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Go Back   TDIClub Forums > TDI Model Specific Discussions Areas > VW MKVII-Mk7 Golf family including Golf Wagon (~ 2015 +)

VW MKVII-Mk7 Golf family including Golf Wagon (~ 2015 +) Discussions area for the Mk7 (2015+) Golf and Golf Wagon TDIs based on the MQB (Modularer Querbaukasten) platform.

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Old May 15th, 2017, 20:08   #1
Yawiney
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Default Lease and change to purchase or just buy? 2015"new"TDI

Who's good at math? Or already done the calculations on this?
With 8.5K rebate on the lease and only (iv'e heard from a dealer) a 650$ penalty to get out of the lease early, it seems leasing and then changing it to a purchase early in the lease would be a great option. Looks like the extra 3.5k minus a couple months of interest until i would change it over and the 650$ penalty still comes out 3K higher than just doing a purchase.

1. Do you still get zero percent on the purchase when changing from a lease?
2.Is there any other reason not to do this?
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Old May 15th, 2017, 20:11   #2
Forte
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Ok do 0% for 72months and be done.... the rate is pretty high on the lease even tho they up the rebate I kicked it around too... even keeping the lease till the end then paying all fee's both were a couple hundred of each other, now ending it sooner is a different story but you can't pass up free money. Just invest the 22k and let that make u money and take theirs and finance it
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Old May 15th, 2017, 21:20   #3
capt_slow
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I actually did the math on this for my car:
MSRP: $32700
Selling Price: $31692 (Invoice + $200)

Finance
In this case, I would deduct $5k for the rebate, but add $3195.80 for taxes and reg fees. If I were to finance the car straight up, I would spend $415.10 * 72 = $29887.80

Lease then finance
In this case, I would deduct the $8500 rebate, but add $625 Acquisition fee and $415.75 registration fees. For my SEL, VW offers 45% residual and 0.00070 money factor on 24-month leases @ 15K/year. If I plan to buy out the car after two years, I can do 10K (47% residual) or 12K (46% residual) without fear of penalties. So lets do 10K and no down, in this case: My monthly payment for the first two years is $431.79 as a lease ($10362.96 total payments). Then, I would need to finance or pay in cash $15369 to keep the car after the lease. At lease-end, VW normally waives the disposition fee if I were to get back into a VW after the lease.

Here is where the unknown is. I would need to finance the remainder $15k, but dont know what interest rate I can get. Assume I can get 0.9% and then assume an interest rate that makes it a wash compared to the 72-month finance. Also assume that I finance for 4 years for a combined 6 years (2 lease years, plus 4 finance years).

At 0.9% interest: my finance payment is $369.94. Or $27385.56 out of pocket over 6 years.

At 7.84% interest: my finance payment is $406.78. Or $29888.21 out of pocket over 6 years.

7.84% is a unlikely interest rate for a credit worthy buyer. In the 0.9% example, I would have saved $2502.24 over the 72-month finance option.

Conclusion
Leasing then buying the car out afterwards is a good idea. Extra savings are to be had, but how much depends on:
  • The money factor the dealer gives you for the lease
  • The interest rate you get for buying the car out at lease-end
Hope this helps
__________________
2017 328d xDrive Sports Wagon: Estoril Blue, Black Sensatec, Driver Assist Pkg, M-Sport Pkg, Premium Pkg, ACC, Side/Top Cameras, Park Assist, Nav, HK
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Old May 16th, 2017, 02:10   #4
Yawiney
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Quote:
Originally Posted by capt_slow View Post
I actually did the math on this for my car:
MSRP: $32700
Selling Price: $31692 (Invoice + $200)

Finance
In this case, I would deduct $5k for the rebate, but add $3195.80 for taxes and reg fees. If I were to finance the car straight up, I would spend $415.10 * 72 = $29887.80

Lease then finance
In this case, I would deduct the $8500 rebate, but add $625 Acquisition fee and $415.75 registration fees. For my SEL, VW offers 45% residual and 0.00070 money factor on 24-month leases @ 15K/year. If I plan to buy out the car after two years, I can do 10K (47% residual) or 12K (46% residual) without fear of penalties. So lets do 10K and no down, in this case: My monthly payment for the first two years is $431.79 as a lease ($10362.96 total payments). Then, I would need to finance or pay in cash $15369 to keep the car after the lease. At lease-end, VW normally waives the disposition fee if I were to get back into a VW after the lease.

Here is where the unknown is. I would need to finance the remainder $15k, but dont know what interest rate I can get. Assume I can get 0.9% and then assume an interest rate that makes it a wash compared to the 72-month finance. Also assume that I finance for 4 years for a combined 6 years (2 lease years, plus 4 finance years).

At 0.9% interest: my finance payment is $369.94. Or $27385.56 out of pocket over 6 years.

At 7.84% interest: my finance payment is $406.78. Or $29888.21 out of pocket over 6 years.

7.84% is a unlikely interest rate for a credit worthy buyer. In the 0.9% example, I would have saved $2502.24 over the 72-month finance option.

