# Sticky  Learn how to calculate a lease...



## VeeDubDriver (Oct 1, 2001)

With so many leasing questions, I thought I would make a seperate post with the lease info from the Car Buying FAQ's. I have also attached my trusty lease calculator for those who still need it.
Calculating a lease payment is not difficult, once you have all the
information you need. The lease payment is based on the difference between
what you pay for the car and what the car will be worth at the end of the
lease, plus interest. 

When it comes to leasing, here is the lingo:

Capitalized Cost - This is the selling price of the vehicle. 

Capitalized Cost Reduction - This is simply a down payment. 

Residual Value - This is what the car will be worth at the end of the lease
(usually stated as a percentage of the MSRP). 

Money Factor - This is the interest rate. It is always give as a decimal
figure. While it is not necessary to know the actual percentage rate when
calculating the lease, you can figure it out by multiplying the money factor *
2400. This number is used no matter what the term of the lease. For example, a
money factor of .0025 would be an interest rate of 6%. 

Inception Money (or Get In Money) - This is the amount of money that you have
to come up with at the start of the lease (not including any Capitalized Cost
Reduction). The inception money usually consists of the first month's payment,
a security deposit (usually equal to one month's payment rounded to the
nearest $25 and a bank fee. It can also include the dealer documentation fee,
tags and sales tax on the any Capitalized Cost Reduction (more on that later.)
It is important to have all of these costs broken down so you know exactly
what is being covered. 

Now, here is how we calculate a lease. First off, you need to have several
things: the MSRP (or sticker price), the selling price (Capitalized Cost), the
residual value (as a percentage) and the money factor. 

Let's use the GTI 1.8T as an example. Adding in the 17" wheels, luxury and
leather packages, it will have an MSRP of $22,000. The residual value for a
36-month lease (with 15K miles/year) is 57%. Usually a 12K mile/year lease
will have a residual value 2% higher (or 59% in this case). The money factor
for 36 months is .00250. Now that we have our figures, we can calculate the
lease. This may seem complicated, but take it step by step and it is quite
easy. 

First we calculate the lease cost. Take the MSRP ($22,000) and multiply it by
the residual value (59%). This gives us $12,980. Now, take the Capitalized
Cost (what you pay for the car) and subtract the residual value from it. Let's
say we pay $21,500 for this car. $21,500 - $12,980 = $8520. Now, we take that
$8520 and divide it by the lease term of 36 months. $8520 / 36 = $236.67. 

If you didn't have to pay any interest, this is what your monthly payment
would be . Unfortunately, few banks lend money without charging interest . To
figure out the monthly interest you take the sales price ($21,500) and add it
to the residual value ($12,980) and multiply it by the money factor (.0025).
$21,500 + $12,980 = $34,480. $34,480 * .0025 = $86.20. So, you are paying
$86.20/month in interest. You add that to the monthly lease cost of $236.67
and you end up with a monthly payment of $322.87. But wait, there's more. Your
state needs to collect their part of the deal in the form of sales tax. If
your sales tax is 8.25%, you would multiply the monthly payment by 1.0825 for
a grand total of $349.51. This is your monthly payment. 

Now, what about putting more money down in the form of a capitalized cost
reduction. You would simply deduct this amount from the capitalized cost
before you run the numbers. For example, if you put $1,000 down, your monthly
payment would drop to $316.73. Now you are probably asking yourself, why not
put more money down? First off, you have to pay your 8.25% sales tax on that
$1000. But that is no big deal. The bigger problem is that if the car ever
gets stolen or totaled, the insurance will pay off your lease, but you will
never see that $1,000 again since it was paid up front. Also, think of it this
way. If you were leasing an apartment and the rent was $750/mo, but the
landlord said, "Give me an extra couple of thousand up front and I will lower
the rent to $650/mo." Few of us would actually do that. Leasing your car is
just like renting. If you can't afford the payment without putting more money
down, I would suggest taking the money you would put down and put it in the
bank to earn interest and then deduct an amount every month to cover the
difference. 
One more bit of advice. Never lease a car for a longer term than the
manufacturer's warranty. If you do and something breaks past the warranty
period, it will be your responsibility to get it fixed and pay for it
yourself. Since you will give the car back at the end of the lease, you are
basically paying to fix someone else's car. So while generally longer lease
terms will give you lower payments, don't lease past the warranty period.
Also, don't lease longer than you will think you will want your car. Breaking
a lease early can be very expensive.

Updated Lease/Loan/Balloon calculator added (thanks GTakacs).


_Modified by VeeDubDriver at 6:02 PM 8-28-2003_


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Excellent lease advice here! There are only a couple of things that I would add to it.
As VdubDriver already said ALWAYS lease with no money down. (And with current interest rates I'd expand that to purchasing as well) If you have money just stick it in the bank and deduct from it every month as he said. To illustrate this issue better, here is an example (I am using a 48 month balloon loan to figure numbers, actual lease numbers would a be worse actually):
Let's say you buy a car for $25,000 and you either put nothing down and lease for 48 months for $323/month or you put $5000 down and lease for 48 months for $211/month.
The difference between the two monthly payments is $112 which seems like a lot. Multiply that by 48 months (number of payments) that is $5376. So you will end up paying $376 more over the term of the lease by not putting anything down and keeping your $5000 in your pocket. I am not going into details that you can actually earn interest on that $5000 and keep taking $112 out of it every month making the $376 difference even less, or that you could have used the $5000 to pay off a higher interest debt with it.
So if nothing goes wrong with your car during the term of the lease you will be out of $376 more by going this route. that is about $8/month (not counting other interest earning possibilities on your $5000).
Now let's look at the other scenario when your car gets totaled or stolen after a year. After 1 year that car will worth about $20,000 due to depreciation. If you paid no money down, after the first year your payoff would be about $22100. If you put no money down up front then you insurance will pick up the gap (GAP insurance) between what the car is worth ($20,000) and what you owe ($22,100). So the gap insurance will pay $2100 while the rest will be paid by the regular car insurance. You walk away clear and free and with $3656 left of the $5000 that you put aside (you made 12 payments of $112 from it towards the car)
However if you put down $5000 up fron on this car as a cap reduction by the end of the first year your payoff would be about $18,200. Since the car is worth $20,000 at this point and you owe $18,200 the insurance would pay the lender $18,200 and give you $1800. So you would end up with no car and $1800 in your pocket.
So if you compare the two numbers you can see that if your car is stolen or totaled after 1 year you would be losing over $1850 just because you put money down up front. This number would get smaller as the years go by, but you will be pretty much uspide down throughout the entire lease.
The other thing I would want to point out with leases is that in some states (Texas included) they asses sales tax on the ENTIRE purchase price of the vehicle even if you only lease it. And to top it off if you decide to purchase the vehicle at the end of the lease term they will asses sales tax on the residual value and you would have to pay that sales tax again during the financing of the used vehicle. Add to it the lease origination fee, safety deposit and other fees and it turns out that lease is not really the best option in these states. If you still want lower payments you might want to consider the premiere purchase (balloon payment) option in which they still calculate residuals, but you pay it as a loan with regular interest rates, and you have a huge residual balloon payment as the last paymet. At that point you can turn the car back in for a disposition fee (about $250) you can refinance the remainder of the loan, you can sell the car yourself and pay off the loan with the cash or you can trade it in on a new car and get the tax credit (in Texas if you trade in a vehicle during a new purchase you only pay tax on the difference between the two). So I think balloon payment loans make a lot more sense than leases, it gives you the same flexibility and some more!
My last advice is relating to mileage. If you know that you'll drive your car a lot, buy miles up front, they are a lot cheaper up front than at the end of the term. Also if you drive a LOT of miles lease is not your best option probably. If you leased your vehicle thinking that you'd only drive it about 12K miles a year but your driving habits changed (because of job, etc.) then be prepared to pay the mileage overage at the end of the lease. If you set out a 1000 mile/month plan but you actually drive 1500 miles a month, put the money that is needed to pay the extra miles into a savings account at the end of each month so you would be prepared to pay the $2000-$3000 in overage miles at the end of the lease. There is no such thing as a free lunch, so don't expect to get away with the excess miles (however if you turn in the lease at the end of the term and lease a new one from the same brand, chances are you can negotiate the excess mileage down).


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## CS VW (Feb 18, 2001)

*Re: Learn how to calculate a lease... (GTakacs)*

Great advice, guys. Thanx. http://****************.com/smile/emthup.gif
One question: Why does EVERY advertised lease REQUIRE you to put money down? Can you just tell the dealer that you're not putting any money down, anyway?


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (CS VW)*

Well, all leases have some sort of upfront costs (first payment, bank fees, security deposits, tags, etc). If so desired, a dealer will gladly roll all of these costs into the lease either by increasing the capitalized cost or the money factor (or both). The thing to remember is that you are paying interest on these items if you do, although sometimes the leasing companies will run promotions waiving various startup items. Other than that, there is really nothing wrong with a "sign and drive" lease.


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## mbuxton (Jan 15, 2001)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Great information! Still don't quite get the balloon payment option.


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (mbuxton)*

You pay all of the sales tax upfront, instead of on just a portion of the car, as with a lease. Also, the payments tend to be a bit higher. I have said it before that I consider balloon payments sort of the bastard child of financing and leasing. The worst aspects of both with no clear benefit.


