Audi SQ5 - Lease or Finance?

Ask the Hackrs
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1

Market is brutal right now. I have a dealer who has agreed to do a deal at MSRP + Buy-Rate MF/interest. And before anyone hits the reply button and begins drafting some snarky reply about how that’s a terrible deal - unless you have experience shopping for (or at least knowledge of what it’s like to currently shop for) an SQ5 in the last few weeks, your opinion on whether this is a good deal or not is absolutely worthless.

For the rest of you, I was hoping you could help me evaluate my options here. Here are the numbers (for context re: sales tax, this is in Maryland):

Market Value Selling Price: $66,860.00
Trade Allowance: $32,129.00
Trade Difference: $34,731.00
Doc Fee: $500
Tax: $2,113.86
Non-Tax Fees: $331
Net Price: $38,670.86
Trade Payoff: $32,129.00
Balance: $70,799.86

36 Months, 10k miles/year: $1,091
42 Months, 10k miles/year: $1,039

For context, here are the relevant MF and RV for 36 and 42 (10k miles/year):

36 Months - .00154 MF and 58% RV
42 Months - .00174 MF and 54% RV

I also ran the numbers for what financing would look like based on the above + using Audi’s buy-rate APR, and here’s what I got:

1.49% APR for 60 months ($0 down) works out to $1,225/month
2.49% APR for 72 months ($0 down) works out to $1,060/month

What would you guys do?

Also, am I missing something, or do the dealer’s numbers not add up? Because when I do the math, I’m getting a balance of $69,804.86 (so $995 less than the “Balance” that the dealer listed).

2

That sounds like a missing acquisition fee. Are you including that in your calculations?

3

Is it normal for dealers to not include that in a deal work-up like this (but include every other relevant figure)?

4

Yes, very. Because it’s a lease initiation fee, they often don’t list it.

Have you put together a lh calculator for your lease deal? It’d have that included.

5

IMO I wouldn’t lease anything in MD unless it was one of those absurdly high RV resulting in super-low payments like in the good ol’ days.

The only reasonable way to amortize 6% of selling price as taxes is to own it for a good 5-6 years.

PS:

One thought experiment worth conducting these days is to assume this is the new normal. Banks are fully aware of just how much consumers are willing to pay to lease cars. Now that that cat is out of the bag, it’s not going back any time soon.

So compare the total cost of:

(A) doing 2 of these leases over the next 6 years.

Versus

(B) buying the car and extending the warranty to 6 years.

1 Like
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@mllcb42 re: putting together a calculator - I’d love to, but I’ve never been able to figure out how to accurately configure the calculator for MD leases. That’s why I provided as many (if not all?) of the relevant inputs as I could.

@max_g I certainly understand that POV, but that said, this particular situation would be a little different, as the trade-in would be off-setting the taxes I’d be assessed on a new vehicle. So with the figures I posted above, the taxes are only being assessed on the difference between Selling Price and the Trade-in (+ doc fee).

As a side-note, what would you consider to be an absurdly high RV?

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You can always set the tax to 0% and then add in the actual number to the gov fees.

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If I had to have this car now, its a buy - no question about it.

I know its irrelevant for today’s market, but I negotiated an SQ5 lease 12k/36month in January 2021, similar msrp, discounted to 59k, for 665/month tax included (7%) with 2k total DAS.

The point is, the lease payment was significantly lower than a finance payment at that time.

The lease makes sense when/if at least one or more of the following are true: the MF is dirt cheap, or the RV is very high, or the car is discounted - none of which are true on your proposed lease.

The proposed finance payment may have been less by 100-200$ in a “normal” market- so it hurts less IMHO.

9

I would simply not buy nor lease a new Audi right now. You don’t have to be a victim in a bad market, you just need to have discipline. I say this as a multi Audi owner and current SQ5 driver.

3 Likes
10

If I have to have SQ5 and the numbers you quoting I will go with a Buy . In 3 yrs if you want to sell and keep mileage low you can get a good resale price.

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In today’s market, that’s rare for an in-demand car like the SQ5.

Are you rolling in some negative equity from a current lease into a new lease?

Even with a 58% RV on a 36/10k deal, that high APR of nearly 4% is not doing you any favors.

Does that include tax?

If you are going to finance it, buy Audicare (it residualizes - the RV goes up by 1%). Also get an extended warranty that covers mechanical, brakes and rotors, and electronics.

You have to ask yourself whether an SQ5 is worth leasing or financing for $1k/month. However, If money is no object, then go for it.

EDIT: Can you do a custom order at a discount off MSRP with the same dealer? What do broker deals in the “Marketplace” look like on this car?

1 Like
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@Bluemkn57cars Re: Whether I’m rolling in negative equity - Nope. The trade-in is technically break-even (dealer is paying the exact amount of the payoff quote from Audi FS) - but in practice, I’m coming out ahead, since the payoff quote includes 4 months’ payments that I’d otherwise have to pay if I kept the vehicle for another month (last month’s payment on the lease + 3 months that I deferred at the beginning of the pandemic). That’s why the “trade allowance” line is the same as the “trade payoff” (the “trade difference” line refers to the difference between the trade allowance, i.e. the trade-in offer from the dealer, and the selling price).

Yes, the finance calculations that I made included tax.

I’m a bit confused re: what you mean by “If you are going to finance it, buy Audicare (it residualizes - the RV goes up by 1%).” Did you mean if I lease it?

13

Correct. I would still get Audicare on a financed car.

14

Why would you get Audicare without the benefit of a Rv bump on a lease?

15

If the cost of covered services >> cost of audicare

1 Like
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Here’s the thing, Audicare covers everything the books says at the dealer, Ie loaners and a traditional experience.

Otherwise for a lesser cost you can go to a reputable indie shop. The delta between 4 oil changes and audicare 10/20/30/40k (1400 for a sq5) might be worth it, but it’s person to person considering an oil change shouldn’t be 400 bucks a pop.

17

If OP decides to finance the car for say 60 months (5 years), the cost of Audicare might be worth it compared to paying out of pocket for maintenance costs up to 50k miles.

Paying $1k+ to lease an SQ5 is not a good deal, IMO. To each their own.

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It’s not. Not on any ICE Audi.

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