After spending a few months with the RX350, decided that I would be able to get into the car that I actually wanted. Lucky for me, the RX350 has some really strong resale values and was able to book 2.6K in positive equity for a 3 month old car. Anyways, the numbers on the Q5 deal;
2018 Q5 Premium + w/ Tech Package
**MSRP: $50,010
**Selling Price: $42,100 (16% off MSRP)
**Monthly Payment: $446 + tax
**Cash Due at Signing: $2,134.58 (acquisition, registration/doc, 1st month)
**MSD: $5,000 (10 MSD’s)
**Incentives: Included in sales price, just conquest.
Congrats! just curious did you consider adding Audi Care and how it would affect your monthly? I am considering the RX and Q5 among others. The RX is so painful to drive that I would probably be okay paying the same monthly on a 10K cheaper Q5.
Yep, considered it but on a low mileage lease, the actual OOP costs for the 10K, 15K, and 20K services is ~$200 through an independant mechanic which is lower than the amount I would have paid.
Did you shop around for this or was it just offered? $500/mo after tax seems pretty good since I know Q5s don’t lease too well / not a lot of discounts. Wonder if this could be replicated.
@Jon - Not that this was your point but I generally take issue with the whole concept of not paying acquisition, licensing, and other fees at signing.
If you do not pay these at signing, you are paying 9.5% (in socal) more for taxes on top of interest. If we’re really “lease hacking” and trying to obtain the best financial deal and lowest cost, we should always be paying those fees up front in states that have sales tax.
MSD’s should always be used unless you have a better allocation of the capital which 95% of the general population doesn’t have.
There are risks with paying that money upfront, like in the case of totaling a vehicle. In most cases when the MF isn’t high, I think it’s better to roll it into the monthly payment. With Audi’s high MF, it may make sense to pay it upfront if you want to save as much as possible.
There isn’t risk because it’s a security deposit, not a down payment. If the vehicle is totaled, your gap insurance will cover the difference and once your account is settled, you will be refunded your entire security deposit.
You mention interest rate and then Audi’s being high at less than 3% once bought down? If anything, the rate is the reason I would roll it in if there wasn’t the tax penalty.
Either way, I can’t imagine that 9.5% of cars get totaled in the first 3 years of ownership so I would still disagree with the premise.
I am not convinced that you are getting a good ROI. You pay the 9.5% tax over 3 years or around 3% per year. You can probably do much better if you invest your money elsewhere.
You pay 9.5% tax on the principal amount and then 2-3% interest based on MF. For simplicity, you’d need a ~6% post tax return which means you’d need to be earning the equivalent of a risk free 7% assuming you’re only in long term positions and 8% in short term positions based on current capital gains tax rates.
Wow, 16% seems great for a Q5! Mind sharing dealer details? A few friends and I are getting together to buy/lease 2x SQ5, 1x Q5, 1x Q7, 1x S5 SB in November and trying to determine if it would be worth going down to SoCal for the cars versus staying local in the San Francisco Bay Area.
I was responding strictly to the tax argument but overall it really depends on the MF. With Lexus you can bring your interest rate to zero so it makes a lot more sense to roll in the fee. If the interest is more than 3% then you can make the case that it’s better to pay it upfront. Don’t forget that you have to adjust your hurdle rate by the probability of totaling your car.
It’s only about $2k so either way you go, roll it in or pay upfront, it’s not a lot of money as far as opportunity cost is concerned. I would just pay it upfront, as the OP did. To each his own.