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (mbuxton)*

The balloon is not much different than a conventional loan. Just think of it as a long term loan that you turn in at the point where you owe exactly as much as your car is worth and walk from the car with no money to owe and no money to gain.
With a conventional loan for 60 months, for the first 20 months or so you actually owe more than the car is worth. With the baloon you owe more than the car is worth for 36-48 months depending on the term of your baloon. You can think of it as a 90 month long conventional loan that you trade in after 48 months.
So your monthly payments on a baloon that runs for 20 months would be the same as the monthly payments on a 60 month regular loan. I hope that made it clear.
Also I disagree that the baloon is the "bastard child". I think it is a legitimate child and it does carry a lot of the benefits of both conventional loans and leases.
1) In several states you have to pay sales tax up front on a lease just as you would on a conventional or balloon loan. Check with your state to see if your state is penalizing like that on leases or not. In these states you end up paying sales tax twice if you decide to keep the car at the end of the term.
2) balloon loans have no security deposits, no lease initiation fees and their "walk fees" at the end of the term are generally lower than lease turn-in fees.
3) you have more options at the end of the term than with lease.
a) you can walk from the car free and clear, less excessive wear and mileage
b) you can refinance the remainder of the loan, usually with good terms, and you don't get taxed twice.
c) you can trade the car in and get the tax benefit of trading in (check with your state if it applies)
d) you can sell the car on your own and pay off the loan and keep the difference between sale price and pay off. Lease third party buyout can be a tough, if not impossible, task in some states with some lenders.
4) the car is titled in your own name, it gives you the feel of ownership (placebo effect, but I like it)
5) you can sell your car ANY time without worrying about the lease company. You are in total control (and your remaining balance of course). You will be ALWAYS upside down in a balloon loan, so take that into account, but it is not as bad as paying the rent fee to the lease company on a car that you don't want any more.
6) your car value is guaraneed by the residual percentage. So you know ahead of time that your car will worth AT LEAST the residual value after 48 months. If it is worth less, you just turn it in and walk from it. The way the economy is doing right now, I'd rahter have the bank/auto manufacturer take the risk of guessing what the car will worth in 4 years and I might pay a little extra for it.
7) with the extra monthly savings over conventional loans you can pay off higher interest debt (if you have any) saving you money.
I also question the statement that says that balloon payments are generally higher than lease payments. On Audi financial calculator I have constantly gotten lower montly payment calculations for the premiere purchase than lease.
With the currently offered low interest rates on balloon loans it is a good alternative for a lot of people (including me).
Edit: added point 6 and the stuff about lease being lower than balloon.



[Modified by GTakacs, 5:09 PM 4-17-2003]


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (GTakacs)*

You are right, I keep forgetting that in some states you have to pay the sales tax differently on a lease.
quote:[HR][/HR]
3) you have more options at the end of the term than with lease.
a) you can walk from the car free and clear, less excessive wear and mileage
b) you can refinance the remainder of the loan, usually with good terms, and you don't get taxed twice.
c) you can trade the car in and get the tax benefit of trading in (check with your state if it applies)
d) you can sell the car on your own and pay off the loan and keep the difference between sale price and pay off. Lease third party buyout can be a tough, if not impossible, task in some states with some lenders.
5) you can sell your car ANY time without worrying about the lease company. You are in total control (and your remaining balance of course). [HR][/HR]​Most of these you can do with leases just as easily, but it probably depends on the individual laws in your state. I know things are different in Texas, guess that's why they say you shouldn't mess with it.








quote:[HR][/HR]
I also question the statement that says that balloon payments are generally higher than lease payments. On Audi financial calculator I have constantly gotten lower montly payment calculations for the premiere purchase than lease.
With the currently offered low interest rates on balloon loans it is a good alternative for a lot of people (including me).
[HR][/HR]​I guess the important thing to do is work the numbers on every alternative and see which one fits the best.


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

quote:[HR][/HR]I know things are different in Texas, guess that's why they say you shouldn't mess with it.







[HR][/HR]​







ROFL!







I guess that's right








quote:[HR][/HR]
I guess the important thing to do is work the numbers on every alternative and see which one fits the best.[HR][/HR]​Yup, yup, absolutely! But lest get back to leasing here, as this tread is about how to calculate your lease numbers not about baloon payments.
Edit:Fixed quotes


[Modified by GTakacs, 9:13 PM 4-17-2003]


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## NickNick (Aug 21, 2000)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Hi VW...well my lease is finally up and I'm going in next week to see about leasing a 2003 GTI 1.8T again, do you know what the lease rates are at the moment. I understand that sales are down so I'm hoping to get a good deal on the car with the luxury package and 17's. I would actually like the R32 wheels but I don't know if they are on offer as an extra yet. I know my dealership will have to order the car as they told me there is not one on the East Coast that they can get hold of.
Thanks for your help.


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## GTInolonger (Jul 19, 1999)

*Re: Learn how to calculate a lease... (NickNick)*

This may be a foolish question, but is there a source for the residual values of cars outside of the "black book"? Is there any internet site that details this?
Thanks.


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (GTIinfuture)*

The Automotive Lease Guide (ALG) is the main source for lease residuals, however most manufacturers do not adhere to their values. There is really no one source for lease residual values.


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## GTInolonger (Jul 19, 1999)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

So, more or less you're at the mercy of the dealership to tell you what the residuals are? I wonder if you'd get different numbers depending on where you called?


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (GTIinfuture)*

Dealerships do not have the power to change residuals. They have to go by what the leasing company lists. Having said that, dealerships use multiple leasing companies and their residuals can vary greatly. Generally, the manufacturer's captive finance companies will have better terms, especially when they have special lease rates, like VW Credit does right now.
The money factor, on the other hand, can be raised by the dealership. This puts more money in their pocket. The only way to know what the actual money factor is is by getting an honest dealer, or you can just ask here.


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## GTInolonger (Jul 19, 1999)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Sorry for all the dumb questions. I've never considered leasing until recently, but...
How would you go about getting all this information before you approached the negotiating table?
Would you call ahead to get their current residuals from leasing companies?
How would you try to get the money factor?
Perhaps a step-by-step of what you did before you leased your car would be helpful? There are plenty strategies for negotiating price on a purchase, and plenty of info on calculating the lease price, but you don't see as much on leasing strategies. The one time I ever mentioned it to a dealer, they just said "our lease price is $xxx a month".
Thanks again.


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (GTIinfuture)*

If your dealer is not willing to show this info to you, just ask here. I can get the lease info for most of the manufacturer finance companies.


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## unixb0y (Apr 9, 2002)

*Re: Learn how to calculate a lease... (GTakacs)*


_Quote, originally posted by *GTakacs* »_Now let's look at the other scenario when your car gets totaled or stolen after a year. After 1 year that car will worth about $20,000 due to depreciation. If you paid no money down, after the first year your payoff would be about $22100. If you put no money down up front then you insurance will pick up the gap (GAP insurance) between what the car is worth ($20,000) and what you owe ($22,100). So the gap insurance will pay $2100 while the rest will be paid by the regular car insurance. You walk away clear and free and with $3656 left of the $5000 that you put aside (you made 12 payments of $112 from it towards the car)
However if you put down $5000 up fron on this car as a cap reduction by the end of the first year your payoff would be about $18,200. Since the car is worth $20,000 at this point and you owe $18,200 the insurance would pay the lender $18,200 and give you $1800. So you would end up with no car and $1800 in your pocket.
So if you compare the two numbers you can see that if your car is stolen or totaled after 1 year you would be losing over $1850 just because you put money down up front. This number would get smaller as the years go by, but you will be pretty much uspide down throughout the entire lease.


Where i live it's provincial insurance. So if you don't have a fleet to insure, you go the the province(or state). Anyway, gap insurance is not included with your policy. You need to get it.
Also, apparently some leases come with gap insurance.


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## surw1n007 (Jun 4, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

VeeDubDriver, i recently leased a 2003 Jetta GLS 2.0 with the leather cold package, the allow rims, the sunroof, monsoon sound system...







and automatic (ma moms drives it sometimes)







, pretty tight car..and i'm leasing it for 1700 down and 265/mth for 42 months..and residual 10,000 the sticker price was 21,650. you think i got a good deal?


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (surw1n007)*

That sounds about right. Looking at the numbers, your residual is 46% (kind of low I think) and if you paid $20K for the car your money factor is 0.0018 (which is 4.32% interest) and assuming 6.5% sales tax.
So I'd say it's about right.


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (surw1n007)*


_Quote, originally posted by *surw1n007* »_VeeDubDriver, i recently leased a 2003 Jetta GLS 2.0 with the leather cold package, the allow rims, the sunroof, monsoon sound system...







and automatic (ma moms drives it sometimes)







, pretty tight car..and i'm leasing it for 1700 down and 265/mth for 42 months..and residual 10,000 the sticker price was 21,650. you think i got a good deal?









I personally have a strict policy of not telling someone if they got a good or bad deal after the fact. If you didn't get a good deal (and I am not saying you didn't), you will just be reminded of the fact every time you get in and start your car. As long as you are happy with your car and with what you are paying, you got a good deal.


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## surw1n007 (Jun 4, 2003)

*Re: Learn how to calculate a lease... (GTakacs)*

okay, when i was about to sign the lease agreement, i told him about switching the car if i didnt like it...his response was keeping the car for two years and then getting a new one without having any penalty...and i was like whoa...nice...he says that between 2-3 years, if i dont like the car, i can get a new one....what do you guys think? is this guy b.s'n me?


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (surw1n007)*

Sure you can get a new one, if you don't mind rolling your negative equity into the new lease! Don't believe what he is telling you!!!


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (VeeDubDriver)*


_Quote, originally posted by *VeeDubDriver* »_Sure you can get a new one, if you don't mind rolling your negative equity into the new lease! Don't believe what he is telling you!!!

Just what I wanted to write! There is no such thing a free lunch. If you want to replace your car in 2 years, get a 2 year lease. If you want to trade it in after 3 years, the 3 year lease is for you. Don't ever expect to walk from a 4 year lease free and clear after 2 years, it's NOT GOING TO HAPPEN (otherwise everyone would do that instead of doing a 2 year lease)!


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## Intgr8VAG (Dec 15, 2000)

*Re: Learn how to calculate a lease... (GTakacs)*

GTakacs,
What hapens if the balloon has no mileage restriction written on the front page of the contract or anywhere in it? I think the dealer forgot rather than be nice to me.
Thanks


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (Intgr8VAG)*

Every lease or balloon payment is based on a residual value. That residual value is partly based on an annual mileage allotment. So whether or not it was specifically written in the contract, the finance company based the payment on a mileage limitation. Because of this, I don't think the dealer's omission on the contract will net you unlimited miles.
I am sure it states somewhere on the contract that it is valid pending the final approval of the finance company. The contract may also be considered null and void if it is not filled out completely.


