jj

i plan to get a 1.8t. however, given the expense of maintenance and things going wrong after warranty is up at 36 months, plus the fact that the NEW a4 will be here by then, i project myself to keep the car for less than 36 months. would it be better to buy or lease? what kind of equity could i build on the car if i leased it and turned it in at the end of a 24 month lease?

also, is it bad to pay for a lease in total up front? i like knowing that i don't have to make monthly payments.

Warren

Generally speaking opting out of a lease early is risky and generally will cost you money.
When you decide to lease the leaseing co. sets a residual price 36 months from now. It is in everyone's best interest to set the residual at the estimated fair market value ot that time in the future. That way you are truly paying for the depreciation only over the lease term.
To exit early the leasing company will charge you an amount to ensure that they get their expected return and this will have little to do with the current fair market value of the vehicle at that time.
The amortization of the lease financing will not track the vehicle depreciation over the life of the lease - althought they should end up at the same place at the end of the lease term. Any time before that you will have to make up the difference.
Paying up front is ok if the leasing company will accomadate. Just be careful - one more area where a leasing company can hide a little extra profit by throwing a lot of numbers around.

jj

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Warren

the cost of financing in a lease can be the same or even better than traditional bank debt financing - especially in the case where the vendor has a captive leasing division like Volkswagen finance. However it is a more complex transaction and easy to get fooled into thinking monthly lease payment and forgetting the bigger picture.
The advantages to leasing are that you get to drive a new car every 3-4 years, its typically always a car under warranty since it is new, and you can probably afford the drive a nicer car for the same monthly payment as bank financing.
However nothing beats paying no finance charge, i.e.,when you own a vehicle outright = and leasing often leads to another lease and you never drive a car that doesn't have a finance charge associated.