First of all, the dealer is adding profit for themselves with that Money Factor. The current 36 month/15k miles money factor is 0.00038.

Secondly, don't put any cap cost reduction on the lease. Yes, you're payment is lower, but you're just essentially prepaying lease payments. Given the relatively low interest rate, you're not really saving anything. Also, God forbid you total the car, you will not likely see any of that money back.

Good job doing the Audi Care, it doesn't change the payment and now you get scheduled maintenace. Good luck!

Audi allows you to make up to 9 security deposits. They are fully refundable at the end of the lease. Each security deposit (monthly lease payment rounded up to the nearest $50, I believe) lowers the money factor by 0.00008.

In my case, I was only allowed to make 4 deposits because the initial MF was 0.00038. So take away 0.00032 from 0.00038 and you get my MF of 0.00006.

When you negotiate the lease, get the payment without MSDs. Then tell them that you want to make as many MSDs as you are allowed and you can afford. See the difference in payment relative to the amount you are giving them. In my case I am giving them $3000 for 3 years. I am saving $30/month in payment. That's a 12% tax free guaranteed return on my money. I get the $3000 back at the end of the lease.

THe reality is that most people don't do this because most people in America don't have more than a couple of bucks in the bank and can't part with the money for the 3 years. But if you can, do it. It usually makes a lot of sense to do.

Mikeoc1 - I still don't agree with your approach. While it is not wrong, here is my rationale.

I am not a fan of tying up money. So you are telling me you want to tie up $3000 to save less than 0.7% in interest cost in your lease rate? From my quick math - the difference is negligible - less than $500 difference than putting the money in a bank CD earning 5% or a wash when looking at the long-term market equity returns of 8%. Having the liquidity and flexibility of the $3000 in my bank account over the three years of the lease is better in my book than tying it up with Audi in a security deposit given the current .00036 money factor regardless of one's bank account size. Additionally, Audi could always try to keep that money if you want to break the lease. You can't price the option value of the liquidity.

If I didn't give Audi the $3000, my payment would be $30/month higher. I would have to pay an additional $360/year each year for 3 years. The $3000 that I am keeping in my account would have to earn 12% tax free to compensate for the additional $360/year.

It doesn't matter that the money factor is already low. The original lease price is based on that. I am making it even lower.

I don't need all of my money now. If I did, I'd be broke. I can take $3000, give up use of it for 36 months, and in return save $30/month on my lease payment.

I would do that 100 times out of 100 and, in my opinion, it would be financially irresponsible not to.

I've been following your posts with interest as I am getting ready to lease a Q7 (15K/36mths). Could you share your monthly payment, MSRP & selling price & your dealer? I'll likely go for the MSD's also.

No argument for me. Just that the dollar difference savings to me is not great enough to tie up $3000 over 3 years to save $1000 (absent time value of money). I would prefer to keep the $3000 liquid.

In my lease - the savings would have been only about $900 over three years. I prefer to invest the difference and keep the money liquid. At an 8% return (which equals the long term S&P average), the amounts are a wash.

I'd be happy to share my deal. After reading everything I've read, I feel it's a decent one.

I have ordered a Bright Silver, Black interior, 3.6 Premium, Infotainment, Convenience, Technology, Moonroof, 19" wheels. I thought about the cricket leather, but didn't see that big of a difference. I thought about the Quartz Gray color ($750 option) but my wife liked the bright silver a lot better. I thought about the 20s, but the car is coming at the same time that our first child, so went for a slightly smoother ride.

MSRP is 55670. Selling price is 53731 (you could probably do a litte better). Residual was 52%, but increased to 53% with AudiCare. AudiCare doesn't change the payment, make sure you include it. Money factor was 0.00038 (Lowered to 0.00006 with 4 MSDs) 36 months/15,000 miles. Monthly payment of $733 taxes included (NJ). Payment would have been about $763 without the MSDs. I bought from Jack Daniels Audi in Fair Lawn, NJ.

$4770 due at lease signing (includes first month, the usual fees and a $3000 fully refundable security deposit)

I ordered because I need the car in May. I can't wait!!

Please ask if you have any other questions. Lots of luck!

I took a look at the numbers and wanted to share. Once again, you have to look at the individual deal with and without MSDs to see if it's worth it. The more expensive the car, the more it's worth it, typically.

