Something doesn't sound right about your lease. You must have gotten a high interest rate. I'm ony paying $265/mo. :iono:
6
Golf R Lease Speical- So Soon!
- Thread starter MattTheCarNut
- Start date
Something doesn't sound right about your lease. You must have gotten a high interest rate. I'm ony paying $265/mo. :iono:
Negotiability is clutch...
If you pay what they tell you to, you will get screwed.
If you pay what you tell them you will, you will be better off.
I have never had a problem walking away from an offer that wasn't what I wanted. On my GTI, I had the salesman call me back a week later to meet my figures.
My finance background gives me the knowledge to calculate how much it is supposed to cost. They tell me residual, money factor, msrp, and I research average purchase prices, and then I tell them how much I am paying.
Has worked wonderfully for me. That is why I speak so highly of the process, IF done properly.
Dirt Nasty
Go Kart Champion
I pay $280.00 a month for my GTI.
Sent from my Galaxy Nexus using Tapatalk
Sent from my Galaxy Nexus using Tapatalk
Not before I put the nail in the coffin...
Lease
$17,000 in total payments ($470/mo)
$21,000 in saved payments ($590/mo)
Purchase
$38,000 in total payments ($1,060/mo)
$23,000 in car value (65% est. residual)
This is clear. Easy.
How about this??
Just so we are clear, the same car is worth the same $23,276 in 36 months...
The pre-determined residual on the lease is $20,410. That leaves $2,866 on the table for the lease owner to take advantage of if they contracted a purchase at the buy-out price, with no negotiation.
You could agree to buy the car for $20,410 and sell it tomorrow for $23 276 if you chose.
So it would look like this in that scenario...
Lease - $1,060/mo allocated
($17,000) in payments
+ $21,000 in cash saved
+ $2,866 in equity
________________
+ $6,866
Purchase - $1,060/mo allocated
($38,000) in payments
+ $23,000 in equity
________________
($15,000)
For 36 months and 1 day with the same exact car for the same exact monthly allocation of funds.:thumbsup:
I am done now.
Lease
$17,000 in total payments ($470/mo)
$21,000 in saved payments ($590/mo)
Purchase
$38,000 in total payments ($1,060/mo)
$23,000 in car value (65% est. residual)
This is clear. Easy.
How about this??
Just so we are clear, the same car is worth the same $23,276 in 36 months...
The pre-determined residual on the lease is $20,410. That leaves $2,866 on the table for the lease owner to take advantage of if they contracted a purchase at the buy-out price, with no negotiation.
You could agree to buy the car for $20,410 and sell it tomorrow for $23 276 if you chose.
So it would look like this in that scenario...
Lease - $1,060/mo allocated
($17,000) in payments
+ $21,000 in cash saved
+ $2,866 in equity
________________
+ $6,866
Purchase - $1,060/mo allocated
($38,000) in payments
+ $23,000 in equity
________________
($15,000)
For 36 months and 1 day with the same exact car for the same exact monthly allocation of funds.:thumbsup:
I am done now.
john@FTC5
Go Kart Champion
What happen if that person purchasing the R and during the 3 yrs ownership and got into a big accident. Will he still sell it for the fair market price ( 25k ) ? In other word if that car was a lease.He can careless and give that car back to the dealer.Let them try to sell it to the lot. I still like the idea of the LEASE only if the deal is fair enough.
Chasing Neil
Passed Driver's Ed
If you truly are a financial analyst, then I'd be really embarrassed right now. Actually, I suppose it's a common mistake... this is why it doesn't matter how good you are at math, accounting is a bitch...
I think you ended up getting too caught up and got a little confused when you tried to oversimplify things. You essentially double counted your monthly savings as profit. I'll use your simple math, but add cash and equity buckets to help clear this up:
Let's say you have $38,000 cash in the bank when you go to purchase the car...
