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Audi A6

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  • When I leased my car, I told the dealer that a competitor made me an offer that seemed to be about $30/month more than what the formula indicated.

    My dealer was then kind enough to show me a place in the Audi leasing software where they can hide a pre-sale profit. It will not change the published money factor (though it will show an adjusted money factor that is for dealer's eyes only). In other words, they can give you the published money factor, agreed upon term, agreed upon sales price and published residual -- and still screw you by hiding a profit that will raise your monthly payment. That's why you need to be able to check their figures.
  • I only try to blow them away at stoplights. I accelerate to about 5mph over the limit (this gives me a peak of about 4200 rpm) and then continue at that speed. So far only one of them got a ticket when he tried to catch and pass me.

    Other than that, I'm religious about staying within the break-in rules.
  • markcincinnatimarkcincinnati Posts: 5,068
    In the post I was responding to -- made by mbnut1 #1451 -- the statement I commented on (made by mbnut1) was: "So if I understand correctly if I lease a car which sells for $42k and has a $20K residual then the lease payment is composed of the depreciation plus a finance charge on $62K (the sum of the selling price and the residual)."

    In my statement, I said, no the payment is not calculated on $62K. In your statement, chicago27t1 #1458 (and your previous statement, which apparently mbnut1 did not understand and was seeking clarification of) you say: "Monthly Depreciation Payment" as a term. You define this term as "(Net Capital Cost - Residual)/(lease term in months)."

    We are in complete agreement, if not in identical use of terms. My unitentional error was that I left out a step, as I was "assuming" that mbnut1 was going to calculate the monthly depreciation incorrectly. For my "rush to simplify" I apologize and stand corrected. For those wading through to this point the web sites suggested are great tools.

    The point I was trying to make (as were you) to mbnut1 was that the Residual was SUBTRACTED from not ADDED to Net Cap Cost or selling price (to calculate depreciation).

    If I somehow seemed to be arguing in favor of the ADDITION of Residual (to the selling price) instead of the SUBTRACTION of Residual (from the selling price) in the algorithm loosely discussed (by me), I want those who are just becoming aquainted with leasing to know that we are in agreement as to the calculation of the monthly payment.

    I said, in post #1453, "The "Payment basis" in really simple terms (but mostly accurate terms) is made up of the Selling price of the car MINUS the residual (which is usually a % of MSRP, not of the selling price)." This is the same (in spirit) as your post. I have no disagreement with your thorough explanation whatsoever. My statement ". . .in really simple terms" was my way of "correcting" the perception that the payment basis (monthly depreciation payment) for mbnut1's question was in the amount of $62,000. Again, my error was in the mf calculation, it should have said mf x $62K not $22K. Again, I apologize for my [hasty] error. Note: "selling price" is my term, Capitalized Cost or Net Cap Cost is the term the finance guys/gals generally use.

    This statement was to further explain (with the risk of oversimplification) the difference between leasing and owning, by agreeing that a lease is fundamentally "renting." Leasing is neither owning nor a "finance to own contract" (generally, and I am referring to a "closed ended" lease, which we may wish to explain in a further post and perhaps in that post contrast it with an "open ended" lease) -- and is therefore based on the payment for the use of the car not the ownership of the car.

    We -- at great length -- would come to the "same" payment amount. Mbnut1 probably would have calculated a much higher payment based on his post #1451 -- as I assume he would have added the residual to Net Cap Cost to determine the depreciation figure.

    On the other hand, maybe we're wrong and he understood it completely and now is really confused!

    My guess is, he has got it and will -- armed with this information -- make the decision based on his circumstances, which is as it should be.
  • Sorry about the confusion.

    Personally, I decided to go with a 48 month lease (my previous lease was 39 months). Why 48 months?

    With Audi's all-inclusive 48 month warrantee, I figured that it would make sense to match the lease term to the warrantee term. I drive around 9-10 thousand miles per year, so the mileage will also stay within the lease limits.