1 choice would be to keep the $3000 in the bank. If it earned 5% (forgetting taxes for the moment) you would have $3484 at the end of 3 years.

If you took the $3000 and gave it to Audi, in my case you'd save $30/month in lease payment. If you diligently took the $30 and put it in the bank every month for 36 months, at the end you would have $1,162. Then you'd get the $3,000 back from Audi so you'd have $4162. Giving up the use of $3000 for 36 months gives you $678 of added wealth.

You shouldn't keep all of your money liquid. Significant opportunity cost to do so. If you have your 3-6 months of living expenses already in savings, taking $3000 out of your investment portfolio to do this makes financial sense. If all you have is $3000, don't do the MSDs, and don't buy a $55,000 car!!

If I gave them my A6 for the trade-in, doesn't it mean that I pay less sales tax on the Q7 lease? So if I get 7,000 off the price of the Q7, I am now saving on the tax.

Here are the numbers I ran through LeaseGuide.com, without and with the trade-in. This is for a base Q7 with a NJ sales tax. Please tell me if this is realistic!

According to LeaseGuide.com w/o trade-in ---------------------------------------------- MSRP: 39900 Base Cap Cost: 38000 Costs Added: 575 (aquisition fee) Cap Cost Reductions: 0 Adjusted Cap Cost: 38575 Residual Value: 23940 (60% - 10k/yr) Money Factor: 0.0004 Term: 36 Sales Tax: 7%

Depreciation: 14635 Finance (Rent) Charge: 900 Total Sales Tax: 1087

Total of All Pmts: 16622 Total Lease Cost: 16622

Monthly Pmt: 431 Tax: 30 Total Monthly Pmt: 461

According to LeaseGuide.com w/ trade-in of $7,000 ----------------------------------------------- MSRP: 39900 Base Cap Cost: 38000 Costs Added: 575 (aquisition fee) Cap Cost Reductions: 7000 Adjusted Cap Cost: 31575 Residual Value: 23940 (60% - 10k/yr) Money Factor: 0.0004 Term: 36 Sales Tax: 7%

Depreciation: 7635 Finance (Rent) Charge: 799 Total Sales Tax: 100

I frankly am not 100% sure, although logic would say that you are correct. I do have two observations.

In the 2nd example, you say total sales tax is $100. Then you say that of the 250 monthly payment, 16 of it is tax. After 36 months, that's $576 of tax. This represents a $504 tax savings along with a $100 interest savings.

Second, you have the total lease cost in the 2nd example as being $15534. $250*36 = 9000 + 7000 down payment = 16000. This compares to the 16,662 cost of the lease in example 1. This more accurately reflects the tax and interest savings.

While saving $600 is nice, the downside of doing this is if the car is totaled or stolen and not recovered, you lose the $7000 trade in. A cap cost reduction does indeed save some interest and I do believe a trade in would save the tax on a lease.

I do belive, though, that the general consensus would be to avoid any cap cost reduction on a lease, tax savings or not.

You're right, now that I think about it. I'd be better off investing the $7,000 in an ING savings account, where I would earn $350 annually, $1050 over 36 months not counting interest on interest, $400 more than what I would get from the tax savings. If I receive a check from them for my car instead, does this mean I now have to pay tax on this sale? Or is it still considered a trade-in?

The big question for me on the Q7 remains - is the money factor is also .00038 for the base model just like it is for the premium? I called Audi Fin Svs but of course they didn't tell me this information... Anybody know? Carman?

Before I even started to discuss numbers, the salesperson telling me that the lease deal on the Premium is better. Are they getting some incentive from the manufacturer on the premium models?

You aren't paying tax on the sale of the car, you're paying tax on the purchase of the car. So if you receive a check, you do not have to pay taxes on the sale.

Mike - No disagreement with your argument. I opted not to tie up the money with Audi for the marginal benefit - which I calculated around $300 for three years versus the ability to invest it somewhere else (i.e int'l ETF fund) and have the ability to get that money if needed (which I won't). While I could have easily put down the 4 MSDs (ironically it was never offered to me), just a personal decision. Some of the int'l ETFs have been earning well in excess of 10%.

If you are paying the same depreciation over 39 months vs 36 months, and the interest rate is low, I see no reason why it would be a bad thing. Chances are the payment will be lower as well. The key is the difference in residual value and the Money factor.

