[nickm]

My car buying guage is this: If on the drive to wherever it is that I am picking up the vehicle in question I am

a) sweating
b) having heart palpitations and
c) repeating "what have I done" over and over again

...I know I've made the right decision.

If I exhibit none of those symptoms its rare that I'll hang onto it for longer than 6 months.

YMMV. ;-)

 

[ania]

Every time you turn your car in before the lease ends, you loose money. The car is owned by the bank not the dealership. The dealer can give you a good or even a great deal on the new car, but the bank will still want its money. The dealer will buy the car from the bank, and applied the difference to your new car. That's how it works. Sure it will lower your payment, but, the least expensive Treg is 40K, Passat only 24K.The difference in payment should be drastic and in this case is not. The lease pymt on Treg is typically 50% higher or more, but in this case, the Passat was only $50 less.
With all that said, it's really your business what you're doing with your money! You like new cars, you can afford them, GOOD FOR YOU! I would drive a new car every year, if I only could! Money is not everything! I agree with you on that one!

 

[nickm]

Every time you turn your car in before the lease ends, you loose money. The car is owned by the bank not the dealership.

This is too much of a generalization...its usually the case but not always. If you are making a lease payment of say $1000. $100 of that goes to interest and $900 goes toward the depreciated value of the vehicle. This is the same at payment 1 and the same at payment 36 or 48 or whatever the final payment is...(numbers are for arguments sake, they are not real). You pay for the new cost less the residual cost. So lets say you pay $60K new and residual is $30K, you are paying $30K in depreciation + interest on $60K for use of the vehicle. This $30K drops in a straight line (ie: $900 for every payment). If the dealer or anyone gives you whatever your current depreciated value is at any time then you haven't lost a dime..you've done exactly what you intended on when you entered a lease -which is paying down the depreciation of the vehicle in exchange for use over a specified time period and mileage..if you don't get this value then you owe the difference between what's owed and what you are getting.

On a loan you may pay $1000 as well, but on payment 1 interest is $400 and capital paydown is $600. By payment 48 (you final payment for example) this changes around quite a bit where $990 goes towards capital paydown and $10 is interest (again numbers are illustrative and not real). In a loan your paydown curve is not straight, it is a curved shape where most of your interest is paid early in the loan cycle...this is why by the time you are 36 of 48 month into a loan, the interest savings of a payout are not worth it. Its also why 12 months in you are upside down, you have spent your money on interest and not on paying down the capital of the vehicle. (look at your mortgage for a very visible example of this..if you are early in a 25 year term you barely paid down any of the mortgage in the first 5 years)...Also with a loan you are paying down $60K, not $30K as in the above lease example.

Not saying loan or lease is better, but understand the math behind them is a bit different and blanket statments like "you lose if you trade early" are false generalizations to make. Every deal is specific to the vehicles.

There's no magic here...if someone gives you what you owe (loan or lease) then you are even..car dealers are in the business of buying wholesale and selling retail (ie:buy low sell high) which is why you will usually be in a losing situation...but not always.

 

[DesertT-REG]

One thing that you did not state (or I missed it) is that the depreciation on any given car is the same if your buying or leasing.

We all know that if you trade a Touareg after you have only had it 6 months you are going to take a 10k dollar bath or more. The only thing a lease will do for you is save you the residual (or what it PROBABLYwill be worth at the end of the lease) and you walk away. If you trade early you still owe the cost of the entire lease contract PLUS the residual. A no win situation for us poor folk.

The dealer can not sell a used car for what new ones are selling for, even if it is only 6 months old. I would not buy a 6 month old used car when I can buy new for a little more. The money given on a trade will reflect that. So will the money the Bank will loan on the 6 month old car.

 

[nickm]

One thing that you did not state (or I missed it) is that the depreciation on any given car is the same if your buying or leasing.

Great point...difference is you pay down the depreciation quicker early in a lease vs in a buy. At the end of the day no matter what you do getting out of something in the first 24 months usually requires a jar of vaseline (sorry to be so graphic, but its true).

 

[ania]

Actually, you can negotiate with the bank, buy the car, and then sell it to the dealer. If you put a nice dowpayment when you signed the lease agreement, and the dealer is willing to give you a good deal on the new car you may brake even. As far as I know this is the only way you can get out of the lease. Otherwise you will have to pay the entire cost of the lease contract, you're right on that one. Lease is a contract, and for example NJ law says that you can get out of it only if you have 3 payments left or less. You still have to make the remaining payments though, so what's the point of doing that! although a lot of dealerships, especially VW are willing to make the last 3 payments for you, just to get you in the new car.
My question is, how come the payment on the Passat is only $50 less. When I got quotes on both, the difference was significant, around 50%.

 

[CA Touareg]

Lease rules must be different according to States because there is no negotiating with the bank (VW Credit) in my case. The dealer takes care of all that. If I owe more than what he is giving me then the dealership pays the rest but makes it up by adding it on to my lease or down payment. It is very simple really.

