Buy or lease?
06-15-2015, 05:56 AM
#1
AudiWorld Super User
Thread Starter
Buy or lease?
I told a friend that I'm planning to buy a new 2016 A4, and he suggested that I lease the car.
He said a couple of the major benefits are:
I understand that you can't mod the car, but I don't do that anyway, so it doesn't matter to me.
Anybody else here prefer to lease? Or does anybody have any lease horror stories?
.
.
.
He said a couple of the major benefits are:
- Your car is always under warranty
- Smaller or no down payment
- After two or three years, you turn it in and get a new car
I understand that you can't mod the car, but I don't do that anyway, so it doesn't matter to me.
Anybody else here prefer to lease? Or does anybody have any lease horror stories?
.
.
.
06-15-2015, 06:24 AM
#2
AudiWorld Super User
In some instances leasing can be an OK deal. However, the Audis seem to have very low residuals which yields a high payment.
Horror story: vastly exceeding the mileage you agree to
Horror story: vastly exceeding the mileage you agree to
06-15-2015, 08:56 AM
#3
I have leased my last 4 Audi’s (2006 A4, 2008 A4, 2010 A6 and currently 2013 A6) and am likely to do so when my current lease is up this fall. I like leasing for a number of reasons beyond what you mention:
I used to buy and sell every 3 years or so to get the “latest and greatest” but that lead to these problems:
I am not a good negotiator and usually let the car go for a lot less than it was worth just to move on.
In NYS where I live I there is an 8.375% sales tax which when you buy you pay on the entire purchase. On my current car (discounted sale price of $49,059) had I purchased I would have paid $4,109 (or $1,370 each year) for sales tax assuming I kept the car for 3 years (there is no refund of the tax). On my current lease I paid $2,023 upfront for all sales tax - $2,086 less than had I bought the car ($58 a month).
I drive conservatively (most of the time) so my tires last the 3 years of the lease term. If one buys and keeps the car longer (even just 4 years) there is the chance that you will have to spend $1,200 to $1,500 in that 4th year for tires. I like the fact that if I control myself there are really no out-of-pocket maintenance or repair cost of any sort when I lease; I know the total cost of having that car upfront.
I have been told that AoA tells dealers to make sure maintenance and service bulletin work is done and done properly on leased cars because they know they will eventually get the car back and then have to sell it.
Excess mileage charges are the potential big risk of leasing as I see it:
If you are going to be driving a lot, then maybe leasing is not for you.
That being said, it is the optics of the situation that makes it seem so. Whether leasing or buying, a 3-year old A4 with 75,000 miles on it will be worth a lot less than the same car with 30,000 miles. On a 3-year old A4 KBB indicates that difference is $5,193 or $0.115 per mile.
When you buy and then drive that much you are not reminded every day that the car’s value is diminishing, but in fact it is. Leasing gives you the bad news upfront in a way.
My current Audi lease allows 10,000 miles/year before an excess mileage charge of $0.25/mile will be assessed. When I negotiated the lease I could have specified higher allowances (12,000 or 15,000 are the most typical). The monthly payment would have gone up about $0.13 for each additional mile, so had I opted for a 15,000 mile lease the monthly payment would have been $54/month more than it is with the 10,000 miles/year lease I have.
Also, Audi typically makes an offer after 24 months of a lease for you to buy additional miles at a discounted rate. I believe this time it was $.015/mile, much less than the $0.25/mile if you wait for lease end to pay.
Nightmare:
In the end I really enjoy being “forced” to get a new car periodically. It makes sure that I never have to deal with a 6-year old German car with expensive parts, out of warranty, that needs a new transmission (or worse) – that’s a nightmare to me!
I used to buy and sell every 3 years or so to get the “latest and greatest” but that lead to these problems:
I am not a good negotiator and usually let the car go for a lot less than it was worth just to move on.
In NYS where I live I there is an 8.375% sales tax which when you buy you pay on the entire purchase. On my current car (discounted sale price of $49,059) had I purchased I would have paid $4,109 (or $1,370 each year) for sales tax assuming I kept the car for 3 years (there is no refund of the tax). On my current lease I paid $2,023 upfront for all sales tax - $2,086 less than had I bought the car ($58 a month).
