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Audi A4 Lease Questions

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hi Chuck. Audi is running a special lease program on the '07 A4 3.2 Avant right now. Its program varies by term and mileage allowance. For now I am going to assume that you are interested in a 36 month lease with 15,000 miles per year. Let me know if you want something different. Through June 4th, Audi Financial Services' buy rate lease money factor and residual value for a 36 month lease of this car with 15,000 miles per year are .00030 and 49%, respectively.

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hi eurocarlov. It is difficult for me to say how much it would cost to get out of your Murano lease at this point, but I suspect that it will be pretty expensive. What I can do is tell you how much the A4 that you are interested in would cost to lease without taking the Murano into account. In order for me to do so, I need you to provide me with the MSRP and approximate selling price of the exact car that you want. Let me know what these numbers are and I will use Audi's lease program to estimate your payment.

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Here's the information that you're looking for, Jason. Through June 4th, Audi Financial Services' buy rate lease money factor and residual value for a 36 month lease of a 2007 Audi A4 2.0T Convertible without quattro with 12,000 miles per year are .00160 and 59%, respectively. This car's 10,000 mile per year residual value would be 1% higher.

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Greetings Donna. The money factor that you were quoted for this car is right in line with Audi Financial Services' current buy rate for it. That is a good thing. Now let's take a look at the selling price that you were quoted. A base '07 A4 2.0T Convertible with quattro has a spread of $3,000 between its full MSRP and its dealer invoice price. I am not personally familiar with what the market is like for this model in your area right now, but the $600 discount that you are being given leaves a lot of room to play with. It wouldn't hurt to comparison shop with another dealer or two to see if you can beat this offer. Also, make sure to stop by the following discussion to see how much other community members have paid for similar vehicles lately: "Audi A4: Prices Paid & Buying Experience".

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hi fuzlbutt. More likely than not the bank that you are leasing through will not negotiate your car's end of term purchase price. Having said this, banks occasionally will so give it a shot. Please a call to the Audi Financial Services, or whichever bank you are leasing your car through, a month or two before the scheduled end of your lease and see what they say. Make sure to give the impression that you are right around your mileage allowance. The fact that you are way under will make your car more attractive to them. If your initial contact is unwilling to work with you, try escalating your negotiation attempt to a manager. There's no guarantee that it will work, but you don't have anything to lose by trying. Good luck.

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hello seana. More likely than not the bank that you are leasing through will not negotiate your car's end of term purchase price. If your initial contact at the bank that you are leasing through is unwilling to work with you, try escalating your negotiation attempt to a manager. There's no guarantee that it will work, but you don't have anything to lose by trying. Good luck.

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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Welcome back, Craig. I know what you mean about needing another German vehicle. Through June 4th, Audi Financial Services' buy rate lease money factor and residual value for a 24 month lease of a 2007 A4 2.0T Sedan with quattro and 12,000 miles per year are .00054 and 63%, respectively. The numbers for an otherwise identical 36 month lease are .00054 and 55%. If you were to lease a 2007 Audi A4 3.2 Sedan with quattro and 12,000 miles per year through AFS right now for 24 months, its buy rate lease money factor and residual value should be .00050 and 60%. The numbers for an otherwise identical 36 month lease are .00050 and 52%. If you were to lease either of these cars with only 10,000 miles per year, their residual values would be 1% higher.

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  • mcwenzelmcwenzel Posts: 37
    You completely misunderstood my post. I am not talking about early termination of the lease, and I am not talking about breach of contract. I am talking about purchasing the car pursuant to the contract.

    Specifically, I am talking about buying the car at the end of the lease, or buying it during the lease if you choose. Most companies will let you buyout the lease at the residual plus remaining payments during the lease. All will let you buy at the end of the lease at the negotiated residual.

    What Audi does that is unconscionable is permit you, but only you, to buy out the lease at your negotiated residual. So, if you want to trade the car in during the lease to a dealer and have them purchase it from Audi, the dealer cannot buy it at the negotiated residual. Instead, they can only buy it at what Audi describes as "Fair Market Value", which is a special quote they create for the particular dealer.

    The "Fair Market Value" differs depending on who the dealer is. For me, at the end of my lease, my residual buyout price was 19k. So I can buy the car for 19k, and pay no disposition fee or wear and tear. However, a dealer cannot buy the car from Audi for 19k, but only at the "FMV", which in my case was $1,500 more than my residual. Essentially, it constricts your ability to get out of your lease by having someone buy the lease out on your behalf.

