I want to start out by saying the info I’ve found here is invaluable! I need your advice on a deal I’m trying to make.
Here are the numbers that I was given on a 2020 Q5 Premium Plus Titanium Quattro:
$51,245 MSRP
3,587 Dealer incentive
$47,658 Dealer price
2,750 Lease cash
$44,908 Total price
Region-Chicago
36 mo/10,000 mi
Residual value = 54%
Money factor = .00222
0 down
Fees
$895 Acquisition fee
$300 Documentation fee
$301 License and title
$ 25 County tax
$ 25 Electronic filing fee
According to the Edmunds forum, the residual value is correct, but the money factor is marked up – it should be .00097, and the True Market Value is $47,349. Edmunds forum also says there is a $1,000 dealer market allowance. I don’t understand if that is already deducted from the MSRP as part of the “dealer incentive” discount. I took a stab at the lease calculator and this is what I got:
I know I can ask the dealer to go lower on the price and the MF, and I plan to, but my question is how low should I push for? I’ve been researching a lot but I can’t get a sense of what is realistic/fair. I don’t want to make an unrealistic offer but also don’t want to sell myself short. I’m thinking since it is the model year-end and dealers want to get rid of 2020’s they can afford to go lower on the price than they normally would.
I’ve been doing my research for a few months and have been shopping around but leasing can be a little overwhelming so any advice is greatly appreciated.
This. You can probably get an SQ5 (10k higher MSRP) for less money per month because of better residual (and assuming buy rate MF). If they’re really charging .00222 MF you’re paying $167 a month in interest alone (pre-tax). At buy rate MF it should be $73. So they’re making an additional $94 a month off you or $3,400 over the term of the lease. Your current pre incentive discount is about $3,600 so once you add back the $3,400 they’re up-charging you in interest the effective discount is a whole $200. Garbage.
Realistic/fair are determined by you, not the other way around. You should take your research and plug it into the calculator and then decide on what YOU think is fair based on a number of personal variables (repeat business at same dealer? Good service department? Treated fair in service (comparable loaner given?), easy communication after the deal?). If you can stomach the monthly and feel like you got a good deal and it was easy, then it was good FOR YOU. There’s always a better deal… but how much effort, work, and time do you want to expend? Just remember no dealership is ever doing you a favor. There is always someone else walking in after you. This is a 2020 though, so at some point they’ll cut their losses. That’s likely not going to be through you, but rather a broker… unless you make their job as easy as a broker would. If you’re doing the back and forth game… you’re doing it wrong. You have to come correct on the first go around and then walk. Even better to do this virtually with an email and contact information at the bottom.
Thank you. That is a good way to look at it. I know that the money factor is high and was not intending to lease at these numbers. This was the dealer’s first offer, so of course we have some negotiating to do and I’m willing to walk away if the numbers aren’t right. I’m sure they will come down on the price and the money factor. My main question is where do I have to be (monthly payment/money factor) for it to be considered a “good deal” for an outgoing model Q5? That’s what I am unsure of.
I know, it’s unfortunate, but for a variety of reasons I have to lease rather than buy this time around. So I’m just trying to get the best deal possible, given the circumstances.
Look in the marketplace at broker deals to get an idea but my guess would be buy rate MF, at least 10% pre incentive discount. But I’d look at an sq5 too. Might be very similar in monthly for a better car due to better RV
I’ve seen people make this argument before, but I have never actually seen it make sense, other than as a way for people to try to justify a poor financial decision.
You do you, but do yourself a gigantic favor and compare your actual costs vs purchasing to see how much cash the city of chicago is graciously lighting on fire for you before signing on the dotted line.
I’m in the same boat in regards to lease versus buying. Even with the taxes it seems like leases can still work. Can anyone assist in how to calculate Chicago tax with the lease calculator?
Gotcha. I just learned about the taxes so I don’t even know how the city tax is calculated. I would assume this same tax would be applied to purchases?
It is not. The city of chicago charges an additional ~9% lease tax to standard ~9% illinois sales tax, so you end up with about a 20% tax rate on a lease vs half that on a purchase. Part of why leasing in Chicago rarely makes financial sense.
(I’m not sure of the exact numbers currently, but it’s right around there)
There is a work around, just talked to a dealership and it is possible to set up a walk away balloon lease where you pay all the taxes off the car to avoid getting double taxed.
I assume in this scenario, I want to use the “ Tax is levied upfront on the total lease payment (e.g. NY, NJ, MN, OH, GA).” option on the calculator.
Totally disagree. Realistic and fair is determined by leveraging the knowledge provided in this community to know if your deal variables are in line with what is achievable. Anything beyond that, is up to the individual to see if they can line up the right circumstances to push the deal further into a true hack. You seem to suggest that settling on a deal of any price is ok if you feel its ok because you want an easy experience or other variables not related to the actual lease financials.
Can you clarify how paying all the taxes avoids taxing? I could see the argument that by doing a balloon financing, you’re getting a payment structure that resembles a lease but isn’t actually a lease, so you avoid the lease tax that way, but it isn’t really about paying off taxes. You would of course need the details of said balloon financing to see if it actually made any sense rather than just getting away from some of the taxes.
