FastMarkA

Pardon my terrible personal finance knowledge...but when you compare the PP vs lease payments, you don't need to be Einstein to figure out which is more affordable (NOTE: Not necessarily the better deal).

But I get bored with cars after 3 years, so if I plan to return the car after the 39 month term is up--why shouldn't I do the premier purchase to take advantage of the $60-$70 lower payments?

The way I see it--where the PP makes Audi some real cash is when that nasty balloon payment starts getting paid, not the initial term payments. But I don't plan on ever paying the balloon, so that shouldn't concern me.

Is my logic off? I've done a search on the board & have learned a lot about the PP program, but I can't seem to answer the above question. Thanks!

RKA

A the difference between a lease and PP is only in who "owns" the car during the term of the lease. In a lease, Audi owns the car, and at lease end, they take it back. With PP, you own the car, and you are obligated to pay the balance at the end of the term.

Both deals require that the money for the purchase of the car (yes, even in a lease, they car is "purchased" by the leasing company) be financed. If Audi is doing a special promotion with a PP, where the interest rates are lower, it might lower the monthly, but not by $70! Assuming the interest rate and term are the same for both deals, the payments should be relatively similar. If they varied significantly, odds are the difference is made up in the difference between the residual and PP balloon payment at the end of the term. Sort of a pay now or pay later proposition...either way, you'll pay.


So, for example...perhaps with the lease, Audi needs to quote a residual of $17K on the car at the end of the 3 yr lease. On the PP, since you own the car, they could theoretically lower the monthly by $70, but at the end of 3 years, you'd owe them a balloon of $23K. And you would be bound to cover that balloon. If you chose to sell the car to someone else for $17K, you would still be liable for the $6K difference between the balloon, and the sale price with the new buyer.

A99A4

turn it in and walk away from it just like a lease but you usualy have to pay a disposition fee (can range from $500 to $1500 depending) and you will also have to pay for any damages and/or overage in the miles. The over mile charges for PP plans are sometimes more then on a lease also, so you need to look out for that as well. Your insurance on a leased car is probably more then on a PP plan car too so thats another up side to the PP. I don't really know what the down side to the PP plan is if you know for sure (cause its never worth it to refinance the balloon payment at the end) that you are going to turn it back in, at the given miles with no damage. Good Luck

RKA

$70/month difference is pretty significant. There must be a catch in there somewhere. Over three years, thats $2500...that money has to be accounted for somewhere in the "rules".

A99A4

True...there is always a catch....some money is made up for in disposition fees but still...