    Even worse, despite claiming that the dealer purchase price of $20,500 (a non-Audi/VW dealer) was based on FMV, when I took my car into Audi, they called and got a payoff amount of 18k, which is 1k less than I can buy the car for and 2.5k less than what a non Audi/VW dealer can buy the car for. If you want to sell it to a third party at the end of your lease, you can't do that at your negotiated price either.

    Other finance companies DO NOT do this. With other companies, the buyout price is the buyout price, regardless of the purchaser. This is simply a way for Audi to prevent you from getting into a non-Audi. It is a customer hostile policy that according to Audi is non-negotiable. I have no problems with incentives for repurchase, all companies do that, but this goes well beyond that.

    Moreover, while it would seem to be a simple solution to just buy the car from Audi at your price and turn it over to a dealer at that same price, you can't do that either without incurring significant tax liability (8.5% in California) for the privilege of owning the car for five minutes).

    So even though Audi/VW will end up losing money on the car by having it turned it rather than purchased at the residual (when factoring in transport costs and auction results), they do it anyway. The policy makes no sense, is customer unfriendly, and is counter to the manner in which other companies run their leasing programs.
  • dm13850dm13850 Posts: 11
    Good information to know, but I'm not sure I understand why this is a "way for Audi to prevent you from getting into a non-Audi." Don't you have this problem regardless of what car you buy after the lease is over?

    Also, this doesn't strike me as something that most people would care about. Someone who keeps the car for the entire lease period with normal wear and miles (as most do, I assume) would be fine. Again, it's good to understand their policy, but I think trying to steer people away from leasing with AFS for this reason might be a bit extreme.

    Just my $0.02...
  • mcwenzelmcwenzel Posts: 37
    Perhaps prevent was the wrong choice of words. The policy does not prevent you from getting into a non-Audi, it just charges you an extra $2,500 dollars to do so (at least in my case). You don't have this problem regardless of what car you buy after the lease is over, you have this problem if you try to have a non-Audi dealer or third party purchase the car during or at the end of the lease so that you can get into a non-Audi vehicle. If you stay in an Audi, they don't jack up the sale price. There is no rational basis behind the policy, other than the obvious attempt to maximize profits at the expense of the customer.

    It is also deceptive, because they claim the buyout price is based on "fair market value", but that value changes based on who the car is being sold to, and whether the customer is purchasing another Audi or VW. Moreover, the FMV is not a reasonable price reflective of the actual value of the car. They actually mentioned something about Kelley Blue Book in setting the FMV, which is silly.

    People should care about it because it further impacts the already limited flexibility a lease provides. While most people will probably never try to get out of their lease early, if they need to, this can be a huge impediment, and won't be discovered until you are in the situation. It is a policy I find hostile to the interests of the customer. It is a practice that is counterintuitive, and a practice not utlized by other leasing companies.

    Audi contracted to a certain residual price with the customer, with the expectation the car may be purchased at that price. Audi cannot sell that car at auction for more than the negotiated residual, so they will actually end up losing money by preventing the leaseholder from having the dealer or a third party buy the car at the residual or residual plus remaining payments depending on the timing as opposed to turning the car in at the end of the lease.

    The practice of artificially increasing the buyout price for a third party to purchase the car makes no sense -- it is simply a transparent attempt to gouge the customer because they can. The odd thing about it is, these are Audi customers they are doing this to.

    My point is that this is a practice not utlized by other leasing companies, and people should be aware of it, because it's not even buried in the fine print.

    Knowing this policy, I would never lease from Audi Financial Services again unless my company were paying the bill and assuming any and all liabilities for lease termination.
  • edwardsfedwardsf Posts: 187
    You are unilaterally terminating a lease. That means you are breaching the terms of the lease, aka contract. Breach of contract IS indeed what you are talking about and your claim that other leasing companies don't charge you a penalty for breaching your lease is hard to believe. Audi is under no moral or legal obligation to allow you to unilaterally terminate a contract and my bet is the vast majority of leasing companies do not do so either - without a penalty to the lessee.

    You can apparently swap out of your lease and get someone to assume your lease obligations (with AFS approval). Try the leasetrader.com site.

    Sorry that you got stuck but car leases are complicated financial transactions - if one doesn't understand them, don't do it. I was very well versed on leases, knew the MF and invoice and negotiated thousands under MSRP but ... I still may have got a couple of points too low on my residual. Also, if one's income stream is not certain, leases are not a good idea.
  • mcwenzelmcwenzel Posts: 37
    Edward, with all due respect, you are completely wrong. I understand the lease terms very well, I am an attorney, and I review contracts frequently. This has nothing to do with a penalty or breach of contract. This is not an early lease termination, it is a lease buyout.