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## GTiandrewK (Jan 12, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Little known subject to buyers is Yield Spred Premium.
YSP. Dealerships get YSP(back end premium payment from a lender) when they charge customers with higher rate than they actually qualify.
Don't forget, It is buyers market. Interest Rate is low.


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## Intgr8VAG (Dec 15, 2000)

*Re: Learn how to calculate a lease... (GTiandrewK)*

I agree with GTiandrewK. I found out this 7 years ago when I bought my first financed car. 
My credit wasn't that great so I had to eat the high interest rate. Later I found out from another dealership that the dealer gets a profit from any rate above the one given by the bank.
As always, shoot for the lowest APR or Money Factor.


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## ImRollin (Feb 12, 2001)

*Re: Learn how to calculate a lease... (Intgr8VAG)*


_Quote, originally posted by *Intgr8VAG* »_I agree with GTiandrewK. I found out this 7 years ago when I bought my first financed car. 
My credit wasn't that great so I had to eat the high interest rate. Later I found out from another dealership that the dealer gets a profit from any rate above the one given by the bank.
As always, shoot for the lowest APR or Money Factor. 

This is exactly how mortgage lenders make $$$. (This and charging points)


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## Cyberrick (Aug 7, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Hi All:
Just a couple of other notes on Leasing that I did not see addressed in the other threads.
VW Credit has a Acquisition Fee of $575. This fee is capatilazed so when you are trying to figure your lease payment take the Cap Cost or sale price and add $575 to it to arrive at the Adjusted Cap Cost. Then deduct the residual from this number. The number divided by the term equals your monthly depreciation payment. To figure the rent charge take the adjusted cap cost plus residual and multiply by the rate factor. This figure will be your monthly rent fee. Add the 2 figures together and you will have your base payment. In Michigan this payment would be subject to 6% tax adding the 3 figures together would give you your total payment.
As some states charge tax on the total cap cost instead of use tax like in Michigan you would need to know how the tax is figured for your state. If charged up front it would be added to the adjusted cap cost before deductiong the residual.
This brings me to another item the VW Drivers Option Program. The VW Web sites payment calculator is very deceptive as it generally figures the Drivers Option payment to be less than the lease payment. This might be true in a state where the customer pays all the tax up front however, in Michigan and most other States that is not the case. Drivers Option payments here are always higher than lease payments. The purchase option at the end of the contract is the same as the lease. Hence very few people ever use the Driver Option Program in Michigan.
12000 vs 15000 mile leases: The payment increase to go from a 12000 mile lease to a 15000 mile lease is typically between $10-12 per month. Basically the residual is 2% less on a 15K lease than a 12K lease. So on a vehicle with a $20000 MSRP the residual would be $400 less on the 15K lease. On a 48 mont payment it would increase your depreciation portion by $8.33 400/48. However, the rent charge would decrease as you are adding the same cost to a lower residual before multiplying by the rate factor. So assuming a .00175 rate factor the rent charge would decrease by $.70 (400x.00175=.70)
On a 4 year lease the excess mileage charge with VW is $.15 on 12000 mile leases and $.12 on 15000 mile leases. So a person that contracts for 12K and drives 15K would have an excess mileage charge of $1800 at the end of 4 years vs paying maybe $450-500 more up front in payments by selecting the 15K lease in the first place. So the moral is if in doubt take the 15K lease as you will recover the difference in about the first 3500 miles you go over the 12K plan.
Someone asked why advertised lease specials always show a down payment. The logic is simple. Dealers spend thousands of dollars advertising. In Detroit a full page ad in the Detroit News runs between $20,000 -$30,000. The object of advertising is to catch the eye of a potential customer by having a very attractive price point. So typically the vehicles advertised will be the lower trim level cars, with manual transmissions, minimal option, the advertised payments are always before tax, and the down payment used is a number we use to arrive at an attractive price point for that vehicle hopefully less than the competitions. A $199 payment looks much better than a $231 payment. So by creating the ad with a $1000 down payment the dealer is able to offer the $199 price point.
When in doubt about what the dealer is doing simply ask for a copy of the lease worksheet on the add car. You can then apply the numbers to the vehicle you are interested in and keep the dealer honest. In other words the work sheet will tell you the residual %, rate factor, cap cost, down payment. So let say you want the automatic instead of the manual. The MSRP is $875 more the invoice is $864 more. Simply apply the new numbers to the work sheet to calculate the payment.
If the dealer is reluctant to share the worksheet information with you find another dealer. A common practice is the Bump. The Bump is to increase profit in the ad deal when the customer changes to a more expensive vehicle, changes the down payment, or the term of the lease. A common bump logically explained by skilled salespeople is the vehicle change. It goes like this:
So the vehicle you want is $875 more than the advertised car. We are not changing the mark up just adjusting for the automatic transmission. So if we take the $875 divided by the term 36 your payment will only be $24.30 more for the automatic. To which most consumers reply OK. The fact is the 875 transmission has a residual of about $480 so the actual difference in the depreciation portion of the payment is only like $11.00 per month. The dealer just picked up almost $500 more profit with the Bump. There are a million ways to create the Bump. So the best advice is take the lease worksheet and analize it. Unless you are leasing the ad car which is generally a pretty safe deal as the profit has been greatly reduced to get you in to the store.


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (Cyberrick)*

WOW! Only 8 posts and such a valuable response! Some people will certainly appreciate your information, even if it was nothing new to me







.
Thah Bump example sounded very interesting, even though I immediately knew what was going on







. It's best to be on the lookout!
As far as Buyer's Option or Premiere Purchase goes, I agree that if your state only charges tax on the monthly payments, lease is a better option as the acquisition fee is offset by the tax saving (unless you're leasing a Kia Rio, but you'd insane to lease such a low residual value vehicle). Unfortunate states like TX (where I live) Balloon loans are always cheaper than lease since no acquisition fee is in place. Also most states with their stupid vicarious liability laws will stop leasing very soon and a more expensive balloon loan will be the only option to "rent" vehicles.
At any rate, welcome to the Car Purchasing forum, there are several of us who can help others, but any newcomer with the inside info never hurts! http://****************.com/smile/emthup.gif


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## Cyberrick (Aug 7, 2003)

*Re: Learn how to calculate a lease... (GTakacs)*

Yeah, a person that understands leasing would catch that Bump right away. However, most consumers do not have a clue.
There are as many ways to bump as there are cars. Another favorite is the mileage Bump. When a customer asks how much more to go to 15K from 12K. Goes like this:
Well lets see the up front mileage charge is $.10 so your looking for 9000 extra miles. That would be $900. KaChing...Just racked up another $500 and change.
Then there is the Credit Challenged soul who knows he is a fish. VW Credit comes back with a B tier or C and we work them back down to an A or B and keep the difference by just not telling the customer we worked the bank back to a lower credit tier.
Another favorite is the $1000 out of pocket lease where the security deposit is waived and converted to cap cost reduction keeping the payment the same. Net result more $
I guess the point is Retail Brick and Mortar Sales will never change. I have been at this 20 years. The last 5 doing nothing but Internet business. This is the only way to go. Unfortunately, there are very few dealers that have really embraced the Internet and customers get frustrated waiting days for a response to their inquiry, or worse the sales person trys to handle the e-commerce customer like a Brick and Mortar customer.
We handle it very differently here. I post both MSRP and Invoice prices on every vehicle in stock on our site. I have about 20 different Internet Specials representing basically the entire line up. I even have a special where the customer can request the Internet price structure for every VW via auto-response. I did post it live at one time. However, the Michigan VW Dealers do not actively use references to invoice in their advertising so I made it interactive where the consumer is requesting the pricing. The auto response come right back telling them by model what the mark up is as a percentage over or under invoice. This month most are well under invoice with the dealer cash.


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## TalYvan (Aug 22, 2003)

I got a spreadsheet to calculate the leasing payments, it works quite well for me. I usually go directly to the dealer and request money factors and residual numbers, they always release that data but they put the "good through date" on the paper, last one was quite impressive. 0.00149 x 36 mo @ 55% for and A4 '03 1.8T. That's about $430 for a fully loaded one w/ $2000 down.
Anyway if somebody is interested, I have no problem to share it. I just hope my inbox doesn't get flooded. [email protected]


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## VeeDubDriver (Oct 1, 2001)

*Re: (TalYvan)*

Often a dealer will give you a money factor that is marked up. It looks like that happend in your case if that rate info is current.


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## hawc (Oct 24, 2001)

*Re: (VeeDubDriver)*

This is a great thread. I've learned a lot already. I'm awful at math (dropped in grade 10) and just know I'm going to get burned when I go to buy my next car. So maybe I can ask a quick question here.
Let's say my next car is $65,000. 
I have absolutely no interest in keeping it longer than 3 years. I have no attachement to owning a car, I'm perfectly happy in just getting rid of it and getting something new. 
I live a little beyond my means and want to be able to affod the nicest car possible, but want to keep my montly payments as low as possible. 
How should I pay for the car?
I assume it would be to lease it with no money down and use what I would've spent on my downpayment (say $10,000) for instance each month on my higher monthlies. 
Am I correct?


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## VeeDubDriver (Oct 1, 2001)

*Re: (hawc)*

In the current car market, if you plan to keep a car less than five years, you are almost always better off leasing because of depressed resale values.


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## Travis Grundke (May 26, 1999)

*Taxes!*

My question comes on the favorite issue of sales tax. I understand that the State of Ohio has changed some of their laws recently in this regard, and I haven't been able to dig up the actual statue. 
So normally, I recall that in Ohio the sales tax used to be factored based on your monthly payments: "Well, sir - you're payments are $300.00 per month plus tax".
But if that has changed to the total purchase price (as in a purchase), how does one appropriate the tax to the lease?


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## GTakacs (May 17, 2002)

*Re: Taxes! (Travis Grundke)*

Use the calculator on page one of this very thread. It will take care of it.








