How does Mercedes-Benz Agility Finance work? [video added]

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kingr
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How does Mercedes-Benz Agility Finance work? [video added]

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So you want to drive a nice car? And maybe a Mercedes-Benz perhaps? The Agility Finance offer from Mercedes has allowed many South Africans to drive these luxury cars, mostly as it makes them “affordable” for many who would normally be unable to buy a Mercedes.

Mercedes’ Agility Finance is essentially a lease that involves a prearranged lease term and regular monthly car payments for that period. The term is typically 36 months, and factoring in a deposit (if you have one) and the number of months of payment will allow you to determine a manageable arrangement that suits you.

Both Mercedes and BMW offer lease financing, and Volvo offers its Versatility plan. Volkswagen too has a lease finance offer for clients, and you’ll find that many manufacturers offer some flavour of their own lease financing. Leasing a car through Agility Finance is often seen as a good route to driving a depreciating asset at no long-term risk to yourself, which is ostensible what Mercedes Agility Finance is offering. It might present as the shedding of risk for you, and affordable too, but Agility Finance lease arrangements are very often geared to put all of the risks onto you, not relieve you, and also come with sometimes unrealistic stipulations within the fair wear and tear conditions.

What is Agility Finance?

Looking at Mercedes’ Agility Finance leasing model, which holds true for pretty much any lease arrangement from any automaker, there are always three components to be aware of in any Agility Finance deal. Although “Agility” Finance seems to address affordability issues, there remains to this day no free lunch on planet earth.

Mercedes’ Agility Finance means you’ll lease a car taken with or without a deposit and with some financing present or not, and pay a certain amount each month for the joy of driving that car.
  • Firstly, the car is never your property (unless you pay a HUGE settlement). You never actually own the car through Agility Finance, but are merely paying for the right to drive it for a certain period of time. Mercedes-Benz places a Guaranteed Future Value (GFV) on the car, and this is the minimum buy-back price they will pay for the vehicle at the end of your agreement. You can also postpone and pay a usage residual at the end of the agreement term, but most people won’t have that amount affordably available when needed, just like the trap of balloon payments.
  • Secondly, there is a big obligation on you to keep the car in tip-top condition, failing which there will be penalties of various hues. Mercedes will also allow you to trade the car in after the lease period, but even in that trade you might have to pay - rather unfairly some people feel - to restore the car to a pristine condition in order to keep the wheels on your next lease arrangement turning.
  • Thirdly, you can drive a new car every three years. Upon return of the car, you can choose a new one and continue with the Agility Finance agreement, if you have met all of the stipulations of your existing Agility Finance deal.
Cons you need to know about Mercedes-Benz Agility finance
  • Your credit status can change after signing the deal
    If your credit status changes during the term of your lease, being able to roll onto your next lease car evaporates. You’ll be careless if Agility Finance is your strategy, and your credit rating dips between cars. There is also often a residual attached to the lease finance if you want to buy the car at the end of the payment term. Balloon payments have a bad reputation as they essentially represent exactly the amount of money you wish you’d had when buying the car in the first place.
    Likewise, it’s no different encountering a residual payment looming if you do decide you’d like to buy a Merc once the Agility Finance lease term is up. In short, residuals are a barely legal postponement of the inevitable, and unless you’ve won the lotto in the interim, they are always painful. Doubly so on a lease car, one you’ll never own.
  • You might be bundled into a finance deal
    Another grey area in this realm is the real difference between leasing and financing, as an Agility Finance lease deal can have aspects of a standard financing deal, assuming you don’t make a deposit payment at the start of the lease arrangement. Various lease models are available from various automakers, but be warned, it becomes easier to be manipulated into accepting some kind of in-house finance under a lease deal.
  • You’re pretty much liable for everything
    Volvo, like Mercedes, often guarantees a future buy-back value, but conditions attached to buy-backs can still be onerous. There is a difference too between a dealership “buy-back” offer and a lease deal’s arrangement, although practically it amounts to the same thing. Just remember, no business gets ahead by gradually taking on more and more risk. Indeed, the Agility Finance lease financing model is a classic example where risk is rather ladled out towards customers, albeit billed as a “safe and secure” means of driving a luxury car. A careful deconstruction of an Agility Finance deal’s paperwork shows quite clearly how liable the client is for innumerable potential costs, typically as the deal draws to a close.
  • Fair wear and tear conditions can be extreme
    If you read all of the details of an Agility Finance lease, you’ll realise that an acknowledgement of real-world issues is in there, it’s just all for your account. So the image is that of a trouble-free few years with you driving a gleaming luxury sedan. The reality, however, is often less palatable than even the typically hefty car repayment premiums we field in this country. The truth is that on an Agility Finance lease deal, you’re pretty much responsible for giving Mercedes a returned car in as good condition as it was years earlier, and how manageable is that?

Right there, we can see a money-making opportunity for Mercedes, as maintaining a blemishless car for years on end is not congruent with real life. So, Agility Finance and many other lease plans often present as more an opportunity for an automaker to get product out, have high marketing visibility on the roads, “sell” units hand over fist while also carrying no risk, as an artificial pool of “owners” pay to keep those cars’ market value high for resale, at no ultimate benefit to them.

Automakers trade on vanity - the need to look good - but while you’re out there smiling away, you’ll pick up the tab for anything not covered by the paperwork. And, since most people lease to get around affordability issues, having to field major or inflated expenses at the end of the lease term defeats the object.

