Leasing a TT

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Please help me out here. I have a question about leasing, if I put down more than the $4000 for down payment and over the course of the 36 month lease,
would I actually save a few hundred dollars, am I correct for assuming this? Also I do not plan to buy the car at the end, so residual value is not a concern.
Thanks
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This isn't an answer, it's an additional question.
Does anyone know how a (standard Audi) lease functions, and what the difference is between that and buying outright? I'm now officially in the market for a TT 3.2, maybe by March. Wife said okay.
--
Charles Fox
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The purpose of lease is to minimize the out-of-pocket dollar (both down and monthly). If you plan to put $4000 down, then you maybe against the "rule." You may save a few bucks by putting more down payment up front. But if you have so much money to spend, why not consider buying the car since interest rate is so low now?
Here is how a lease works:
Car Price - Down Payment = Based Price Based Price - Residual Value = Leased Cost Leased Cost + Rent Charge = Total out of pocket Total out of pocket / Terms = Monthly Payment
Couple things are negotiable: 1. Car price 2. Residual value (choose the lowest mileage option can increase this value) 3. Rent charge (usually based on the money factor. If you put more down, you maybe able to lower this a bit)
This is all based on my experience. I am not an expert in auto financing. Just a FYI.
wrote:

more
this?
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Gloriously clear explanation, Who . . . Thanks a ton. It gives me a way to work out a couple of scenarios. And explain them to my dear bride.
Wish me luck!

lease,
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It gives me a way to work out a couple of scenarios. And explain them to my dear bride. Wish me luck!
But will the little dear understand any of them anyway?? Oh well..................
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Wife said okay.
Well then, just go ahead!!
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wrote:

Leases make sense for 3 type of folks:
1) Get to drive a car that you could not afford the payments on to purchase. (You really should buy something you can afford if you are in this group)
2) You want the newest car at all times (for whatever reason) and wouldn't keep your car past 3 years if you bought it anyway.
3) You are writing it off as a business expense or other tax reason (though this usually coolapses down to reason 2 if you think about it)
With a lease you are paying to drive the car, at the end of the lease you own nothing (and owe nothing).
You always want to minimize your out-of pocket, as you are better off paying that money over the term of the lease (cost of money is a big factor in leasing).
I generally have 1 car leased and one purchased at any given time. The leased car is always done with near 0 out of pocket, no money down. The purchased car is done with the biggest down payment I can afford and the shortest loan period I can afford. The purchased car is kept for 10+ years, the leased car for 3.
Factoring just the raw costs (lease payments vs. loan payments, depreciatioin vs owning nothing, etc) and not including cost of money, my leased car is the same cost as purchasing the same car and re-selling after 3 years. But, I do not have to re-sell it and I get sales tax breaks when I trade for another lease. After including those factors (and even better with cost of money) I come out well ahead on the lease: GIVEN THAT I DO NOT PLAN ON KEEPING IT PAST 3YRS ANYWAY. The longer you keep the car the better a purchase looks.
Also, if you drive more than about 18kmi/yr the lease can start looking unattractive as well (too low a residual value means too high a lease payment).
Leasing a car at the begining of a new body style helps, as you get a higher residual value.
Scott
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Some further comments (UK perspective):
1. Different finance companies can have different views on a particular car's residual value.
2. Excess mileage charges can vary.
3. Amount of remedial work at the end of the lease can vary.
4. Some/most dealers are willing to give up their finance commission rather than discount the car. -- Doug Ramage
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And also different models with equal retail prices can also have different residuals. During recent research, I found the residual value placed on an A3 Sport to be less than that on an A3 SE, despite both having the same retail price.

Though usually around the 7-8 pence per mile mark.

You mean work by the customer? All lease contracts I've been a part of require that the vehicle be returned in the condition it was supplied.
This means no making holes for car kits and the like, and any accident damage must be repaired.
I rule of thumb I was given by a local bodyshop that does a lot of work on lease cars, prior to return, was that the vehicle should have no obvious blemishes when viewed all round at a distance of one metre.
--
Toby

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your forgetting a few things, there's a set value at the end of the lease, so there's an asset. With a lease the interest is lower so are the taxes, and with that savings you can invest it and make your money back. The most important there are no repair cost, to get "money/value" out of a purchase the vehicle must be kept 9 years or 3 leases. I was told a lease is like dating and purchase is a marriage
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<snip>
most
If that were true, then why would the lease company bother leasing-out the cars..?
The main argument for leases that I've heard (YMMV) is that one can afford a more expensive car for the same payment, or the same car for a lower payment. If you are the type of person who doesn't want an asset, and ditches it as soon as the warranty expires, then all power to your elbow..
OTOH, things like excess mileage can eat any savings, and there may be other impacts - e.g. having to seek permission from the owner before driving abroad.
The set [balloon] value at the end is calculated by the leasing company, and includes their discount, interest on the money they've spent, and profit. You don't get something for nothing. Naturally, you will have to pay for all repairs to the car before handing it back (if you don't then it'll be even more expensive). And, generally, the service costs.
Not sure where taxes come into this..?
--

Hairy One Kenobi

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On Fri, 24 Oct 2003 00:02:32 +0100, "Hairy One Kenobi"

It is not ballon, baloon means a payment you MUST make at the end of term. You would only make that payment if you chose to keep the car (this only makes sense if the residual is below current market and you do it to turn a profit).