My Passat was only $10,000 Sticker less than my Touareg so my payment didn't go down very much due to the roll over of negative equity which was minimized. When I trade early I try to find a way to do it (incentives etc) in which it minimizes the loss. The dealership I deal with is exceptional in this way. I have never (and I have bought many, many cars) had a dealership that could do what this one does. I drive 80 miles instead of 10 miles because he is the best. I have referred many people there and he has done the same for them. That is why he is number one in Southern CA.

 

[ania]

That is exactly what I’m talking about. You don’t actually buy the car from the bank; dealer does that behind the curtain to get you out of the lease. Any negative equity is being rollover, and you’re upside down. If there are incentives available on the new car you may do OK. But, remember one thing, the payment on the new car would be lower under normal circumstances. That’s all! Perhaps, leasing a car for only one year would work better for you and save you some money. If you like the car and want to keep it or another 6 months or a year, you can negotiate with the bank and extend the lease. I have done it before, and let me tell you this; bank may be able to give a much better deal than the dealer. I have extended my BMW lease for another year and saved almost 35% on my payment.

Best of luck with your new Passat(white is hot)!

 

[CA Touareg]

Great idea to lease for one year. I will consider that next time. We hope to hold tight on our most recent purchases. We have a lot going on in the housing dept so we will have to slow down on cars! We love the ones we have and will enjoy them for now.

Thanks

 

[barbelface]

Where about's in SoCal are you located? I used to live in Valencia before I moved to the Great White North. I had a half decent dealership in Santa Clarita but always ended up buying my Audi's and VW's from Van Nuy's, they seemed to be one of the better run Sales/Service establishments I'd come across.

 

[CA Touareg]

I live in Temecula just north of San Diego. We are from the San Diego area.

 

[nltomba]

Well thanks to all. I did get all the answers I wanted after all.
Leasing would not be for me me. I drive way to many miles for that.
@Matt, if I make it to the Touareg Rally next year I will buy you a beer.

 

[Vegas Matt]

@Matt, if I make it to the Touareg Rally next year I will buy you a beer.

No worries at all! There will be a couple cold ones in my cooler for you as well. =)

Matt

 

[nickm]

Well thanks to all. I did get all the answers I wanted after all.
Leasing would not be for me me. I drive way to many miles for that.

I'm in the same boat..as much as I think its a better financial move I always buy my vehicles since I put on far too much mileage for leasing to work for me.

 

[CA Touareg]

I know this could start a whole another discussion but if you trade your lease before the lease is up or buy/sell it then the miles are meaningless except for the depreciation value (same for if you own it though). I have never paid a penalty (like leases of the past) for doing this.

 

[nickm]

That's a good point..probably a good approach to take especially if lease rates are very favorable or there is a lease promo on the go. This sounds similar to someone I know who took advantage of 0% lease rate (this was on a ford f150) then bought it out after 3 years...so instead of paying cash up front he borrowed ford's money for free for 3 years.

 

[Arkarch]

Yes, the lease specials make it almost free money if the purchase price / residual / depreciation math comes close to matching your payments - the $399 on V6 specials were pretty good last year. Then you can come back and buy out the residual at the end.

Unfortunately if you are higher mileage than the lease and want to terminate for a new vehicle, you might end up with a couple-few thousand behind at the end. I am in that boat, and may likely find that it would be better to dump the lease a few months early to avoid burning a $0.20 / mile rate.

Or it may work out better to overlap, splitting miles to minimize further burn on the old and banking miles on the new. Reg will be paid for but there are insurance issues, etc covering multiple vehicles. Decisions I'll need to make in about about 16 mos (for a potential swap in 20 months) as I plan to order the next one.

You know, this probably is a new thread.

 

[737 Jock]

If he wants to spend money out of the wazzoo on new cars so be it. Wish I could, I would have had the V10...

So, if you had more money..... you would spend it freely on a non-essential vehicle because it gives you pleasure.

This admission negates your entire lecture on frugality. It sounds rather more like envy.

Well, must run, my chauffeur is bringing 'round the *Bentley. Oh drat -- he's smudged the tires running over one of those street urchins again -- nasty little buggers.

*Bentley = status dripping VW

 

[nltomba]

I have read this post several times but I do not get what you are trying to accomplish with this. The touareg is a non essential vehicle in itself if you look at it like that. In that case we would all drive a KIA Rio or something.
The Treg gives pleasure .That why we drive it.
Driving a V8 instaed of a V10 is because I drive within my means. I would like to have a V10 and could buy one tomorrow but then I would have to give up other things that are pleasurable too.
Envy? Towards whom?
If I had to scale down It would be a used 2003 Audi A6 2.7 T, chipped to 310 hp. Gobs of power, still awd, for about 15k.
PS I have been thinking about trading my expedition for something like that.. Then again My expedition does not cost much except gas.
It is 9 years old and has over 200k

 

[737 Jock]

I have read this post several times but I do not get what you are trying to accomplish with this.

In short; it's rather impolite to lecture others about how they spend their money, particularly when you would do the same.

Think of Hollywood types who use energy to heat and cool 5 or so massive houses, while boldly telling the rest of us our SUVs are ruining the planet.