Questions on buying out a lease
#11
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Obviously I didn't make a true profit. There's no profit in buying or leasing, its always a cost. However, they would have taken more money from me had I bought. I leased rather than bought because the money factor at the time provided a better interest rate that the lowest financing rate. (Money factor was .0004, equating to less than 1% interest rate) This was in 2004 when Audi really supported their leases with low money factors.
I only paid tax on the depreciation, rather than the full purchase price, which I would have done if I purchased the car at inception and later resold. When I bought and resold at the conclusion of the lease term, I paid no additional tax and pulled 2k out of it, thereby decreasing the three year cost.
I was also able to keep the car cost in savings. Savings rates at the time were 5%, so figure 40,000 at 5% for three years and deduct that as well, further reducing the three year cost.
If you know you want to buy the car at the end, and the lease rate is below the finance rate, it may make sense to lease rather than buy, and then buy the car out of the lease. Of course your options are limited if you lease in terms of flexibility.
I only paid tax on the depreciation, rather than the full purchase price, which I would have done if I purchased the car at inception and later resold. When I bought and resold at the conclusion of the lease term, I paid no additional tax and pulled 2k out of it, thereby decreasing the three year cost.
I was also able to keep the car cost in savings. Savings rates at the time were 5%, so figure 40,000 at 5% for three years and deduct that as well, further reducing the three year cost.
If you know you want to buy the car at the end, and the lease rate is below the finance rate, it may make sense to lease rather than buy, and then buy the car out of the lease. Of course your options are limited if you lease in terms of flexibility.
#12
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I can tell you how it works in NJ. During the lease term one pays sales tax each month on the amount paid for the use of the car. At the end of the lease, to purchase the vehicle, sales tax is paid on the amount paid to purchase the car.
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I'm aware of this. Been paying tax only on the lease portion. My question is how did SFMike buyout his lease with having to pay sales tax on the residual amount?
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One generally only pays sales tax at the time of registration. If SFMike bought the car from the dealer but did not have them reregister it prior to selling it, and did not reregister it himself during that time, I suppose he could have avoided the tax.
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My lease is not up for another 2 years but I do plan on buying it out simply for the fact that I can turn around and sell it for more.
My residual amount is $20,973 and my car will be 3 years old with ~30,000 miles on it. Looking at used Audi A4s now, 3 years old, there isn't anything near that price...most are in the mid-high 20s, especially with the options I have on mine. It would be dumb not to buy it out then turn around and sell it and be left with a few thousand in my pocket.
My residual amount is $20,973 and my car will be 3 years old with ~30,000 miles on it. Looking at used Audi A4s now, 3 years old, there isn't anything near that price...most are in the mid-high 20s, especially with the options I have on mine. It would be dumb not to buy it out then turn around and sell it and be left with a few thousand in my pocket.
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My lease is not up for another 2 years but I do plan on buying it out simply for the fact that I can turn around and sell it for more.
My residual amount is $20,973 and my car will be 3 years old with ~30,000 miles on it. Looking at used Audi A4s now, 3 years old, there isn't anything near that price...most are in the mid-high 20s, especially with the options I have on mine. It would be dumb not to buy it out then turn around and sell it and be left with a few thousand in my pocket.
My residual amount is $20,973 and my car will be 3 years old with ~30,000 miles on it. Looking at used Audi A4s now, 3 years old, there isn't anything near that price...most are in the mid-high 20s, especially with the options I have on mine. It would be dumb not to buy it out then turn around and sell it and be left with a few thousand in my pocket.
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My A4 KBB value and the listed online prices are easily +$4-5k over what the residual amount is now. Buying out the lease makes sense, as I've also exceeded my allotted mileage. For all the troubles with the A4, really enjoyed driving it every day and so have my parents when they borrowed it. Parents will be taking the A4 off my hands after the buyout.
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