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Discussion Starter #1
Hello,

I would like to trade in my Lexus GS for a new Touareg. I am also shopping at Lexus. I am in Canada.

I do not want to put in any down payment for the lease. At the Lexus dealership, the salesperson said that the dealership would write a cheque/check for the value of my old car if I wanted zero down for the new car. Easy. Can a VW dealership do the same?

At the VW dealership, the salesperson subtracted the value of my trade from the price of the new car and said that the dealership would not write a cheque for the value of my old car. He also claimed that I still had zero down, even though he subtracted the value of my old car from price of the new car.

I am willing to have higher payments, but I am not willing to have any down payment. I do not know how writing me a cheque for my trade and having higher payments is different than lumping the two together for the dealership because it still get the same amount of money. Is this is the case for all VW dealerships? If so, a Touareg is out of the question. I also do not want to sell my car privately because I do not want hassles.

Also, does anyone have any detail on Multiple Security Deposit to lower the interest rate?

I have only visited one VW dealership. So far, the shopping experience has been as stress-free at Lexus as it has been stressful at VW. I am not sure VW is ready to sell a car that costs more than $50k...


Thank you.
 

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Find a different dealer, what he is telling you is flat out wrong and BS. The equity in your trade could be used to pay the entire lease if it were enough. The question unanswered here is do you have equity in your trade car?
 

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x2 the dealer is just wrong. It makes no difference if they apply the trade to the value of the vehicle or apply the trade to your down payment.

One item of interest for you - regardless on if they apply it to vehicle price reduction or down payment, you get a tax credit for the value of the trade in. Once you calculate the total sales tax on the value of the lease, you apply the credit from your trade towards this sale tax - effectively lowering your total payment.

I've only seen the more money down for better rate on Lexus, haven't seen this on any of the German makes.

As for VW not being ready to sell 50K vehicles, VW has been at the Touareg game for over 10 years and VW Finance runs financing for VW, Audi, Porsche, Lambo, Bentley, Bugatti so they are more than familiar with financing expensive vehicles into the 7 figure range. You may have just gotten a bad sales rep.
 

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Discussion Starter #4
Thanks guys.
I own the Lexus 100%. What I expect is for the dealership to pay me for my old car + tax and then to sell me the new car + tax. Two separate transactions, but the same net amount of money at the end. I do not want to have any asset down for a car that I do not own. There are too much risk, such as in the event that I have to transfer lease or total the car. This is how the Lexus dealership do it for me if I buy from them. I do not see why the VW dealership cannot do the same. I need to make sure.
As for VW not being ready to sell 50K vehicles, VW has been at the Touareg game for over 10 years and VW Finance runs financing for VW, Audi, Porsche, Lambo, Bentley, Bugatti so they are more than familiar with financing expensive vehicles into the 7 figure range. You may have just gotten a bad sales rep.
I think I will try another dealership. This one is well-know for their "service" among the VW enthusiast community, but I went there first because it was close. To be fair, there are bad salespeople at Lexus too, but my guy has been very good and no BS.
 

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Just traded a 13 Touareg for a15. Used my equity in the old one as DP
No problem
Yes there is a security dep
But u get back At term
 

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Also when you trade a car in on a lease you will pay tax on the down payment at least in British Columbia that is the case they tried to charge me $800 on my $10,000 down payment in the end I made the dealer pay for it
 

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Discussion Starter #7
Also when you trade a car in on a lease you will pay tax on the down payment at least in British Columbia that is the case they tried to charge me $800 on my $10,000 down payment in the end I made the dealer pay for it
I am trying to have no down payment. If you do not mind me asking, is there a reason why you want to put in a down payment on a lease?
 

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Why can't you just trade in the Lexus in for the Touareg? If you owned the Lexus outright why wouldn't you want to own the Treg? I'm confused.
 

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Discussion Starter #9
Why can't you just trade in the Lexus in for the Touareg? If you owned the Lexus outright why wouldn't you want to own the Treg? I'm confused.
I am not sure I want to own the Touareg outright. I switch cars too often, so having a guaranteed value at the end is appealing, and I don't need to deal with trade-ins or private sales.

I want the value of the Lexus in my pocket rather than in VW's, and pay VW as I use it instead of pre-paying.

Here are cases:

Case 1: Say a Touareg is $60k and subtract $10k from the Lexus, and the residual of the Touareg is $30k, I am owe the amount of $20K+interest in the next 36 months. Meanwhile, I do not have $10k in my bank, and I do not own the car.

Case 2: Say a Touareg is $60k, VW pays me $10k for the Lexus, and the residual of the Touareg is $30k, I am owe the amount of $30K+interest in the next 36 months. I can make more than the interest saved with the $10k in the bank or some investment.

Ultimately, in both cases, the dealer gets $50k and the Lexus, just a matter of paper work.

Also, if I totaled the car, the insurance is going to pay the financing company before me, so I lose some amount of the $10k, and that "some amount" is an unknown - a huge one. If I want to transfer the lease, I lose the down payment. (It is probably hard to *sell* a lease contract to someone.)

I own the Lexus outright, and I don't want to give it away to VW so I can have an artificially lower payment in 36 months. If they include the trade in the total obligation, it is the same as putting a huge down payment on a car that I don't own, and many people discourage down payments on leases.

Some people do put a down payment on a lease, and I want to hear their reasoning, which I think is probably reasonable too.

Thanks!
 