    I read all of the contractual terms. The contractual provisions explicity permit a lease buyout. Lease buyout does not consitute a breach. You are confused about what constitutes a breach.

    If Audi wanted to put in a contractual penalty for an early lease buyout they could, but they don't. They expressly permit a lease buyout in the lease contractual provisions. Again, an early lease buyout does not constitute a breach. A buyout at the end of the lease does not constitute a breach.

    The issue is the disparate buyout price based on who is buying the car. Audi does this whether you are in the first or last month of your lease. It has absolutely nothing to do with a breach of contract or early lease termination.

    I got a great deal on my Audi, with a very low MF and with a reasonable residual. Unfortunately I can't take full advantage of the bargained for residual.

    My statement regarding how other companies handle the exact same situation is 100% accurate because I verified it. Again, it has nothing to do with breach. I really don't want to get bogged down in complex legal issues. The facts are the facts. I point this out simply to warn others of my experience and the inflexibility of Audi which stands in stark comparison to other lenders.

    Luckily I am not stuck because my lease is just about over, and it won't cost me too much, but others could be impacted more greatly.
  • jazz11jazz11 Posts: 3
    Hi,

    New to leasing but was offered at the dealership:

    a4 2.0 quattro msrp: $32,300

    $3000 down $400/mo (tax incl.) 36mo/lease

    a4 sline quattro $40k range

    $4000 down $480/mo + tax 36mo/lease

    I'm kind of new to leasing and was previously looking to buy a used 2005/6 in the low 20's and thought leasing might be an option...get a new car for lower monthly payments...but the amount down seems a bit high.

    I have excellent credit and should always get the lowest rate...although leasing and residual value etc...confuses me a bit. What's reasonable for the southwest? I don't need a superb deal just something fair.
  • bvdj84bvdj84 Posts: 1,721
    Yes, the amount you put down on both the models seems high. I know that had run a lease special that required you to put less down and less a month. Be careful before going any further, also you might want to have several dealerships fax or email you quotes. pick the best one. Look Audi website for specials. They just ran this special, but this seems to be the norm of what they do on this model. It seems a bit less, but I would try to negotiate a littler lower. Never take the first deal offered. You can always do better.

    $379* lease per month for 36 months
    Now through July 2, 2007

    Down payment: $999
    Refundable security deposit: $400
    Acquisition fee: $575
    First month's payment: $379
    Amount due at lease inception: $2,353
    EXCLUDES TAXES, TITLE AND DEALER FEES

    Try asking for a couple deals with 0 down or 1k down, see what you get.
  • jazz11jazz11 Posts: 3
    bvdj84,

    ok thanks....when I went in there, the sales person said that $2,353 doesn't include the dealership fees and the low monthly payment only applies to the base models.

    Everything is negotiable but being new to leases I wasn't sure on what you negotiate. Also do you negotiate on APR with leases?
    My credit union says I can get 6% no problem.

    If 0 down or 1k down is offered, the monthly payments usually go up also?

    Reading the forums a bit I see a lot of weight is put on residual value.

