Mercedes MSD Question - First time leasing

Team - One of the Mercedes dealer just informed me that it’s not recommended to put MSD’s as if the car meets an accident and even if you fix it, Mercedes can retain some money from the MSD as the value of the car decreases because of the accident…is this true? has anyone faced this before? any help and guidance will be really appreciated.

Not sure about this, but on the other hand, if you don’t put down any MSDs and run into the same accident, do they bill you for this depreciation?

I believe this is false but you must contact MBFS directly to get the answer.

I believe this to be false too. The only way you don’t get back your MSD’s is if you miss payments or walk away from the vehicle.

that’s a good trick they’re doing to keep your payment high.

1 Like

MBFS always includes GAP insurance built-in. if in doubt check with MBFS. “MSDs” is finance lingo - many run-of-the mill sales people are less aware, even if aware., less knowledgeable about it.

Yes - most likely they are trying to keep payments high. They may have marked-up their finance/MF rate ., hence they don’t want you to mess with MF side of their profit bucket.

GAP is optional with MBFS. You must opt in.

That being said, if you are in an accident, as long as you get the car fixed they cannot charge you for diminished value. If the car is totaled, and your insurance company doesn’t payoff the lease balance, they will hold you responsible for the deficiency. Whether you pay from the MSDs or out of pocket, you still pay.

Outside of that, at turn in, they will charge you for any excess wear and tear and mileage overage that you haven’t already taken care of. You will pay either out of pocket or out of your MSD balance.

The reason that they give you a rate discount with multiple MSDs is that you are lowering their collection risk at turn in, or in the case of a repossession.

1 Like

soooooooooooooo true … nor do they care to learn about it


Let’s say you return the vehicle before the term is up, such as taking it back to MB at the 30 month mark during a 36 month lease, or sell to a third party (CarMax, etc) before term is up, or even walk over to another dealer, let’s say BMW in this case, and they offer to take over the remaining payments as long as you lease a new BMW; in any of these cases, do you still get your MSDs back, and is the process of being refunded much more complicated?

The lessor handles the return of the MSD. Once the car is paid off (including carrying it to term end and paying the disposition fee, or turning it early using any of the methods you describe), the MSD is returned to the lessee, less any monies due during disposition (of course, if you trade it in elsewhere, there are no other fees, except possibly an early termination fee, which is not insignificant in some cases).

1 Like

So if we are transferring the lease before the end of the term to someone else, we have to ask the new person to pay the MSD to us and ask MBFS to return the MSD’s back to the new lessee or do we ask MBFS to return the MSD’s to us and work directly with the new lessee on the new terms?

person-to-person, the MSDs go to whomever is the lessee at lease termination, meaning once you transfer the lease to someone else, that’s it - the MSDs are not yours anymore, they belong to the transferee. So you’ll want to negotiate with the transferee to pay you for your MSDs as the time of the transfer, unless you’re offering it as an incentive for them to take over the lease.

Dealer purchase: the payoff they get from MBFS (or whomever) will include application of MSDs and any fees that are due with early termination. Essentially, on a dealer purchase, they are buying out the lease and taking title to the car from MBFS. If the trade-in value or purchase price is more than the payoff, they’ll give you a check. If less, they’ll ask you to pay. Just like a normal trade.

BTW, I’m currently leasing an E300 and have verified all of this with MBFS as I am contemplating a transfer in a few months.

1 Like

I may be able to answer this from what I’ve seen on here;

If you are transferring the lease before the end of the term to someone else, you ask the new person to pay the MSD to you since their name will be on the contract rather than yours. And at the end of the term, the MSD gets refunded to the person on the contract, in this case the new lessee.

Done…I will post once I get the response for benefit of everyone.

Thanks…this really helps

this is correct. If a car is transferred to a new person, the MSDs go to the new person at the end of the lease.
So if you paid any MSDs down and transfer the car, you will need to have the new leasee pay you the MSDs which he will get back at end of the lease.

The main issue with this is that the leasing company is not getting involved in this process with the MSDs during the transfer.

So technically the following could happen:
Person 1 agrees to transfer lease to Person 2 with the agreement that Person 2 pays Person 1 the MSDs.
Then Person 1 initiates the transfer and upon completion of the transfer, Person 2 decides not to pay Person 1 the MSDs as agreed. There will be no recourse with the finance company because they won’t undo the transfer. You would have to go after the person on your own to try to collect.

On the other hand, if you tried to ask Person 2 to give you the MSDs ahead of initiating the transfer, Person 2 might not be willing to do so because he doesn’t know that Person 1 will go through with the transfer. Person 1 could just pocket the MSDs and change the phone number.

So there’s some risk involved when transferring a lease with MSDs.
The only way i saw that might lessen the risk is using a service like but that costs money and i haven’t done it personally so i don’t really know if it’s a good way of doing it. But it’s worth looking into and i would love to hear from someone who has used some sort of 3rd party escrow company/service for holding MSDs.

1 Like

This is very useful information. I would love to hear from someone who has gone through these transfers and see how they did it.

Yes it is, Thanks @amasih & @305Hackr for all the info (i have 10MSDs on my MB, so losing them would be, uhm… hefty :stuck_out_tongue: )

So i reached out to to ask if they can assist with holding MSDs until a transfer goes through.

They are actually aware of lease transfers and it appeared that they’ve done so in the past. Here’s what they sent me:

So regarding your question about our company holding the deposit, we can definitely assist with that where The Buyer, would fund the transaction, the Seller will be notified that the funds are secured so to process the lease transfer and once the transfer has been completed, The seller can update the status to confirm that they “have delivered the merchandise” which in this case would be the completion of the lease transfer. The buyer can then update the status and click on “receive” which would start the inspection period, this can be set between 1 to 30 calendar days and this period is where the Buyer would be able to inspect the vehicle/documentation regarding the lease transfer. The Buyer at this point can either click “accept” and this would release the funds to the Seller, or “Reject” and would have complete the transfer of the lease back to the Seller.

The above talks about an “inspection period” which really doesn’t apply in this scenario because all they’re doing is holding the money until paperwork is processed so since you can set inspection period between 1 and 30 days i would just set it to 1 day so then the security deposit would be released after 1 day of giving the green light. At least that’s how i’m understanding it, if i’m not reading it right let me know.

Fees seem to be 3.25% up to $5k. There’s a fee calculator here:

So for a $3k MSD in escrow, it’s about $100. Not too bad for piece of mind.

Again, i have no actual experience in using them for this type of transaction but it seems like they know how to do it.
I think it’s worth exploring for someone who has to do a lease transfer with MSDs involved.

1 Like