If you want to do it yourself, you just add sales tax to the cap cost and don't add sales tax to the individual payments. Easy as that.
However if your state assesses tax on the entire sale price of the vehicle instead of the monthly payments (this is the case in TX) you might be better off with a premiere purchase/buyer's option balloon loan. No bank fees, easier paperwork, and you don't get double taxed if you decide to keep the car at the end of the term. Also, run the numbers on both scenarios and see which one works out better.
I hope this helps.


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (CS VW)*

I am a VW dealer in Mass. and we do it to show a low monthly payment. However; most people put little if no money into a lease. 
Why would you put money down towards something that depreciates? Buy a house or something that will gain in value. 
Noone should buy a car unless they drive only a few thousand miles a year and keep a car for at least seven years.


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

At the rates we are using today, noone in their right mind would pit money down towards a lease and I "roll in" those fees for most of my customers.
With the money you put into these leases; you could be making a little even on a money market. Better yet...........put your money into a CD you can rollover and you will have made money instead of giving it away to some corporate entity, such as VW or Audi.


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (NickNick)*

Got a few instock now and would arrange shipping for the right price!
I am a dealer in MASS and would love to put it together for you! Sounds as if your dealer isn't looking hard enough.
Email me if you are interested or post here.


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (GTakacs)*

Sold Audi's for Clair International in Boston, MA for years and never got the right calculations from the calculators on Audi or VW's site. NEVER! Don't believe everything that you see on their site. It is only to draw you into the showroom. 
I know I should not say this but ; "trust me, it never works out to within $40 a month." It is always higher than the calculator says it will be. Check it out for yourself..........go to a dealer and try leasing or ballooning a car for the AFS or VCI quote. It will never happen. They will look at you and say you are crazy and you can show them yourself online; but they will show you with an actual lease or balloon calculation done with the numbers that are provided to them by AFA or VCI.


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (GTakacs)*

With the balloon note the bank also agrees to finance your residual for you, keeping your payment the same until the car is paid off. The catch is... you finance the remaining balance at the interest rates available at the end of the balloon period for however long it takes to pay off your loan. 
Too many what if's to deal with and there is no telling how long your loan could be. What happens if rates go back up over 7%?!? You could be paying for that car for a total of 8 years. You probably will be in an equity position after 6 years; but you could have been driving a fresh car long ago, with a warranty, new features, and for a payment that is affordable.
Food for thought!


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (GTakacs)*

You wrote: "With a conventional loan for 60 months, for the first 20 months or so you actually owe more than the car is worth. With the baloon you owe more than the car is worth for 36-48 months depending on the term of your baloon. You can think of it as a 90 month long conventional loan that you trade in after 48 months.
So your monthly payments on a baloon that runs for 20 months would be the same as the monthly payments on a 60 month regular loan. I hope that made it clear."
This is not accurate at all. Can you give some follow up info, so I can better understand your point?


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (GTInolonger)*

Residuals are provided to all dealers by the lease company and the dealer cannot adjust them for any reason except to compensate for the increase or decrease in the expected mileage you will be driving. The residulas are dependent upon the region you live in as well.


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Equity is an abstract concept with cars. You can only have true equity if you "own" an appreciating asset. Most new cars will never be worth the purchase price, let alone more. Most people never truly own a car and when you lease it you certainly don't "own" it and when you finance with a bank conventionally you don't "own" it until that last monthly payment is made.
You pay for the equity you think you have! 
Figure out how much a car will cost over a five year period financing it conventionally. Once you have paid it off......sell it(this is what most will do). Then figure out how much you put into it in monthly payments, taxes and maintenance. Deduct the selling price of your used car and deduct it from the other incremental costs and this gives you your "true cost of ownership". Once you do this with your lcalculation with your last car; you will never "buy" or want to "own" another car again.


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (Swampyankee)*


_Quote, originally posted by *Swampyankee* »_Sold Audi's for Clair International in Boston, MA for years and never got the right calculations from the calculators on Audi or VW's site. NEVER! Don't believe everything that you see on their site. It is only to draw you into the showroom. ..........go to a dealer and try leasing or ballooning a car for the AFS or VCI quote. It will never happen.

While I agree that the calculator on the VW and Audi website is for rough estimate I would beg to disagree with the fact that you can never get a car for that rate. You can do a lot better in most cases actually since the calculator uses MSRP to get the numbers and you would be insane to pay MSRP for any of these cars nowadays. I am paying $416/month for my A4 Avant for 39 months and the AoA calculator showed $470 at that time for my car.

_Quote, originally posted by *Swampyankee* »_With the balloon note the bank also agrees to finance your residual for you, keeping your payment the same until the car is paid off. The catch is... you finance the remaining balance at the interest rates available at the end of the balloon period for however long it takes to pay off your loan."

Not entirely true..... Interest rates, or should I say interest rate increase over the original rate, are capped so it might be lower than the actual current interest rate offered at the end of the term. You have to read the agreement to be able to say anything accurate.
Balloon loans are not made in lieu of 8+ year conventional loans. They are made of in lieu of leases in states where leasing is infavorable tue to taxes or it is not possible any more due to vicarious liability cases. If anyone does a balloon he/she shoud be ready to turn the car back in at the end of the term, especially with the inflated residuals that we've been seeing in the past couple of years. AF and VWC will be losing money left and right on balloon returns (according to an article the automotive industry has lost over $2 billion (!) in 2002 on negative equity on lease and balloon turn-ins, which is money that lessors and balloon loan buyers won).

_Quote, originally posted by *Swampyankee* »_You wrote: "With a conventional loan for 60 months, for the first 20 months or so you actually owe more than the car is worth. With the baloon you owe more than the car is worth for 36-48 months depending on the term of your baloon. You can think of it as a 90 month long conventional loan that you trade in after 48 months.
So your monthly payments on a baloon that runs for 20 months would be the same as the monthly payments on a 60 month regular loan. I hope that made it clear."
This is not accurate at all. Can you give some follow up info, so I can better understand your point?

A 24 month lease on a car would cost roughly the same on a per month basis with zero down as a 60 month conventional loan payment. As na example, on a $30K car a 60 month loan with 5% would be $566/month (I ignored TT&L for the sake of simplicity). If this car has a residual value of 63% after 24 months ($18,900), a balloon loan for 24 months would be $565/month with the last payment being $18,900. If you don't believe me, just put the numbers into my calculator that is posted on the beginning of this thread. This should drive home the point.

_Quote, originally posted by *Swampyankee* »_The residulas are dependent upon the region you live in as well.

Not if you're leasing an Audi or VW, their residuals and money factors are national rates at the moment







.
I find it hard to believe that you're selling cars for a living by posint all this misinformation and confusion..... Given that I am just an "amateur" who is on the other side of the desk and only deals with "car buying" (I don't buy them I rent them) every 3 years it seems like I should be selling the cars instead of you







.
Now that we set the records straight let's get back to regualr scheduled programming!


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## Swampyankee (Jan 23, 2003)

*Re: Learn how to calculate a lease... (GTakacs)*

If you know so much about the car industry and financing why don't you join the crowd. We could use another "I think I know it all type on our sales floor."
Nice job taking most of my statements out of body and not understanding them fully. Keep up the good work.
You could not hack it in the car business because you have no interest in having an open mind. Apparently; you seem to be a product of the run down school system in the great State of Texas. Are they ranked in the top 48 states for education yet?!? I am sure you'll find some sort of calculator or statistical information to prove your point.
Just so you know....I am in the top 50 nationally for volume sales of VW's and in the top 15 in my region for volume sales of VW's. Who do you think know's more?!? Me or you? I know your response. 

_Modified by Swampyankee at 12:42 AM 11-3-2003_


_Modified by Swampyankee at 12:49 AM 11-3-2003_


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## GTakacs (May 17, 2002)

*Re: Learn how to calculate a lease... (Swampyankee)*


_Quote, originally posted by *Swampyankee* »_If you know so much about the car industry and financing why don't you join the crowd. We could use another "I think I know it all type on our sales floor."

I think I can earn my own daily bread wit developing software for a living, thank you very much. And the more I see how car sales operate the less I want in on it....

_Quote, originally posted by *Swampyankee* »_Nice job taking most of my statements out of body and not understanding them fully. Keep up the good work.
You could not hack it in the car business because you have no interest in having an open mind.

I quoted every single line from your posts, I did not take anything out of context. I just pointed out that nothing is as simple and clear cut as it might seem. I did not disagree with you on your points for the most part I just tried to state that your answers were not complete or entirely accurate (to which you have yet to rebut). And I have plenty of open mind....


_Quote, originally posted by *Swampyankee* »_Apparently; you seem to be a product of the run down school system in the great State of Texas. Are they ranked in the top 48 states for education yet?!? I am sure you'll find some sort of calculator or statistical information to prove your point.

Hahaha! Best line from you so far! Too bad you're sorely mistaken again (ask me if I'm suprised







). Just because I live in Texas today does not mean I am a born and raised ******* now, does it? I actually grew up in Europe and moved to Texas to get higher education. I successfully graduated from a fully accredited private university ( http://www.tcu.edu ) with a BS in computer science and currently taking master level courses at UTA Arlington part time to get my MSCS degree. And as we all know the UT system is second best to MIT in the nation.....









_Quote, originally posted by *Swampyankee* »_Just so you know....I am in the top 50 nationally for volume sales of VW's and in the top 15 in my region for volume sales of VW's. Who do you think know's more?!? Me or you? I know your response.

Given that you have 14 posts on Vortex and I have been around for a year and a half helping the community I think I'll let my posts speak for themselves. In the meantime feel free to read all my posts in this very thread from page 1 as well as check out the financial calculator that I whipped together for the masses (page 1 in this thread).
And here are some of the financial gems that I managed to put together over time and managed to find this morning (again, look for my name to see what I had to say):
http://forums.vwvortex.com/zerothread?id=933117
http://forums.vwvortex.com/zerothread?id=906203
http://forums.audiworld.com/a4...phtml
http://forums.audiworld.com/a4...phtml
And remember, people on message boards are usually judged by their posts (not the number of them, but their value) and not by their profession. There are plenty of VAG sales managers lurking on Vortex and helping out others. You might want to take notes from Cyberrick to see how it's done..... (he didn't have to prove his point that he's a sales manager, his valuable posts spoke for themselves)


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## kande (Aug 20, 2003)

can anyone help me figure out what my payment for a vehicle thats 185000 out the door with nothing down will be? would it be the same formula??


