Lease early-purchase experience anyone ?

Assuming the lease is through VW Credit.

The idea is to exercize the 8500-off lease offer, wait 3 month (rumour has thats when the dealer gets their cut, just to be fair to them) and then purchase the car.

Technically, there shouldnt be a penalty for purchasing it early (as opposed to getting OUT of the lease early) , at least so said VW Credit person I called today, in lease-termination dept ?

There's no way these will be at 45% market val at the end of the lease, bottom is about to fall out of used car market.

Never leased before, but after comparing the loan vs the lease, I am going with the lease. I plan on buying the Passat in 3 months so will be getting out of the lease early. I have the contract and there is no fee for early buyout. So if I were to go the full term of the lease, 2 years, vs the 0% 72 month loan, the lease is $2,200.00 cheaper. The lease gets us $8,500 discount and the loan is $5,000.00 discount.

Once the lease is active you can have the vwcredit site calculate a payoff amount, which is usually good for 5-10 days. I can't specifically recall how it compares to keeping the car until the end of the lease term, except that it's less money than the total of the remaining payments plus residual.

I plan to check out payoff for my Golf in late Summer or early fall, after 3-5 payments. If the numbers save me money I'll end the lease early. If not I'll let it run its course.

Lease always seems complicated to me. Yet, should be simple to explain.

Does this seem accurate ?

Say the price is $20K, after all the discounts.

You want to have it for 2 years, driving total of 30K miles

They say OK, we think in 2 years, the car with 30K miles will be worth 15K (and you will have opportunity to buy it at the end of lease at that price). If the actual market at the end of lease will be less, VW Credit will eat that (probably insures against that risk). Is these car command even higher prices, they will make extra $$$. But the residual is fixed as far as you are concerned.

So, we want you to pay us 5K difference over course of 2 years , with some credit-score-dependent interest , say 2%, so your monthly payments will be (5000/24) * 1.02

Then, on top of that you have the usual fees and some kind of fee to issue the loan/lease. That and the tax on the $5K (depends on the state you're in), which is spread over the 24 payments.

You pay the fees, VW Credit pays $20K + tax (?) to dealer and takes ownership of the car and leases it out to you.

3 months/payments later, you want to purchase the car.

VW Credit is in for 20K + tax(?) - 3 monthly payments. You'd need to pay that amt to get the title. And to get title to the car in your state, you will most likely have to pay sales tax.

Isn't this lease offer at a zero or near-zero interest rate? Why pay it off early?

Not paying it off keeps your options open - i.e. of letting VW eat the depreciation in case it plummets like a rock ... which it might. If you pay it off early you STILL have to pay all of the fees (because they are paid up front) and you remove that option.

If you're gonna lease ... lease! If the car ends up being a pile, or depreciates like a rock, let them have it back at the end. If you're gonna buy it out then buy it out at the end.

edit: I've got a monthly car payment for a new car for the first time in my life. Didn't have to ... could have paid cash ... but 0% financing for 72 months means I can do something else with that cash ... like leave it invested where it earns more than 0%.

The interest rate on the lease isn't near zero, the money factor is. I've read that the money factor depends on the car you're getting, more expensive cars have a lower rate. On the GSW it translated into about 2.5% interest on the entire lease balance ($17K in my case for car plus fees) for the 24 month term. I think interest charges totaled a little over $900. So paying it off early does save money, depending on how they calculate the payoff amount.

With interest and fees, if you kept the lease for all 24 months, savings on my car were about $1,900 compared to the 0% financing. And every dollar you pay on interest for the residual eats away at that $1,900. Also, if you get a more expensive TDI thank I did (and most will) the savings are going to be less because the interest on the lease and the residual will be higher.

Long story short, the lease offers a significant savings if (a) you're buying a less expensive TDI; (b) you don't have to finance the residual; and (c) if you can pay it off early. Otherwise, get the 0% loan.

I thought about doing the 0% financing, but I really, really hate car payments. I'm more than happy to sacrifice whatever small investment gains I may have on the money to not have a payment. Irrational? Sure. But sometimes you have to do what makes you happy.

Lease has the advantage that if the car ends up being a dud, you have the option of letting VW have it back at the end of the lease term without having to attempt to sell it ...

Remember you can still place a chunk of change as a down payment and that will affect not only payment but also the residual and how that money factor plays into it. We'll probably place $5K down, and then pay off as soon as we possibly can.

I called VW credit and after 15 min waiting for a rep, she explained you can pay off the residual plus the remaining payments day one after signing docs. You can pay that via cash or via a loan at another credit institute.

