Audi Q5 Lease Terms - Numbers don't make sense to me

harpua728

When comparing lease quotes I only care about one thing....the total price over 36 months including EVERYTHING (Down payment, taxes, fees, etc.). I just want to know the total cost and don't care what's due upfront or what the monthly payment is (though I prefer to keep upfront costs low).

I use a simple formula to figure out the true cost of leasing the car for 36 months. I simply gross up the total taxes I need to pay to get the “taxable amount” which should be the cost of depreciation and interest, and then add the taxes back in.

Using the example given here (http://www.realcartips.com/leasing/0434-how-to-calculate-lease-payments.shtml) I would multiply the monthly tax of $32 by 36 to get the total taxes over the lease which would be $1,152. The tax rate in the example is 7% which means the total pre tax cost is $16,457.14 ($1,152/.07) and the total overall cost, with taxes is then $17,609.14. This total over 36 months comes out to an average of $489.14 per month and that matches the calculation in the link above.

I’ve used this method for my current lease and the numbers work. However, I just got a quote on a 2016 Q5 and something seems off so please let me know if I am missing something.

I was quoted the following on a premium package with heated seats:

36 months with 10,000 miles per year
$399 per month with $2,654 plus DMV due at signing.
Amount due at signing broken down as: $399 first monthly payment
$795 bank fee
$1,460 tax (8.625% Tax rate)
$2,654 total

Cap cost - $39,392
Residual - $25,715

Using my method above, I get ($1,460/.08625)+$1,460 = $18,387.54 as the total cost of the lease.

Since $2,654 is due at signing, the remaining balance to be paid over 35 months would be ($18,387.54 - $2,654) would be $15,733.54 (i.e. $449.53 per month). How are they getting to $399/month?

harpua728

Actually, the total cost of the lease would be $18,387.54 plus $795 bank fee. That would increase my numbers to $472.24 a month.

They did mention a dealer incentive of $750 but that still wouldn't get me to $399.

kyfdx

@harpua728 It would be helpful to know which state you are in.
Also, which Q5 model is this?
What is the MSRP?

Using a tax calculation to reverse-engineer a lease payment is a lot of work. You say you only care about the total cost, but evidently, that isn't true, because now you want to know how it was calculated.

Just tweaking you a little bit.. lol

Lease calculations are easy, once you have the information I asked for. Give us that, and I bet I can answer most of your questions.

harpua728

it's a 2.0 premium and I am in NY (8.625% tax rate). Net cap is 39,392 after $1,750 in dealer rebates. I'm not sure what the exact MSRP is but does it matter, or is only the sale price and residual important? I got the numbers to work finally.

However, I have another quote on another car that I can't get to tie out.
$37,810 MSRP
$35,836 Sale Price
$24,198 residual
.0016 MF
36 months
$2,499 total out of pocket due at signing and $438.74/month (Includes NY tax)

kyfdx

@harpua728

Using the numbers in your first example, I get exactly $399.44/mo.

The problem with using your tax method, is rebates and some other discounts may be taxable. So, even though they aren't part of what you are paying, you still have to pay tax on them. This skews the tax higher than what it would be if you were just taxing your outlay.

The reason we ask for MSRP is two-fold.
a) The spreadsheet calculates residual as a percentage of MSRP, it doesn't solve for MSRP.
b) It helps us evaluate the entire lease deal, including discount from MSRP.

$43585 MSRP
$39392 CAP
.00030 MF and 59% residual
$379.91/mo. depreciation
$19.53/mo. finance
$399.44/mo. payment

What car is the other quote for? Do you have the CAP cost on that one?

harpua728

$35,836 is the cap cost. It's a 2017 Acura RDX.

kyfdx

harpua728 said:

it's a 2.0 premium and I am in NY (8.625% tax rate). Net cap is 39,392 after $1,750 in dealer rebates. I'm not sure what the exact MSRP is but does it matter, or is only the sale price and residual important? I got the numbers to work finally.

However, I have another quote on another car that I can't get to tie out.
$37,810 MSRP
$35,836 Sale Price
$24,198 residual
.0016 MF
36 months
$2,499 total out of pocket due at signing and $438.74/month (Includes NY tax)

With this residual on the 2017 RDX, looks like a quote for 36mo, 10K/yr.
It's a new model with a high residual, but also a high money factor.

If that $35,836 is the actual adjusted CAP cost, then I get $419/mo.

Either way, the Audi deal looks better.

harpua728

Thank you!