I drive conservatively (most of the time) so my tires last the 3 years of the lease term. If one buys and keeps the car longer (even just 4 years) there is the chance that you will have to spend $1,200 to $1,500 in that 4th year for tires. I like the fact that if I control myself there are really no out-of-pocket maintenance or repair cost of any sort when I lease; I know the total cost of having that car upfront.
I have been told that AoA tells dealers to make sure maintenance and service bulletin work is done and done properly on leased cars because they know they will eventually get the car back and then have to sell it.
Excess mileage charges are the potential big risk of leasing as I see it:
If you are going to be driving a lot, then maybe leasing is not for you.
That being said, it is the optics of the situation that makes it seem so. Whether leasing or buying, a 3-year old A4 with 75,000 miles on it will be worth a lot less than the same car with 30,000 miles. On a 3-year old A4 KBB indicates that difference is $5,193 or $0.115 per mile.
When you buy and then drive that much you are not reminded every day that the car’s value is diminishing, but in fact it is. Leasing gives you the bad news upfront in a way.
My current Audi lease allows 10,000 miles/year before an excess mileage charge of $0.25/mile will be assessed. When I negotiated the lease I could have specified higher allowances (12,000 or 15,000 are the most typical). The monthly payment would have gone up about $0.13 for each additional mile, so had I opted for a 15,000 mile lease the monthly payment would have been $54/month more than it is with the 10,000 miles/year lease I have.
Also, Audi typically makes an offer after 24 months of a lease for you to buy additional miles at a discounted rate. I believe this time it was $.015/mile, much less than the $0.25/mile if you wait for lease end to pay.
Nightmare:
In the end I really enjoy being “forced” to get a new car periodically. It makes sure that I never have to deal with a 6-year old German car with expensive parts, out of warranty, that needs a new transmission (or worse) – that’s a nightmare to me!
06-15-2015, 03:59 PM
#6
06-16-2015, 12:37 AM
#7
I see only two reasons to enter into a (f)lease. First is if you really cannot afford an Audi the lower per month outlay is less compared to financing the purchase price of the car. The second is if you can use your capital to make more than the premium paid for the (f)lease, you will be dollars ahead.
Better to purchase the car, then sell it when you get to the end of your preferred ownership period. Comparing the terms of most 36 month, 10K/yr leases with buying then selling, you will wind up about 5K ahead. The $5K is what the leasing company takes home as profit after they buy and sell the car while taking payments from you.
Better to purchase the car, then sell it when you get to the end of your preferred ownership period. Comparing the terms of most 36 month, 10K/yr leases with buying then selling, you will wind up about 5K ahead. The $5K is what the leasing company takes home as profit after they buy and sell the car while taking payments from you.
Trending Topics
06-16-2015, 08:19 AM
#8
I see only two reasons to enter into a (f)lease. First is if you really cannot afford an Audi the lower per month outlay is less compared to financing the purchase price of the car. The second is if you can use your capital to make more than the premium paid for the (f)lease, you will be dollars ahead.
Better to purchase the car, then sell it when you get to the end of your preferred ownership period. Comparing the terms of most 36 month, 10K/yr leases with buying then selling, you will wind up about 5K ahead. The $5K is what the leasing company takes home as profit after they buy and sell the car while taking payments from you.
Better to purchase the car, then sell it when you get to the end of your preferred ownership period. Comparing the terms of most 36 month, 10K/yr leases with buying then selling, you will wind up about 5K ahead. The $5K is what the leasing company takes home as profit after they buy and sell the car while taking payments from you.
No doubt, the lease vs. buy calculation is different for each of us based on financial situation, preferences, risk aversion, etc. The old rule was to buy things that appreciate and lease the ones that depreciate, but things are not really that simple. I personally like knowing my full 3 year cost up front and not having to deal with selling or trading-in after 3 years. Even figuring out what my "lost" investment return might be (opportunity cost) if I plunk down $50+K to buy a car is in some sense a risk: investments and markets could go south in 3 years.