The lease acquisition fee is $625, this includes gap insurance, some are reporting gap insurance for VW loan at $700. If the dealer needs you to carry the lease for 3 months, ours is saying 6, maybe this can be a negotiating tool. "Take $300 off and we'll hold the lease until you get your kick back."

IMO with all car purchase it doesn't make sens to only own the car for 2 years. Biggest decision the wife had would she be happy driving pretty much the same car she has been for the past 5 years for another 5 years? the little extra the SEL had over the SE Nav and roof was enough especially once I mentioned a tune.

Again never even looked into a lease, but I was at the dealer last night and it is extremely complicated the way it is written up.

740GLE said:

The lease acquisition fee is $625, this includes gap insurance, some are reporting gap insurance for VW loan at $700. If the dealer needs you to carry the lease for 3 months, ours is saying 6, maybe this can be a negotiating tool. "Take $300 off and we'll hold the lease until you get your kick back."

Click to expand...

I wouldn't worry too much about the dealer getting their slice of the pie in this instance. They're making out pretty well on these sales, since the incentive is all corporate.

When we bought our 2015 back in Feb 2015 (and VW was offering $6,000 off sticker), I made the same agreement w/ the dealer and waited before refinancing the loan with my credit union. My mistake, we exceeded the mileage threshold for a new car loan, so I got stuck with an extra .5%. It was still better than the VW Credit financing, but not by much.

Also, this is something to consider for anybody refinancing their lease through their local bank -- there's a good chance these cars won't qualify for new car terms or rates, due to their model year, even if they're low mileage. My banks stipulate current model year or one calendar year prior. It doesn't mean you won't get financing, but it'll be at a slightly higher used car rate, and likely for a shorter term.

GoFaster said:

Lease has the advantage that if the car ends up being a dud, you have the option of letting VW have it back at the end of the lease term without having to attempt to sell it ...

Click to expand...

Sacrilege

Couple of thoughts. I was at a dealer last night discussing all of these same issues. First, they said you will not be allowed to terminate the lease early, and the financing likely not until 2 or 3 years. The reason they gave was that VW wants to keep you on the hook to ensure you get the stage 2 updates done. I have no idea if this is actually true or not as they did not show any evidence to support the statement.

Next, concerning putting extra money down on the lease, I would be careful. Whatever extra you put down will be gone if the car gets totaled.

Also, if you are allowed to pay the lease off early, I'm pretty sure you still have to pay the interest for the full 2 year term.

So, taking all of that into consideration, I'm still torn on how to buy. My sticking point is I am trading in a car, that will net me around $12,000. I'm leaning toward putting the whole amount toward the new TDI and financing the rest for at 0% for 72 months. Or I could get some cash out of the trade-in, say $5000, and then finance the rest. Or do the 2 year lease and take just enough of the trade-in to pay the fees, etc., and take rest as cash.

I'm so confused!

Make sure you lease through VW Credit.

I might do just that tomorrow, assuming the car I found checks out in person.
Then you have to decide if you want to purchase early. Now, remember, you have entire 2 years of lease to do that. But, if you do it early, u might save some $$.

If you wait the entire time and the bottom falls outta used market, as everybody and their mother is saying it will, you might be able to get VW to lower (HERESY!) the pre-agreed end-of-lease-purchase price.

In other words if VW Credit sees that 2YO diesel is worthless in '19, they might let you buy it for thousand$$$ less, they dont want to get stuck with worthless car.

It could also happen that VW will cave in to the pressure and bring Passant Variant TDI to USA, in '19. With AllTrack.

r11 said:

In other words if VW Credit sees that 2YO diesel is worthless in '19, they might let you buy it for thousand$$$ less, they dont want to get stuck with worthless car.

Click to expand...

Don't hold your breath on that one. I've never heard of a leasing arm of an auto manufacturer renegotiating lease buyout costs, and I know a number of people who've tried.

The lease-end buyout number is cast in stone once you seal the deal. If the vehicle is worth less on the market than what the buyout number is, let them have the car back and then buy a different used one on the open market.

Don't forget that the amount of mileage that you plan to put on the vehicle is another thing that can be factored into the payments up front. It may be less expensive to do that than to pay a mileage penalty at the end.

Paying extra on a lease in order to not have monthly payments, whether done up front or mid-stream, is never ever ever ever a good idea. Pay as little as you can up front. You WANT to be upside-down in this case. If there is ever an insurance claim on the vehicle, for whatever reason, that terminates the lease at whatever the situation happens to be at that moment. If it's upside down, so sad for the lender and insurance company, they have to eat it. If you made extra payments, they're gone ...

