2023 Lease on ID4 ending, Qs about purchasing a used ID4

Ask the Hackrs Used Cars
1

I’m not sure if this is an area of expertise for the LH community, but I thought I’d give it a try.

My lease is ending in December on a 23 ID4 pro trim car.

It’s been a good enough car, and I think I may stick with the devil I know rather than switching to a Hyundai Ioniq 5.

My residual is $24,205, and supposedly there is a $3,000 off deal through the end of this month.

My dealer, who is the one I’d have to negotiate with, lied to me about the sales tax on my lease, even after I showed him an email from the trade group representing local dealers that sales taxes are due on EV leases (not sales) in my jurisdiction. That cost me $1,600 over the life of the lease. (This is to say I’m a little irritated by the idea of shopping with him again; but this dealer is the one clearly buying the cars at auction/specializing in low-mileage used ID4s in my region)

This same dealer currently has three CPOs of my model/trim/year, for $21,695 through $23,095. Those have fewer miles than ours (which I expect will have somewhere around $27,000 to $28,000 miles at turn-in). The cheapest CPO has about 19k miles.

Non-CPO same model/trim/year selling at that dealer for $19,495 and $20,795.

The CPO takes you to seven years on broad warranty (the factory battery warranty is 8 years already)

VW Drive Easy is another way of getting a VW-sponsored extended warranty, haven’t asked what they would price that at.

Another local dealer has a same yr/model/trim with 21k miles for $18,900 (just one)

CarMax has same model/trim/year selling for $22,350 with 20k miles and $23,150 for 14k miles

A broker posting on Reddit said that at Manheim auctions, Pros are selling for $16,500, not including auction fee, broker fee and transport. He said a '24 Pro (which would be my preference, if I could get one for no more than 26k all in) is going for $18,500 on average. None of those are for sale at the moment at local dealers.

I think we would want to buy an extended warranty no matter which way we go. What would you do? If I wanted to do the broker buying at auction, how much time would I need to budget for that to be sure that I am not carless on the last day of December?

2

I personally don’t have the experience/expertise to answer the questions you’ve posed in the paragraph, but I did want to clarify

What is this referring to?

Why is the “original” dealer the one you’d have to deal w/?

I’m not sure what you mean by “sales taxes are due on EV leases (not sales)” in your jurisdiction. Do you mean the sales taxes is due on the lease payment and not the selling price? You’ve tagged “VA,” and the LH calculator does states that taxes are due on the selling price, not the lease payment.

3

Good questions – I have a '23 ID.4 lease ending in December as well.

Confirm with the VA DMV, but you won’t have to pay sales tax on the residual, if you buy out your lease, because you’ve already paid sales tax on the entire selling price of the car when you first leased the car in VA. With $3K credit from VCI, that brings you cost to around $21-22K.

Buying used appears cheaper (from $18,900), but do note that DMV dealers are notorious for high dealer fees and you’d have to pay sales tax, so the total cost might be comparable to the lease buyout.

Is your car in perfect condition and has it been reliable? Those are factors to consider aside from cost alone. Also, standard VW CPO adds 2 years, not 3 years to bumper-to-bumper coverage.

4

Using a broker to buy you a vehicle with unknown history at auction does not sound like a good plan to me. You could buy your vehicle, drive it for awhile, then trade it in for a newer model to capture some tax savings. I think VA gives a tax credit for trade value when buying another vehicle, but check to make sure.

5

VW Credit sent a message that I can get $3,000 off for buying my own car (i.e. $3,000 reduction from residual). But from what I’ve been seeing on Reddit, a lot of time the dealer who sold you the car requires all kinds of fees to make it a certified pre-owned vehicle, so it’s really maybe just a $500 discount. Given the market prices I’m seeing, that’s not that attractive of an offer.

Even though my tag is VA, (and I bought the car in VA, and the dealer with a lot of inventory I listed is in VA), I actually live in DC (as my sig suggests). In DC, at least in 2023, you paid 10% sales tax on each lease payment, but did not pay a sales tax if you bought an EV.

6

Thanks for the clarification on CPO coverage length. As I said to the first person who replied, at the time I leased the car, there was essentially a sales tax on lease payments on EVs, not on purchases of EVs.

However, that sales tax break on EVs no longer is the case; now it is a 2% rate.

I haven’t taken the car to pre-turn in inspection, so I don’t know if it needs three new tires (I replaced one), but otherwise, it’s in low-mileage condition. It’s reliable, though, like for most everyone, the Android Auto and/or Carplay sometimes disconnects or is slow to connect.

7

I am unlikely to try the drive and trade in approach, because of the depreciation issue, and also because I may have private school tuition to pay next school year, and so I want this big purchase done before then.

I understand your point about the risk in the broker plan. The other advantage I would say to going that route is it seems like he may be seeing more 2024s for sale than I am? When I did a https://visor.vin/ search on 2024 id4 pro level with fewer than 30k miles, there were only five listed in the country! It would be nice to upgrade to a 2024 if I could do it without paying more than a $6,000 premium above the '23.

8

Pretty sure the CPO VW program gets you 1.99% APR

9

Are you required to go through a dealer to buyout your lease?

10

If I want to try the “$3,000 off” deal, I would have to go through a dealer. Otherwise, I get my Manheim pre-turn in inspection, and hand over the keys at the end of December.

As long as Manheim doesn’t suggest $2,000 worth of items, it makes more sense to buy a used ID4 and let VW Credit take the haircut.

11

Actually if Mannheim finds $2K of excess wear and tear it makes your decision easier. You can pay the lease end charges and own nothing, or buy the vehicle and owe only the RV. I don’t think you will pay tax on the buyout in VA, not not entirely sure about that. Tires are always a big potential cost, so if you have to pay for them you might as well use them.

Are you sure VW will lower your buyout by $3K if you buy the car? You should not need the dealer for that.

12

Audi Financial is/was offering lower buyouts that seemed to require one to contact the dealer, so it is conceivable that OP does actually have to go through a dealer.

13

Right, I agree, if Mannheim says $2,000 or more in excess wear and tear, then I pay the residual and keep the car.

And yes, it says contact your dealer, so it’s a dealer-only offer.