    At the time I turned my A4 in, I would have happily driven it for another 9 months. So, in my opinion, the marginal difference between having the car in month 39 vs. month 48 was pretty small. The effect on payments was about $40 month, meaning a savings of around $1520 between months 2 and 39 (as a returning lease customer, the first payment is waived). Spreading this savings out to months 40-48 yields a savings of around $170/month for the final months. True, the car is also worth less in those months. However, the utility (i.e., fun) I gain from driving the car cannot be measured in economic terms. Though at that point in time, I may find myself gawking at a lot of the newer cars.
  • For those of you who are interested, there is a very significant difference between a Close Ended Lease and an Open Ended Lease. Here is an extremely simplified explanation of the primary differences.

    In very simple terms, a close ended lease means that your obligation ends at the termination of the lease (though you may have to fork out some bucks if you have mileage overages, if the car is damaged or has abnormal wear and tear). Aside from this, you get to walk away from the car.

    In even simpler terms, an open ended lease leaves you on the hook for the difference between the residual and the market value of the car at the end of the lease. As an example, if the residual on the car is $20K, but the market value of the car is only $15K, you could be on the hook for the $5k difference. This is particularly a problem when you consider that residuals (as MarkCincinnati pointed out) are often exaggerated to reduce monthly lease payments.

    I believe that open ended leases are illegal in Illinois.
  • markcincinnatimarkcincinnati Posts: 5,068
    My circumstances -- and for different reasons, many of the people with whom I work and/or are my friends -- dictate a much shorter term for a lease than 48 or even 39 months.

    Not to scare any potential Audi "buyers" off -- I must tell you that these German cars (and I am not limiting it to Audi -- and to CYA you might broaden this to be "European" cars) are or can be breathtakingly expensive to repair and sometimes just to service. The great minds at Audi coprorate came up with the term "The Audi Advantage" -- my first so advantaged Audi product was a 1988 80 quattro with the 5 cylinder engine. The Audi Advantage is simply free service and warranty for 48 months or 50,000 miles. Literally all you pay for is plates, gas, insurance and one or two sets of tires beyond the factory originals. (In 1988 they called it the Three year test drive, as I recall -- and it was 3 years and 50,000 miles or 16,666 miles per year for 3 years).

    After the Audi Advantage expires, you are "running naked." This phrase I have heard used in relationship to cars and computers -- in that "you had better not be caught running naked" (because you probably can't afford it).

    All my friends and co-workers and most of my family drive in excess of 15,000 miles per year. A thiry six month lease is "just about right" in terms of the Audi Advantage. Moreover, most of my friends and co-workers are under the age of 40 (I am 50, however) and have both the urge and the means to get new cars with reasonable frequency (around 3 years -- meaning they would lease a 2001, skip the 2002's and either get a 2003 or an "early" 2004). The "magic" term for these folks (not everyone of course) is a maximum of 36 months. Also they do hope to balance (as much as possible) having a reasonable residual factor with as low as possible money factor (interest).

    My "upside down" comments previously effect people who drive greater than or equal to 15,000 miles annually if they run out of miles/warranty (Audi "Advantaged" miles, i.e.) before they run out of "term." SOME of the lease programs (including Audi's) got such a low payment number by overstating the residual (this is not done nearly as much as it was a few years ago, but it is still done). A very very high residual (unable to be supported by market demand for the "used car" -- any used car) factor used to arrive at the lease payment virtually "traps" you in the lease for the full-term (warranty or "new car lust" or whatever be damned).

    Couple all these things together with the truth of European car repairs (if you are running naked) and throw in some "major" maintenance items or -- god forbid -- a breakdown, and you can see that you run a potentially serious financial risk (possibly within a few months of the end of your lease term). If you take a hit, from either a repair or the "cost to get out of an upside down lease" -- you will probably no longer be a fan of the car that you were hit by. Whew!

