Lease early-purchase experience anyone ?

Not yet. I'm going to wait until I get a bill. Then I can just go on their site and see the payoff amount and do the math.

Saw someone earlier in this thread talk about putting money down on a lease. Don't do it. If you put money down on the lease and then total the car a month later, that money is just plain gone. Always put as little down on a lease as you can.

The stuff is simple: whatever u dont pay down, is financed(borrowed w interest). They will have their sweet time with the rates too, as it is not the 72m/0% deal. The fact we're desperate to get the few cars that are out there, sends a strong "have your way w/ me" signal too.

If your intention is to purchase the lease right away, then u need to be sure you're not stuck paying those finance charges anyway. Most sane states would have laws protecting customers from that.

Say you borrow 20K at 10% (!) interest. That 24K is to be paid back over 2Y. The interest is taxable as well, so it is more like 24300over the 2Y

If you pay the borrowed amt the day after borrowing, you'd only need to pay back the 20K + may be $20

They will also need to refund back to you: Sec Deposit, Lease-end fee. Gap insurance is probably a goner.

You can call your insurance Co and tell them to reduce the coverage.

So you'd save probably $5000+. That assumes that:

1. U leased w intention to buy
2. you buy out the lease ASAP as opposed at the end of the lease
3. they stuck you w high interest on the borrowed amt ( which will not be called interest at all, but "money factor" and look like 0.06324 in 4 point font on page 20 of the agreement).

Another kicker is taxes. VW Credit buys the car from the dealer, to lease it out to you. So they pay tax, which simply gets passed on to you. If u dont pay it down, it too, will get financed. And they might say, damn, man has no $$$ to put down, lets jack the rates even more !

When you purchase few days later, for effectively the same exact price, you will again have to pay same exact tax $$$ on purchase price. The state laughs all the way to the bank.

Is there a provision to get the tax back, when you purchase out early. Dunno. Murky territory.

You're making a lot of negative assumptions here. First, interest rates on the leases seem to be in the 2.5% range, some higher, some lower. Seems to depend on the vehicle. Not 10% as you've speculated.

Second, gap insurance is included in each payment, not levied in one lump sum. So if you pay early you pay less GAP.

Third, I don't see any evidence in my lease paperwork that VW Credit is paying sales tax on the vehicle. Sales tax on the "rental" as they call it is included in each lease payment, about $16.25 in my case. Eventually I'll pay Massachusetts sales tax on the entire purchase price, some in the lease payments, the remainder when I transfer title and registration at buyout. But it would appear that VW Credit has a way to not pay state sales tax on the leased vehicle. Probably because they're a bank like entity.

In summary, the difference between a lease and loan is you pay a $395 document fee (loan might have one of these, too), a $625 acquisition fee, and the interest in each payment. That's it. Sales tax you'd pay on either. And you get GAP insurance with the lease, which you have to buy separately with the loan.

In my case, dealer did put the NJ Sales tax on purchase price into the total. Could be different in other states.

Clearly, when you purchase the car from VW Credit, sales tax will have to be paid again for you to register the car.

Peter & John are twin brothers. Peter has bad credit, John's is OK.

Peter asks John to buy a car for him. John buys $20K car. Pays sales tax - and of course, expects Pete to pay him the 20K+ tax back. Plus a bottle of fine cogniac for his trouble. Sells it to Peter days later.

Peter goes to register the car and will have to pay sales tax, on that same amt (Peter is smart now and doesn't try to cheat his way out).

I used 10% just as an example, to ease the math a bit.

Indigo - are there sec deposit and lease-end fee in the lease ?

State laws can vary. In Washington you pay sales tax on the lease payment, then sales tax on the final purchase price whenever you purchase it. So it pretty much doesn't matter whether you buy out early or not from a tax perspective.

What I was saying is VW Credit doesn't pay sales tax on the car. At least not in any way that shows in the costs they provide. And I see no security deposit listed on my lease paperwork. The disposition fee is included in the lease payments.