Related: 5 Things Car Dealerships Don’t Tell You

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Agility Finance can work

Two things are essential with an Agility Finance lease deal: warranties and insurance. Agility Finance cars are offered with a warranty and a 6-year maintenance plan in place, so that’s a relief. You should, however, investigate top-up cover that addresses things that are perhaps specifically excluded in the standard paperwork. You need to comprehensively ensure the car, including gap cover and even paintwork policies, which will see technicians come out to you and remove minor scuffs from the car. That is the kind of maintenance you’ll need to effect under an Agility Finance lease deal arrangement if you hope to keep swimming at the end of its term.

Even minor skimping on insurance with Agility Finance, for example, can leave you open to huge expenses, all determined by Mercedes themselves, where things can cost a lot more than elsewhere, it seems. Typically, this kind of detailed insurance adds up pretty quickly, making the affordability of a leased car simply less so.

Related: Car Insurance Explained

To get the best from Agility Finance, spend several hours on the dealership floor if needs be, going over the paperwork as many times as you like until you’re satisfied that you’ll be liable for nothing, having insured yourself in every way. If that final premium after tallying the monthly payment and all accompanying warranties and insurance are affordable, good show. Great stuff. As long as there is not a single crack through which liability can slip, it’s safe to lease a car and thus avoid ownership expenses. But if you see that you’re heading back towards an amount close to the monthly repayments of simply buying the car, an Agility Finance lease arrangement might not be so attractive after all.

Also, although news reports often point out that one advantage of Agility Finance is that the sale of the car at the end of the lease term is “not your problem,” the reality is often different. It’s not your problem after they make you pay for all the issues on the snag list before releasing you from your deal. Hence many motorists who opt for a lease deal get out prematurely to avoid the inevitable costs of an ageing car and maintain their strategy, in spite of the penalties involved. Agility Finance can see you paying as little as half the cost of financing a car to own on a monthly basis, but no matter how much it suits you, you need to know that all the real risks are yours.

If you do fall foul of Agility Finance stipulations, you’re now potentially fixing a car you couldn’t afford to buy in the first place. In a nutshell, Agility financing can cut both ways. If you’re more concerned with not owning a liability in the form of a bought luxury sedan, and would rather keep trading up over the years, you might well have a cash flow or other incentive that makes this structure worthwhile. You won’t end up driving a depreciating car for years to come. On the other hand, if you only just scraped into lease financing and missed a single point of cover in terms of insurance, you’re likely to find yourself spending money on an expensive car as though you owned it, before being allowed to trade up.

This is exactly what Agility lease financing is supposed to avoid. So the marketing of lease financing makes it sound like a breeze, but the realities are often lousier, with you forking out unexpected money in any case, on a car you don’t own. It doesn’t have to go that way, but you had better ensure that you have insurance and warranties to the hilt, to avoid the financial liability of damage or breakdowns.

Conclusion

On the whole, driving a Mercedes-Benz car on an Agility Finance deal, you’ll pay less per month than you would actually be buying the car so that you own it at the end of repayments. Don’t forget also that the average lease term across brands in South Africa is 58 months, and there are penalties if you want to buy out of the contract before the term is up. According to Wesbank, the break-even point to get out of a lease deal is around 48 months, where you can minimise your expenses and move onto a new car.

There are several advantages and many potential disadvantages of Agility Finance, and you’re advised to look at existing snapshots online that further depict the realities of lease financing before taking the plunge yourself. Also don’t forget that if the newer version that you want to upgrade to after the lease period is now almost double the old price - something not impossible to experience with Mercedes, for example - and you decide to keep your existing car, you’ll end up paying a whack for a dated car that you never meant to drive for long anyway. If the new Agility Finance lease options are unaffordable, you’re stuck.

Beware of the mileage limitations and residual amounts in any lease deal. With Agility Finance, be especially aware of how the dealership depicts that day in the future when you’ll return to car to supposedly upgrade. Ask any and all logical questions around that scenario and ask the dealership to point out where it states in writing what they are happily throwing about in conversation. Visit user forums and look at others’ experiences of an Agility Finance lease arrangement, all before you sign on the dotted line.
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kingr
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Re: How does Mercedes-Benz Agility Finance work? [video added]

Post by kingr »

Kurt #3337

Current:
- 10" Mx5 NC2 (main daily)
- 12" Toyota Hilux D/C 2.5tdi 4x4 (tow car / vacay)
- 2020 Mini Cooper S Clubman (swambo)
- 80" VW Mk1 2 Door Golf 8vt project 192wkw/314nm

Ex: 07" G5 GTi, 13" ST180, 03" Mk4 2 door 1.8T Stage 2, 07" Velo 1.6, 83" Mk1 GT 2.0 8v MP9, 87" Mk1 1.6 CitiSport, 88" Mk2 2.0 16v, 83" Mk1 GT 1.6 + 40 webers
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Re: How does Mercedes-Benz Agility Finance work? [video added]

Post by Hoosier Daddy »

People think it's all that because of the premiums. A friend who worked for them actually spoke to me about this, nice write-up
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Re: How does Mercedes-Benz Agility Finance work? [video added]

Post by SkinnyD »

Yeah. No free lunch for sure.

I’d rather have a depreciated asset at the end of a HP finance agreement than be stuck without a car and starting the whole thing again.
They score by selling you new cars every 3 years and have clean used stock afterward


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