The Basics of Leasing a Car (LONG)
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Originally Posted by StatmanDesigns
Why would you EVER want to dump all that money up front into a depreciating asset? It makes absolutely no sense; common or financial.
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In CA, I like to lease because I only keep my cars 2-3 years and don't want to pay sales tax on the residual. CA does not allow for a credit on the trade-in value if you purchase, but if you lease, you only pay sales tax on the monthly lease payment. So on my present car I am saving about $3,000 in sales tax by leasing. In addition, it's a great benefit to me not having to worry about selling the car or getting ripped off from a "stealer" on a trade-in. At the end of the lease, I just drop the keys and walk. And if I have value in the car over the residual, I can always try to sell it and pocket the difference.
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Originally Posted by adsc4s
I've got too many bills as it is, one less is always better in my book.
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Leasing is 99% of the time for new cars, we are not talking about 2 year old cars. Much of the benefit is that the leased car is never out of warranty and most new cars come with all scheduled maintenance included. Why do you think new cars depreciate so damn quickly. It is because their warranties evaporate after 3-4 years.
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Dan,
I leased my C4 Cab as a two year old car. It has the Porsche extended warranty and someone else took the big hit up front - $40K! I must be in that 1% category.....
Dave
I leased my C4 Cab as a two year old car. It has the Porsche extended warranty and someone else took the big hit up front - $40K! I must be in that 1% category.....
Dave
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A small clarification on Daniel's original post, if I may. The residual is a percentage of the vehicle's MSRP. Capitalized cost is the agreed upon purchase price which may or may not equal the MSRP.
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Working at an Audi dealership, I can assure you that this gentleman is correct in his theory. However, I would make two comments. Be weary of the car company's with 57% and higher residuals, as the dealership is surely making the residual payoff so high compared to end-market value that it behooves the consumer to turn the car in. (BMW 745's are the biggest culprit in the market today) However, a REAL lease deal, you can purchase the car at the end of the lease and actually sell it privately for a profit. The common wives tail is that a dealership can manipulate money factor's, however, in reality the manufacturer has strict guidelines on this issue, and they cannot be changed. This makes sense, mainly because the advertised leases you see on TV simply would not work. James
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Originally Posted by StatmanDesigns
Most likely then you would not have the resources to purchase a new car outright.
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Originally Posted by autounion1
The common wives tail is that a dealership can manipulate money factor's, however, in reality the manufacturer has strict guidelines on this issue, and they cannot be changed. This makes sense, mainly because the advertised leases you see on TV simply would not work.
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I wish I could scan this month's lease program for Certified Audi Dealership's. I will, however, parphrase it for you. "Model Year04/05 10k, 12k, and 15k new vehicle eligible only, maximun allowance for money factor increase= (+,-) 0.00000 percent."
Again, increasing issued money factors above and beyond what a manufacturers rates are is not allowed.
What you are refering to is a "balloon lease." These are deadly, and I recommend staying as far away from them as possible.
Again, increasing issued money factors above and beyond what a manufacturers rates are is not allowed.
What you are refering to is a "balloon lease." These are deadly, and I recommend staying as far away from them as possible.
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Originally Posted by autounion1
I wish I could scan this month's lease program for Certified Audi Dealership's. I will, however, parphrase it for you. "Model Year04/05 10k, 12k, and 15k new vehicle eligible only, maximun allowance for money factor increase= (+,-) 0.00000 percent."
Again, increasing issued money factors above and beyond what a manufacturers rates are is not allowed.
Again, increasing issued money factors above and beyond what a manufacturers rates are is not allowed.
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I will tell you that most leases are "canned" the analogy that you open them up and they cannot be manipulated. These are for most of our vehicles. I will give it to you, however, that some specialty vehicles like our RS-6 and the upcoming A8-W12 the dealership makes up the own lease rates from scratch with certain minor stipulations from Audi. (as to not completely screw the customer) Again, as for the a4, a6, TT, and ALLrOAD vehicles, the money factors are not to be manipulated.
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"Leasing" is known as "fleecing" for a reason. I'm sure for a very small percentage of people it makes sense but after having leased a car twice (trying to live beyond my means when I was younger) it won't happen again.
Dave Ramsey did the math in his "Total Money Makeover" book and showed that if a 25 year old kept a $400/month car payment until he was 65 he was throwing away $1.4MM USD assuming an 8% return. That is why all three of my cars are paid for, when I buy a 996 or 997 (used) it will be with cash, and my new house will be paid for in 5 more years. When you have debt you are tying up your most important wealth building tool....your income!
Dave Ramsey did the math in his "Total Money Makeover" book and showed that if a 25 year old kept a $400/month car payment until he was 65 he was throwing away $1.4MM USD assuming an 8% return. That is why all three of my cars are paid for, when I buy a 996 or 997 (used) it will be with cash, and my new house will be paid for in 5 more years. When you have debt you are tying up your most important wealth building tool....your income!
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I leased my 2000 C4 and when I went to turn it in the payoff was around $58k and the value was closer to $51k. During the conversations they have with you near the end I inquired if they wanted to "deal" at all on the payoff figure. They declined and the car went straight to the auction and sold for $51k. (I know because the buyer called me) I never could understand why they didn't want to discount the price, to save the auction. Well, the other day I was taking about this to a Porsche sales manager and his explaination was that there is one main company that sets residuals for the major lease companies (Chase in this case) and that as a part of the deal they guarantee their numbers to the lease companies, not a complete recapture but enough that it doesn't pay the lease companies to bother with making deals. Learn something new every day.
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Originally Posted by Bill (NC)
...Well, the other day I was taking about this to a Porsche sales manager and his explaination was that there is one main company that sets residuals for the major lease companies (Chase in this case) and that as a part of the deal they guarantee their numbers to the lease companies, not a complete recapture but enough that it doesn't pay the lease companies to bother with making deals. Learn something new every day.