CreoS4

Like others have said, it depends on what you want out of the car. I don't stay in a car for longer than 2-3 years (nor do I want to) and I write it off as a business expense through my corporation, so it makes sense for me to lease.

I can't give you any numbers yet (as the pricing isn't out on the 2014s).

My Ally savings account is still at 0.84%, although it seems to be dropping every month or two...

Dr Chill

I will be leasing my 2014 S6 when it arrives in about a month (selling price is 6% off MSRP). I will post numbers then. Audi leases have no factory subsidy and only make sense (as far as total cost of ownership is concerned) when you own a business and pay for it with pretax dollars.

Mattsam

I leased mine
$83,380 MSRP
$81,000 negotiated another -$1,500 applied for customer loyalty (more to come)
15K Miles
36 month lease
Audi care

$1,432.00 per month - Drive off paying 0 so $1432 with 35 more payments ($1500 loyalty went on the first note)

I think the MF was .0021 at the time

B8S410

$74,750 MSRP .... $4,350 down (included 1st month's payment) with a $1020 / mo. lease payment.

If I recall correctly, the lease payment was based off of $71,850 (approx 3.9% off MSRP) ... plus, I was 13 months into a 36 month S4 payment and got out of the lease with no penalty whatsoever.

///M Traitor

For those on the Lease/Finance fence:

Here is a very rough "back of the napkin" way to rationalize lease vs finance:

Just an example that's 35 payments X $1432 each = $50,120 out of pocket for the lease term. At this point, one should back out the sales tax as it would be paid for finance or lease. However, on a lease, you only pay sales tax on the amount that you "depreciate" the vehicle during the term. Let's just assume there is $3000 of sales tax in that number conservatively.

So, the lease terms above cost approx $47,000 to lease the car for a maximum of 45k miles and three years.

The question is, if you financed the vehicle at todays extremely low rates would it be a better option? To finance the car at 2% (fairly high rate right now - conservative for this example) for 60 months at $83k would cost roughly $4300 in interest for the life of the loan, and $3600 in interest by the 36th month into the loan.

In the finance option, if you sell the car three years from purchase for any more than $39,600 ($83,000 - $47,000 + $3,600) then the additional would be money you "saved" over the lease.

I think an S6 that is 3 years old with 45k miles on it will sell for far more than $39,600 for sure. That means the finance option is a better financial decision from a pure numbers approach with todays extremely low rates. And, if you don't put the full 45k miles on your car, it would be worth even more in the finance option - but cost the same regardless in the lease option.

There certainly are other factors that can sway one one direction or another such as the convenience of "handing in the keys" at the end of the lease - but persionally I feel it would be the same convenience to trade-in my vehicle at the dealer.

If interest rates were at the typical 5% - 7% as they are in a normal healthy economy, the numbers wouldn't be so skewed towards owning/financing.

I'm not a financial advisor, or an accountant, so there may be some inaccuracies in my example, but the approach is sound I believe. I hope it helps someone make a decision.

Dr Chill

Your breakdown above is a very logical, well thought out cost analysis but doesn't take into account the huge financial benefit of a car lease if you own a business or work in a business that leases cars for its employees.

Leases are better business write-offs than financing because owning a car only allows for depreciation deduction for your taxes which is far less than writing off a very large percentage of a lease payment. Using your figures above, if you are in the 30% tax bracket and lease a car paying with pre-tax dollars, the effective payment is $1002($1432 x .7). Using your model above, that would make your payments at lease end total $35000 of which roughly $2000 of that was sales tax.

Therefore, it is virtually always less costly to lease if the car is legitimately leased for business use and not just commuting to and from work.

Also, Audis usually build equity during the lease and can be sold for more than the buyout, although if you sell to anyone other than a car dealer, the lessee must actually purchase the car first and pay sales tax before being able to sell it.

///M Traitor

I do own a small business, which is my only income source. But, my effective tax rate is only about 11%. Are you really paying 30% of gross in taxes? That's a personal income level of taxation no?

snowbooch

i need a better accountant!

Dr Chill

The 30% is reflected in your personal take home pay. Since the lease is paid by the business or deducted from your paycheck before taxes are removed, it is effectively immune to the 30% tax rate the remaining gross compensation is subject to.

For example, say your business grosses $500,000 and your lease payments are $12000 a year and say other business expenses including business taxes total $138,000. That leaves you personal compensation at $350,000 of which 30% taxes are paid, leaving you $245,000 as net pay.

If you don't write the lease off on a business and keeping everything else equal, gross compensation of $362,000 (350k +12k), then after taxes you net $253,400 and then have to pay $12000 for the lease, equaling a net of $241,400. Therefore there is a savings of $3600(which is $30% of $12,000).

///M Traitor

I see. Maybe because I'm taxed as an S-corp it's a different scenario. Everything for my business is on my personal 1040 schedule C. Or maybe your just absolutely right!