I sent in my check to buy out the lease today. The numbers in the offer worked out as expected. All unpaid anticipated interest built into the lease payments is refunded and since sales tax is charged on it in my state, that also comes off. It took me a while to work it all out, but when I register the car I'll just have to pay sales tax on the residual value minus the interest payments. May work differently in different states.
In total I managed MSRP - $8500 + $600 lease origination + $180 document fee + 1 month's interest (about $55).

Thanks for the update ! Must be relieved, having secured the car
Record your experience @ DMV, that must be special

How did u come out, buying the lease @ $8500 off vs 5K off 72/0% deal ?

And to help out other potential lease-buyers, can you provide the (sanitized) numbers$$$ from your lease agreement and the state u are in ?

My numbers worked out like this: MSRP $25735 + $625 lease origination + $180 documentation = $26540 - $8500 = $18040
Residual Value = $12353
Depreciation + rent charge = $5687 + $1284 = $6971/24 = 290 per month

In Kansas so sales tax was collected at purchase on the $8500 rebate. Monthly sales tax took the monthly payment to $316.
Lease Buyout was $18479 after one month's payment and was made up of following numbers:
Residual $12353 + remaining lease payments $6680 + sales tax on lease $605 = $19638
$19638 - lease charge rebate $1159 = $18479

As you can see, the sales tax complicates things, especially since the numbers above include sales tax on the lease rent charge ($1284). That is overcome by reducing the residual value (the only component that I have yet to pay sales tax on) on my receipt by $1159 (the lease charge rebate that I have paid sales tax on but had refunded due to early payment).

Ignoring sales tax, I paid $18165 for the car including all fees and interest. It looks like they only refund 22 months of interest, despite paying off 9 days before due date of second payment. My rent charge seems high compared to others reporting here and even the dealer commented it being higher than normal especially since I had a credit score above 800 when they pulled it. But since I intended paying it off asap it didn't worry me too much.

Hope that helps.

U stole it, more or less

Congratulations ! Just for fun, see my "proposed" lease pricing for same car (earlier in this thread). They got it to 30K before the 8500. That's NJ. I walked out.

Dealers basically can do whatever they want with the money factor, no matter the FICO. But, u ended it early, so it doesn't matter to you. It does matter to them, as they got nothing for the lease origination

AMDTDI said:

My numbers worked out like this: MSRP $25735 + $625 lease origination + $180 documentation = $26540 - $8500 = $18040
Residual Value = $12353
Depreciation + rent charge = $5687 + $1284 = $6971/24 = 290 per month

In Kansas so sales tax was collected at purchase on the $8500 rebate. Monthly sales tax took the monthly payment to $316.
Lease Buyout was $18479 after one month's payment and was made up of following numbers:
Residual $12353 + remaining lease payments $6680 + sales tax on lease $605 = $19638
$19638 - lease charge rebate $1159 = $18479

As you can see, the sales tax complicates things, especially since the numbers above include sales tax on the lease rent charge ($1284). That is overcome by reducing the residual value (the only component that I have yet to pay sales tax on) on my receipt by $1159 (the lease charge rebate that I have paid sales tax on but had refunded due to early payment).

Ignoring sales tax, I paid $18165 for the car including all fees and interest. It looks like they only refund 22 months of interest, despite paying off 9 days before due date of second payment. My rent charge seems high compared to others reporting here and even the dealer commented it being higher than normal especially since I had a credit score above 800 when they pulled it. But since I intended paying it off asap it didn't worry me too much.

Hope that helps.

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In your case the money factor is 0.00127 (calculated from what you showed above), which is 3.72 times the 0.00034 factor I was quoted on the SE that I'm about to close the deal on. And your credit history is perfect. Weird. I thought that good credit history meant the lease would be close to 0% APR.

But if he pays it off right away the money factor doesn't really matter. I got something between you two, worked out to 2.59%.

IndigoBlueWagon said:

But if he pays it off right away the money factor doesn't really matter.

