Lease with plan to buy?
08-03-2011, 08:52 PM
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Lease with plan to buy?
I was talking to my dealer last month and told him I would certainly be planning to buy if I decide to go with the A4 because I drive way too many miles to make a lease reasonable (~18-21K/year) and he told me he would recommend leasing with the plan to buy out the lease. The rationale is that they would do the CPO inspection at the end of the lease and give me a big extension on the warranty at that time and that the price wouldn't really be much different.
Any experience with this setup? Any thoughts?
I haven't seen the actual numbers yet, but the simple fact that a commissioned salesmen tells me he's got a way for me to get a better deal seems suspect.
Any experience with this setup? Any thoughts?
I haven't seen the actual numbers yet, but the simple fact that a commissioned salesmen tells me he's got a way for me to get a better deal seems suspect.
08-03-2011, 10:29 PM
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That option will cost you much more in the long run than just financing a purchase. If your intention is to buy, you should NEVER lease. The salesman is taking you for a ride. Don't give this guy a chance to get any of your money. find another salesman that will listen to your needs and not try to pad his commission with a double sale. (sale of the lease and the second sale when you try to buy your leased car back)
08-04-2011, 03:57 AM
#3
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It all really depends on the incentives being offered. When I got my S4, for example, the interest rate on the lease was half what the "Premiere Purchase" rate was. I also did not have to lay out or finance the other half of the sales tax at that time either. I know I took a gamble on what the rates were going to be at the end of the lease but it all worked out quite well for me.
08-04-2011, 04:16 AM
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That option will cost you much more in the long run than just financing a purchase. If your intention is to buy, you should NEVER lease. The salesman is taking you for a ride. Don't give this guy a chance to get any of your money. find another salesman that will listen to your needs and not try to pad his commission with a double sale. (sale of the lease and the second sale when you try to buy your leased car back)
I have a lease, and the way it's structured, I pay less interest (money factor) on the lease than I would had I bought the car outright. In fact, the cost of the lease + buyout is within dollars of financing it over a 60 month term.
I consider a lease like this a "risk free trial period". For very little extra money, I drive the car for 3 years. If I like it, I buy it out. If I don't like it and want something different, then there are two options based on my own history:
1) Say the car was a nigh-lemon with a fist full of service visits and the depreciation on the car with the crappy carfax report along with it means the car is worth less than residual. Thank you Audi, here is your POS car back, and I walk away. My last car, a POf'nS Jetta TDI was a total lemon with a stack of repair paperwork as thick as your arm. I paid cash for that polished turd and wish I had leased it. It would have saved me a ton of heartache getting rid of it.
2) Say the car is decent to me, but I just want something different. The car hasn't depreicated that much, and the trade in might be $5k-$8k more than the residual buy-out. So, in that case, I buy-out the car and trade it in/sell it elsewhere, or I renegotiate with the dealership based on the value difference between NADA/KBB and the contract residual. My Father in Law got a killer lease deal on a Prius. Those things have near-zero depreication With a $13k buyout on a 2 year old Prius, he'll make back almost $8k on the trade-in value, alone.
08-04-2011, 09:58 AM
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As to CPO & warranty extension, I certainly wouldn't take a salesman's word for it and I wouldn't believe it unless written down in the contract. And even then, they can game you by saying the inspection revealed problems x, y, and, z, and you need to pay us $$$ to fix them before we extend the warranty.
08-04-2011, 11:07 AM
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I drive way too many miles to make a lease reasonable (~18-21K/year) and he told me he would recommend leasing with the plan to buy out the lease. The rationale is that they would do the CPO inspection at the end of the lease and give me a big extension on the warranty at that time and that the price wouldn't really be much different.
1) At your annual mileage, the warranty will expire before your lease ends. Can they really do a CPO extension in that situation?
2) If the team of economists, who successfully forecast the mess we're currently in, is right again, interest rates will be much higher in 3 years.