    That is why if you get a lease that is 3 - 12 months longer than the liklihood of the "Audi Advantage" (or BMW or Volvo, etc.) remaining in force, you place yourself in a risk situation that, in my experience, is NOT offset by a slightly lower payment.

    Put it this way -- if you think that in 36 months you will breeze through the 50,000 mile warranty (Audi Advantage) -- DO NOT get the 39 month lease. If you do (and you "enjoy" the lower monthly payment that a 39 month term affords you) be aware of the potential of a four figure service and/or repair bill within those extra three or four months. The extra premium of a 36 month term is insurance -- if the difference is $10.00 (and it WILL be more than that in all probability) -- multiply the term by that number and that is your "cost" to avoid an expensive "issue" near your lease term end.

    Our chicago friend is safe --- at 48 months term -- due to the circumstances he described (i.e., he is not likely to run out of Audi Advantage before he runs out of lease payments (due to the 48 month term and the 48 month Audi Advantage coupled with his low milage expectations)).

    I, on the other hand have chosen a 30 month term. At month 8, I am at 11,000+ miles. If I order a new Audi @ month 25 (when I will have 34,000+ on the car) and it takes 3 - 4 months to come it, I can "walk away from my 40,000+ mile car" with no upside down monster at month 28 or 29. My only cost will have been one new set of tires (which I replaced @ 8,000 miles) -- plus tags, insurance and gas. If they offered a 33 month term, based on my driving needs and history, that would appear to be "perfect." Hmmm, maybe, just maybe a 36 month term would work -- but then again I don't want to run out of Audi Advantage -- great as they are, Audi's are very expensive when you're maintaining or fixing them with YOUR money.
  • max27tmax27t Posts: 35
    It is counter-intuitive that the finance charge should be based on the SUM of the Net Cap Cost and the Residual Value, but this is correct. It might be more palatable to say it is based on the average of the Net Cap Cost and the Residual Value. Of course the average is the SUM of these two figures, divided by 2.

    When you make a payment, part of the payment is to pay down the amount borrowed and part is to cover the interest incurred on the outstanding balance owed.

    If we assume the depreciation is paid evenly over the life of the lease, the finance charge is the annual interest rate times the number of years times the average outstanding balance. The Average Outstanding Balance is the average of the amount borrowed at the beginning (Net Cap Cost) and the amount owed at the end (Residual Value).

    The Total Finance Charge paid over the life of the lease is then

    (Net Cap Cost plus Residual Value)/2 times annual interest rate times the number of years of the lease

    which is also equal to

    (Net Cap Cost plus Residual Value)/2 times monthly interest rate times the number of months of the lease

    As we all know, the monthly interest rate is just the annual interest rate divided by 12, so the Total Finance Charge is:

    (Net Cap Cost plus Residual Value) times annual interest rate/24 times the number of months of the lease

    Therefore the Monthly Finance Charge is = (Net Cap Cost plus Residual Value) times annual interest rate/24

    or

    Monthly Finance Charge is = (Net Cap Cost plus Residual Value) times Money Factor, where the Money Factor is the Annual Interest Rate / 24

    This is the source of the mysterious factor of 24
  • markcincinnatimarkcincinnati Posts: 5,068
    My wife has a 2001 225HP TT (13 months old) -- she has 19,000+ miles on it. She claims she wants to keep it forever. The Audi Advantage will change her mind. She WILL want a 2003 in about 13 months (26 months into her 30 month lease) -- it could be close.

    Her last "full" lease was 24 months and we were @ 40,000+ miles. We thought we could squeeze by this time -- well, Audi Financial does offer 27 months.

    Another lease example for your contemplation and consideration.
  • patpat Posts: 10,421
    I just want to be sure that you all realize we have two other boards where there is lots of conversation and information on the ins and outs of leasing: the Finance, Warranty & Insurance Board and the Smart Shopper Board.

