Buy or lease?
06-30-2015, 10:22 AM
#21
I'm trying to figure the A4 lease/buy value proposition as well. My understanding is in most cases with Audi leases, Audi Financial Services writes the lease and they routinely offer the lessee (you/me/consumer) first right of refusal to purchase the leased Audi at term end for the pre-determined residual value.
As I've been tracking the B8 used/CPO market, comparing posted lease residuals, and trying to find an off lease CPO A4 that was reasonably/well equipped, it's been pretty clear that a majority of A4 lease holders are buying out their cars at lease end. The used A4 market was/is full of base models with no nav or other nice options and those cars were still selling for $8k-$10k over residual- so savvy lessees would be foolish to not buy the car or try to leverage soft equity at trade in time. I've only bought used/CPO in the past, so I haven't had a reason to go through AFS lease paperwork or terms/rules in detail- so I could be mistaken here.
Have any of you who've leased consecutive A4s (or other Audis) over many years had any luck getting an Audi dealer to show you some "soft" equity where your residual value is A LOT less (i.e. $10k+) than current street retail?
As I've been tracking the B8 used/CPO market, comparing posted lease residuals, and trying to find an off lease CPO A4 that was reasonably/well equipped, it's been pretty clear that a majority of A4 lease holders are buying out their cars at lease end. The used A4 market was/is full of base models with no nav or other nice options and those cars were still selling for $8k-$10k over residual- so savvy lessees would be foolish to not buy the car or try to leverage soft equity at trade in time. I've only bought used/CPO in the past, so I haven't had a reason to go through AFS lease paperwork or terms/rules in detail- so I could be mistaken here.
Have any of you who've leased consecutive A4s (or other Audis) over many years had any luck getting an Audi dealer to show you some "soft" equity where your residual value is A LOT less (i.e. $10k+) than current street retail?
07-01-2015, 01:14 PM
#22
AudiWorld Super User
Thread Starter
Leasing is good if you like a newer car, that cost more than what you would have been able to buy.
Leasing is bad because you never really gain any equity in the product and you have to keep coughing up a down payment every few years. When you add all that up, say over ten years, sometimes it's more costly than if you just bought the car.
Look at your longterm goal. What is more important to you? The nice car now or getting out of the trap of long-term payments? It's really your call what suites you best.
Leasing is bad because you never really gain any equity in the product and you have to keep coughing up a down payment every few years. When you add all that up, say over ten years, sometimes it's more costly than if you just bought the car.
Look at your longterm goal. What is more important to you? The nice car now or getting out of the trap of long-term payments? It's really your call what suites you best.
But I would prefer to have a new car every four or five years. After that, I find myself getting a little bored with it. But after reading all of the comments on this thread, I am heavily leaning towards leasing my next car. I will lease it for three years, and then buy the car at the end of the lease (knowing I'm getting a well-cared for car) and keep it for another four years. That gives me the benefits of leasing and the benefits of ownership.
Will I save money this way? Who knows? But like I said in an earlier post, I usually put down a pretty big downpayment when buying a car. Now, I will take that money and invest it instead, and hopefully come out ahead.
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07-01-2015, 04:10 PM
#23
I am not one of those people who needs to have a new car every three years. However, I do like to buy a new A4 every time the new model comes out. Not counting the minor cosmetic upgrades, a new A4 comes out every six or seven years.
But I would prefer to have a new car every four or five years. After that, I find myself getting a little bored with it. But after reading all of the comments on this thread, I am heavily leaning towards leasing my next car. I will lease it for three years, and then buy the car at the end of the lease (knowing I'm getting a well-cared for car) and keep it for another four years. That gives me the benefits of leasing and the benefits of ownership.
Will I save money this way? Who knows? But like I said in an earlier post, I usually put down a pretty big downpayment when buying a car. Now, I will take that money and invest it instead, and hopefully come out ahead.
.
.
.
But I would prefer to have a new car every four or five years. After that, I find myself getting a little bored with it. But after reading all of the comments on this thread, I am heavily leaning towards leasing my next car. I will lease it for three years, and then buy the car at the end of the lease (knowing I'm getting a well-cared for car) and keep it for another four years. That gives me the benefits of leasing and the benefits of ownership.