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I understand that. However, I thought this was VW mandated, that with perfect CH you get the 72 mos, 0% financing and 5k rebate; or 8.5k rebate and "almost" 0% financing on the 2yr lease.

Apparently not, dealers do whatever they want on the lease deal. Also, in my case they said they'd apply the 8.5k rebate after tax, not before. I've never heard of that: all lease calculators apply rebates before tax.

aditud said:

I understand that. However, I thought this was VW mandated, that with perfect CH you get the 72 mos, 0% financing and 5k rebate; or 8.5k rebate and "almost" 0% financing on the 2yr lease.
Apparently not, dealers do whatever they want on the lease deal. Also, in my case they said they'd apply the 8.5k rebate after tax, not before. I've never heard of that: all lease calculators apply rebates before tax.

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The issue of tax calculated before or after rebate has been discussed elsewhere. Basically each state is different, but most charge the sales tax before the rebate. It's treated the same as buying a washing machine and then getting a $100 rebate in the mail.

I just received the official numbers on the GSW SE 6MT I'm about to buy (they told me the deal with the guy who had a deposit on the car fell through due to credit related issues; needless to say that I was excited, I didn't think I could grab one so late in the game). Looks good, out-the-door price of $25,100 (I even included the tax on residual, plus registration fee, which I know I'll have to pay again at the end of the lease when I purchase the car). But they wouldn't send me the full contract. Just texted me the upfront cost (one month payment plus state tax), monthly payment, residual and said "this is all you pay". I said "I'm not flying to NY to pick up the car without seeing the contract in advance". They finally agreed to send it to me via FedEx, and I said I'd look it over, sign it and send it back. This way, the purchase will be completed and I'll just go there to pick the car up and leave. I don't know if I'll do that or just fly in with the unsigned contract, so that I have the option to not sign it if something's wrong with the car.

Hi all. Just put down a small deposit for a dealer to hold on to a TDI. They can't sell it because it wasn't "fixed" yet.
Anyways I have a trade in we already negotiated worth 10k. I was going to buy the TDI with the 0%72 month.
Now that this lease deal comes up, please enlighten me on how the trade in works. Thanks

It will offset the price, just like the 8500 incentive. Not sure about FL, but in some states you could also save by not having to pay the taxes on that amount - in which case, it will be applied BEFORE the taxes.

If u do trade-in for the lease, buy out the lease ASAP. Otherwise, if she's totalled, that 10K is gone.

To simplify, post the thing on Craigslist, you can always get better price by selling to a private party.

aditud said:

I just received the official numbers on the GSW SE 6MT I'm about to buy (they told me the deal with the guy who had a deposit on the car fell through due to credit related issues; needless to say that I was excited, I didn't think I could grab one so late in the game). Looks good, out-the-door price of $25,100 (I even included the tax on residual, plus registration fee, which I know I'll have to pay again at the end of the lease when I purchase the car). But they wouldn't send me the full contract. Just texted me the upfront cost (one month payment plus state tax), monthly payment, residual and said "this is all you pay". I said "I'm not flying to NY to pick up the car without seeing the contract in advance". They finally agreed to send it to me via FedEx, and I said I'd look it over, sign it and send it back. This way, the purchase will be completed and I'll just go there to pick the car up and leave. I don't know if I'll do that or just fly in with the unsigned contract, so that I have the option to not sign it if something's wrong with the car.

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Original MSRP was $28,815. They're only giving you $3700 off MSRP on a 3 year old car? Ouch.

I leased a 2014 JSW in July of 2014 and got about 5k off MSRP, for reference. Seems like the short end of the stick to me.

r11 said:

It will offset the price, just like the 8500 incentive. Not sure about FL, but in some states you could also save by not having to pay the taxes on that amount - in which case, it will be applied BEFORE the taxes.



If u do trade-in for the lease, buy out the lease ASAP. Otherwise, if she's totalled, that 10K is gone.