Hi lej1447. The price that you were quoted for the Q7 is definitely not below dealer invoice. Perhaps it is after all sorts of advertising and other fees are added in. Having said that, the price that you were quoted is still pretty good, especially if the dealer that you're working with had to swap for the model that you want. The lease program that you were quoted is right in line with Audi Financial Services' current program for this model.

Here's the information that you're looking for, shoprey85. Audi Financial Services' current buy rate lease money factor and residual value for a 36 month lease of a 2007 Q7 3.6 Premium with 15,000 miles per year are .00038 and 52%, respectively. The residual value for a lease with only 12,000 miles per year would be 2% higher. $500 over dealer invoice would be a very good price for this truck. That's a good target to shoot for, but don't be disappointed if you have to pay a little more than that. Make sure to stop by the following discussion to see how much other community members have paid for similar trucks lately: "Audi Q7: Prices Paid & Buying Experience".

You're absolutely right, ny_driver. Audi has been making up for its below average residual values on the A6 and Q7 with extremely low money factors. Good lick in your negotiations.

Oh darn it, I was hoping to be somewhere in the neighborhood of $500 above invoice. Any how, leasing contract does not list every padded or hidden cost, possibly such as ad fee and any other added in.

You mentioned about good quoted price given dealer swapping models. Would you please give me a little explanation why such was the case?

BTW, is it worth it to buy the Audi Care at this point, considering the cost of regular maintenance at intervals of 15K, 25K, 35K, and 45K (if I purchase the car after 36K mi lease)?

If you are going to lease, absolutely add Audi Care. It will add 1% to the residual value. This virtually eliminates the additional $550 cost. In my deal, my payment actually went down $0.30/month by adding AudiCare. Now I don't have to pay $100-$150 at the scheduled maintenace intervals.

Something to consider is that you have to pay for the fourth year of registration for only 3 months of use. May or may not be a factor for you, but that equates to several hundred dollars.

I've been reading some messages about the extra three months on the infiniti fx35 lease forum made by exaudiowner, see if his reasoning against it makes sense to you.

Let's say the residual value is the same for 36 months and 39 months. This is the way it was on my current lease.

From Lease Calculator

For 36 month lease, the monthly payment would be $864.76. Let's assume that all of the upfront fees are the same, in this case $0. 36 $864.76 payments = $31,131.36 total cost of the lease.

For a 39 month lease, the montly payment would be $807.61. 39 $807.61 payments = $31,496.79

You are payment a little more in total payments because you are using their money for 39 months instead of 36 months.

The depreciation cost is the same. You are paying it over 39 months instead of 36, so the payment is lower, but you make more payments.

If the residual value is much lower on a 39 vs 36, then you have the analyze the two and see which is better.

This scenario costs you $365 over 39 months to have a payment that is $57/month lower.

Do you know if I should be paying both the Destination Charge and the Acquisition (Bank) Fees, or just one of them? Should this fee(s) be capitalized as a part of my Net Cap, or paid up front?

Please look at my numbers that I got from the dealer yesterday:

I do believe that the adjusted cap cost includes the taxes. I'm unsure about what fees are capitalized.

As for the MSDs, they should be allowed but check on their program. For instance, a Mercedes dealer told me that for them, MSDs reduce their base money factor. If MB Financial is offering a subsidized money factor, MSDs do not lower the subsidized rate, making them a non-factor.

I know for sure that BMW and Audi allow for MSDs to reduce whatever the rate they offering.

## Comments

46Secondly, don't put any cap cost reduction on the lease. Yes, you're payment is lower, but you're just essentially prepaying lease payments. Given the relatively low interest rate, you're not really saving anything. Also, God forbid you total the car, you will not likely see any of that money back.

Good job doing the Audi Care, it doesn't change the payment and now you get scheduled maintenace. Good luck!

46Audi allows you to make up to 9 security deposits. They are fully refundable at the end of the lease. Each security deposit (monthly lease payment rounded up to the nearest $50, I believe) lowers the money factor by 0.00008.

In my case, I was only allowed to make 4 deposits because the initial MF was 0.00038. So take away 0.00032 from 0.00038 and you get my MF of 0.00006.

When you negotiate the lease, get the payment without MSDs. Then tell them that you want to make as many MSDs as you are allowed and you can afford. See the difference in payment relative to the amount you are giving them. In my case I am giving them $3000 for 3 years. I am saving $30/month in payment. That's a 12% tax free guaranteed return on my money. I get the $3000 back at the end of the lease.