36 mo Lease
$17,000 in total payments ($470/mo)
$21,000 in the bank at the end of the lease (38K - 17K)
$0 in equity ($2-$3K if you buy and flip)
Net Cash + Equity = $21,000 to $24,000
36 mo Purchase
$38,000 in total payments ($1,060/mo)
$0 in the bank at the end of the purchase term
$23,000 in equity
Net Cash + Equity = $23,000
I'm not making this argument for which is better. There are way too many variables this scenario ignores, but I had to at least correct your flawed logic.
I think you ended up getting too caught up and got a little confused when you tried to oversimplify things. You essentially double counted your monthly savings as profit. I'll use your simple math, but add cash and equity buckets to help clear this up:
Let's say you have $38,000 cash in the bank when you go to purchase the car...
36 mo Lease
$17,000 in total payments ($470/mo)
$21,000 in the bank at the end of the lease (38K - 17K)
$0 in equity ($2-$3K if you buy and flip)
Net Cash + Equity = $21,000 to $24,000
36 mo Purchase
$38,000 in total payments ($1,060/mo)
$0 in the bank at the end of the purchase term
$23,000 in equity
Net Cash + Equity = $23,000
I'm not making this argument for which is better. There are way too many variables this scenario ignores, but I had to at least correct your flawed logic.
You mean money I don't spend doesn't magically double itself?
I usually avoid smileys, but :clap:
Dybz
Banned
lol C4L.. ok you save the money sure... but what do you do after the 3 years is up is when the problem with leasing comes into play. you have no transportation, so you HAVE to go get another car. play your math out to lets say 6 years. you spend no more money in the "purchase" scenario besides maintenance things, while in the next 3 years you have to spend another $17000 (supposing no inflation and you get the same car/deal) for a car.
also, chasing neill has already pointed out that if you elect to buy out the 20k residual, you're basically in the same place lease vs purchase. also, owning a depreciating asset makes sense if leasing it will cost you more over the potential life of the asset.
also, chasing neill has already pointed out that if you elect to buy out the 20k residual, you're basically in the same place lease vs purchase. also, owning a depreciating asset makes sense if leasing it will cost you more over the potential life of the asset.
No question that if you keep the purchase car longer it becomes more advantageous. I am fully aware of that.
I did not create the scenario of each being kept for 3 years. Someone else did. I did create a scenario a few pages back comparing the monthly costs of a 3 year lease with those of a 5 year finance term.
Leases were solely created for people who keep cars for short periods of time. It avoids taking on risks such as; maintenance, repairs, secondary market values, accidents, etc.
However, do keep in mind that even when you have no payments on a car you are losing money in the form of unrealized depreciation. The average depreciable life of a car is 10 years. On a $35k Golf R that would represent an average of $3,500 per year in depreciation. An unrealized cost of $292/mo...
Sure, you paid for 100% of that depreciation when you pay off your note but you are losing value in equity every day you own it.
Lost value = unrealized gain
With a lease I don't have to worry about lost value because I am only paying the direct portion I am using.
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The life of the asset is the key here. When you buy, you are 100% in the dark as to how long that might be.
When you lease, you can guarantee how long that will be.
There is far less risk in leasing as well.
Its like this saying for me when it comes to leasing
"a bird in the hand is worth more than two in the bush"
A guaranteed $590/mo every month for the next 3 years is worth more to me than a possible $23,000 3 years from today...
Especially given my field of business, you have no idea what I do with $590/mo in terms of an investment.
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I will concede that it appears that at 100% MSRP (no negotiation) with zero dollars invested (savings in payments under you bed), at an est. residual value (completely unknown on a car like a Golf R), you would be slightly ($2,000 or 5%) worse off over the next 3 years by leasing at the advertised price.
NOW, if you even went to trade-in value on the financed car, its over for financing.
AND/OR, if the est. residual isn't actually 65%, its over for financing.
AND/OR, if you even negotiated to 95% MSRP acquisition cost (worse than average), its over for financing.
AND/OR, if you could earn JUST 1.66%/year on your money, its over for financing.
Not unrealistic assumptions if you ask me. And in really ALL those things could happen but only one needs to to make leasing a better deal.