    Pat
    Host
    Sedans Message Board
  • mbnut1mbnut1 Posts: 403
    max27t-
    Thanks thats the explanation I was looking for. It all makes sense now. I'm armed and dangerous now.:)
  • portedported Posts: 16
    Any recent updates on good extended warranties? We have about 15K miles ('99 A6Q). Looks like we will keep the car (owned, not leased) longer than expected.

    BTW: the Tip works just like a manual, no automatic upshift 1-2, can downshift to 1st. Not a 99.5, build date 12/98.

    Thanks,

    Ported
  • jeqqjeqq Posts: 216
    Mark,

    Please explain in detail how you terminate a 30 month lease on the 28th or 29th month. Also I thought Audio does not deviate from their fixed monthly leases, i.e. 12, 24 , 36 , 39 and 48 month leases. Please explain this to me.

    Thanks,

    Jeff
  • beerguybeerguy Posts: 3
    Has anyone had good luck with window tint that does not affect the AM radio reception? When I tinted my '96 A6 with Llumar Platinum (metalized) my reception when right down the tubes because the antenna is built into the rear window. I've added a 2001 2.7t and am broiling in the MN summer. However, I don't want to mess up my radio reception. Thanks in advance for any recommendations or success stories.
  • markcincinnatimarkcincinnati Posts: 5,068
    At the risk of oversimplification (which I have been rightly chastised for doing) -- let's start out with the following:

    Leasing is renting the use of the car -- generally speaking the purpose of an auto lease is to use the vehicle with no intention of ever establishing any equity in it. It is, in many respects, like renting an apartment or staying in a long-term hotel. With the Audi Advantage (and other mfg's similar programs) coupled with a lease, "all you do" is pick the car, arrange for the lease, pay for the tags, gas and insurance (and tires if you wear a set out or want snow tires or something like that) and drive. Everything else is taken care of -- and for the term of the lease you have all the responsibilities of ownership and some of the rights of ownership.

    For example -- you have to take care of the car AS IF IT WAS YOUR PROPERTY (or pay the consequences at the termination of the lease). Yet even this obvious responsibility is also a "right" of ownership (sort of). If you buy a car (in cash) or lease a car or finance a car and keep it for 50,000 miles and "abuse" it -- you will pay, one way or the other. If you lease the car, you are, however (in the case of abusing the car) REQUIRED to pay for your sins. If you buy a car and abuse it and do not sell it -- just allow it to die that is -- you will not be required to pay another entity (as you are when you lease). Of course, when you own a car outright and abuse it you will "pay" either because the car will have a shortened lifespan or, if you decide to sell or trade it in, you will take a hit on the value of the car.

    The point of all the above is to say that in spite of the financial arrangement called leasing, you have virtually all of the rights and responsibilities of ownership -- it is just that the payment terms are different.

    In the example above, I say that you "will pay" if you abuse a car during the term of the lease at the end of the lease -- perhaps it will be for "excess wear and tear" or high milage or the fact that you smoked in the car (which reduces the number of people who may consider buying it used), or other factors including perhaps "normal" wear and tear. The opposite is also true. That is, if your car is not abused and is "desirable" you may find that instead of costing (as it does when you abuse) it can pay -- you can "profit" by keeping your leased car in "better than expected" condition.

    Here, after years and years of experience, are some suggestions that generally work to allow you to walk away from a lease early.

    As has been discussed at length above, there are friendly and unfriendly leases -- a friendly lease has a "realistic" residual. If, for example, you lease a 2001 Audi today for 4 years and the residual at month 48 is 62.5% and the milage allowance is 60,000 miles -- well, you better plan on keeping the car to term, because it is virtually impossible for a four year old (actually 5 model years old) Audi A6 to be worth 62.5% of MSRP. The leasing company structured your contract to get you a low low payment perhaps by using this technique. The lesson here, if you even think you might like to get out of your lease early is to do everything in your power to get a friendly lease (friendly in terms of "getting out of it early" which would, in this example, mean a "realistic" residual).

