VAT on top of that price.

yeah it was a personal lease option Inc vat... or do you mean something else? also I can prove income regarding bank statements, receipts etc im only a sole trader do not have any full tax accounts as of yet as i am yet to complete my first year of full trading.

 

[turbopete]

no offence, but i think that you would be better off to wait until you have a year or 2 trading under your belt, then you can see how, if at all, this recession will hit you later on. whilst things are good now, it may get worse and that could be disasterous for you at this point. just my opinion

 

[V6Matty]

hmm i can't seem to find anything on mercedes website about that offer so it may be a garage one rather than mercedes thats the reason i questioned wether it was personal or business. being a sole trader i expect you have opened a business account and have all incomings and out goings seperate from anything personal if not they will just not entertain the idea. the gaurentor will be credit checked as well but you should be ok if your right about him having a good report.

 

[selfemployed]

hmm i can't seem to find anything on mercedes website about that offer so it may be a garage one rather than mercedes thats the reason i questioned wether it was personal or business. being a sole trader i expect you have opened a business account and have all incomings and out goings seperate from anything personal if not they will just not entertain the idea. the gaurentor will be credit checked as well but you should be ok if your right about him having a good report.

Hi,

its through a broker but the finance is handled by Mercedes Benz themselves from the information I was provided and yeah have business accounts that show all incomings from sales etc and outgoings inc and yeah guarantor is good credit wise... im planning on applying next month but see what happens till then like see what everyones opinions etc are then make a proper decision

no offence, but i think that you would be better off to wait until you have a year or 2 trading under your belt, then you can see how, if at all, this recession will hit you later on. whilst things are good now, it may get worse and that could be disasterous for you at this point. just my opinion

No offence taken at all! totally understand point and it has been taken on board

 

[V6Matty]

you should be fine and the car will be wonderful, just make sure you keep an eye on the miles they add up soo quickly, just going to and from work these days and doing things at a weekend i manage to rack up 12k a year. on that note it may be worth finding your what the pence per mile over fine would be, should say it in the documents somewhere if i remember rightly.

 

[turbopete]

you should be fine and the car will be wonderful, just make sure you keep an eye on the miles they add up soo quickly, just going to and from work these days and doing things at a weekend i manage to rack up 12k a year. on that note it may be worth finding your what the pence per mile over fine would be, should say it in the documents somewhere if i remember rightly.

very true about the mileage. i seldom go anywhere now due to unemployment (dont get me started on that one) but im still racking up 8-9k miles per year WITHOUT travelling to work!

 

[H0pe]

If you are self employed you should go for business lease rather than personal. I am also a sole trader, leasing is a no brainer because of the tax savings. Speak to an accountant about that.

I'm not sure how you will get on with a low credit rating and only having traded for less than a year, just shop around someone will want your business. Some companies will not even speak to you if you have not been trading for 2 years but some don't mind.

The lease prices on mercs are very competitive at the moment, the E220 estate I ordered is cheaper than the C-Crosser I have now even though the list price is much higher. It was also a lot cheaper than an equivalent BMW or Audi which shocked me.

 

[christopherwk]

Here's my experience if you'd like to compare.

28 years old (so slightly older), leasing a E220 CDi SE, on 45,000mile/year for 3 years.

I'm a self-employed chauffeur, and have been almost 5 years.

This is a personal lease, I'm not VAT registered, and don't have a business bank account.

They did a credit check, and asked for my current account details. I did not have to prove my income (e.g. by supplying bank statements, annual accounts).

Just be aware with leasing you probably have to get it serviced at a main dealer (the amount I just paid for the first service for mine was a bit of a shock!) - unless you have a service plan included, and needs to come back in almost perfect condition bodywork/interior wise - so any significant damage needs to be attended to.

Otherwise I think it's a good way of financing a car, it will be under warranty, fixed monthly payments, and no hassle in selling it on once the term has finished - just hand it back. Also if you use it for work, you can offset it against your income tax.

 

[selfemployed]

If you are self employed you should go for business lease rather than personal. I am also a sole trader, leasing is a no brainer because of the tax savings. Speak to an accountant about that.

I'm not sure how you will get on with a low credit rating and only having traded for less than a year, just shop around someone will want your business. Some companies will not even speak to you if you have not been trading for 2 years but some don't mind.

The lease prices on mercs are very competitive at the moment, the E220 estate I ordered is cheaper than the C-Crosser I have now even though the list price is much higher. It was also a lot cheaper than an equivalent BMW or Audi which shocked me.

Hi thanks for the response only reason I'm not doing business is because the car would be used for personal use my business doesn't involve me travelling too much

The problem is from what iv been told the finance is arranged by mercedes themselves if it was like given to 10-15 different lenders I would have a good chance and yeah your right! Mercedes lease wise are very competitive compared to other cars like Audi BMW etc!!

 

[selfemployed]

Here's my experience if you'd like to compare.

28 years old (so slightly older), leasing a E220 CDi SE, on 45,000mile/year for 3 years.

I'm a self-employed chauffeur, and have been almost 5 years.

This is a personal lease, I'm not VAT registered, and don't have a business bank account.

They did a credit check, and asked for my current account details. I did not have to prove my income (e.g. by supplying bank statements, annual accounts).

Just be aware with leasing you probably have to get it serviced at a main dealer (the amount I just paid for the first service for mine was a bit of a shock!) - unless you have a service plan included, and needs to come back in almost perfect condition bodywork/interior wise - so any significant damage needs to be attended to.