To simplify, post the thing on Craigslist, you can always get better price by selling to a private party.

Click to expand...

I think what I got from the dealer for my trade in is more than fair actually, plus the tax saving I'd get on the lease.

I do plan on buying out that lease ASAP



I still dont get how the math works though.



i was following the calculator on this website and also tried a few different site, they all seem like the dealer will be paying me money instead ... ?



https://www.edmunds.com/car-leasing/calculate-your-own-lease-payment.html



so lets just say my GOLF has:

MSRP 25000,

my trade in is worth 10000, the rebate is 8500,

residual is 0.45 like the other person stated, = 11250

doc fee = 625+180 = 805

money factor = 0.00012

tax = 6.5%



how do I put all these numbers together ???

MSRP + doc + title + reg + license plate + sales tax + lease origination fee + lease termination fee + whatever else dealer can dupe you for (pinstriping, VIN etching, $500 medical kit, "undercoating", $400 mud flaps, $200 floor mats ) = price'o'grande <- the most important # of them all. This is what you need to bring down/control. Very hard to do when you really really want that pink unicorn one-of-a-kind-never-to-be-made-again car

price'o'grande - trade in - 8500 = $Y

.45*$Y = residual
$Y - residual = depreciation
depreciation * money_factor * 2400 = rent (effectively interest for the depreciation)

(depreciation + rent)/24 = monthly payment

Most states, u'd also have to pay sales tax on depreciation, rolled into your monthly payment

You 'd want to buy ASAP as you have $10K of your own equity in it. It is titled to VWC and if it is to get totalled, they will get the check from insurance and you wont get squat. That $10K will be gone.

So you MUST buy it ASAP.

VWC will refund the rent and the lease termination fee. Your total purchase price will be $N, will NOT include sales tax. $N will include residual + whatever portion of depreciation that you didnt pay yet.

You receive the title and go to DMV to register it under your name. In most states they will ask you to pay sales tax on $N. The car is already titled in your state, so no title fee. If you kept your trade-in's license plates, in most states they can "reuse" them for the VW, so no license plate fee either (may be $5).

If you're in really good state, they'd prorate the registration fee, if not, you will get nicked for 1 full year of registration fee.

When leasing they will force you to have "full coverage" for your car. When it is your own, up to you what coverage you want to have, so call your insurance Co, might save few hundred there as well.

r11 said:

MSRP + doc + title + reg + license plate + sales tax + lease origination fee + lease termination fee + whatever else dealer can dupe you for (pinstriping, VIN etching, $500 medical kit, "undercoating", $400 mud flaps, $200 floor mats ) = price'o'grande <- the most important # of them all. This is what you need to bring down/control. Very hard to do when you really really want that pink unicorn one-of-a-kind-never-to-be-made-again car
price'o'grande - trade in - 8500 = $Y
.45*$Y = residual
$Y - residual = depreciation
depreciation * money_factor * 2400 = rent (effectively interest for the depreciation)
(depreciation + rent)/24 = monthly payment
Most states, u'd also have to pay sales tax on depreciation, rolled into your monthly payment
You 'd want to buy ASAP as you have $10K of your own equity in it. It is titled to VWC and if it is to get totalled, they will get the check from insurance and you wont get squat. That $10K will be gone.
So you MUST buy it ASAP.
VWC will refund the rent and the lease. Your total purchase price will be $N, will NOT include sales tax. $N will include residual + whatever portion of depreciation that you didnt pay yet.
You receive the title and go to DMV to register it under your name. In most states they will ask you to pay sales tax on $N. The car is already titled in your state, so no title fee. If you kept your trade-in's license plates, in most states they can "reuse" them for the VW, so no license plate fee either (may be $5).
If you're in really good state, they'd prorate the registration fee, if not, you will get nicked for 1 full year of registration fee.
When leasing they will force you to have "full coverage" for your car. When it is your own, up to you what coverage you want to have, so call your insurance Co, might save few hundred there as well.

