frankie_Toronto

Sorry if this has already discussed (I assume it has been, but couldn't a thread based on my search, but I could've missed it - new at this).


I recently ordered a 2017 A4, and the car should arrive by the beginning of January. I have not yet decided whether I am going to lease it or simply pay cash (using my line of credit since it offers a much better interest rate than Audi Finance). I typically like to keep my vehicles longer than 4 years, and therefore was leaning towards buying it out (so that I don't have to buy it out in 4 years at the high residual value and buy-out fee).


That said, I worry about buying (versus leasing) a German luxury car. I've typically owned Honda and Acura vehicles (which have been relatively trouble-free for 10 years or so), but keep hearing (seeing) warnings about owning a German car after the warranty has run out. In this case, I guess the issue could be compounded due to the fact that it is a first year model (with a lot of new tech).


Curious as to what most others are doing - buying or leasing?


Plus, for past Audi owners, what has been your experience with reliability after the warranty has expired?

VipinLJ

I personally think lease is the way to go. I change my cars once the warranty period is up. Plus, like the salesman told me, if God forbid anything happens to the car (like an accident), then it shows up on carfax and resale will take a hit which you don't have to worry about with a leased car. I know it is an extremely rare thing but it can happen. Another thing is that once the warranty runs out, you might end up spending big money if something needs to be changed. I don't think you get extended warranty in America. I checked the website but saw nothing about extended warranties. I'm not sure about Canada.
Offourse, one can always argue that those things happening are rare and to not worry about it.
Also, my lease for 36 months worked out better for me financially since, if I planned on selling the car after 3-4yrs, I would end up losing some money if I financed the car for buying compared to my lease rate.
In the end, it all depends on you. I bought my A6 because I wanted to "own" one car. My A4 and X3 are leased. The warranty on the A6 will be up in a years time.

VipinLJ

The downsides of leasing are if you are the type of person who keeps his car for 10years, no matter what, you will end up losing more money if you lease first and then buy it at the end of the lease period. Also, no modifications can be done on the car as long as it doesn't belong to you entirely.

munsabin

hahaha oh man this post. Prepare for battle!

Here's the way I look at it. I pay off my car in 5 years with payments not much higher than a lease on 4 years. I keep the car for 6-7 years, take care of it cause I take care of my things anyways. At the end of 6-7 years I trade in / sell and purchase a new one, but I've gained about 17 - 22 K on the new vehicle, so that's all cash, after tax, that I don't have to pay anymore on the new vehicle. Then again this car is a beauty. I may keep it for longer. So ageless IMO.

gguy

I am not a fan of leasing. I know there are different opinions on it but after talking to several people, I just don't think a lease is a great way to go. I just paid for mine, I also don't like car payments.

VM

Audi does offer manufacturer-backed extended warranties up here; I don't think they're too heavily discussed on the web site...

VM

Okay, I will tell you my thinking for leasing mine.

Residual on mine was 54%. Assume I get 5% off MSRP (this is Canada...). So that means that I've paid for 41% of the car (+ freight/PDI/etc + interest) in 4 years.

Let's say I lease two cars in 8 years on the same terms. I've paid for 82% of a car and in 8 years, I end up in the dealer's lot holding my licence plates and nothing else.

Now, let's say I bought it. I've paid for 95% of a car, plus $5K for the extended warranty (that's 10% of MSRP!), so that means I've paid 105% of MSRP. In 8 years, how much will my car be worth? 20% of MSRP (i.e. $10K)? So I've paid 105% of MSRP, I have an asset worth 20% of MSRP, so I'm roughly breaking even compared to my two leased cars that have cost me 82% of MSRP.

Obviously, this is a simplified example, once you add interest (more interest on a lease), taxes (you don't pay taxes on the residual in a lease), maintenance costs (year 5-8 on the purchased car will cost more that year 1-4 on leased car #2), etc, things will wiggle a bit. But my conclusion was that you really don't save money by buying unless you keep the car past the extended warranty and it requires little repairs.