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Never put a dime down on a lease. The whole point of a lease is to use their money since its pretty easy to beat a 1 point interest rate, and also use their money for an income tax expense benefit (if you can). Yes they will charge tax on a downpayment since any payment toward the lease is taxable (you don't pay tax on residual value). Advantage 2 of a lease is a guaranteed residual, giving you a pre-determined "out" point at a guaranteed price.

Understanding a lease is pretty easy, you pay interest on the whole amount of the vehicle (say 60k), but you only make payments plus sales tax on the difference between purchase price and residual (say 30k). So pay down 30k while paying interest on 60k is essentially the structure of the deal. There is ZERO advantage to putting money down as you are still paying the full interest cost.
 

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I beg to differ
Putting money down brings a $1300 month payment to $800. The DP gets divided over the lease term making a more manageable payment
 

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I'm not sure what the MF is in Canada right now, but it is .00001 in the US. It's the wrong choice in every circumstance to put a down payment down on a lease with a MF that low. Put the money in a special bank account if you are worried about the monthly payment - the customer shouldn't be assuming the risk if the car is totaled as rightly pointed out above.

BMW has a program called MSD (multiple security deposits) that is basically upfront money used to buy down the money factor. Its returned upon lease completion and this IS a good thing to do in nearly every case. BMW money factors are usually around .0013 (3.9 % APR) before MSDs.
 

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I beg to differ
Putting money down brings a $1300 month payment to $800. The DP gets divided over the lease term making a more manageable payment
Financially, its the equivalent of pre-paying rent to a landlord so you can cash flow the rent. Purely from a financial point of view there is no interest saved, or any other sort of financial advantage if you pre-pay (put money down).

If its an emotional decision to get into something you want at a lower monthly cash flow then yes I agree with what you're saying.
 

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Discussion Starter #14
I asked another dealership the same question. I told the salesperson whether or not I would buy a VW depends on his answer, and yes, the dealership could pay me for my old car.

Also, here is a fun dealership story for you all:

The first VW dealership that I visited was chaotic, but I think their salespeople uses chaos as a sales tactic. On the phone, the salesperson at the first dealership told me that he would give me X discount, send me an email of a scanned ads that was so small that I could not read the fine prints, and when I arrived, he told me the discount was only for a manager’s demo gasoline engine with an interior that smelled like French fries. Another salesperson told me that they were not giving the cars away, and I told her that I had a price in mind, and I was not going to give one cent more than that price away, so I told her we were on the same page (with my trademarked smile!) I should have walked away, but because of how they acted, and I had a few hours to waste, I wanted to experience for myself how bad a buying experience can be. I heard stories, but I never experienced one.

I told the salesperson that I wanted a brand new car with a diesel engine. The salesman acted all surprised when I showed him an invoice report. After two hours of sharing personal stories, testing my old car, and trying to get my commitment to buy, he came back from his manager’s office and presented me the “great news” of a mediocre deal, subtracted the value of the old car from the new car, and said “look at the LOW payment!” To top it off, the salesperson joked why I did not look surprised at such “amazing” deal (I think I gave him my unimpressed look) and told me the deal was good for the next hour. He also said he could lower the price if I went with the demo. (Since the beginning, I told him I wanted a diesel only. I thought that he was listening to my needs, but he was just trying to make a sale. I really thought he had my best interest in mind LOL.) It was an experience all too stressful but funny at the same time, and I went doing errands instead. He called a little over an hour later, and I told him I would go with Lexus instead. (However, since, I have changed my mind and I am still debating between VW and Lexus.) The car that I wanted is still on the lot today.

Also, for the vehicle that I was wanted, there was a huge gouge in the interior that cut across the plastic trim to the aluminum trim to the wood trim. The gouge which was probably caused by a knife when someone was removing the wrapping. (They said that they could change the trims, but I am unsure that they are competent enough to change the trims without causing rattles in the future.) With their demos, it looked like someone used a really rough clothe to wipe the wood trims, so the wood trims were horribly scratched. I am not sure if I want to have my car serviced there if they treat their unsold inventories like that. (This is why I originally said that I am not sure whether or not VW is ready to sell and service a car that costs more than $50k.)

The sad thing was that one older couple bought a car at the same time, and I guessed that their salesperson used the same tactic, and they did not get a good deal.

If Lexus (of all brands) can give me below invoice price with all incentives, snow tires, and free maintenance with little to no haggling and top-level service, I am pretty sure VW can too.
 

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my dealership experience was actually pretty pleasant. I was concerned as BMW, Audi, MB all have low pressure, bottom line oriented sales approaches. No real messing around. My VW dealer was very easy to deal with, sent the invoice along with my initial inquiry that matched Edmunds invoice. A pretty good experience overall. Some hassle on lease numbers that didn't get resolved until finance. But overall, a very good experience.
 

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I think where Lexus is way ahead of VW (and just about everyone else) is that they dictate the client buying experience to the dealers. Dealers have no discretion re: what "sales tactics" to use. As you say, you get the whole deal up front with them...
 

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Discussion Starter #17
I think where Lexus is way ahead of VW (and just about everyone else) is that they dictate the client buying experience to the dealers. Dealers have no discretion re: what "sales tactics" to use. As you say, you get the whole deal up front with them...
Unfortunately, Lexus has not figured out how to create a car like the Touareg, and their designers have been smoking something lately.

However, it is amazing how good service can build loyalty. Lexus does not have an SUV that meets all my needs, but they are still in the radar because of my history with them. I think most brands can learn from Lexus in this area.
 

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The first VW dealership that I visited was chaotic, but I think their salespeople uses chaos as a sales tactic.
Just had visions of Ricky Roma from the classic movie, "Glen Gary Glen Ross".
 

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Coffee is for closers.
 
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