I'm in a unique situation with VW. Anyone else?

A couple years ago my wife and I were shopping for a vehicle. We hadn't planned on buying new. We stumbled upon the 2014 TDI Jetta which we really liked because of the mileage. On our test drive, I was seeing well over 50 mpg at speeds of around 60-65 mph with the AC off. This blew my mind. Aside from hybrids, nothing else came close to this number...

So we talk it over and decide this is a good purchase a fully loaded TDI and say to the salesman ok let's do it. Now, somehow we were talked into doing a lease and purchasing afterwards. I forget now the exact reason we went that route but maybe it was the lower monthly payments and the option of not having to be stuck with it if we didn't like it. In any case, we leased the damn thing...

Here's where we may have really messed up. My wife insisted on putting money (8 grand) down on it. It was money she wanted to dedicate to this car and not be kept in the bank, and it kinda made sense to me. Also, it lowered our payments and would make the purchase afterwards a lot cheaper. I wish we hadn't done that now because we cannot terminate lease without giving that $8k up is what we're being told.

What really ticks me is that we got this car purely based on the mileage it achieved. And that turns out to be completely fraudulent and will go down after the "fix". Btw, anyone have an idea on what mileage will be afterwards????

So now it looks like our only option is to make the remaining 8 lease payments, and then buy the vehicle. Our restitution will still only be half of what a purchasers restitution will be. Long story short, we'll get $3400 off the total amount we agreed to on a car bought only for the economy, which we were lied to about and will now be less. Seems legit!

Just wanted to know if anyone else is in the same boat, and if I'm looking at all of this correctly. Probably a pretty rare situation.

When looking at this car's fuel economy, I apparently should've remembered the lesson that if it's too good to be true.....

How is the $8k lost? The $8k "down payment" (aka capital reduction) should have lowered your monthly lease payment proportionally. The lease end residual should not have changed. Since you only have 8 payments left now, and you can continue to drive to the end of the lease if you want, so the only money that should be lost is however many payments worth of reduction you lose. If you have 3 payments in when you cancel the lease, you would lose 3/36 or 1/12 of $8k.

I am not a lease expert but that is how it looks to me from what I have picked up on how leases work (I've had 2 leases in my life, both VW).

I'd buy the car out, keep driving it and motor on.

Yeah...."down payment" on a lease?! It just reduces your monthly lease payment unless you did some crazy lease with an very odd buyout clause....
A leased car is calculated so you have just paid the value loss on it during the time you have had it in your possession....and the calculated buyout price may or may not be. "good deal"...
Think you somehow misunderstood a Lease agreement....
Know that the lease deals on tdi cars were about $200 a month when I got mine...I purchased....but if I paid extra, it would just reduce the MONTHLY lease payment as a prepayment of sorts....
Did you buy tons of extra miles?!

And you will have turned in your CAR before any fix is approved....so you get $$$$ but zero effect of the loss in value...the lease owner/bank/VW took that hit...
You are the best off....you saw ZERO reduction in values...as a lease holder you were renting...and got $$ back...and the car was never modified before you turned it it...
I am lost....
You are better off than if no diselgate had occurred....

oilhammer said:

I'd buy the car out, keep driving it and motor on.

Click to expand...

This. And other posters are right, the down payment lowers the lease payment, doesn't change the residual. So if you pay the lease to term you've received the benefit from that initial payment.

oilhammer said:

I'd buy the car out, keep driving it and motor on.

Click to expand...

THIS.

Keep it and keep driving it and have no car payments for a long time.

What are car payments? (I have none.)

Your situation isn't particularly unique. As others have said, you leased, and so the finance company took the risk of ownership, and lost the value. Even so, you're receiving the restitution payment. You could apply that money toward buying your car, and then the loss associated with the transaction will have been offset, or you can keep the money, and buy some other car. In any care, you're not out anything at all, compared to where you'd have been otherwise.

I'd say stick with the vehicle. Unless it is really not working for you, get the "fix" if/when they ever propose it.

oilhammer said:

I'd buy the car out, keep driving it and motor on.

Click to expand...

Yeah, you should have a very low buy out. Why not?

Debra Morgan said:

Yeah, you should have a very low buy out. Why not?

Click to expand...

The buy-out doesn't change when you do a "cap reduction" on a lease. The lease payment is lowered.

Debra Morgan said:

Yeah, you should have a very low buy out. Why not?

Click to expand...

If you have no understanding whatsoever about how a lease works, why post?

Mark SF said:

If you have no understanding whatsoever about how a lease works, why post?

Click to expand...

What's more unfortunate is that OP himself has little understanding how a lease works. Hopefully this thread will do some good.

Mark SF said:

If you have no understanding whatsoever about how a lease works, why post?

Click to expand...

chadbag said:

The buy-out doesn't change when you do a "cap reduction" on a lease. The lease payment is lowered.

Click to expand...

Debra Morgan said:

Yeah, you should have a very low buy out. Why not?

Click to expand...