Another plus for leasing became clear to me with my current car. I have been hit twice (once rear-ended by a student late for class while I was stopped at a traffic light and once a deer darted out at full gallop from behind a blind of trees at 65 mph). The total repair cost for both incidents was close to $28,000. If I owned the car I would be concerned about diminished value. With a lease, Audi is the one taking the risk and they are insured against such things. As long as I return the car looking good and having been repaired at a quality shop (I had both repairs done at the Audi dealer’s recommended shop) there will no cost implication for me (I hope - lol).
06-16-2015, 11:37 AM
#9
Personally I have leased many cars over the years and at times leased two at at time.
A few years ago I stopped as the lease numbers are not as good as they were 10 years ago. BMW used to be amazing!!!
Im driving a 2007 328i coupe with sport package and 6mt. with 73k on the odo its been great, love the ride and only drive about 8k a year on it. Its paid for. That gives me a greater apprciation for it. I go and shop, and have looked at leasing but to replicate this car will run me about $600 plus per month and have to put something down. This car is not costing me $7200 a year in repairs!!! I bought it used in 2010 for 25k and its depreciated about less than 50%, or about $2000 a year. I was leasing a 2007 530i and when it expired then it was very much in the recession and leasing rates were a bit nutty. This has worked very well for me. I was a "New car every three years" guy for the last 25 years but I dont' have the drive for that anymore. IM plowing thru my Mortgage the extra money and saving a ton of money NOT paying intrerest. 8 years left until ouse is paid off! My wife's Allroad is jsut a few months old and we put only financed about 26k on it with a 5 year note at 1.9 IM paying an extra $100 a month so it will be done quicker. We love the car and just enjoying it, not thinking about when to replace it. Her 4 year old Avant burned oil and needed rebuild but dealer and Audi USA really gave us an amazing deal on new allroad. That said, if you replace your car every 3 years then leasong is great. If you take good care of the cars, leasing is great. If you are investing money you would have to have put down to get an affordable payment then its great. years ago I sold a car for $10,000 and invested it in a good equity fund and then leased. I would tap it for some down payment money on new lease but let it grow. I sold a good chunk of it and it was my $25,000 BMW purchase I mentioned earlier. So in a way I kept my old car money in play in the event I jumped out of the leasing game. I figure it would be down payment money but while my 530 had a MSRP of $55,000, the 328i loaners they gave me were more fun to drive and when found what I wanted at half the cost, I jumped on it. I love the naturally aspired inline 6 with a manual transmission! I suppose the years of having the latest and greatest car are just not as appealing.
I did it for many years so I get it. As I said, leasing worked great for me when I turned cars over. I was thinking of leasing the allroad but they knocked 10k off the sticker and financially it worked better to buy it.
A few years ago I stopped as the lease numbers are not as good as they were 10 years ago. BMW used to be amazing!!!
Im driving a 2007 328i coupe with sport package and 6mt. with 73k on the odo its been great, love the ride and only drive about 8k a year on it. Its paid for. That gives me a greater apprciation for it. I go and shop, and have looked at leasing but to replicate this car will run me about $600 plus per month and have to put something down. This car is not costing me $7200 a year in repairs!!! I bought it used in 2010 for 25k and its depreciated about less than 50%, or about $2000 a year. I was leasing a 2007 530i and when it expired then it was very much in the recession and leasing rates were a bit nutty. This has worked very well for me. I was a "New car every three years" guy for the last 25 years but I dont' have the drive for that anymore. IM plowing thru my Mortgage the extra money and saving a ton of money NOT paying intrerest. 8 years left until ouse is paid off! My wife's Allroad is jsut a few months old and we put only financed about 26k on it with a 5 year note at 1.9 IM paying an extra $100 a month so it will be done quicker. We love the car and just enjoying it, not thinking about when to replace it. Her 4 year old Avant burned oil and needed rebuild but dealer and Audi USA really gave us an amazing deal on new allroad. That said, if you replace your car every 3 years then leasong is great. If you take good care of the cars, leasing is great. If you are investing money you would have to have put down to get an affordable payment then its great. years ago I sold a car for $10,000 and invested it in a good equity fund and then leased. I would tap it for some down payment money on new lease but let it grow. I sold a good chunk of it and it was my $25,000 BMW purchase I mentioned earlier. So in a way I kept my old car money in play in the event I jumped out of the leasing game. I figure it would be down payment money but while my 530 had a MSRP of $55,000, the 328i loaners they gave me were more fun to drive and when found what I wanted at half the cost, I jumped on it. I love the naturally aspired inline 6 with a manual transmission! I suppose the years of having the latest and greatest car are just not as appealing.