08-04-2011, 12:12 PM
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I'm gonna break with you on this one.
I have a lease, and the way it's structured, I pay less interest (money factor) on the lease than I would had I bought the car outright. In fact, the cost of the lease + buyout is within dollars of financing it over a 60 month term. I suppose that depends on your credit. I paid mine off in 24 months with next to no interest through my credit union.
I consider a lease like this a "risk free trial period". For very little extra money, I drive the car for 3 years. If I like it, I buy it out. If I don't like it and want something different, then there are two options based on my own history:
1) Say the car was a nigh-lemon with a fist full of service visits and the depreciation on the car with the crappy carfax report along with it means the car is worth less than residual. Thank you Audi, here is your POS car back, and I walk away. My last car, a POf'nS Jetta TDI was a total lemon with a stack of repair paperwork as thick as your arm. I paid cash for that polished turd and wish I had leased it. It would have saved me a ton of heartache getting rid of it.If you have a lemon, you have a year to determine that anyways and get the dealer to buy it back. Maybe it's different in other states. I hear you on the Jetta front. I bought my baby brother a Jetta GLI (Good ole NAFTA) and he got broadsided sent him head on into oncoming traffic. Roof looked like an accordian and he was in a coma for 2 weeks. Not a single airbag deployed. VW's official response was that it must have been an offset head on that wasn't strong enough to trigger the sensors. BS. I had the 40 mph NHTSA offset frontal crash test video of the same model Jetta and it clearly showed ALL airbags deploy. I wouldn't touch VW ever again even if the GTI is a great car and still built in the motherland. Don't get me started.
2) Say the car is decent to me, but I just want something different. The car hasn't depreicated that much, and the trade in might be $5k-$8k more than the residual buy-out. So, in that case, I buy-out the car and trade it in/sell it elsewhere, or I renegotiate with the dealership based on the value difference between NADA/KBB and the contract residual. My Father in Law got a killer lease deal on a Prius. Those things have near-zero depreication With a $13k buyout on a 2 year old Prius, he'll make back almost $8k on the trade-in value, alone.
I have a lease, and the way it's structured, I pay less interest (money factor) on the lease than I would had I bought the car outright. In fact, the cost of the lease + buyout is within dollars of financing it over a 60 month term. I suppose that depends on your credit. I paid mine off in 24 months with next to no interest through my credit union.
I consider a lease like this a "risk free trial period". For very little extra money, I drive the car for 3 years. If I like it, I buy it out. If I don't like it and want something different, then there are two options based on my own history:
1) Say the car was a nigh-lemon with a fist full of service visits and the depreciation on the car with the crappy carfax report along with it means the car is worth less than residual. Thank you Audi, here is your POS car back, and I walk away. My last car, a POf'nS Jetta TDI was a total lemon with a stack of repair paperwork as thick as your arm. I paid cash for that polished turd and wish I had leased it. It would have saved me a ton of heartache getting rid of it.If you have a lemon, you have a year to determine that anyways and get the dealer to buy it back. Maybe it's different in other states. I hear you on the Jetta front. I bought my baby brother a Jetta GLI (Good ole NAFTA) and he got broadsided sent him head on into oncoming traffic. Roof looked like an accordian and he was in a coma for 2 weeks. Not a single airbag deployed. VW's official response was that it must have been an offset head on that wasn't strong enough to trigger the sensors. BS. I had the 40 mph NHTSA offset frontal crash test video of the same model Jetta and it clearly showed ALL airbags deploy. I wouldn't touch VW ever again even if the GTI is a great car and still built in the motherland. Don't get me started.
2) Say the car is decent to me, but I just want something different. The car hasn't depreicated that much, and the trade in might be $5k-$8k more than the residual buy-out. So, in that case, I buy-out the car and trade it in/sell it elsewhere, or I renegotiate with the dealership based on the value difference between NADA/KBB and the contract residual. My Father in Law got a killer lease deal on a Prius. Those things have near-zero depreication With a $13k buyout on a 2 year old Prius, he'll make back almost $8k on the trade-in value, alone.