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## VeeDubDriver (Oct 1, 2001)

*Re: (kande)*

In order to figure out the payment you need all the pieces of the puzzle.


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## Audi Advocate (Nov 6, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Thanks for the advice - just had my A6 4.2 stolen from my driveway - now leasing a new S4 - learned the hard way that insurance covers the depreciated cost - lost my downpayment.
I recommend putting minimum down 'cause if it's stolen (likely in Toronto) you lose the upfront $$.
Advice: Get Boomerang 2 - and a gun. http://****************.com/smile/emthup.gif


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## LETTERMAN52 (Jul 28, 2003)

*Re: (VeeDubDriver)*

Thanks for all the info. I really appreciate it. I'm in a lease now and it just seems like it's a whirlwind of money coming out of my pocket, but now after reading your post i see that it isn't really that bad. Thanks again....


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## kande (Aug 20, 2003)

im going to be leasing my vehicle tomorrow.. and i coul REALLLLY use some help! i have literally read this thread 6 times over, and it doesnt make any sense to me... im bad with all the silly names for stuff, the numbers, percents, etc.
the car im looking at has a sticker price of 22,105... and the tax is at 7.6%... im planning on using the 1000 vw owner loyalty, plus 1500 down... if anyone could help me.. im desperate.. the guy had me quoted at $334.54 on a 48 month lease, at 15k miles/year... its an 04 plat. grey jetta gls tdi with leather and 5 spd... if that matters... any help is appreciated!


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## Cyberrick (Aug 7, 2003)

*Re: (kande)*

Good Morning:
Backing into the lease you have with 7.6% Use Tax and a total of $2500 due at delivery it would appear that the dealer is hosing you.
The vehicle you describe a 2004 Jetta GLS TDI 5 Speed with Leather does have a MSRP of 22105 and a invoice price of 20989.
I figured a lease with a total of $2500 due at delivery the 1500 from you plus the 1000 owner loyalty you said you were getting. A 48 month lease with 15000 miles would generate a cap cost of 22538 or $433 over the MSRP of the vehicle. 
Now a couple of things I do not know. One did you get an A Tier Approval from VW Credit. The rent factor or interest rate is higher on a deal where the customer has marginal credit. Also you said 1000 owner loyalty I am in a hurry this morning but as I recall the owner loyalty is 500 on 2004 models and 1000 on 2003's.
Anyway, based on your numbers a fair deal on this vehicle at 500 over invoice would be $306.96 per month with an A Teir Approval through VW Credit with 7.6% Use Tax for 48 months and 15000 miles.
It is the last day of the month you are in a position of strength they do want to move the car. Go back in and tell them to refigure the deal with a cap cost of 21489 (500 over) for 48 months with 15000 miles. It should come out about 306.96 per month as long as you have good credit.


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## kande (Aug 20, 2003)

306 for everything included?!?!?!
son of a .. i thought this was a pretty good deal... ohhhh myyy god... the lease is 334/month... my mom bought an additional warranty... so my payment is about 358. ohmy****inggod...
i so got ripped off.. is there anything i can do?!?!?!?!?!


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## Travis Grundke (May 26, 1999)

*Re: (kande)*

I wouldn't flip out quite so much - you may not have qualified for Tier-1 rates. You also said you added in an extended warranty. 
For future reference - these are things you should figure out *before* signing papers.


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## GTakacs (May 17, 2002)

*Re: (Travis Grundke)*

Don't cry over spilled milk. There is nothing you can do at this time about it. Enjoy the ride and nex time do your research before you sign.


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## Guyute_ (Oct 31, 2003)

That sounds like you got Tier 2 or 3 credit. At Tier 3 you did fairly well, at Tier B you got it just about right. It is harder to qualify for the A tier or Tier 1 than you think.


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## kande (Aug 20, 2003)

we qualified for a teir credit... i asked him specifically.


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## usmc1811 (Dec 1, 2003)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

How do you know what rate you qualify for and that they will give you the best rate?... I did the lease/buy option- 36 months, tier 1 credit but got a rate of 4.75 with nothing down... did I really get screwed??
Thanks.


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## StuntUCA (Sep 7, 2001)

*Re: Learn how to calculate a lease... (usmc1811)*

hey guys,
im about to lease a 20th anniversary in black. i need some help here because i dont have much time to do all the math. the cost of the vehicle has been agreed to be $21,812.
they have offered me a 48 month lease/15k miles/$0 down for $380. what do you think? i may put down a security deposit just to hold it for the night since lease rates end this evening.
thank you in advance. call me if you need to.
RJ
773.802.8989


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## Cyberrick (Aug 7, 2003)

*Re: Learn how to calculate a lease... (StuntUCA)*

Somebody is full of C---.
I ran the numbers and based on a cap cost of 21812 a 48 month lease with 15000 miles, and $0 Down would be far less than $380 per month. Unless of course the dealer has you fixated on the price and they are hammering the hell out of you on the rate.
First of all while VW Credit is nice when there is a program. They are not currently supporting 2003 models and they are in fact $68 per month higher than the best Bank in the country if they are telling you 380.
Provident Auto Lease is Best at $312.62, Followed by Wells Fargo at 325.52, then Huntington Bank at 329.72. VW is at 359.45 with security and 364.60 without.
There are numerous ways to Skin the Proverbial Cat. The 20thAE at 21812 cap with a 380 payment ain't what it seems to be.


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## StuntUCA (Sep 7, 2001)

*Re: Learn how to calculate a lease... (Cyberrick)*

Rick,
Can I contact you at work and discuss more details with you so Im well informed and educated when I speak to a new dealer tomorrow.
Thanks!


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## VR6 Master (Sep 16, 2003)

well i have never leased a car before but, never the less i learned a lot with what i read in this thread and thank you


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## Integrale (Aug 1, 1999)

*Re: (TalYvan)*

Could you please send me the file to my home address? I'll IM you.
Thanks.


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## waffleboy (Oct 15, 2000)

*help with my lease...thank you!*

Hello everyone...I have been quoted today a lease on a '03 Jetta Wolfburg Edition with 12,000 miles a year for 36 months for $204 a month and 2600 down. Is this a good deal...what Incentives/rebate can I add to it? He already to the loyalty incentive off it which was of the amount of 500 dollars.
I am in the Boston(MA) area. Can anyone help me with this?
Let me know A.S.A.P as I am going to make my mind really soon on this deal.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

Waffleboy. you have not supplied enough information to back into your numbers. A 2003 Wolfsburg Jetta is not enough. Would need description of vehicle either MSRP or list of options auto/manual, moon roof, cold weather, esp, monsoon.
I can tell you that the car is probably not eligible for the Owner Loyalty incentive. Most if not all dealers reported all remaining 2003 models into Service Loaner status at the end of November to capture the maximum incentive available on the remaining cars. The Wolfsburg Jetta had a $2750 November incentive. 
So essentially what happened at the end of last month is all remaining 2003 models were put into this status to earn the cash incentive. Our Central Region reported something like 1200 of them during the last couple days of November. Not that they are actually being used for service loaners. It is just a loop hole we use to help sell the vehicles. VW encouraged this to help with their sales figures for the month and year as well. While they did not come out and say do it. It was clear that not doing it would make it very difficult to sell them off as the December incentive dropped to like $1000.
However, due to this status the vehicles are technically sold as far as VW is concerned so no additional incentives would be payable on them. A smart dealer or sales person would not tell you the loylaty incentive was no good on the 2003's anymore. They would simply act as though they were giving it to you by adjusting the price numbers. In other words a base Wolfsburg 5 speed with a 20075 MSRP and a 18799 invoice price is now technically on the books for 2750 less or 16049.
So if they told you they were selling you the car at say invoice 18799 less the December dealer cash of $1000, less your Owner Loyalty of $1000 or 16799. The deal would still be 750 over invoice.
While your deal does not sound terrible without the exact options I cant say for sure. You also said 2600 down? Does this mean 2600 down plus other start up fees like first payment and plate fees, or do you mean 2600 out of pocket?
The car I described above a base 5 speed at 2000 under invoice would lease as follows: with 2600 total due 193.58 including 6% Michigan Tax, or 181.41 with 2600 down and a total of 3002.81 due at delivery in Michigan with 1st payment, title, and plate transfer.
This is not however, through VW Credit they are about $30 per month higher than the best banks. I figured this through Wells Fargo. VW as I said no longer supports 03 models with finance or lease programs.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (waffleboy)*

oops...so here are the numbers. MSRP 20,550( first month, taxes....all the dealer said)...it is a Jetta '03 Wolfburg Edition with monsoon, Cold weather package, manual with 16 inch BBS wheels, front sport wheels, sport suspension, rear spoiler, special side badging. CD player, cruise front and rear carpeting, antitheft alarm and radio, Immobilizer III theft deterrent system. I got this number from the sales person I talked to....203.35 a month and 2548.35 down for 36 months and 12,000 miles a year.
But now I have a problem...he won't give it ti me to lease!