The only nuance here is I am trying to get the buyback $$$ applied toward OWNING a "new" one-of-a-kind car with 162/11 wty. One-of-a-kind means that I value the TDI experience, the torque, the MPGs, utility of wagon .

Indigo - do you might sharing your lease $$#s, if u dont mind ?

Sure. I did in another thread, but here goes:

Vehicle cost including fees: $24,369.00
Monthly payment: $274.54
Due at signing: $8774.54 (rebate plus first payment)
Residual: $11,542.50
Interest (or 'rent charge' as they call it): $719.86

Since I'm paying $16.15 sales tax (in Massachusetts) on each lease payment, I will owe tax only on the residual at buyout. Works out the cost of the car at the end of the lease term, including interest and fees, is $17,024.

I think I have that right.

Thanks, going bit crazy here
How many miles per year ?
Assuming the true value here is OWNING the 162/11 car, I'd want to buy it out early. Save on interest. I guess whatever mileage per year you choose, total cost of buying one will be same ?

Looking through my lease agreement, it shows

• The agreed upon value of vehicle
  ($25435 [MSRP minus $300 I was able to sweet talk out of])
• Gross capitalized cost-
  $26773 (not sure how they got to this number)
• Capitalized cost reduction
  $8500 (rebate)
• Adjusted capitalized cost
  $18273
• Residual value
  $11580 (45% of MSRP of $25735)
• Depreciation & any amortized amounts
  $6692.25 (Adjusted capitalized cost minus Residual)
• Rent charge
  $752.31 (not sure what this is for )
• Total base payment
  $7444.56 (depreciation plus rent charge)
• Lease terms
  24 months
• Payments

$310.19 ($7444.56/24)
So, how do I figure out how much money I could save if I buy out the lease as soon as possible? Is it just the $752.31 rent charge?

VW Credit should have lease's "current" purchase price on their website, so I heard.

About the only way to know what the savings are going to be.

Probably most of 752 u mentioned

A portion of the $752.31 is what you'd save. Honestly not a lot given you're reducing that savings with each monthly payment.

Bank fee - ???, for VW Credit to issue the lease
Doc Fee - dealer, ~$400
"interest" - the $700 u mentioned
Possible sec deposit
Possible disposition fee
Reg, title, license - by the state
Dealer extras - must watch out for those

=================
Bottom line - real ez to get to $1500 ballpark.
Some of those fees would still be there even if u finance

Now, we are ahead of finance offer, by $3500. So, like Indigo stated before, even with extra lease charges, we should be able to save $2K (effectively getting $7K off MSRP) by doing lease-to-buy thing.

IndigoBlueWagon said:

A portion of the $752.31 is what you'd save. Honestly not a lot given you're reducing that savings with each monthly payment.

Click to expand...

If the savings is $752, that averages about $31 (10%) of each of the twenty-four $310 monthly payments. I've only made one payment so far, so that reduces my saving to $721 (assuming I pay it off before my next payment)?

Sounds right. Mine works out to $29.99/month. That's not an amount I'm going to get in a sweat over, although I probably will still pay it off early.

Any place that lists the residual value of the models?

It's a percentage of MSRP based on miles selected. 15K/year was 45%. IIRC 18K/year is 42, 12K/year is 46 or 48.

Have a good laugh . Try to figure out what place they pulled the numbers from.

Flat refused to provide #s from VW Credit.

Didnt walk, ran away

MSRP 25.5K

They added rack x-bars, liner and mud flaps, wanted a $1000 on top of MSRP for that.

The GCC @ 30K (!) offset by residual of 12191 (semi accurate #, but he quoted only 10K/Y (!) - why go higher if u want to purchase it.

Kept implying (w/o ever running numbers by VW), that money factor on the 8847 will be cool 5.5%

VWMark said:

Couple of thoughts. I was at a dealer last night discussing all of these same issues. First, they said you will not be allowed to terminate the lease early, and the financing likely not until 2 or 3 years.

Click to expand...

My dealer said 6 months, a call to VW credit, who actually holds the lease, said any time you'd like.

Maybe there is fine print for these 2015's that VW Credit didn't get out to the phone reps soon enough but I'll be calling before we sign for it.

There're 2 ways to terminate the lease, make sure you ask specifically about purchasing out early

Indigo - did u call the VW Credit, just for S&G, to see what purchase price would be, if you were to buy it _now_ ? What savings, what gets waived, etc etc ?