Two options were available to you, but the OP will have no choice but to buy given the number of miles he will have put on the car by the end of the lease. Edmunds claims that for the 2011 model, you can get 0.9% financing for up to 36mos and 1.4% for 48mos. The rates are 1.9% and 2.4% for the 2012 model. It's hard for rates to be much better than this, and while there are no interest rate hikes in sight, we don't know what rates will be three years from now.
As to CPO & warranty extension, I certainly wouldn't take a salesman's word for it and I wouldn't believe it unless written down in the contract. And even then, they can game you by saying the inspection revealed problems x, y, and, z, and you need to pay us $$$ to fix them before we extend the warranty.
As to CPO & warranty extension, I certainly wouldn't take a salesman's word for it and I wouldn't believe it unless written down in the contract. And even then, they can game you by saying the inspection revealed problems x, y, and, z, and you need to pay us $$$ to fix them before we extend the warranty.
A couple of potential problems:
1) At your annual mileage, the warranty will expire before your lease ends. Can they really do a CPO extension in that situation?
2) If the team of economists, who successfully forecast the mess we're currently in, is right again, interest rates will be much higher in 3 years.
1) At your annual mileage, the warranty will expire before your lease ends. Can they really do a CPO extension in that situation?
2) If the team of economists, who successfully forecast the mess we're currently in, is right again, interest rates will be much higher in 3 years.
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08-04-2011, 01:15 PM
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They aren't offering him a buyout. They want to CPO it. That means that they have to take ownership. CPO it. Then he gets to pay full pop to buy it back. SCAM! The used car market is SUPER hot right now. Used inventory flies out the door. New models are having a tougher time moving as each month the REALITY of the economic plight we are facing finally sinks in to the general population.
As a side note, I took my car in for the 5k service yesterday and the sales manager put a sign up in the drive-im bay "We want to buy your car! please talk to me." seems that the backlog on orders is 5 months + now on new Audis, esp. the Q5's and Q7's. They're buying out any and all cars they can to backfill the lot.
08-04-2011, 02:05 PM
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Do your own math. What is the current finance rate vs lease money factor? How much will the residual be at the end of the lease? Will you be able to buy it outright at the end of the lease or will you have to finance the rest? Remember you can always sell your lease before it ends.
08-04-2011, 08:52 PM
#10
I buy a lot of equipment, and I lease a lot of equipment. I lease when there is a business reason to do so. With minor exceptions, most cars leased have no business purpose. For a personal vehicle they should call it a (f)lease, because that is what they are doing to you.
On most A4's with all the bla-bla, woff-wuff of money factor, residual, cap cost reductions, and drop off fees are brushed aside you are putting five thousand dollars in (f)lessor's pocket you will never see again.
Unless you can invest the money and make more than cost of financing or the higher cost of leasing, you should pay cash. If you do not have the cash, perhaps you need to look for more economical transportation. If you can only swing a 10 stack of Benjie's, there is a Subaru beater with your name on it. Drive it and save your money to join the Audi club when you can pay for it.
For the original poster, what happens if your possession is cut short when a criminal alien totals the car and shrugs while running away? As they say on the London tube, "Mind the Gap."
On most A4's with all the bla-bla, woff-wuff of money factor, residual, cap cost reductions, and drop off fees are brushed aside you are putting five thousand dollars in (f)lessor's pocket you will never see again.
Unless you can invest the money and make more than cost of financing or the higher cost of leasing, you should pay cash. If you do not have the cash, perhaps you need to look for more economical transportation. If you can only swing a 10 stack of Benjie's, there is a Subaru beater with your name on it. Drive it and save your money to join the Audi club when you can pay for it.
For the original poster, what happens if your possession is cut short when a criminal alien totals the car and shrugs while running away? As they say on the London tube, "Mind the Gap."