If the residuals were in the 30s, I'd think otherwise. But it looks to me like with these residuals, you aren't really ahead when buying until the car is about 7-9 years old, and who will still want to have this car in 7-9 years?

Note that Audi Canada offers MSDs on leases, which is a great deal...

Ray_QT

There’s no right or wrong… I have done both multiple times. You just can’t buy or lease without doing some calculations…at least for me.

They’re both financial tools with their own merits and drawbacks, and it’s up to you to align or fit your interests and financial situation to them.
In general, most people who lease want to pay as little as possible and return the car a few years later and get into another one. In that case, you look for the lowest MF and highest residual. I’ve had cases where the MF was practically zero, making leasing a no-brainer. Leasing allows you to drive a relatively more expensive car for the same payment as financing a lesser car (15-30% less). If you own a business, a part of your lease payment can be deducted as a business expense. You can use MSD to further reduce your MF and get it back at the end of the lease. Throughout the lease, the manufacturer’s warranty is valid, giving you some peace of mind, especially for first-year models (unless you lease a Chrysler product for more than 36 months ). The lease company assumes the risk of guessing the future depreciation; if they’re wrong, you still have the option to buy and sell the car for a profit. The main drawback is that you’re limited in when you can change cars and could breach your lease contract if you tune your ECU or add any hardware mod.

Financing is straightforward. At the end of your term, the car is yours and the payments stop. At the time, your factory warranty is generally expired and you’ll be looking for an extended warranty for peace of mind. If you keep your cars for a long time, this is the way to go.

Bottom line is that you have to consider both and go with the one that suits you better.

hans007

If you keep your car like 3 years and buy it. You can always CarMax it or something.

My 2010 audi I drove 49k miles in 3 years , had purchased it. Sold it to CarMax. Did better than. The lease would have been.

A lease is just them doing the same thing except you have to pay origination fees etc. If the residual is close to accurate it makes no difference since you can trade the car in for what it's worth. Plus a lease will usually have a money factor that is higher than you could get at say a credit union so they get you on that too (so audi has 2.99 now which is around .00129 money factor x2400)


The one good thing about s lease is in California you don't pay tax on the whole car. For say a BMW they give a blanket residual so a car loaded with stuff like adjustable suspension a lease is really great for because those things retain value poorly. Audi gives a different residual for premium pp+ and prestige tho so not as good an advantage to Leasing.

I'd say the lease argument makes more sense for bmw IF you buy super loaded. Or if you can write of on taxes a lease more easily if you own a business.

Otherwise just buy the car and sell it. And if it gets in an accident you can claim diminished value to make up for it having an accident on record so that isn't really a factor either.

VM

No such thing as CarMax up in Canada (where the OP is). Not really any other large well-known outfits that will pay top dollar for used cars if you're not buying a new car from them.

Canadian leases have interest rates expressed in percentages... and I think they're offering 3.9% on 48 month leases right now, and that can go down to about 2.6% with MSDs. That's... closed-5-year-mortgage (something else mostly unique to Canada) low. Cheapest borrowing option for most people would be a HELOC if they have enough equity in their home, and I think most of those are variable rates that are currently 3.3-3.7%...

No such thing as 'origination fees' up here that I know of... sure, there are lots of fees, but I think all of them apply equally to a financed car.

In Ontario, you're paying 13% sales tax... which you only pay on the lease payments if you're leasing. If you're buying the 13% is paid up front.

Assume MSRP is 54K. Residual is 53%. You've paid $3700 more tax on the financed car that you trade in than on the leased car that you return.

Also, I'm not sure there's such a thing as diminished value in Ontario car insurance. A quick Google suggests that it's a very new, shaky legal area right now.

Frankly, I think that threads like this should be answered only by people in the same country as the OP. So many differences between countries, especially when it comes to taxes and Audi policies (e.g. Audi Canada will let you lock in residual/rates when you factory order a car; according to all Americans in this forum the same is not true in the US).