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In my case, they FedEx-ed me the contract and got it yesterday. Now I have a feeling the deal's gonna go south.
How I read the contract: there's a "gross capitalized cost" of $30,289.32, which there's no explanation in the contract where it comes from, but I called, and the guy who drafted the contract told me it's the "sale price" of $29,290 (which is $165 below the MSRP of $29,355) plus $625 acquisition fee, $236 license & registration fees for PA, plus $75 doc fee, plus $62 some tax I never heard of. Then they subtract the $8,500 from VW, subtract the residual of $14,090.4 (48% of MSRP) to get the "depreciation" of $7,699, then they add the "rent charge" of $293 (calculated at 0.00034, which they'd promised), they add that to the depreciation to get $7,992, add 10% tax (PA has 7% sales tax, plus 3% usage tax for leasing), which gives $366 when you divide by 24. All great!
But here comes the funny one: they claim I need to make 23 payments of $366 plus a one time payment of $1,302 when I pick up the car. This $1,302 is the sum of $366, $625, $75 and $236. In other words, I'm due first payment, PLUS the doc fee, acquisition fee and the doc fee.
Of course, I pointed out to the guy: hey, you already factored these in the lease calculations above, so now you want me to pay these fees untaxed upfront? After I'm already paying them taxed, included in the payments?
He seemed confused. I sent him a spreadsheet explaining the "mistake" he's made. He wrote back saying he'll review everything and "advise". That was 3 hours ago.
I bet what happened was that, indeed, those fees will have to be paid upfront, before tax. The "gross capitalized cost", which is itemized here in the contract, clearly doesn't show as coming from a sale price + fees, it's just "agreed upon value of the vehicle" of $30,226.82, then all the other fees (doc, acquisition, registration etc) are "N/A", except "taxes" of $62.50 (don't know what tax this is). But I think the sales manager just jacked up the price from the MSRP of $29,355 (which is on the sticker they sent me a pic of) to $30,226.82, so that's the "sale price" alone, it has nothing to do with the fees.
It's upsetting they don't come clean with what they do. They try to obfuscate things and hide all these numbers in the hopes they'll fool you somehow.
I'm afraid they'll call me and say something like "sorry, a guy just walked in and left with the car, he purchased it on the spot". They'll refund me my deposit and that's that. Oh, well... We'll see.

Only the 1st lease pmnt really HAS to be made @ pickup.

The rest could all be rolled in - but then you will be borrowing that amt at interest.

When banks see one can not come up with any money to put down, they might jack up the money factor.

Yet, you DONT want to put much money down as it will be a straight loss should car get totalled while still owned by VWC. ~$1500 is reasonable.

You did seem to catch a mistake they made , dont overthink it. Other than that, it is very straightforward lease pricing example and you have it all figured out. Money factor is pretty low, so go for it.

r11 said:

Only the 1st lease pmnt really HAS to be made @ pickup.

The rest could all be rolled in - but then you will be borrowing that amt at interest.

When banks see one can not come up with any money to put down, they might jack up the money factor.

Yet, you DONT want to put much money down as it will be a straight loss should car get totalled while still owned by VWC. ~$1500 is reasonable.

You did seem to catch a mistake they made , dont overthink it. Other than that, it is very straightforward lease pricing example and you have it all figured out. Money factor is pretty low, so go for it.

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Yes, he wrote back in the meantime saying he'll send me a new contract on Thursday (he's off tomorrow). I guess that means he admitted to the mistake. Maybe it was just a mistake, after all. But one that would have ended up costing me like $900 if I hadn't caught it.

Anyway, I guess I should be happy it was a mistake, and not what I suspected. That will put the whole deal at about $24,200 (and that includes state tax on residual, plus re-registration of the car upon purchase). Not bad for an SE 6MT.

Hopefully, there won't be any more surprises with the revised contract. Nor with the condition of the car when I fly in to pick it up (flat spots on tires, bad battery, etc).