    Anyway thanks for the info I'll email a few dealerships in other states.
  • rallyfanrallyfan Posts: 36
    I TEST DROVE TWO A4'S 2.0 CVT FRONT TRACK AND A A4 3.2 FRNT TRACK I LOVED BOTH OF THEM MY WIFE WAS VERY IMPRESSED, ALSO BECAUSE SHE WANTS A CAMRY ARGH. WELL I RATHER LEASE THAN BUY BUT I WNT 36 MOUTHS 15K A YEAR AND LITTLE TO NO DOWN AS POSSIBLE I AM IN SO CAL. ARE THE NEW LEASES ADVERTISED GOOD ONES. THANKS ANY COMMENTS
  • jazz11jazz11 Posts: 3
    Just wondering if you can expect a better deal if you have an excellent credit rating when leasing or is a credit rating irrelevant?
  • cars0153cars0153 Posts: 45
    It always plays a factor
  • cars0153cars0153 Posts: 45
    I agree with you except on #3. These are costs added to dealer invoice and affect the invoice.
    Be fair to the dealer
  • cars0153cars0153 Posts: 45
    I got close to $2700 off
  • raudiaudiraudiaudi Posts: 8
    I worked out the math on a 2007 a4 Audi. Now my comparison is lease vs. buy numbers. On the buy side, I would be looking at a finance loan of 35k, 60 mos. at %5.89 with a payment of about 675/mo. Where as the 36 mos. lease is 379/month 10k mi/yr. Here is the kicker. The residual value on the car after the 36mo. lease is at $18,796.40 and the balance on loan after 36mos. on the 5yr loan situation is, $15,243.80. A difference of $3,553.00 less on the loan. But now factoring in $300/month MORE I pay on the loan for the 36mos., this is $10,800.00 total. So was it worth paying 10,800.00 over three years to buy down the value of the car by 3,553.00? My answer is NO! I can take the 300/month an put it in savings or investment, thus offsetting the cost of driving a newer car. I don’t care about the 10k mi. restriction b/c I will buy the car at the end of the lease. This is a great option because if you look up the same car with the “planned” amount of mileage after three years which would be a 2004 model right now, these cars are priced at 25k. This is a good argument to buy the car from the dealer after the lease end for 18,796.40, then sell it on the market and make a few grand or drive it some more. I think I am seeing all angles of the deal, please let me know if something is in my blind side. Basically I am avoiding loan interest for the first three years of ownership, which is a very large savings with the cost of borrowing money these days at a rate around 5.89%. That is how the savings is made in the lease rather than buy of this car, and maybe in taxes, but that is a gray area to me right now since I haven’t researched it yet. I know the purchase after lease situation of ownership has always been regarded as a way to pay the most for a car, but I think in this situation it works out better to lease.
  • mcwenzelmcwenzel Posts: 37
    You won't be buying the car from the dealer, you will be buying it from VCI Account Services, LLC, who Audi assigns their lease rights to. You can buy it at the end of the lease and resell it, but you will be subject to double taxation depending on your state.

    Also, 2004 A4's are not going for 25k. That might be the asking price, but not the selling price. I know that because I am currently selling a 2004 loaded A4 with 33,000 miles on it.

    I am in a similar situation in an A4. I leased the car with a ridiculously low money rate of .0004 or something like that, and while the car is worth more on the open market then my residual, factoring in the tax consequences makes it a wash.
  • edwardsfedwardsf Posts: 187
    Whether those advertising fees are "real" or not, they add to the cap cost of the vehicle. And informed posters here are simply not paying those fees. Sure, one can let the dealer add those fees on if he wants, then one should offer invoice. Actually, right now, people are getting well below $500 above invoice as it is the end of the model year. So I would start well below $500 above invoice (or start at well below invoice if the dealer is adding advertising fees.)

    BTW, I have never seen a Southern California or Bay Area Audi dealers ad. I see them for Bimmers and Lexus all the time, but I never see them for Audi. The only thing they do is link some poor deal to the AudiUSA website.
  • cars0153cars0153 Posts: 45
    lease period. Here are other fsactors to keep in mind. What happens if you don't want o-r like car after 3 years? With the lease your done and have options. With the purchase you still owe money. What happens if the car is not worth the residual(mine wasn't)?
    with a lease Audi has the risk. On a purchase you do!
  • rallyfanrallyfan Posts: 36
    how to tell what are good numbers and what bad numbers im sure when you go into a dealer it can be overwhelming
  • raudiaudiraudiaudi Posts: 8
    I have owned a 2003 A4 before and liked the car, but it was when I could get a smokin' deal on the borrowed money, like 1.9% interest offer. I don't think that hitting a $18,500 residual will be too tough. There was a lawyer that posted something about leasing through Audi Finance as a bad idea because of not being able to sell the car to someone else without getting hit with taxes twice. I am not worried about that, plus it is not true...A lease needs to be thought of as a rental, not a purchase of an item, yes you are getting taxed on the lease payment throughout the course of the lease, but that is expected, as you would have to pay sales tax on the transaction to rent a car for example. What you are getting taxed on when you buy the car for the residual is the residual value of the car, in this case, $18,500.00 which is what you would pay if you bought the car outright anyway, but the taxable amount would be based on the market value of the car today. Audi isn't some special lease company that comes up with their own rules to screw a customer, it is simple business. Being a lawyer, I would hope that the Bumsville, Idaho Cosmotology, Tire, Community College and Law School Center he went to to get his Law Degree would have taught him the difference between a loan and a lease agreement, but I have overestimated lawyers before. Off the rant and back to what I was saying, so yes, if you buy the car from the dealer at that time, there will be taxes, i.e. transfering the car from the dealer to you, since it was a "rental" from the dealer to you, then there maybe another tax situation depending on who you sell the car to at the time depending on the party you sell it to and how straight edge you are with those types of transactions. Anywho, lease does look better in the numbers...
  • audihorseaudihorse Posts: 15
    That was a nasty reply to someone who was correct about Audi lease exclusionary pricing and explained it multiple times quite well.