If you walked in to the dealership and agreed to pay 100% of what they were asking, you would be $2,000 (over 3 years) better off buying. BUT, it would take you a full 3 years to realize that $2,000.
I would rather have guaranteed $590/mo in lower payments FOR the next 3 years than a possible $2,000 net positive cash IN 3 years.
And avoid all the risks associated with buying and assume the risks of the market being able to provide just 1.66%/year return on my money.
I would say it is so close in this particular case that even getting the lease for $450/mo instead of $470/mo would change things.
NOW, if you even went to trade-in value on the financed car, its over for financing.
AND/OR, if the est. residual isn't actually 65%, its over for financing.
AND/OR, if you even negotiated to 95% MSRP acquisition cost (worse than average), its over for financing.
AND/OR, if you could earn JUST 1.66%/year on your money, its over for financing.
Not unrealistic assumptions if you ask me. And in really ALL those things could happen but only one needs to to make leasing a better deal.
If you walked in to the dealership and agreed to pay 100% of what they were asking, you would be $2,000 (over 3 years) better off buying. BUT, it would take you a full 3 years to realize that $2,000.
I would rather have guaranteed $590/mo in lower payments FOR the next 3 years than a possible $2,000 net positive cash IN 3 years.
And avoid all the risks associated with buying and assume the risks of the market being able to provide just 1.66%/year return on my money.
I would say it is so close in this particular case that even getting the lease for $450/mo instead of $470/mo would change things.
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veedoubleme
Go Kart Champion
The problem with that scenario is that you don't have a car for the following two years with the 3 year lease. You can't compare 3 years of leasing with 5 years of ownership. You need to add in all the payments for the first 2 years of your next car, unless you plan on walking to taking a bike. Then consider that after 5 years you don't make any more payments. Or, if you trade the car in (or sell it), it will reduce how much you pay for the car next time. So your next loan will be $10k less, or whatever your car was worth. With the lease you start over every time. Granted with the lease you have a new car every 3 years. That's the only advantage I've ever seen.
Also, nobody does a 3 year loan, so that exercise was silly.
Note: I could give a shit about all of this, as I drive over 20k miles per year
I broke down the respective cost to a monthly basis to create a common denominator between the purchase and lease scenario. You would just go lease another car and continue the monthly payments at an assumed similar monthly rate, but on a new car of course.
The 2 assumptions made here are;
- that you finance the car for 5 years and sell it after 5 years. (avg. among Americans)
- that you lease a car for 3 years and repeat. (avg. among Americans)
This makes sense that in both scenarios you always have a car payment. Of course if you pay of the car and keep it, that changes. Most people don't. I will never argue a lease being a better option than financing if you plan on keeping a car for 6/7/8+ years. In the 3-5 year range, many times leasing is more advantageous.
AND,
I did not create the 3 year finance scenario. I 100% agree it was a silly exercise but I just humored its creator. No one is paying $1,060/mo on a VW Golf R...
how 'bout we all agree that the current lease "special" ain't a special ....
I leased an 09 GLI Autobahn MSRP'ed at 28600, paid $25000 with $2000 down for $330/month ... big deal (3 year lease)
I leased an 07 GTI - 4door - pkg 1 - MSRP'ed at 24400, paid $21500 with $2000 down for $225/mo ... another big deal (2 yr lease)
Certain cars it makes sense ... others it doesn't. ATM, you're better off financing the Golf R from pendfed.org @ 1.99% then leasing with their ~5% financing (money factor).
I leased an 09 GLI Autobahn MSRP'ed at 28600, paid $25000 with $2000 down for $330/month ... big deal
(3 year lease)I leased an 07 GTI - 4door - pkg 1 - MSRP'ed at 24400, paid $21500 with $2000 down for $225/mo ... another big deal
(2 yr lease)Certain cars it makes sense ... others it doesn't. ATM, you're better off financing the Golf R from pendfed.org @ 1.99% then leasing with their ~5% financing (money factor).