Conclusion
Leasing then buying the car out afterwards is a good idea. Extra savings are to be had, but how much depends on:
  • The money factor the dealer gives you for the lease
  • The interest rate you get for buying the car out at lease-end
Hope this helps
Thanks! So i guess the zero % financing only applies if you start out that way.
I have great credit so i think i'd get a good rate.
Was considering using up most of my buyback $ and cashing it out at lease end or before. Think that would save the most $ especially if i could come up with an extra 4.5k right away(I'm getting an S) and cash it out after a few months of lease.
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Old May 16th, 2017, 02:17   #5
Yawiney
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Quote:
Originally Posted by Forte View Post
Ok do 0% for 72months and be done.... the rate is pretty high on the lease even tho they up the rebate I kicked it around too... even keeping the lease till the end then paying all fee's both were a couple hundred of each other, now ending it sooner is a different story but you can't pass up free money. Just invest the 22k and let that make u money and take theirs and finance it
So only a couple hundred difference if i pay the interest of the whole lease?
But if i change to a purchase right away could save a couple thousand?
Hmmm...
Yeah having the $ to do other things is worth a lot. i just don't make a lot and have never made monthly payments on a car, so i'd end up spending it all there anyway over time. Or spending it somewhere else and struggling to make the payments.
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Old May 21st, 2017, 11:04   #6
giuseppe_b
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How exactly do you figure the lease payment? I am getting different numbers from dealers, between 370 and 470 for a SE with msrp of $29824.
That car's residual is $13410, 44% and money factor is 0.00034, according to a chart someone provided in another thread.
Is it as simple as depreciation x .00030?
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Old May 21st, 2017, 13:02   #7
Yawiney
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Quote:
Originally Posted by capt_slow View Post
I actually did the math on this for my car:
MSRP: $32700
Selling Price: $31692 (Invoice + $200)

Finance
In this case, I would deduct $5k for the rebate, but add $3195.80 for taxes and reg fees. If I were to finance the car straight up, I would spend $415.10 * 72 = $29887.80

Lease then finance
In this case, I would deduct the $8500 rebate, but add $625 Acquisition fee and $415.75 registration fees. For my SEL, VW offers 45% residual and 0.00070 money factor on 24-month leases @ 15K/year. If I plan to buy out the car after two years, I can do 10K (47% residual) or 12K (46% residual) without fear of penalties. So lets do 10K and no down, in this case: My monthly payment for the first two years is $431.79 as a lease ($10362.96 total payments). Then, I would need to finance or pay in cash $15369 to keep the car after the lease. At lease-end, VW normally waives the disposition fee if I were to get back into a VW after the lease.

Here is where the unknown is. I would need to finance the remainder $15k, but dont know what interest rate I can get. Assume I can get 0.9% and then assume an interest rate that makes it a wash compared to the 72-month finance. Also assume that I finance for 4 years for a combined 6 years (2 lease years, plus 4 finance years).

At 0.9% interest: my finance payment is $369.94. Or $27385.56 out of pocket over 6 years.

At 7.84% interest: my finance payment is $406.78. Or $29888.21 out of pocket over 6 years.

7.84% is a unlikely interest rate for a credit worthy buyer. In the 0.9% example, I would have saved $2502.24 over the 72-month finance option.