Will I save money this way? Who knows? But like I said in an earlier post, I usually put down a pretty big downpayment when buying a car. Now, I will take that money and invest it instead, and hopefully come out ahead.
.
.
.
07-01-2015, 07:57 PM
#24
I'm trying to figure the A4 lease/buy value proposition as well. My understanding is in most cases with Audi leases, Audi Financial Services writes the lease and they routinely offer the lessee (you/me/consumer) first right of refusal to purchase the leased Audi at term end for the pre-determined residual value.
As I've been tracking the B8 used/CPO market, comparing posted lease residuals, and trying to find an off lease CPO A4 that was reasonably/well equipped, it's been pretty clear that a majority of A4 lease holders are buying out their cars at lease end. The used A4 market was/is full of base models with no nav or other nice options and those cars were still selling for $8k-$10k over residual- so savvy lessees would be foolish to not buy the car or try to leverage soft equity at trade in time. I've only bought used/CPO in the past, so I haven't had a reason to go through AFS lease paperwork or terms/rules in detail- so I could be mistaken here.
Have any of you who've leased consecutive A4s (or other Audis) over many years had any luck getting an Audi dealer to show you some "soft" equity where your residual value is A LOT less (i.e. $10k+) than current street retail?
As I've been tracking the B8 used/CPO market, comparing posted lease residuals, and trying to find an off lease CPO A4 that was reasonably/well equipped, it's been pretty clear that a majority of A4 lease holders are buying out their cars at lease end. The used A4 market was/is full of base models with no nav or other nice options and those cars were still selling for $8k-$10k over residual- so savvy lessees would be foolish to not buy the car or try to leverage soft equity at trade in time. I've only bought used/CPO in the past, so I haven't had a reason to go through AFS lease paperwork or terms/rules in detail- so I could be mistaken here.
Have any of you who've leased consecutive A4s (or other Audis) over many years had any luck getting an Audi dealer to show you some "soft" equity where your residual value is A LOT less (i.e. $10k+) than current street retail?
You're exactly correct on what you're calling "soft equity." I leveraged that in a lease-end to negotiate another $1000 from the dealer on a new car acquisition. The facts were as you would have guessed: Low miles, perfect condition, full maintenance completed, flawless. Dealers want those cars as CPOs, and will give you value back towards whatever you're doing next. They're probably making more on a CPO than a new A4.
My negotiation was pretty simple: Give me $1000 or I'll buy the car and sell it myself. They get first crack at those lease returns, and most returnees are not going to think to try to derive some value from their lease return. I think it's a sweet business for the dealerships.
07-02-2015, 01:54 AM
#25
AudiWorld Super User
I have been rethinking this lease thing. I haven't leased a car in years or, for that matter, had a car loan in years either. I have paid cash either selling the car myself or trading it in and paying the difference on what was negotiated. My intention was to keep my MY2013 for at least until the second year of the next generation A6 which for us here in the U.S. would likely be a MY2018 in 2017 making my car 5 years old at that time. I dislike interest bearing monthly payments (I have no loans except my mortgage) but the lease option may be worth reconsidering. I'm pretty **** when it comes to these things and the last time I ran all the numbers on a lease vs outright purchase, the lease, all variables considered, was overall more costly but things may have changed. We'll see in two years.
07-02-2015, 10:47 AM
#26
Hi VAG-Fan1:
You're exactly correct on what you're calling "soft equity." I leveraged that in a lease-end to negotiate another $1000 from the dealer on a new car acquisition. The facts were as you would have guessed: Low miles, perfect condition, full maintenance completed, flawless. Dealers want those cars as CPOs, and will give you value back towards whatever you're doing next. They're probably making more on a CPO than a new A4.
My negotiation was pretty simple: Give me $1000 or I'll buy the car and sell it myself. They get first crack at those lease returns, and most returnees are not going to think to try to derive some value from their lease return. I think it's a sweet business for the dealerships.
You're exactly correct on what you're calling "soft equity." I leveraged that in a lease-end to negotiate another $1000 from the dealer on a new car acquisition. The facts were as you would have guessed: Low miles, perfect condition, full maintenance completed, flawless. Dealers want those cars as CPOs, and will give you value back towards whatever you're doing next. They're probably making more on a CPO than a new A4.