I did it for many years so I get it. As I said, leasing worked great for me when I turned cars over. I was thinking of leasing the allroad but they knocked 10k off the sticker and financially it worked better to buy it.
06-19-2015, 10:34 AM
#10
AudiWorld Super User
Thread Starter
I have leased my last 4 Audi’s (2006 A4, 2008 A4, 2010 A6 and currently 2013 A6) and am likely to do so when my current lease is up this fall. I like leasing for a number of reasons beyond what you mention:
In NYS where I live I there is an 8.375% sales tax which when you buy you pay on the entire purchase. On my current car (discounted sale price of $49,059) had I purchased I would have paid $4,109 (or $1,370 each year) for sales tax assuming I kept the car for 3 years (there is no refund of the tax). On my current lease I paid $2,023 upfront for all sales tax - $2,086 less than had I bought the car ($58 a month).
I drive conservatively (most of the time) so my tires last the 3 years of the lease term. If one buys and keeps the car longer (even just 4 years) there is the chance that you will have to spend $1,200 to $1,500 in that 4th year for tires. I like the fact that if I control myself there are really no out-of-pocket maintenance or repair cost of any sort when I lease; I know the total cost of having that car upfront.
I have been told that AoA tells dealers to make sure maintenance and service bulletin work is done and done properly on leased cars because they know they will eventually get the car back and then have to sell it.
Excess mileage charges are the potential big risk of leasing as I see it:
If you are going to be driving a lot, then maybe leasing is not for you.
That being said, it is the optics of the situation that makes it seem so. Whether leasing or buying, a 3-year old A4 with 75,000 miles on it will be worth a lot less than the same car with 30,000 miles. On a 3-year old A4 KBB indicates that difference is $5,193 or $0.115 per mile.
In NYS where I live I there is an 8.375% sales tax which when you buy you pay on the entire purchase. On my current car (discounted sale price of $49,059) had I purchased I would have paid $4,109 (or $1,370 each year) for sales tax assuming I kept the car for 3 years (there is no refund of the tax). On my current lease I paid $2,023 upfront for all sales tax - $2,086 less than had I bought the car ($58 a month).
I drive conservatively (most of the time) so my tires last the 3 years of the lease term. If one buys and keeps the car longer (even just 4 years) there is the chance that you will have to spend $1,200 to $1,500 in that 4th year for tires. I like the fact that if I control myself there are really no out-of-pocket maintenance or repair cost of any sort when I lease; I know the total cost of having that car upfront.
I have been told that AoA tells dealers to make sure maintenance and service bulletin work is done and done properly on leased cars because they know they will eventually get the car back and then have to sell it.
Excess mileage charges are the potential big risk of leasing as I see it:
If you are going to be driving a lot, then maybe leasing is not for you.
That being said, it is the optics of the situation that makes it seem so. Whether leasing or buying, a 3-year old A4 with 75,000 miles on it will be worth a lot less than the same car with 30,000 miles. On a 3-year old A4 KBB indicates that difference is $5,193 or $0.115 per mile.
You have made some very good points. It makes it seem like a lease would be good for me.
I generally baby my car, and with the exception of a few shopping cart dings on my bumper, my car looks like new. And after six years of ownership of my current A4, I have put only 52,000 miles on the car -- another reason I am a good candidate to lease.
Also, aside from some VAG-type mods, I don't modify my car, so no worries there. And you made a good point about the tires. I put new tires on my car in the spring of 2014, and with some careful driving they'll last another two years. So if I lease my next car, I probably will never have to put new tires on it.
In addition, I have owned three Audis, and each one of them came down with a major problem -- after my warranty had expired. If I had leased the cars, I would have been covered.
When purchasing my current Audi, I put a $20k downpayment on it. I'm sure that money would have done a lot better in a Roth IRA.
.
.
.