Conclusion
Leasing then buying the car out afterwards is a good idea. Extra savings are to be had, but how much depends on:
  • The money factor the dealer gives you for the lease
  • The interest rate you get for buying the car out at lease-end
Hope this helps
Since you are in CA i need to ask this: Is it true what the dealer told me that: For any car lease in CA you have to pay the interest of the whole term whether buying out early or not?
I ended up only saving 600$ over the purchase but did the lease anyway. Apparently it doesn't matter if i buy it out early or not, No difference there. From what they told me.
For me the difference of being required to have full coverage is a lot so i'll prpbly buy out early anyway.
Money factor(interest rate) on lease was only 1% and i still only saved 600$ out of the extra 3.5k. I feel like the dealer talked me into the lease so he could absorb some of the extra rebate $.
EDIT:I decided to lease and then buyout rather than lease and turn into a finance.
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Old May 21st, 2017, 13:23   #8
Forte
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I really hope you didn't deduct 5k then add taxes in cause your math is wrong then. Rebates are given to you as cash so you tax the full amount of the dealer selling price, add your taxes, Then you can deduct the 5k rebate.
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Old May 21st, 2017, 13:25   #9
cane929
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The 0% for 72 was a no brainer for me, thats at least 1-2K in savings, free money.
Lease only makes sense if you have cash to buy the car out right when you are ready, because financing on a used car won't be close to the 0% rate.
Also, you pay tax on the residual amount.
Positives about the lease, is if the car turns to be a nightmare, just give it back and walk away.
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Old May 21st, 2017, 13:49   #10
arcaidy
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Lease was the better option for me. I plan to buy it out right at lease end. Though if money is still really cheap I'll probably take a loan. My numbers showed over $2K in savings by doing the lease. It'll take a lot of interest to eat into that at today's rates... My buy out is $12,XXX. A 3 year term on that at 4.5% costs $850 in interest. Still making out better on the lease.
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Old May 21st, 2017, 20:54   #11
Yawiney
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Quote:
Originally Posted by arcaidy View Post
Lease was the better option for me. I plan to buy it out right at lease end. Though if money is still really cheap I'll probably take a loan. My numbers showed over $2K in savings by doing the lease. It'll take a lot of interest to eat into that at today's rates... My buy out is $12,XXX. A 3 year term on that at 4.5% costs $850 in interest. Still making out better on the lease.
So how is it possible that at 1% i'm only saving 600 bucks doing the lease vs if i had financed it? I think the dealer got some of my rebate $ somehow.
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Old May 21st, 2017, 23:23   #12
capt_slow
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Quote:
Originally Posted by giuseppe_b View Post
How exactly do you figure the lease payment? I am getting different numbers from dealers, between 370 and 470 for a SE with msrp of $29824.
That car's residual is $13410, 44% and money factor is 0.00034, according to a chart someone provided in another thread.
Is it as simple as depreciation x .00030?
For your car, it should be 0.00034 money factor and 45% residual for 15k/year. Use the LeaseHackr calculator to validate the dealer's numbers. If something is not right, then they are padding somewhere like money factor or taking chunk of the rebate.
Quote:
Originally Posted by Yawiney View Post
Since you are in CA i need to ask this: Is it true what the dealer told me that: For any car lease in CA you have to pay the interest of the whole term whether buying out early or not?
I'm not sure about that actually. In CA, sales tax on leases is assessed each month, since each payment is considered an individual transaction. My best guess is that you add sales tax to the payoff quote whenever you decide to buyout the lease.
Quote:
Originally Posted by Yawiney View Post
So how is it possible that at 1% i'm only saving 600 bucks doing the lease vs if i had financed it? I think the dealer got some of my rebate $ somehow.
I'm not sure how you got 1% interest on your GSW S lease. The lowest money factor for a S is 0.00105 or 2.52% interest. If you would like help deconstructing your lease deal, post up details like MSRP, selling price, etc. or PM me.
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2017 328d xDrive Sports Wagon: Estoril Blue, Black Sensatec, Driver Assist Pkg, M-Sport Pkg, Premium Pkg, ACC, Side/Top Cameras, Park Assist, Nav, HK
2015 GSW TDI SEL: Pure White, DSG
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Old May 22nd, 2017, 04:04   #13
r11
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Folx,

we have "actual early lease-purchase" thread in main dieselgate forum. Check it out.

You can save $2k+ compared to 0%/72 deal, depending on your state. The "rent" will be fully refunded if you buy out lease ASAP
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Old May 23rd, 2017, 12:04   #14
Yawiney
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Question

Quote:
Originally Posted by capt_slow View Post
For your car, it should be 0.00034 money factor and 45% residual for 15k/year. Use the LeaseHackr calculator to validate the dealer's numbers. If something is not right, then they are padding somewhere like money factor or taking chunk of the rebate.

I'm not sure about that actually. In CA, sales tax on leases is assessed each month, since each payment is considered an individual transaction. My best guess is that you add sales tax to the payoff quote whenever you decide to buyout the lease.

I'm not sure how you got 1% interest on your GSW S lease. The lowest money factor for a S is 0.00105 or 2.52% interest. If you would like help deconstructing your lease deal, post up details like MSRP, selling price, etc. or PM me.
Thanks Capt_slow, This stuff is not simple to understand. I know i'll have to pay tax either way just hopefully not on the residual until i buy it out and go to register with DMV.
I called VW credit and them told me there is no interest on Leases with them and that the "money factor" was a dealer term, AND i'm not seeing it anywhere on my lease agreement.http://forums.tdiclub.com/images/icons/icon5.gif

Also, shouldn't my down payment be figured into the into the calculations for my monthly. Number 7. on the Lease agreement.
I want to make sure i didn't get duped but also i want to feel good with my new car and be done thinking about this stuff.
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Old May 23rd, 2017, 20:17   #15
capt_slow
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Quote:
Originally Posted by Yawiney View Post
Thanks Capt_slow, This stuff is not simple to understand. I know i'll have to pay tax either way just hopefully not on the residual until i buy it out and go to register with DMV.
I called VW credit and them told me there is no interest on Leases with them and that the "money factor" was a dealer term, AND i'm not seeing it anywhere on my lease agreement.http://forums.tdiclub.com/images/icons/icon5.gif

Also, shouldn't my down payment be figured into the into the calculations for my monthly. Number 7. on the Lease agreement.
I want to make sure i didn't get duped but also i want to feel good with my new car and be done thinking about this stuff.
I'm not seeing any link, maybe it's protected? In any case, you can use this to calculate your money factor from your rent charge:

http://www.leaseguide.com/lease08/

VW Credit is correct that "money factor" is a dealer term. Your down payment is figured into your monthly payment as a "capitalized cost reduction".
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