I would be repairing any damage even if it were my car I was purchasing. Here in the US the rule-of-thumb seems to be if the dent is smaller than a quarter (unit of currency here), then you do not have to repair it for lease purposes. Also, most cars sold here (and certainly any worth leasing) have at least a 3yr bumper-to-bumper warranty. The cars I tend to lease also cover all scheduled service for 3 yrs (oil, wipers, XXkmi service, everything but tires and gas).

This may also be specific to the US. There is sales tax here (8.6% in my area). If you sell your own car then buy a new one you immediately pay sales tax on the new one based on it's full cost (and the person that bought your car pays sales tax on the amount they paid). For tax purposes a lease is also a purchase, however, you a little of the sales tax with each payment. You only end up paying taxes on the part of the car you 'use', and you get to pay it over time with no interest as the sales tax is not financed in at the beginning (always better than paying up front).
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lease,
taxes,
the
other
and
Er.. yep. (Thought that was what I said? Sorry..)

even
Interesting. In Europe (and specifically the UK), falling-off-the-road and replacing any part that wears isn't covered by a warrenty.

In the UK, we pay 17.5% Value Added Tax ["VAT"] - sales tax by any other name. It doesn't matter whether you're a private individual or a fleet manager, you still get to pay it. OTOH, fleets get much larger discounts than individuals. OTOOH, a leasing company also has a bigger profit margin..
One argument that I'm surprised hasn't come up is that, when you buy a car, you end up with an asset. This can, of course, be traded-in on your next car - reducing the amount you have to save/borrow. With a lease, you simply pay to /use/ a vehicle..
Just as a comparison, let's take a UK example. Using Google, the first company in the list will lease you a 225TT Roadster for 435 a month; that's over three years, with a maximum mileage of 10k per annum. Total outlay: 15,660.
In my case, I bought my 225 (now 270 - I wouldn't have been able to chip a lease car!) in Holland for 24,616 (excluding custom number plate and, unlike the lease example, fully loaded. If I'd have got the exchange rates just right, I'd have saved an additional 750. C'est la vie!).
Subtract 11k from the sale of my old BMW, and we get an outlay of 13,616, or 378 per month.
It gets even more scary if we ignore the BMW and instead look at the residual value of the TT I own outright - there's one up for sale 14 miles from me (according to AutoTrader) - same year, similar spec, double the mileage, 20.5k asking price. Even if we knock off a grand for mine being an import, that's just 5,116 for three years, or 142 a month.
Note that I'm assuming you have to pay for your own insurance on both vehicles. I /believe/ that's the case..?
Still, makes yer think, dunnit..?
H1K
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Not by a manufacturers warranty, but wear & tear is covered by all maintained lease contracts, although malicious or accident damage must be fixed by the lessee.
--
Toby

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and
In maintained leases, yes.
Didn't realise that anyone was buying such things on a *personal* basis, these days - can't recall seeing one recently. Weren't they hideously expensive, even when compared with franchised dealer servicing costs?
As I said - not really in the market myself, as it doesn't make particular financial sense, even at my current miniscule mileage.
H1K
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On Sat, 25 Oct 2003 09:49:04 +0100, wrote:

All valid points, but much easier is this:
A leasing company buys the car at the beginning, and sells it at the end. They make a profit doing so. If you lease, that profit is coming from you. If you buy, the equivalent of that profit is staying in your pocket.
It really is as simple as that. Individual cases can vary, the residual value can be higher or lower than expected, etc., but overall, leasing is NOT advantageous for individuals (there may be some tax benefits for corporations). With a lease, you're paying to avoid the hassle of selling a used car at the end.
--
Mark

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With all due respect, you may want to understand leasing a little better before you come to the conclusion that leasing is not for individuals, only for businesses. There are, of course, many situations in which leasing is not a good answer for certain people but, there are likewise many situations in which leasing can provide advantages and benefits.
I've been leasing all my family personal cars for the last twenty years, always successfully and with great benefit. I just leased my most recent vehicle (a high-resdiual, low money factor, low acquisition fee SUV for my wife)last week. I've never paid a cent in mileage or wear fees, bought a couple of the vehicles when the purchase price was less than residual, and typically negotiated better deals each time than the time before (the poor economy helps).
The problem seems to be that many people who don't understand leasing get into it for the wrong reasons and realize their errors later. They then declare that leasing is wrong for everyone -- to mask their own individual mistakes. It's true that leasing is more complex than simple financing, and there's more opportunity to make mistakes. But, as with any business transaction, if you know how it works and know what you're doing, you can do it successfully and make it work for you.
Rather than expound on details, I suggest you take a look at www.LeaseGuide.com/index2.htm and check out the Lease Guide there.
Al

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Here in my country at least, only businesses lease their cars. Individuals here prefer to own their private cars. It is exactly the same with houses, we prefer to own.
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and never had any equity.
Leasing companies aren't making profits based on their good looks. Buy vs. lease comparisons including captive leasing companies (GIAC, Ford Acceptance, etc.) are generally invalid, since the manufacturer is often footing a large part of the bill in order to offer a below market rate.
--
Mark

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On Mon, 27 Oct 2003 18:56:55 -0500, Mark Allread

Haven't you ever heard the motto (paraphrased) "If it appreciates, buy it. If it depreciates, rent it."
Unless you run all the numbers for your own situation it really is meaningless. It does make sense for some people to lease (at least the way things are set up in the US) and it makes more sense for most people to buy a used car and drive it until it don't drive no more.
Scott
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