He says that car has certain sale criteria and one of them being not to lease it!!! Is this normal? I spoke to the manager...he says the '03 he's got he can't lease....something to do between him and VW of America! I don;t get it.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

Yeah, it is like I said before the car is technically already delivered and reported sold to VW to get the $2750 November Dealer Incentive. That does not prevent them from leasing it though. How does the tax work in your State? Is it use tax on the monthly payment or is the cap cost of the vehicle taxed and not the payment. If you are not sure maybe someone listening can tell us. I think you said Boston right? The car you are talking about is a 20550 MSRP and 19219 invoice car. The dealer has received $2750 in incentive on the car so its adjusted invoice is now 16469. You should be able to get for about 16769 right now or 300 over his invoice. 
In Michigan we have 6% tax. My recommendation would be to buy the car. Out the door with 6% tax it would be 17840.54 here. Take off your 2600 down stroke and finance 15240.54 for 60 months. Chase has a 3.34% rate right now that works out to 276.15 per month. More than the lease but 3 years from now you would have some equity.
If you let me know the tax method in your State I will figure a lease for you with Wells Fargo. Call the dealer and ask for the Finance Manager. Ask him if they use Wells Fargo in your State. They are about $30 a month better than VW Credit on the 2003 models.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (Cyberrick)*

hey o.k...I got another one he could lease out...so the deal is, same options as before: it is a Jetta '03 Wolfburg Edition with monsoon, Cold weather package, manual, 16 inch BBS wheels, heated sport wheels, sport suspension, rear spoiler, special side badging. CD player, cruise, front and rear carpeting, antitheft alarm, radio, Immobilizer III theft deterrent system and the additional option that wasn't on the first car I was looking at is the sunroof. It is for $217 a month and 2548.35 down for 36 months and 12,000 miles a year. It is black with gray interior. What do you guys think about that one? I think it is a good deal.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

You still did not say what bank or lender the dealer is putting you through. If VW Credit it would be a great deal. However, VW Credit is about $30 per month higher than the best banks on a Wolsfburg Jetta. So using VW Credit in your case wold not be in your best interest as it will cost you about 1000 more in payments over the term.
There are some benefits to VW Credit so I do not normally use another lender unless the payment difference is significant. Certainly not for a 10-15 difference. However, when you start talking $30 a month most people would think that significant.
No other lender will ever offer you anything like the current Lease Pull Ahead Program. Technically this expires at the end of the year. However, most people in the business seem to think that the Lease Pull Ahead Program is here to stay. LPA might allow you to terminate this Wolfsburg Lease up to 10 months early so your 36 month lease may in fact become a 28 month lease if you wanted to turn in early and get another VW.
The private banks will never simply allow you to terminate early unless someone makes the remaing payments. So LPA is a benefit to VW Credit. If you are certain you will want to keep this vehicle for the entire 36 months though another lender could save you some cash.
Also if you do not have sterling Credit VW is much more liberal in purchase policies than a Wells Fargo. Private Lease Companies that offer these great rates do so only for individuals with very good credit. Wells Fargo requires a 730 Credit Score to get their Best Rate.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (Cyberrick)*

Hmmm...I didn't know you could lease the car not necessairely though VW of America! Damn, I just closed the deal through them. I thought a lease is closed through the manufactor of the car...in this case VW. I don't know you could lease the car by using another banks. Shoot, they took me for a ride again








but ye, that is the final price I got through them all in. Think it is still a very good deal. So, I am picking it up the 30th of Decmeber and will be riding the new year in my new car! Wooohooo...Happy New Year! hahaha


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

Definetely a good deal through VW Credit. Its just that whatever deal VW Credit has on an 03 Wolfsburg Jetta is about $30 per month less through Wells Fargo.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (Cyberrick)*

If I didn it through Wells Fargo...how do you do that? Ones you brought down the price you contact wells fargo and tell them you want to lease this car? I have no clue how yu would do that? I think the price I got the lease on was close to 16800.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

This is not something you would do. Most dealers have multiple lenders that they use for when the manufacturer rates are not competitive. Most dealers also have computer systems like Lease Link or Lease Profit that tell them the best bank as far as payment goes for any given vehicle or scenario. So when we run a lease we see for every term sorted by lowest payment. So who ever has the best deal going on a vehicle is shown every time we figure a lease. If you were buying your 2003 Jetta how would you feel about financing through VW Credit at their best rate of 4.9% when I could put you through Chase at 3.34%. It is the same thing with leasing.
Like I said earlier though there are benefits to dealing with the manufacturer that you will not get with a private bank like Wells Fargo. So when differences are small I forget about the private banks. However, at $30 a month they are worth a look.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (Cyberrick)*

so, let me get this streight, you have to ask for the cheapest lease or do they authomatically find the cheapest one for you and calculate the lease at that point? I have just been approved by VW credit...meaning I can still change as I don't have the car yet, I am guessing. Might piss of the dealer for doing that I guess.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

I can think of only 2 reasons why the dealer would be using VW Credit on a 2003 Wolfsburg. One is that they are not signed up with Wells Fargo or Wells Fargo does not do indirect lending in your State. (I doubt the second part). The other reason may be that you do not qualify for a Wells Fargo Lease. The standards are much higher with a Bank like Wells Fargo than they are with a Captive Finance Source like VW Credit. For the Wells Fargo Gold Plus rate you need a 730 Credit Score, 5 years in the Credit Bureau, and similar prior credit or a Mortgage. In other words they don't buy first time buyers. 
My advice would be to call the dealer or have someone call them for you. Ask for the Finance Manager. Then ask him point blank if their dealership has other lenders they use for leasing. If the answer is yes ask if they do business with Wells Fargo. If yes and you are certain you meet the credit criteria I mentioned ask him why you were not offered their program as it is about $30 per month better than VW Credit.
Remember though a private lender like a Wells Fargo cares about only 1 thing and that is getting all of their payments on time. You will never see a private lender like Wells Fargo offer a Lease Pull Ahead Program like VW, GMAC, Ford, Chrysler, and just about every other manufacturers finance arm. So while you will be hearing about friends that got out of their lease 8 or 10 months early and got a brand new car without it costing them anything. Just remember you already got your savings up front and enjoy the Wolfsburg for the entire 36 months.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (Cyberrick)*

o.k..what is exacly the lease pull ahead program?


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (waffleboy)*

WaffleBoy:
You don't get out much huh. Lease Pull Ahead Programs started 3 or 4 years ago with GMAC. It has since spread to most other captive finance sources. Simply put the lender allows you to terminate you current lease anywhere from 4 to 10 months prior to the scheduled maturity date as long as you lease or purchase another vehicle from that manufacturer.


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## waffleboy (Oct 15, 2000)

*Re: help with my lease...thank you! (Cyberrick)*

ah ye that is the one I thought so. I got a letter from VW telling me I could quite early as long as I go for a new VW. That wasn;t new as I also talked to other manufacturers and they had even proposed to pay the rest of the payment on my VW if I would go and get their car which was a Lexus, Saab or a Volvo. All 3 had proposed to pay the rest of my payments, so I wasn;t obliged to stay with VW.
Thanks for the explantion man


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## melech (Oct 5, 1999)

*Re: help with my lease...thank you! (Cyberrick)*

Cyberrick, your are insights into the leasing process are extremely helpful. However, don't dealers tend to make a profit by marking up the money factor? Therefore, wouldn't they try to place you with the lease company that offers the dealer, not necessarily the consumer, the best deal, such as how much mark up they will permit the dealer to charge?


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (melech)*

Sure all the time. Whether or not they mark up the factor. If a customer presents a payment he has been shopping at another dealer and it is simply a matter of beating that payment many times a dealer would simply see if there was a better lease company on that vehicle. 
This does not happen a lot with core product like a Jetta or Passat GLS as VW will typically have the best payment going. It does happen on other vehicles though that are not supported with lease specials like a Beetle Convertible, or a Golf, or TDI.
The worst thing to do as a consumer is to shop payment. ALWAYS shop the price of the vehicle and the payment is secondary. Once you have established your price then ask about the bank and if that bank offers the lowest payment available on the vehicle. Don't get too caught up in payments though. If VW Credit is close to that of a private bank like $10 per month or less I would always go for the Manufacturers Lease as it affords you benefits that you would not get with a private bank like a Lease Pull Ahead Program. However, if and when the differences are $20-30 per month or more you have to look at the deal and ask yourself if you really intend to keep the vehicle to full term. With a private bank there is never an easy or cheap way to terminate early.


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## billsbuddie (Apr 29, 2004)

*Re: help with my lease...thank you! (Cyberrick)*

I am considering leasing a Jetta TDI, with an agreeded upon sales price of $19000. Can anyone tell me the VWofA residuals, money factor, lease fee, etc. My credit score is an even 800. I am looking at 15000 miles and 36 months. I am not too trusting of the finance guys in dealerships.


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## VeeDubDriver (Oct 1, 2001)

*Re: help with my lease...thank you! (billsbuddie)*

Money factor is .00133 and residual is 50%. There is a $575 acquisition fee, first payment and a security deposit equal to your monthly payment rounded up to the nearest $25, plus sales tax, tags and dealer fees.


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## billsbuddie (Apr 29, 2004)

*Re: help with my lease...thank you! (VeeDubDriver)*

Thanks VeeDubDriver. So if someone quotes a no money down lease I need to add the first payment back into the Cap Cost? Another question is about "dealer fees", is it a standard amount? Or is this the area where some profit gets hidden? 
I do appreciate your help, I leased a Lincoln many years ago and really have no clue what happened to me, I was happy as a lark and probably got screwed. 
I am debating this lease idea, I don't think I can make 3.192% money on my investments in this market.


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## VeeDubDriver (Oct 1, 2001)

*Re: help with my lease...thank you! (billsbuddie)*

If you are doing a sign and drive lease, the first payment will go back into the capitalized cost. The security deposit and acquisition fee can either be rolled into the lease or you can raise the money factor to eliminate them.
As for dealer fees, most of them are just added profit. They deserve a reasonable amount for taking care of the tags and registration for you, but anything else is just profit.


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## billsbuddie (Apr 29, 2004)

*Re: help with my lease...thank you! (VeeDubDriver)*

Everything jives with what you said except that he is giving me a money factor of 00225, maybe he is basing it on a different credit score. 
By the way, what is the interest rate that VW Credit will charge on a 48 month note?


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## VeeDubDriver (Oct 1, 2001)

*Re: help with my lease...thank you! (billsbuddie)*

The .00225 is the standard rate. Your dealer may not be aware that the TDI's have special lease rates now.
The 48 month term is 3.9%.