THe reality is that most people don't do this because most people in America don't have more than a couple of bucks in the bank and can't part with the money for the 3 years. But if you can, do it. It usually makes a lot of sense to do.

4639I am not a fan of tying up money. So you are telling me you want to tie up $3000 to save less than 0.7% in interest cost in your lease rate? From my quick math - the difference is negligible - less than $500 difference than putting the money in a bank CD earning 5% or a wash when looking at the long-term market equity returns of 8%. Having the liquidity and flexibility of the $3000 in my bank account over the three years of the lease is better in my book than tying it up with Audi in a security deposit given the current .00036 money factor regardless of one's bank account size. Additionally, Audi could always try to keep that money if you want to break the lease. You can't price the option value of the liquidity.

46If I didn't give Audi the $3000, my payment would be $30/month higher. I would have to pay an additional $360/year each year for 3 years. The $3000 that I am keeping in my account would have to earn 12% tax free to compensate for the additional $360/year.

It doesn't matter that the money factor is already low. The original lease price is based on that. I am making it even lower.

I don't need all of my money now. If I did, I'd be broke. I can take $3000, give up use of it for 36 months, and in return save $30/month on my lease payment.

I would do that 100 times out of 100 and, in my opinion, it would be financially irresponsible not to.

14I've been following your posts with interest as I am getting ready to lease a Q7 (15K/36mths). Could you share your monthly payment, MSRP & selling price & your dealer? I'll likely go for the MSD's also.

Thanks in advance.

J

39In my lease - the savings would have been only about $900 over three years. I prefer to invest the difference and keep the money liquid. At an 8% return (which equals the long term S&P average), the amounts are a wash.

2146I'd be happy to share my deal. After reading everything I've read, I feel it's a decent one.

I have ordered a Bright Silver, Black interior, 3.6 Premium, Infotainment, Convenience, Technology, Moonroof, 19" wheels. I thought about the cricket leather, but didn't see that big of a difference. I thought about the Quartz Gray color ($750 option) but my wife liked the bright silver a lot better. I thought about the 20s, but the car is coming at the same time that our first child, so went for a slightly smoother ride.

MSRP is 55670. Selling price is 53731 (you could probably do a litte better). Residual was 52%, but increased to 53% with AudiCare. AudiCare doesn't change the payment, make sure you include it. Money factor was 0.00038 (Lowered to 0.00006 with 4 MSDs) 36 months/15,000 miles. Monthly payment of $733 taxes included (NJ). Payment would have been about $763 without the MSDs. I bought from Jack Daniels Audi in Fair Lawn, NJ.

$4770 due at lease signing (includes first month, the usual fees and a $3000 fully refundable security deposit)

I ordered because I need the car in May. I can't wait!!

Please ask if you have any other questions. Lots of luck!

46I took a look at the numbers and wanted to share. Once again, you have to look at the individual deal with and without MSDs to see if it's worth it. The more expensive the car, the more it's worth it, typically.

1 choice would be to keep the $3000 in the bank. If it earned 5% (forgetting taxes for the moment) you would have $3484 at the end of 3 years.

If you took the $3000 and gave it to Audi, in my case you'd save $30/month in lease payment. If you diligently took the $30 and put it in the bank every month for 36 months, at the end you would have $1,162. Then you'd get the $3,000 back from Audi so you'd have $4162. Giving up the use of $3000 for 36 months gives you $678 of added wealth.

You shouldn't keep all of your money liquid. Significant opportunity cost to do so. If you have your 3-6 months of living expenses already in savings, taking $3000 out of your investment portfolio to do this makes financial sense. If all you have is $3000, don't do the MSDs, and don't buy a $55,000 car!!

Have a great day!

21If I gave them my A6 for the trade-in, doesn't it mean that I pay less sales tax on the Q7 lease? So if I get 7,000 off the price of the Q7, I am now saving on the tax.

Here are the numbers I ran through LeaseGuide.com, without and with the trade-in. This is for a base Q7 with a NJ sales tax. Please tell me if this is realistic!

