snagitseven

All good points from everyone posting. To boil it down to the simplest terms, leasing is essentially renting a car for the contract period with the leasing company owning the car. You are responsible for maintaining their property until lease end or disposition of the vehicle and are limited to the terms of the agreement in miles driven, etc. or you will pay more.

If you can deduct the payments as a legitimate business expense (be careful here - the IRS has specific rules on when and how much you can deduct), a lease deduction can be straightforward. You can also do the same with a purchased car using a somewhat more complicated depreciation process/actual expense or simply by deducting a fixed amount for business miles driven.

Most will advise to put as little money as possible down on a lease (cap reduction). Since you are just "renting" the car, that would be equivalent to paying extra months of rent in advance on an apartment while still making the rent payment every month from the get-go. It will reduce your monthly payment but you lose the use of that money during the lease period.

I've both leased and financed in the past but my last several cars have been all purchases. Thankfully, I've been able to buy my last three Audis outright from savings - (I hate payments and paying interest; took me a few decades of working my butt off to be able to swing it).

The only real way to determine if a lease vs. purchase with a loan makes sense for you is to get all the numbers and plug them into one of the online calculators. Also, there is an abundant supply of info on the internet comparing the advantages/disadvantages of both options.

Numbers needed to compare:

Lease:
Final price of the car
Lease money factor
Cap cost
Lease term
Residual amount
Cap reduction (up front down payment)
Miles allowed
Estimated miles to be driven if different than allowed
Estimate value of the car at lease end (this is a guess)
Disposition fee (if any)
Possible cost to bring car to acceptable condition at lease end (if turning it in)
Loss of payment money use, i.e. investing elsewhere

Purchase/Finance:
Final price of the car
Loan term
Interest rate
Down payment
Estimate value of the car at loan end (this is a guess)
Loss of payment money use, i.e. investing elsewhere

Then there are the non-financial differences to consider like early lease termination vs selling your car outright any time you wish, the option of walikng away at lease end, etc.

DrGP

Leasing IS more expensive ONLY if you plan on keeping the car 5-6 yrs. If you want to get a new car every 3-4 yrs , leasing is less expensive. Also you are always under factory warranty. But this B8 s4 has been a good problem for me. When my lease was up, there was nothing else out there that I thought would be the latest and greatest to replace the S4, So I leased another one. But now had $6k to put toward it.

Digital_Bees

I think it's fair to say the residual would be substantially higher in their estimation from the onset to make this scenario work. Let's keep using $50K as the example purchase price... Your payments in this example are $21,600. They also charge you all kinds of rental fees. I would guess the buyout would probably be more to the tune of $36Kish, or possibly more. At least that's been my experience.

They are there to make money, so simply letting you borrow the car for 3 years and paying it down doesn't make them much. They want to collect the depreciation, plus add a little extra to ensure their pockets get a bit fatter. After all, they are the ones assuming the risk more than the lessee.

My two cents...

snagitseven

I'm not sure that a lease will be less expensive if you dispose of a car in 3-4 years is necessarily true. It all depends on the terms of the lease vs. a loan/purchase - there are many moving parts that can affect the final cost comparison. For example, comparing money factor to loan interest rate, miles driven, loss of use of money between the two during the years, etc. If a car is purchased it can be sold or traded at any time including just before the warranty runs out in your lease example. By the same token, a leased car can be bought out at lease end and kept past the factory warranty period. The car's value in 3 or 4 years will be the same regardless if it was purchased or on a lease. So, there can be no blanket determination that a lease or purchase will be less than the other at any date in the future until all the numbers are plugged in.

MaxSport730

Although this will differ quite a bit depending on lease terms vs the finances of buying but they've done calculations where you have to keep your purchased cars for longer than 8 years to make it better financially vs leasing a new car every three years. That's why I choose to lease, I don't want to wait 8 years to get a new car. :-)

AudiS4SD

Excellent information from everyone; thank you!

If you don't mind, may I ask what the leaser on the forum are paying for their new S4s given the purchase price and length of term? I'm curious to see if there is a good average.

I appreciate all the help.

snagitseven

Please include a link where it determines you have to keep a car longer than 8 years for a purchase to be less expensive than a lease. I'd be interested to see the calculations on how they came up with that.

Digital_Bees

+1

AudiS4SD

+2

Also, once you lease a vehicle, I assume you are not allowed to do basic changes, such as tint, since the car is technically not yours, correct?

Digital_Bees

True, it's not yours. However, tint and really minor modifications are typically overlooked when you turn the car back into the dealer without changing anything back.

The other issue is you won't get a dime back on any modification, unless you are able to unbolt it and sell it sideways on eBay or the forum here. Even if you can unbolt it, you had better cover your tracks with the car so that they can't tell you modified it... If anything goes wrong with the car, and it can be attributed (even loosely) to the work you did to it, you can be held liable for the repair work to bring it back to OEM specification. I guess they could technically do that to you with tint, though I've never heard of that happening...