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## billsbuddie (Apr 29, 2004)

*Re: help with my lease...thank you! (VeeDubDriver)*

Again I want to thank you for the information VeeDubDriver. I currently have 3 requests for quotes out and hope to make a decision by the weekend. I can't wait to smell that diesel.
By the way, a salesman yesterday scared the bejesus out of me by showing off the ESP on a 20MPH cloverleaf doing 50. That car has some great handling ability.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (billsbuddie)*

Just a couple of things you may want to consider on this TDI Lease. The motivation with 90+ % of people wanting a TDI is saving money on fuel cost right? 
The TDI option comes at a price. $1020 on the Jetta over that of the standard 2.0L engine. In round numbers it will take you abour 60,000 miles just to recover the difference in cost of the TDI Option.
Now consider this. The TDI's are in very short supply. As such you are not going to get as good of a deal on the vehicle from the dealer as you would on a 2.0L Jetta. In other words your discount if any on a TDI will be less than what you coulld expect on a gas Jetta.
The rate factor on the lease in .00099 on a 2.0L GLS Jetta and .00146 on the TDI again higher than the standard engine.
Finally, VW Dealers have a $750 Dealer Cash allowance on the lease of a 2.0L Jetta GLS and nothing on the TDI.
All in all leasing a TDI under these conditions is frankly DUMB. Not saying you are dumb. Just not looking at the Big Picture. We call this the "Sky is Falling" syndrome. Every time the gas prices spike people com out of the woodwork to get a TDI. Truth is this car is not for everybody. Typically TDI people fall into one of 2 catagories. Either they drive well over the national average like 20,000 plus miles per year, or they are enthusiast that keep their cars for many years.
You should slow down and sit down and put a pencil to it. Figure what the cost of ownership would be on the TDI over the term of the lease. Take the amount due at delivery plus all of the remaining payments. Then add the fuel cost for the term. If for example you have a 4 year 15000 mile lease divide 60,000 miles by the EPA fuel rating of the TDI then multiply by the cost of a gallon of Deisel.
Now get a competitive price on a 2.0L Jetta GLS and do the same thing. Not sure where you are located but in this market Detroit, with a little work you can get a Jetta GLS 5 Speed with Cloth, Cold Weather, and ESP for about 400 under invoice. That would be a 20465 MSRP car with a 19105 invoice for 18705.
This would give you a 36 month 15K lease at 306 per month and 48 months at 265. These payments include tax and are based on nothing down, just first payment and security deposit, plus plates How does that compare to your TDI lease?
Now if you are a Tree Hugger And the TDI is being leased because you just want to do your part to reduce the fossil fuel consumption and price is no object "Go For It" . 
Last but not least. The GLS Jetta with the 2.0L engine can be purchased for 72 Months at 0% interest


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## billsbuddie (Apr 29, 2004)

Thanks for all of your input Rick, and frankly, extremely good advice. None of what I am doing is very logical, I just have a "woody" for a TDI. I bought an 81 Rabbit diesel which I really loved, only compact car I ever owner. Passed it down to the kids. I am now retired and really don't "need" a new car. I am not sure what sparked my interest in the TDI, have not thought about a diesel in years since I dumped an 83 Impala diesel, I'm sure you know what those were like. 
I have been looking at a 00 NB diesel, drove it and loved the feeling of shifting and the smell of diesel in the garage again. I am inpressed with the TDI mileage but I don't really drive enough to "justify" the difference. 
I guess it is just an emotional thing. And it would be in my best interest to cool my jets until this gas price thing settles down and the availability and prices will probably be back to earth.
I probably need to take a cold shower.


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## Cyberrick (Aug 7, 2003)

*Re: (billsbuddie)*

Its a great car and it sounds like you are the type of guy that would keep it a long time. You should just buy the car and get it over with.
VW has a 3.9% rate which is OK. However, there are a couple of banks Chase Manhatten being 1 that will give people with good credit a 3.34% rate for 60 months. Now this is the Michigan rate I would think it the same where you are. You would have to ask the dealer if they are signed up with Chase. 
The benefit here is that VW has a $500 Dealer Cash allowance for cash deals or deals that are financed not using one of their Specials. So you would have to let the dealer know that you know they get a $500 incentive and you want it passed on to you. Tell him up front though so you can see what sort of a real discount you are getting. I mean if he gave you a $500 discount in essence he would still be selling you the car at MSRP. I would not look for too big a discount though on TDI's they have been very scarce for months now. 
If you financed say $20,000 for 5 years at 3.34% you would have a $362.40 monthly payment probably in line with the lease they are quoting you. 
You are doing the right thing with the TDI I just happen to feel that you would be better served purchasing the car.


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## billsbuddie (Apr 29, 2004)

*Re: (Cyberrick)*

I have finally made the deal. Jetta GL TDI Manual, no options. The dealer is going to give me the $500 and take my trade for what I wanted for it, about $500 more than I was afraid I would get for it. And as a result of all the good advice I received here on leasing vs buying vs VW credit vs banks, etc... I am going to pay cash from my IRA which is not earning enough to match the 0.9%.
I have learned a great deal from reading everyone's thoughts and have taken some of the counsel that was offered. I think this is a very helpful sight and I appreciate everyone who is interested enough to contribute.


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## Cyberrick (Aug 7, 2003)

*Re: (billsbuddie)*

Good Job glad to hear you picked up the $500 Dealer Cash. Hope you enjoy the TDI.


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## billsbuddie (Apr 29, 2004)

I think i burped. I got a last minute case of presale buyers remorse. So I backed out of the deal and bought a 2000 NB TDI instead. I figured I could see if I wil still have all the fun I am anticipating six months from now. If not it will be a lot cheaper to get out from under.


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## SN2BDNGRZB55 (Feb 14, 2003)

*Re: help with my lease...thank you! (waffleboy)*

This is an awesome thread for people wanting to get a lease! 
The only thing I would add to it would be the use of the term Interest or Interest Rate. 
In the Financial World, Interest specifically is defined as the cost to borrow money, so while you may have a specific money factor in lease that the Lease Company charges, based on credit and other terms, I have to advise that there is no interest in a Lease. Interest in finances is defined as: 
-BLOOMBERG(http://www.bloomberg.com/analy...i.htm): 
"Interest 
The price paid for borrowing money. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption. Also, a share or title in property."
-FORBES(http://www.forbes.com/tools/gl...ter=i): 
"Interest 
The price paid for borrowing money. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption. Also, a share or title in property."
The Dictionary of Finance and Investing (http://www.duke.edu/~charvey/C...y.htm):
"Interest 
The price paid for borrowing money. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption. Also, a share or title in property. "
These definitions are all derived from information in Banking and Finance from the Securities Exchange Commission, the Standard & Poors business terms, NASDAQ, NYSE, and the US Financial Accounting Standards Board. Since you don't actually borrow money in a lease, you pay for use of the vehicle, there is no "Interest rate" or "Interest". The only reason this is important, and actually is similar to my personal experience when I got my first lease four years ago, is that if a person has the impression or mind-set that there is interest in a lease then they may approach the buying table with that mind-set because they may confuse it with the structure of a simple-interest loan. Also when they are talking to their leasing company, they may get frustrated and confused if the Lease Company tries to explain the difference to them and explain how their lease works and they use the word interest. A Lease Company will always tell you there is no interest, and the word interest is never seen in a Lease Contract. 
I know it isn't that important in the overall decision to buy a car with a lease, but it does help separate the differences in peoples minds between Simple Interest Loans and Lease Contract structures. Thanks for this great FAQ on leases!



_Modified by SN2BDNGRZB55 at 12:18 PM 5-28-2004_


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## SN2BDNGRZB55 (Feb 14, 2003)

*Re: help with my lease...thank you! (Cyberrick)*


_Quote, originally posted by *Cyberrick* »_Just a couple of things you may want to consider on this TDI Lease. The motivation with 90+ % of people wanting a TDI is saving money on fuel cost right? 
The TDI option comes at a price. $1020 on the Jetta over that of the standard 2.0L engine. In round numbers it will take you abour 60,000 miles just to recover the difference in cost of the TDI Option.
Now consider this. The TDI's are in very short supply. As such you are not going to get as good of a deal on the vehicle from the dealer as you would on a 2.0L Jetta. In other words your discount if any on a TDI will be less than what you coulld expect on a gas Jetta.
The rate factor on the lease in .00099 on a 2.0L GLS Jetta and .00146 on the TDI again higher than the standard engine.
Finally, VW Dealers have a $750 Dealer Cash allowance on the lease of a 2.0L Jetta GLS and nothing on the TDI.
All in all leasing a TDI under these conditions is frankly DUMB. Not saying you are dumb. Just not looking at the Big Picture. We call this the "Sky is Falling" syndrome. Every time the gas prices spike people com out of the woodwork to get a TDI. Truth is this car is not for everybody. Typically TDI people fall into one of 2 catagories. Either they drive well over the national average like 20,000 plus miles per year, or they are enthusiast that keep their cars for many years.
You should slow down and sit down and put a pencil to it. Figure what the cost of ownership would be on the TDI over the term of the lease. Take the amount due at delivery plus all of the remaining payments. Then add the fuel cost for the term. If for example you have a 4 year 15000 mile lease divide 60,000 miles by the EPA fuel rating of the TDI then multiply by the cost of a gallon of Deisel.
Now get a competitive price on a 2.0L Jetta GLS and do the same thing. Not sure where you are located but in this market Detroit, with a little work you can get a Jetta GLS 5 Speed with Cloth, Cold Weather, and ESP for about 400 under invoice. That would be a 20465 MSRP car with a 19105 invoice for 18705.
This would give you a 36 month 15K lease at 306 per month and 48 months at 265. These payments include tax and are based on nothing down, just first payment and security deposit, plus plates How does that compare to your TDI lease?
Now if you are a Tree Hugger And the TDI is being leased because you just want to do your part to reduce the fossil fuel consumption and price is no object "Go For It" . 
Last but not least. The GLS Jetta with the 2.0L engine can be purchased for 72 Months at 0% interest


This is awesome advice, you rock! So very few peole look at the big picture when making major purchase decisions, which consequently over the national average is leading America to a very dangerous place financially. Looking at things like this is what I do in my business - very commendable! Nice ! http://****************.com/smile/emthup.gif


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (SN2BDNGRZB55)*

I really wrote this out of necessity. About 1/3 of all of the inquiries I am seeing are for TDI's again the Sky is Falling Syndrome. In most cases once properly explained to a person the see the light and buy a standard gas model. The exception of course the the enthusiast or person who drives 25-3000 miles a year and keeps the car for 150,000 miles or more.
However, Leopards and people seldome change their spots. A person who has historically driven their new car 3-4 years and 45-6000 miles would be foolish to purchase or lease a TDI especially a Jetta, Golf, or Beetle. An argument could be made on Passat under certain cirmumstances as the premium for the TDI is only $205. Even there though only a purchase as the GLS Passat 1.8T has a 48 Month Rate Factor of .00002 on a lease which is essentially a 0% lease. They would actually pay around $40 in interest or rent charges over 48 months.
Everybody can relax though the Saudi's have upped the output from 7M to 11M barrels a day so by July the Spot Price on Crude will drop from $41 a barrel to under $30 which will take pump prices down to around $1.70 again. This will also have the same effect as about a $70Billion tax break to the economy which will raise the GNP this Summer by almost a point.


