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Prices Paid: Buying & Leasing Experiences Audi Q7 Lease Questions
816 messages, Last post on Nov 24, 2009 at 8:49 AM
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Replying to: kris17 (Feb 18, 2007 9:40 am)
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Replying to: hoosbest (Feb 18, 2007 3:54 pm) Thanks
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Replying to: cwa318 (Feb 18, 2007 6:28 pm) |
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Replying to: hoosbest (Feb 18, 2007 7:42 am)
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Replying to: hoosbest (Feb 18, 2007 3:54 pm) Bad advice, man. The details of my lease are a few posts above. I am making 4 Security Deposits ($3000) which lowers the money factor from 0.00038 to 0.00006. The result is that I am saving $30/month. $360 tax free earnings on a $3000 investment is 12% tax free. Find me something better and I will take you up on it. Don't just blindly do MSDs. Find out the monthly payment without MSDs and compare them to the payment with MSDs. If it makes sense, do it.
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Replying to: anderlecht (Feb 17, 2007 8:29 pm) 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! |
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Replying to: kris17 (Feb 18, 2007 9:40 am) 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. |
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Replying to: anderlecht (Feb 18, 2007 9:01 pm)
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Replying to: mikeoc1 (Feb 19, 2007 11:14 am) 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.
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Replying to: hoosbest (Feb 19, 2007 4:20 pm) 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. |
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