Now you see why dealers love to write lease deals...
They are usually at FULL MSRP and the buyer thinks they are getting a great deal....but they don't realize, they are doing a glorified rental....
The ONLY case I can think of is a unique type of lease many Muslims, and other loan adverse buyers make, where the initial payment is used to lower the buyout price to a smaller balloon payment at the end of the lease....sure these "leases" meet the needs of certain groups, but are VERY risky since of you miss a payment, the deal might be cancelled, and the large amount of $$ used for the buyout reduction is lost....
Imo these deals are a lease in name only, even if they meet some religious requisites....just a loophole...and fail to follow the intent of the no loan rule....but just me...you are observant of your faith or not. But some people buy houses on deals like this....similar to a land deal, but slightly safer in some respects....
In this case, if it is this type of a lease, you bought the car (for all intents and purposes)...but you will get 50% of the settlement....you can decide to do the buyout...and use the $$ from VW to pay part of the balloon payment....so you might loose some $$ vs if you owned it...
But unconventional deals involve unconventional risk.
If you hate the car...keep it...get the $$, the fix, and the $, then sell it. Least $$ loss....even a 10% loss of mpg will take MONTHS to add up.

In northern New Jersey, there are a number of car dealers along a highway called Route 22. They are notorious for their consumer deception and often fined by the State for their practices. One of them advertises it has translation staff in about 30 languages for car shoppers not fluent in English.

I can just imagine what kinds of deals they write for their customers.

To the OP: If you are concerned the mileage was fraudulent then I would just keep the car, (provided VW does not have the right to NOT sell it to you without the fix.)
Most likely, there will be minimal effect of the fix on the car. The fix (as my understanding goes) will NOT bring the car into compliance with the emissions certification. VW and the EPA have negotiated an acceptable "middle ground", and VW will offset the extra emissions by paying to upgrade busses to new, cleaner ones. The environment should make a net gain, and VW owners will see very little loss.

YardingMaster said:

What really ticks me is that we got this car purely based on the mileage it achieved. And that turns out to be completely fraudulent and will go down after the "fix". Btw, anyone have an idea on what mileage will be afterwards????

Click to expand...

Does the car actually get the mileage? Yup, then that wasn't the fraud. The fraud was that it spews more NOx than it should, not that it doesn't get the fuel economy that it gets.

What will be the mileage after the fix? Nobody knows yet. As I recall, VW is supposed to inform people of what the effect of the fix will be -- the performance change, the mileage change, and the longevity change. So you'll know how things are going to change before it happens. I think I read that owners get a choice at that point whether they opt for fix or buyback, but double check that if its important to you.

Lastly, you could try to opt out of getting the fix and buyback altogether, in which case the car's performance and mileage wouldn't change. It'd be the same car it was when you started the lease. Might be as simple as just never letting VW do the fix and never selling it back to them.

oilhammer said:

I'd buy the car out, keep driving it and motor on.

Click to expand...

I have to agree with oilhammer. At this point VW doesn't have a fix so its impossible for anyone to know what the affect on mileage, performance, and reliability will be.

I am not a leasing expert either but leasing is good if you want a new car every couple years and you don't put on a lot of mileage. I would not do a lease in my situation because I put on a fair amount of miles. My mother on the other hand has an 11 year old Volvo thats literally falling apart but still runs good. She is getting up there in age and so I considered leasing a car for her.

@YardingMaster, if you were to turn the car in at the end of your lease and get nothing from VW, you'd have gotten exactly what you bargained for when you leased the car. It was the car you thought it was, it got the mileage you thought it did, and you suffered no loss of value since you didn't own it to begin with.

But you're going to do better than that. You can return the car early if you choose with no penalty, and no responsibility for the remaining payments. You won't be charged a turn-in fee, which often accompanies lease terminations. And you'll walk away with about $3200.

ZippyNH said:

Now you see why dealers love to write lease deals...
They are usually at FULL MSRP and the buyer thinks they are getting a great deal....but they don't realize, they are doing a glorified rental....

Click to expand...

Yup. I got a kick out of the lessees checking into the original dieselgate thread...complaining about the loss of resale value to "their" (VW Credit) cars, lol.

Auto leasing allows people to drive a car they cannot afford for a relatively brief period while fooling their neighbors and relatives that they can.

Tax deductible business use of leased vehicles may be an entirely different situation.

At the end of years of leasing cars they can't afford people may end up at retirement time with no car and no income to buy one.

YRMV.

HBarlow said:

Auto leasing allows people to drive a car they cannot afford for a relatively brief period while fooling their neighbors and relatives that they can.

Tax deductible business use of leased vehicles may be an entirely different situation.

At the end of years of leasing cars they can't afford people may end up at retirement time with no car and no income to buy one.

YRMV.

Click to expand...

Yup. If I ran a business, I would do the lease thing. As an individual though...not so much.

There is nothing magical or mysterious about leasing. It's simply another form of financing.

It's the same cost to finance a car through a traditional car loan as a lease--the difference being that you can walk away from a lease when the term is over or buy it out for the residual. These days, leasing is less expensive than financing since you only pay taxes on the amount you "use" and interest rates are less than inflation. You still have to watch out for sneaky add-ins but that's from the dealerships, not manufacturers, and holds true regardless of financing terms.

People badmouthing leases don't have experience with them and some might even be really old members who remember a time decades ago where walking in to a car dealership with a bag of cash meant a lower price. Whatever you negotiate as the bottom line holds true for a lease or financing and pulling a duffel bag out from under your seat is likely to result in a worse deal than accepting the dealership's financial terms and paying it off after you leave with the car.

Good post, bizzle. I've leased a bunch of cars in the last 20+ years and it's always worked out well for me. Most I bought at the end of the lease term. But the interest, or "money factor" was low, I didn't tie up any cash, and at the end of the lease term I bought a great used car that I knew everything about, because I had driven it since new.

And getting out of leases early is easy, now, too. No significant penalties.