According to LeaseGuide.com w/o trade-in

----------------------------------------------

MSRP: 39900

Base Cap Cost: 38000

Costs Added: 575 (aquisition fee)

Cap Cost Reductions: 0

Adjusted Cap Cost: 38575

Residual Value: 23940 (60% - 10k/yr)

Money Factor: 0.0004

Term: 36

Sales Tax: 7%

Depreciation: 14635

Finance (Rent) Charge: 900

Total Sales Tax: 1087

Total of All Pmts: 16622

Total Lease Cost: 16622

Monthly Pmt: 431

Tax: 30

Total Monthly Pmt: 461

According to LeaseGuide.com w/ trade-in of $7,000

-----------------------------------------------

MSRP: 39900

Base Cap Cost: 38000

Costs Added: 575 (aquisition fee)

Cap Cost Reductions: 7000

Adjusted Cap Cost: 31575

Residual Value: 23940 (60% - 10k/yr)

Money Factor: 0.0004

Term: 36

Sales Tax: 7%

Depreciation: 7635

Finance (Rent) Charge: 799

Total Sales Tax: 100

Total of All Pmts: 9024

Total Lease Cost: 15534

Monthly Pmt: 234

Tax: 16

Total Monthly Pmt: 250

46In the 2nd example, you say total sales tax is $100. Then you say that of the 250 monthly payment, 16 of it is tax. After 36 months, that's $576 of tax. This represents a $504 tax savings along with a $100 interest savings.

Second, you have the total lease cost in the 2nd example as being $15534. $250*36 = 9000 + 7000 down payment = 16000. This compares to the 16,662 cost of the lease in example 1. This more accurately reflects the tax and interest savings.

While saving $600 is nice, the downside of doing this is if the car is totaled or stolen and not recovered, you lose the $7000 trade in. A cap cost reduction does indeed save some interest and I do believe a trade in would save the tax on a lease.

I do belive, though, that the general consensus would be to avoid any cap cost reduction on a lease, tax savings or not.

21The big question for me on the Q7 remains - is the money factor is also .00038 for the base model just like it is for the premium? I called Audi Fin Svs but of course they didn't tell me this information... Anybody know? Carman?

Before I even started to discuss numbers, the salesperson telling me that the lease deal on the Premium is better. Are they getting some incentive from the manufacturer on the premium models?

4621Are there any reasons not to get a 39 month lease instead of 36 months? The warranty still covers it.

394638,515Car_manHost

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16Oh darn it, I was hoping to be somewhere in the neighborhood of $500 above invoice. Any how, leasing contract does not list every padded or hidden cost, possibly such as ad fee and any other added in.

You mentioned about good quoted price given dealer swapping models. Would you please give me a little explanation why such was the case?

BTW, is it worth it to buy the Audi Care at this point, considering the cost of regular maintenance at intervals of 15K, 25K, 35K, and 45K (if I purchase the car after 36K mi lease)?

I'm still learning. Thank you so much.

464746212146Let's take a scenario and run it.

MSRP 60,000

Selling Price 58000

MF 0.00125

Residual Value 55%

Taxes 7%

Let's say the residual value is the same for 36 months and 39 months. This is the way it was on my current lease.

From Lease Calculator

For 36 month lease, the monthly payment would be $864.76. Let's assume that all of the upfront fees are the same, in this case $0. 36 $864.76 payments = $31,131.36 total cost of the lease.

For a 39 month lease, the montly payment would be $807.61. 39 $807.61 payments = $31,496.79

You are payment a little more in total payments because you are using their money for 39 months instead of 36 months.

The depreciation cost is the same. You are paying it over 39 months instead of 36, so the payment is lower, but you make more payments.

If the residual value is much lower on a 39 vs 36, then you have the analyze the two and see which is better.

This scenario costs you $365 over 39 months to have a payment that is $57/month lower.

21Do you know if I should be paying both the Destination Charge and the Acquisition (Bank) Fees, or just one of them? Should this fee(s) be capitalized as a part of my Net Cap, or paid up front?

Please look at my numbers that I got from the dealer yesterday:

http://tinyurl.com/33h269

The dealer said he's charging me $300 over invoice, yet the Net Cap includes the Tax amount...

I also have the right to give them multiple security deposits to reduce my MF ?

46As for the MSDs, they should be allowed but check on their program. For instance, a Mercedes dealer told me that for them, MSDs reduce their base money factor. If MB Financial is offering a subsidized money factor, MSDs do not lower the subsidized rate, making them a non-factor.

I know for sure that BMW and Audi allow for MSDs to reduce whatever the rate they offering.