My negotiation was pretty simple: Give me $1000 or I'll buy the car and sell it myself. They get first crack at those lease returns, and most returnees are not going to think to try to derive some value from their lease return. I think it's a sweet business for the dealerships.
In this instance, it may not work for me as I'm in the last several months of a '13 CC 4Motion Exec lease, but I will be WELL under allowed miles on it and condition is ~9/10. I'm expecting a VW dealer will show me more for it than an Audi dealer, but who knows. We also have a Q7, so Audi loyalty cash could come into play, though I'd be getting a B-to-B supplier discount from the start (similar pricing as Audi Club of America discount) and don't know how/if they stack incentives.
I wouldn't mind seeing a flattening of Audi sales numbers month to month. It might actually push them to offer a better lease deal like BMW has been doing lately. The current situation where lease end residuals are ending up $10k-$12k under street retail (in many cases) makes for an expensive lease. I wish they'd bring residuals a little more in-line with trade-in values at the used street retail phase- i.e. where "trade in" values are $6k-$8 under street retail. I think you'd see residuals on moderately equipped A4s more in the mid to upper $20k range vs. the lower $20k range I've seen posted on leasing forums. That would knock the monthly lease payment down a good chunk, but Audi doesn't seem to have any trouble moving cars right now, so I'm not holding my breath.
07-02-2015, 02:45 PM
#28
Thanks for the response and that's what I was thinking/hoping would be the case. I'd not expect them to write me a cash-out check or anything, but if a dealer would cover the up front fees across the board, plus maybe an extra discount or small cap cost reduction, I'd be happy.
In this instance, it may not work for me as I'm in the last several months of a '13 CC 4Motion Exec lease, but I will be WELL under allowed miles on it and condition is ~9/10. I'm expecting a VW dealer will show me more for it than an Audi dealer, but who knows. We also have a Q7, so Audi loyalty cash could come into play, though I'd be getting a B-to-B supplier discount from the start (similar pricing as Audi Club of America discount) and don't know how/if they stack incentives.
I wouldn't mind seeing a flattening of Audi sales numbers month to month. It might actually push them to offer a better lease deal like BMW has been doing lately. The current situation where lease end residuals are ending up $10k-$12k under street retail (in many cases) makes for an expensive lease. I wish they'd bring residuals a little more in-line with trade-in values at the used street retail phase- i.e. where "trade in" values are $6k-$8 under street retail. I think you'd see residuals on moderately equipped A4s more in the mid to upper $20k range vs. the lower $20k range I've seen posted on leasing forums. That would knock the monthly lease payment down a good chunk, but Audi doesn't seem to have any trouble moving cars right now, so I'm not holding my breath.
In this instance, it may not work for me as I'm in the last several months of a '13 CC 4Motion Exec lease, but I will be WELL under allowed miles on it and condition is ~9/10. I'm expecting a VW dealer will show me more for it than an Audi dealer, but who knows. We also have a Q7, so Audi loyalty cash could come into play, though I'd be getting a B-to-B supplier discount from the start (similar pricing as Audi Club of America discount) and don't know how/if they stack incentives.
I wouldn't mind seeing a flattening of Audi sales numbers month to month. It might actually push them to offer a better lease deal like BMW has been doing lately. The current situation where lease end residuals are ending up $10k-$12k under street retail (in many cases) makes for an expensive lease. I wish they'd bring residuals a little more in-line with trade-in values at the used street retail phase- i.e. where "trade in" values are $6k-$8 under street retail. I think you'd see residuals on moderately equipped A4s more in the mid to upper $20k range vs. the lower $20k range I've seen posted on leasing forums. That would knock the monthly lease payment down a good chunk, but Audi doesn't seem to have any trouble moving cars right now, so I'm not holding my breath.
I hear what you're saying about residuals, but the other way to impact the math is to negotiate hard on the cap cost and ensure you're getting the best possible (lowest) money factor.
07-30-2015, 02:21 PM
#29
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Except in certain states like California.... (as far as I know)
07-30-2015, 05:12 PM
#30
In my case since I now lease, should I decide to buy at the end of the lease I would have to pay sales tax on the full purchase price. Turning in a leased car is not a trade in.