Originally Posted by SFMike

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.

Originally Posted by dht34

Curious, why is there no additional sales tax paid when you bought out the lease? If you kept the car rather than have sold it, do you incur the sales tax on buyout?

Originally Posted by TheRebbie

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.

Originally Posted by TheRebbie

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.

Originally Posted by dht34

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?

Originally Posted by HX_Guy

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.

Originally Posted by snagitseven

Agreed - been there done that; it can work out for those over the mileage allowance as well (avoiding extra charges). You also need to factor in the sales tax when you get to that point.