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## melech (Oct 5, 1999)

*Re: help with my lease...thank you! (Cyberrick)*

Rick; Excellent analysis. Too many people simply don't work out the future savings in gas versus the cost of a new, gas-efficient car. Just as in the stock market there's an old saying, "Never sell on bad news", there needs to be a cautionary statement for car shoppers --don't make buying decisions during a newspaper crisis.


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## Cyberrick (Aug 7, 2003)

*Re: help with my lease...thank you! (melech)*

Amen!
Have a Great Holiday and buy some Gasoline and spend lots of money its good for the economy. Just don't use the plastic money


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## 73LS4 (Nov 4, 2004)

*Re: (VeeDubDriver)*

Wow, this thread has been extremely informative! I sold cars 30 years ago when leases were virtually unheard of, but I certainly knew about all the other ways to screw customers, charging them higher interest rates than the dealer was paying for it, etc. When leasing started to get popular about 15 years ago, it looked to me that there were 20 new ways for a dealer to manipulate the figures without the customer ever knowing how the lease payment was determined. Great explanations !!!


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## A4Pass (Mar 9, 1999)

*Re: (73LS4)*

An excellent source for residuals/money factors/etc, discussion on all makes...
http://forums.roadfly.org/forums/financing/


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## VWAudi70 (Jan 31, 2005)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Baloon Payments are only on Prefered Buy Accts (CSA) which are only done in certain states to get around the lease laws. THe ballon payment gives the customer the option to refi for the Residual Value of the car and purchase the car or sign a Power of Attorney signing the car back top VW...


_Modified by VWAudi70 at 3:17 PM 2/2/2005_


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## doctorit (Feb 20, 2005)

this is a great thread - thanks for all the info!
now that I know how to calculate my lease, anyone have the current money factor, residual, and any factory cash incentive for a 2005 Jetta GL? Looking at 39 or 48 month lease, 12k or 15k miles (not sure yet).


_Modified by doctorit at 9:01 PM 2-19-2005_


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## savethefleas (Oct 29, 2003)

*Re: (doctorit)*


_Quote, originally posted by *doctorit* »_this is a great thread - thanks for all the info!
now that I know how to calculate my lease, anyone have the current money factor, residual, and any factory cash incentive for a 2005 Jetta GL? Looking at 39 or 48 month lease, 12k or 15k miles (not sure yet).


If you lease through VW, you get a total of $1700 incentives right now, plus 500 if you'r a current vw owner. 0.00025 money factor on A tier, 50% at 39 mos, 46% at 48mos (15k) add 2% for a 12k lease


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## Audi Finz (Jul 9, 2003)

*Re: (savethefleas)*

can a dealer dictate the term of the lease? Like if I want a 36 month and they say I can only do a 48 is that a false statment?


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## GTakacs (May 17, 2002)

*Re: (Audi Finz)*


_Quote, originally posted by *Audi Finz* »_can a dealer dictate the term of the lease?

No they cannot. Simple as that.....


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## Portland Sig (Mar 17, 2005)

I must say this thread is a wealth of information. That said, I am hoping to get some info myself.

Right now, I am looking at picking up the hot, new 2005.5 Audi A4. Equipped as such: 2.0T Q w/6 speed; sport package; prem. pack; light package; prem audio w/XM; cold weather pack; Audi DVD Nav+; Quartz grey w/Ebony interior and power rear and manual side sun shades. The dealer is quoting me $38084 vs. MSRP of $38995. The specs on the Premier Purchase are 39 mos @ 12k a year w/$2000 down + fees. (Oregon does not have any applicable taxes to this deal). Monthly payment is to $488 with A tier credit. Does this compute?? 
I called the dealer and inquired more and they told me that the rate was 4.6% and a residual of $21447.
Is this deal workable to more favorable numbers even though this model is brand spanking new? I have been wading through the advice in this thread and I want to think I can do better. 
I appreciate the help! 
Cheers.


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## DanoP (Apr 17, 2002)

*Re: (A4Pass)*


_Quote, originally posted by *A4Pass* »_An excellent source for residuals/money factors/etc, discussion on all makes...
http://forums.roadfly.org/forums/financing/

This is a great link, A4......I just finished browsing the messages that helped to clarify the balloon/lease implications (especially when the balloon is due) in the great state of Tax-us.


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## carnutchuck (Mar 8, 2005)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Here's the easiest formula: 
(price + residual) x money factor = interest
(price - residual)¸ ¸ term = depreciation

add them togther for a payment.
taxes are based on total of payments.


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## carnutchuck (Mar 8, 2005)

, , was supposed to be a division sign


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## carnutchuck (Mar 8, 2005)

*Re: (Audi Finz)*

they can quote a payment thatis only for 48 months and say that yuou can't do the same payment for 36.


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## VT Passat (Dec 1, 2001)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Why is the residual value added to the sales price to figure the interest?


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## Luchak (Sep 12, 2002)

*Re: Learn how to calculate a lease... (VT Passat)*

I apologize for taking this a little OT, but is there a similar post on Vortex or other site concerning financing the purchase of a car


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... (VT Passat)*


_Quote, originally posted by *VT Passat* »_Why is the residual value added to the sales price to figure the interest?

Because that is what the leasing gods demand!


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## VeeDubDriver (Oct 1, 2001)

*Re: Learn how to calculate a lease... ([email protected])*


_Quote, originally posted by *[email protected]* »_I apologize for taking this a little OT, but is there a similar post on Vortex or other site concerning financing the purchase of a car
















This might help: http://www.edmunds.com/finance...ce..2.*
Otherwise, go ahead and create a new thread and we will see if we can get you questions answered.


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## Tuxedo (May 30, 2000)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

I am thinking of leasing my new TDI but the numbers I'm given by the dealership seem way too high. Here are the the numbers they give me:
Selling Price: 23460
Residual: .58 (13897)
Interest Rate: 3.5%
Georgia Sales Tax: 7%
Lease Term: 36 months, 12K miles
Lease Price: 420
When I calculate it using your formula, I get 342.53.
Am I doing something wrong or getting ripped off?
Thanks.


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## pickuptyper (Jul 5, 2005)

I want to lease a 2.0T A4 Avant. Black/black with prem, navi, lighting, sport, audio. 36 months, 12k miles, 3500 drive offs.. But you guys said I shouldn't put money down.
The dealers gave me these numbers.
Offer1:
MSRP $39,745.00
Invoice $37,563.16
Selling price $38,063.16 ($500 over invoice)
Adjusted residual value $23,052.10
Drive offs $ 3,500.00
Monthly Payment $ 454
Offer 2
OFFER 2:
Selling price $35,498
Money factor: 0.00135
Residual 58%
Monthly $420
OFFER 3: (I originally requested one with just Prem, Navi, Lighting and this is what he quoted me telling me he'd do this if he could find one.. which he couldn't so he later called and offered $426 or something for the same car above)
MSRP is $37995.00
Invoice $34770.16
Cap Cost $35770.00
Out of Pocket $3500.00
Residual 58%
Monthly $410.40 
Should I expect better numbers? Since a base 2.0T sedan is going for $299 (but for a 24 month, 10k miles, with 2900 drive offs)


_Modified by pickuptyper at 5:17 PM 7-12-2005_


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## Bowlth (Aug 4, 2005)

*Re: (VeeDubDriver)*

It's true. Especially given the current incentives being offered in North America on new vehicles, it does nothing to help maintain the resale price of a new car.
Therefore, leasing is a great alternative to buying new if you have the cash flow. I'm not sure about the US, but in Canada, if you work for yourself, you can actually write your lease off as a business expense up to $750/month, which makes leasing even more attractive!


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## KingofCancer (Oct 8, 2005)

*Re: Learn how to calculate a lease... (CS VW)*

OK, so I have a good car('99 Alero) that I want to trade in on a Golf (my virst VW). Right off the bat, lease payments are significantly lower than buying so thats my natural first choice. Driving to and from work (Surprise to Phoenix) would be 12k miles, I may be getting a new job that would add 2200 miles to what I already drive...so by the advice given I should not go with a lease right? Problem is that with a lease I can get a Golf for 220 a month and buying means like 350.
Am I totally screwed here? FWIW, I would be trading in my car which is paid off to cover the initial down, most likely I would keep the vw and not turn it back in. For me the monthly payment is most important..like keeping it under 250 per month.
Not sure what to do...help? 

_Modified by nymike at 2:02 AM 10-8-2005_


_Modified by nymike at 2:06 AM 10-8-2005_


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## doctorthirst (Apr 26, 2001)

*Re: Learn how to calculate a lease... (VeeDubDriver)*

Just wanted to say, "Thanks." My folks are looking to lease a CR-V and aren't really ones for reading the fine print, so I feel obliged to help 'em out. Reading this post made me feel prepaired.
I really appreciate the time you took to make that spread sheet.
Cheers!


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## Bowlth (Aug 4, 2005)

*Re: Learn how to calculate a lease... (nymike)*

For this example, I would save up and put money down towards financing the vehicle if you really want to own it in the end. However, you could look for a lease transfer where someone has put several thousands down that would reduce the monthly costs of the lease. In addition, the buy-back might be even better than buying used.
Just a thought.


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