MaxSport730

So the lease on my 2011 328xi coupe is up at the end of the month and I've been weighing my options as to which car to lease next. I definitely want something with more power and it has to have 4 doors (we've procreated :-) I thought I would go with the 335xi sedan (x-drive because I live in NJ) but I started looking into the S4, Q50 or IS350. I test drove the S4, lurked on this forum a while and then finally got my wife to drive it and she agreed its awesome and by far my top choice. I was even ok with paying the dispo fee for "leaving" BMW

The best deal for a 3 year, 10k lease I got was $4360 due with $640 a month (talked down from 660) on a $55,375 MSRP. This is based on a 55% residual which is what really kills the deal. I can get 335xi with similar MSRP for a much lower monthly lease payment because of their 60% residual PLUS I would pay much less up front because I'd be paying tax on only 40% instead of 45% of the car.

The salesman (very nice guy) basically knew this and admitted that Audi can't compete in the lease market because of the residual numbers. He even said his wife drives a 328 and pays 379 a month and he pays tons more than that for his S4 and he even works for Audi.

First off, is this all true? I assume it is since he let me walk out of there without much haggling. I told him I wanted the lease monthly to start with a "5" and he said there's no way unless I start putting money down.

Secondly, aside from them being AWESOME cars (even Car and Driver now admits they beat the Bimmers) how can I justify from a financial sense going with a car that I'll pay more for a lease per month, pay more in sales tax to the not-so-great state of NJ and then have the car worth less after three years?

Thirdly, I thought of buying but I really prefer to lease and get a new car every three years. I looked at the CPO market and it seems very pricey, almost not reflecting the lesser residual.

I really want an S4 but from a financial standpoint I may have to "settle" on a 335xi. Anyone have any thoughts?

uberwgn

Max, welcome aboard! It seems like you already know the answer.

It's true, the residual values for VWs and Audis are weak driving up the monthly pmt to the point where it's tough to consider leasing. IME, if you have to pay out a bunch of $$$ at lease inception, it's no longer a good deal and you should probably look elsewhere.

Leasing is a good deal when you put down $0.

Sometimes you can create a lease-like pmt by doing a long-term conventional finance. However, the sales tax due on a new S4 is still going to be a big number.

FrozenCommunist

correct me if I'm wrong, but can you lease the S4, and after 3 years when the lease is up - assuming you took care of the car and it has low mileage, simply buy the car and then sell it for more on the private market?

DrGP

There can and usually is a big difference in the monthly lease costs of a BMW VS a comparable Audi. BMW want to sell a high volume of cars. To do this, they artificially raise the lease residual . This makes the payments less. They make less money on the lease than VW but make it up on the sale of the used BMW. Audi, on the other hand, goes the other way. They are very conservative on their lease residuals. Causing monthly payments to be more. BUT, with the S4, I have found this to be an advantage. If you do not go over mileage and take care of your car, the B8 S4s residual lease end value has been MUCH lower than wholesale price of the car. Because of this, you can buy the car for way under resale value. Alternatively, you can trade the car in BEFORE lease end and take the difference between the residual and trade in price and put that down on a new vehicle lease/purchase. OR you can put that money in your pocket. Its not even necessary to trade in or buy from Audi. Any dealer can buy the car and give you money back. On my 04 s4, I bought the car, paid over $2k in taxes and transfers and sold the car at below retail and pit $3k back in my pocket. On my 2010, I trade the car on a new 2014 S4 and came away with $6k. When the leae on my E92 335i was up I then leased a '10 S$, In order to keeep lease payments in line with what i had on the BMW, I had to skip some of the bells and whistles that were on the BMW. But I knew that the S4 was a superior carand was not unhappy with my choice. Since i had $6k extra by trading the car, I was then able to lease a 2014 with all the options that I wanted. $57K MSRP. I am now paying $664/month 36 month/10K miles per yr. I walked away without putting a penny out of my pocket.

DrGP

You need to decide what is more important. You can either spend more to drive the superior car or spend less to drive a really good car. Or decide to limit you selection of options and lower the MSRP .

BigBluu

This is what I've read almost everywhere. The true market value of the car at lease end will be more than the residual on the books. So many end up choosing the buy-out option at lease end, then selling it on their own for trading it in for more than the buy-out.

uberwgn

While it may work in some states, it won't in others. In my state you've got to pay sales tax and fully register (title) the car before you can re-sell it. And Audi will not convey the car directly to an unrelated 3rd party.

PhilNotHill

Leasing just does not work for me. As a former banker, never have seen where it made economic sense for me.

BMW leases ARE cheaper. I have owned several BMWs and IMVHO they are not as good as the Audi.

got a 1.99% fixed rate loan for four years. My old 2004 Subaru trade-in covered all the down payment. Sales tax where I live in Colorado is 2.8% and was included in the loan amount. No mileage limits to worry about. I can earn much more than 1.99% on my investments but I could have paid cash. So it was a painless transaction. they offered to finance 100% of the S4 and give me the trade-in cash. I declined as the trade reduced my sales tax and I hate paying taxes. LOL

Bottom Line: I can sell the car any time or keep it as long as I want. My choice.

Good luck.

I also think BMWs are ugly nowadays. I have owned several M3s and 7 series in the past. Audi is just a better car. Fifth gear had a comparo of the Audi S4 (estate) Euro model compared to the Merc C Class AMG. the audi killed it in every category except fuel mileage on the track...Audi only got 5+mpg and Merc got 7+mpg. Do not care. then I just watched a Fifth Gear comparo of the C Class AMG vs the BMW M3. the AMG killed it. Mika Salo was the driver and he said the M3 was a little better on the track but not as usable for normal highway driving so he would pick the AMG.

Thus S4>AMG>M3. Ergo Audi>BMW

Best

sjuhawks19

I sold my leased Q5 to CarSense with no issues from Audi, and it was 6 months early. I just called and got a payout number and CarSense took care of the rest. You can buy a lease out at any time, doesn't matter. In PA there is no penalty taxiwise, and I walked away with cash since they offered me more than what was owed. So yes Audi sets the residuals low to protect themselves from being upside down at the end of the lease. But because Audi's are hot and retain their value well, you will more than likely end up with a car being worth significantly more than the buyout once the lease is up, so that is something to factor into your decision.

DrGP

Audi will sell the car to a VW/Audi dealer and non Audi dealer as well. But the VW/Audi dealer can actually buy the car for less that the residual.