    Not necessary. Bad manners, too.

    Audi will not sell the car on buy-out price defined in lease agreement (residual value + remaining payments less interest) to anyone BUT the lessee. That is the difference he finds in Audi from other auto cos. Audi will quote a higher price if a 3rd party wants to buy the car. Other auto cos. in his research have indicated that a 3rd party could buy a car from them off of a lease to you at that agreed price and this would enable you to escape tax burden by having to buy the car and re-sell it to 3rd party....

    The tax occuring twice refers to something that is true on most leased cars in most states. If I buy my Audi today I pay remaining tax owed and then if I sell it tomorrow to another party they pay the tax on the amount they pay me, too. That is not exclusive to Audi, though. There are clever ways to get around this in some states. What is exclusive to Audi according to the poster and guarantees this tax situation is their refusal to sell to a 3rd party for the same (possibly attractive) price as they have agreed to sell it to you in their lease agreement. It is not as though they get the tax money so it is just a way to encourage you to stay in the leased car by making it financially unattractive to get out of the lease. Either you have to buy the car and re-sell and pay tax or a 3rd party (non Audi dealer or your next door neighbor for example) has to pay more unattractive price to buy out from Audi and then they pay tax once on their transaction (if it is private party - but if it is a dealer - then no tax will be paid until the car is sold to another private party by dealer.)

    What part did you not understand?
  • mcwenzelmcwenzel Posts: 37
    I will take the high road here and simply agree with what Audihorse posted. Raudiaudi, you seem to have a complete lack of understanding of how the transaction is going to work, but in any case, go for it and see how it turns out for you. It seems no efforts to simplify will enlighten you.

    Just don't call me in three years for help when you decide to buyout your lease from the "dealer" and finally figure out how the transaction will work.
  • mcwenzelmcwenzel Posts: 37
    For further clarification regarding tax liability on a lease buyout for anyone interested, in California there is an exemption to avoid tax liability on a lease buyout if you resell the car within ten days of taking ownership. The condensed timetable makes this a difficult but not impossible timeframe to comply with if you have a buyer you can trust lined up.

    This will avoid tax liability on the lessee's part and allow the lessee to resell to a third party at the favorable lease buyout price (or higher to turn a profit).

    http://www.boe.ca.gov/pdf/reg1610.pdf

    Tax laws vary state to state however.
  • edwardsfedwardsf Posts: 187
    What RaudiAudi (and I) don't understand is why the lawyer, who contends he knows about contracts because he is a lawyer of some sort, signed a contract which he can't comply with. As previously pointed out, if the lawyer signed a contract he is bound by the conditions of that contract. If the lawyer chooses to sell the car in violation of the lease terms, the contract allows for Audi to penalize him in some manner - as all leasing companies do in one form or another. If you can give me a cite or a link to a leasing company that does NOT penalize one for selling a car out of a lease, please do.

    Or, if the lease allows him to sell to a third party but at a higher buyout fee, he has to perform that contract term because ... he signed the contract. So if Audi wants to keep you in a lease for their business purposes (which I think we can assume they know better than the consumer), they can penalize him for breaching that lease by selling the car to a third party. Maybe some companies will let the lessee sell the car to some third schmoe for the remaining payments and residual, but the lessee will still owe them a fee. Otherwise, what is the incentive to stay in the lease?

    If Audi has violated the terms of the lease by requiring a higher buyout than the lawyer contracted for, then the lawyer has a cause of action against Audi. But it appears that Audi is not violating the lease as the lawyer does not mention litigating the issue (and if a lawyer would not litigate, who would?) Again, if they penalize him beyond the terms of the contract, the lessee has legal redress. Indeed, he could get attorney fees under truth in lending laws.

    http://consumerlawpage.com/article/common.shtml

    I don't think Raudi was following the tax argument of the lawyer. The lawyer is indeed hosed by the tax circumstances he got himself into. The lawyer never did respond to my suggestion to trade or sell the lease itself. As I said, if one don't understand the risks inherent in a lease or have an uncertain income ... one should not enter a lease.
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