Otherwise I think it's a good way of financing a car, it will be under warranty, fixed monthly payments, and no hassle in selling it on once the term has finished - just hand it back. Also if you use it for work, you can offset it against your income tax.

Hi I think for myself the main problem is my credit history it does not seem very strong I'm guessing yours was very strong! I'm having trouble finding a guarantor now as well...

 

[christopherwk]

Go to www.lingscars.com and do a "dummy" order.

It won't go through until a document is signed and returned in the post.

However don't go too far to the point whether you know it will be accepted or not, as you probably know if it's refused it may harm your credit rating.

You may be able to see what sort of eligibility requirements and information is required.

Also, it looks like you got a good deal there, even with the high initial rental. Similar car at Lings doesn't match it.

 

[sailorjim]

At 20 years of age I would have thought that your main problem would be insurance. Many insurers won't cover young men of that age and, even if they do, the premiums are likely to make your eyes water.

 

[christopherwk]

At 20 years of age I would have thought that your main problem would be insurance. Many insurers won't cover young men of that age and, even if they do, the premiums are likely to make your eyes water.

I was thinking that too, I assume the OP has that sorted out, as we are not sure of the OP's financial circumstances, who said was doing well, and living at home so not really any commitments. Also, being self-employed, he could be a hard working chap who puts in the hours in order to fund a car and may forego other luxuries in order to do so. When I was 20, my motorbike insurance cost £2,200, didn't put me off getting it though!

 

[keefysher]

Here's my experience if you'd like to compare.

28 years old (so slightly older), leasing a E220 CDi SE, on 45,000mile/year for 3 years.

I'm a self-employed chauffeur, and have been almost 5 years.

This is a personal lease, I'm not VAT registered, and don't have a business bank account.

They did a credit check, and asked for my current account details. I did not have to prove my income (e.g. by supplying bank statements, annual accounts).

Just be aware with leasing you probably have to get it serviced at a main dealer (the amount I just paid for the first service for mine was a bit of a shock!) - unless you have a service plan included, and needs to come back in almost perfect condition bodywork/interior wise - so any significant damage needs to be attended to.

Otherwise I think it's a good way of financing a car, it will be under warranty, fixed monthly payments, and no hassle in selling it on once the term has finished - just hand it back. Also if you use it for work, you can offset it against your income tax.

Are you financing through Mercedes Benz finance? There is a specific exclusion for 'Private Hire' use of vehicle, which chauffering is classified as.

At 45k miles per year, what rate are you paying on MB finance? Is that not a very expensive way of funding the car?

If you register for VAT you can use the flat rate scheme for your first year which will give you 7%, the difference between the rate you charge (20%) and the rate you pay. Given the miles you cover the VAT recovery on fuel alone makes it worth your time registering. Any good accountant will advise that route. Register as a Limited company and the tax benefits are even better, moreso if you are married and if your wife doesnt work. If you bought the car new you could have claimed the VAT back on the car, @ 20% that is a big chunk.

 

[MBDevotee]

A credit refusal is not logged on your credit file - only the fact a search has been made.

Also, do consider that you lose your deposit - so it's not costing you £250 per month - it's costing you £250 per month PLUS £83.33 per month lost deposit - so £333 per month - still not bad for a nice new car.

Also 10k a year mileage is very low, and I know MB charge like a Wounded Rhino if there is any damage at all when the car comes back....

I've just bought a van - it used to be on contract hire (basically the same thing) - in the glovebox was the hand-back sheet - the previous owner was charged £2500 for a few dinks scratches etc.... make sure if there is any damage that you get it repaired before the thing goes back.

 

[Ricardo_e220]

Are you financing through Mercedes Benz finance? There is a specific exclusion for 'Private Hire' use of vehicle, which chauffering is classified as.

At 45k miles per year, what rate are you paying on MB finance? Is that not a very expensive way of funding the car?

If you register for VAT you can use the flat rate scheme for your first year which will give you 7%, the difference between the rate you charge (20%) and the rate you pay. Given the miles you cover the VAT recovery on fuel alone makes it worth your time registering. Any good accountant will advise that route. Register as a Limited company and the tax benefits are even better, moreso if you are married and if your wife doesnt work. If you bought the car new you could have claimed the VAT back on the car, @ 20% that is a big chunk.

Not sure about the private hire part, but I have my s211 on a pcp through Merc on 38k miles per year, I have a car allowance and I make good money against having a company car. My balloon is also pretty reasonable and I should have at least my deposit back. £270 month for 28 months at 38k miles per year. Car was 2.5 years old though.

 

[christopherwk]

Are you financing through Mercedes Benz finance?

If you register for VAT you can use the flat rate scheme for your first year which will give you 7%, the difference between the rate you charge (20%) and the rate you pay.

Any good accountant will advise that route. Register as a Limited company and the tax benefits are even better, moreso if you are married and if your wife doesnt work. If you bought the car new you could have claimed the VAT back on the car, @ 20% that is a big chunk.

Yes, it's £503.47/month for 6+35.

If it was financially viable to register for VAT, I'm sure my accountant would have advised by now. More paperwork and preparation of accounts will be involved (and no doubt, accountant's charges would go up). I would also have to either increase my rates, or take a 20% drop in earnings for the companies/clients I work for who are not VAT registered.

Registering as a limited company, again would need accounts to be prepared accordingly, as a director, my name and address, and said accounts will be in the public domain. Probably will also need a business bank account, which is a further cost (usually after the first free year, anyway).

Also, what happens after the first year with the flat rate 7% scheme?

Too much hassle, unless I'm certain that the savings are significant. I'm also not married (yet!) and don't have a wife (and she would be working, if we were to get married!).