    Next -- keep your car immaculate inside and outside and under the hood. Perform all required service ON TIME at the dealer (a dealer). In my case I generally do 1.5 to 2.0 times as many oil changes as are required -- and I pay for them, and I have them done at the dealer. This (the immaculate inside and outside part) is really hard -- this means washing and waxing the car regularly and even detailing the car professionally at least once every 12 months (twice if you can). And, in our case, we always have the detailing done at the dealer (which costs about 20% more than elsewhere).

    Get to know, by name and face both the service manager and the service advisor. When they do good work, tell them. When they do something special, tell them, tell the dealership ownership and/or management and write a letter (cc'd to the dealership) to Audi Customer Loyalty personnell here in America.

    Keep in touch with the sales staff, especially the sales associate who sold you your car.

    Remember your sales, service, parts, finance and management people at Christmas -- send them a card. Last year, my wife and I sent the various departments a basket of fruit from Harry and David -- thanking them for their committment to excellence.

    When you get the call asking you how the dealership does -- give them 5's -- if you can't give them 5's, tell them NOT the telemarketers who call. It helps if you tell the people (about your picks and your praises) to their faces, not a nameless, faceless telemarketer. The net of this is, become your dealership's "best customer." You will be amazed at the level of service AND sales.

    OK so now you are into your "I would like to get out early phase" of your lease. It may be 6 months early, for example -- make sure you begin the "alignment" process. You will need to know the "street value" and/or the "trade in value" of your car. You will also need to know the "payoff amount" -- the salesperson will usually be all too happy to get this and the trade in value for you (with a phone call).

    All cars go through value cycles -- Audi's are neither particularly good or bad, although I have found that the later model Audi's seem to command a little more on the street value than perhaps a comparably priced (when new) non-Audi (Volvos, Jags, VW's and some BMW's, but generally NOT Porche's for example).

    Assuming you have a friendly lease, you may be suprised to find (as have I) that the value of your Audi with months to go on the lease is within $1,000 of the buyout. Once, my buyout was less than the street price and I sold the car in the paper and pocketed several hundred dollars.

    Assuming you are going to ORDER a new car at this point (for example 5 months out), you can ask your salesperson for a projection of the value of the car -- the buyout will be known in advance month by month. If the car you order takes 3 months to come in, and all of the above circumstances are "in place" -- the dealer will "make you whole" -- you will have a new car and be free of your old lease before the end of the term.

    Now, however, notwithstanding, etc.: The dealer cannot, will not, "give the store away." Do not expect this, do not ask for "a favor." You will find, often, that because you are a "really good customer" (and a repeat customer) you will get the "best deal" possible both from the dealership and the mfg (the Audi Loyalty program is a great example: no sec dep and Audi makes the first payment for "repeat" customers).

    Of the more than two dozen Audi's my wife and I have owned, we have bailed out early (even if it has just been a mo
  • mariobgoodemariobgoode Posts: 114
    I had a similar problem before, and my solution (worked for me, maybe not for everyone) was add another antenna to the car, something that is not too ubiquitous. The smaller, the better. I find these small add-ons lately in European cars, and they even look good. I hope this helps you. Mario
  • patpat Posts: 10,421
    I understand. I just wanted to make sure everyone knew that other resources on this subject are alive and well in Town Hall.

    By the way, I may have mentioned this to you before, but your posts would be a lot easier to read if you would put them in the message box, rather than the title line.

    Pat
    Host
    Sedans Message Board
  • jeqqjeqq Posts: 216
    thank you for the explanation.

    Jeff
  • vkjvkj Posts: 67
    sorry, on the a6 board on Audiworld.com the opposite seems to be the consensus. If the message is short, just say it, if it is long then your approach is adopted. I am not sure why you believe it is easier to have short messages broken up, but I will bow to the will of the majority. Any one else have an opinion?
  • kam66kam66 Posts: 31
    On the Audiworld board it is a little more difficult to get to a post as they display them as threads. Here you can follow along by just scrolling down and do not have to select a message to read it.

    Just my opinion.
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