I'll keep you posted (I've learned so much here on this forum).

aditud said:

Yes, he wrote back in the meantime saying he'll send me a new contract on Thursday (he's off tomorrow). I guess that means he admitted to the mistake. Maybe it was just a mistake, after all. But one that would have ended up costing me like $900 if I hadn't caught it.
Anyway, I guess I should be happy it was a mistake, and not what I suspected. That will put the whole deal at about $24,200 (and that includes state tax on residual, plus re-registration of the car upon purchase). Not bad for an SE 6MT.
Hopefully, there won't be any more surprises with the revised contract. Nor with the condition of the car when I fly in to pick it up (flat spots on tires, bad battery, etc).
I'll keep you posted (I've learned so much here on this forum).

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Hopefully they get it straightened out and come clean, and good job getting the contract up front and analyzing it thoroughly. Concerning the condition of the car, I would also ask for a copy of the service ticket for when the car was refurbished/updated. There is a list somewhere around this forum that shows what the dealers must do, and what they need to evaluate on each car. I believe they have to change oil, oil filter, fuel filter, cabin filter, flush brake fluid. Other items they have to evaluate are tires, brake pads and rotors, and wipers. I'm probably missing something...

Can I ask the dealer to cut me a $8500 check?

Miata said:

Can I ask the dealer to cut me a $8500 check?

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Yes, you can, and most will do that. I did that 3 weeks ago when I got my GSW. I also had a trade in that I was able to haggle a very good trade in amount for, and it offset most of the sales tax on the new car. I had them cut me a $5000 check and put the rest toward the new car, and financed the rest at 0%. They should do that for a lease as well.

VWMark said:

Yes, you can, and most will do that. I did that 3 weeks ago when I got my GSW. I also had a trade in that I was able to haggle a very good trade in amount for, and it offset most of the sales tax on the new car. I had them cut me a $5000 check and put the rest toward the new car, and financed the rest at 0%. They should do that for a lease as well.

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Wish i had tried that. Doubt they'd of went for it, but if they had i'd have less questions as to where it went.
I'd love to know if anyone here has gotten the dealer to write them the rebate check on a lease.

Yawiney said:

Wish i had tried that. Doubt they'd of went for it, but if they had i'd have less questions as to where it went.
I'd love to know if anyone here has gotten the dealer to write them the rebate check on a lease.

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I'm not talking about a check for the rebate, I'm talking about a (partial) check for my trade in. Although I guess it's all the same anyway.

My point is if you are doing the lease and have a trade in that's worth a decent amount, have them give you a check for most of it. You don't want to put $10,000 down on a lease, if the car gets totaled, that money is gone. IMHO, if you have a trade in that's worth a good amount you should either: Trade the car in and finance the rest at 0%(this has the advantage of offsetting a bunch of sales tax as well in most states), OR do the lease and only put enough down to cover the upfront costs, and have the dealer cut you a check for the rest. Also, only do the lease if you can pay it off completely at the end(or earlier).

VWMark said:

Hopefully they get it straightened out and come clean, and good job getting the contract up front and analyzing it thoroughly. Concerning the condition of the car, I would also ask for a copy of the service ticket for when the car was refurbished/updated. There is a list somewhere around this forum that shows what the dealers must do, and what they need to evaluate on each car. I believe they have to change oil, oil filter, fuel filter, cabin filter, flush brake fluid. Other items they have to evaluate are tires, brake pads and rotors, and wipers. I'm probably missing something...

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OK...

They mailed out another contract. After tens of phone calls I managed to get the guy who drafted it on the phone; he said he mailed it already, but he would scan and email it to me right away.

Funny thing: they fixed the double charge issue but managed to squeeze the equivalent amount of money someplace else. Guess where? Money factor, went up from 0.00034 to 0.00134. Yep, that's right. Increased it almost FOUR times.

Now I'm trying to get ahold of him to tell him the deal's off.

Car buying's always been a stressful experience for me. Because of this kind of stuff.