Thought you were grandfathered otherwise not sure about the question. Meecedes and Audi do though.
Put your 6k in a savings account, use it to pay off the higher monthly payment each month. No risk other than paying a bit more in interest. [Or lease a model with interest rate near 0, so interest isn’t an issue].
It’s only a maybe that you might lose some/all of your down payment if the car is stolen or totaled, not a certainty. If the insurance company deems the car is worth what the payoff would have been without a down payment, then there is no loss to the lessee, as he gets his share of the equity back. Not a high probability really, but a potential risk.
If the lease has GAP insurance built-in (a potentially big benefit), then it makes sense not to put any money down. The loss of some/all of the down payment is avoided, as well as responsibility for any negative equity.
If I’m not mistaken, BMW’s MF is the same for all their products and not that special at 0.00166, right? Or do they subvent the rate on X1s, I don’t know. You could find out on edmunds.com if you haven’t already, or I’m sure it’s been discussed somewhere here for July. VWs rates are all over the place, I think.
If you can bring down BMW payment to < $200, I’ve got to believe you can do the same with VW.
Try calling James Stanford at Concord BMW (I’ve found him great to work with) or James Jamous at VW San Francisco. He generates screaming deals.
Why would you even consider buying down your monthly lease payment? What’s the difference between a $200/mth payment and a $366/mth payment on the same vehicle other than you forking over $6,000 on the front end of the deal for the sole purpose of making your payment appear to only be $200??
Put the $6k in a savings account and pay the $366/mth.
Now if you are paying $6,000 as MSD’s to lower your money factor then that is a whole different ballgame and something you should do without hesitation.
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Thanks KD6-3.7. Been digesting all of the information provided. Going to be reaching out to dealers in the next two weeks, after August info comes out. I’m East Bay-based, and did my preliminary reconnaissance at Weatherford and VW of Oakland. Will reach out to both folks you mentioned as well!
Mostly psychological. Some people think long term and want lower payments when thinking about possible job loss or some other unexpected expenses in the future while having enough cash to put down today. Sure, they can put this cash away for that, but they may not trust themselves to keep it stashed away for 3 years.
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Not going to be easy, not even with 6k for fully loaded X1 at 4around 4 k MSRP. Negotiate the price with 0 down for easier comparison…
Thanks for the counsel. To clarify, you’re suggesting that I start negotiations by proposing 0 down, and working up from there, correct? Preparing my spreadsheets this weekend before reaching out to dealers. Will keep folks updated on my progress (or lack thereof).
Entirely psychological, in my case. With a bit of concern about cash management over the next few years. I’d prefer to run with an MSD based deal, but can’t get over my past experiences with Audi and Mercedes. Thanks for the counsel and kind words Ursus!
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Not psychological in my case. I have $15k that I need to write off from my taxes this year and I was just going to put that as down payment on a lease, I had no idea I’d basically loose that if my car was totaled or stolen after 3 months, for example. I don’t have any other options in this case? I read on Audi’s brochure saying GAP insurance would not apply to leased cars? I want to have the $15k expensed this year and keep my monthly payments low toward the rest of the lease.
This is the last deal I’ve been working on:
Audi SQ5 2018 MSRP $62,735, dealer price $54,481, $15k down, 10k miles, 24 months x $199.43/month (w/ CA tax). I’d greatly appreciate any insight, thanks in advance!
As stated above you will lose the 15k if your car gets totaled. If you have 15k to spare look at a possibility of doing a one pay lease for 2 years. Mercedes allows one pay lease.
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See if Audi will do a onepay instead.
What most people in this forum (I posted the example in different topics) failed to understand is that I consider the $15k “lost” already since that amount will go out to the government as taxes anyway. I personally think it’s worth the risk of putting the $15k down to allow me to drive an awesome car for as low as $200/month for 24 months (or as long as nothing bad happens). Of course, the $15k could indeed go down the drain if I total the car driving out of the dealership, but again, that’s a risk I’m easily willing to take given the circumstances.
As someone else pointed out, if you are required to amortize your down payment over the life of the lease, you don’t really get to deduct it entirely in your 2018 taxes
Correct, hence the shorter lease. Still a good deal
Isnt the $15k just reducing your taxable income (or business’s profit), so the entire $15k isnt going to the government, just $15k x tax rate? If you needed to save $15k in taxes, you would need to spend $15k divided by your tax rate to have that impact. [E.g. tax rate of 33%, reduce your income by $15k, you save $5k in taxes. To reduce your taxes by $15k you would need to reduce income by $45k.]
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What @cheapdad00 says. I don’t think you are lowering your taxes by 15k, but 15k x tax rate which isn’t that attractive.
But if you want to drop 15k on a down payment then go ahead. Not sure why you are trying to convince people.
I think the only portion of the down payment that could be lost would be the difference between the appraised market value and what the payoff would have been if there was no money down (CCR). It can’t be right that the insurance company only has to cover the payoff regardless of what the lessee put down on the lease- that doesn’t make sense. For example:
Scenario A- no money put down on lease. Car’s market value when totaled $50K, payoff $53K. GAP insurance covers this, if included (it usually is).
Scenario B- down payment (CCR) was $12K, payoff is $41K vs $53K. Lessee gets $9K ($50K - $41K). It appears you guys are saying the $9K is lost. In reality, $3K is lost because the GAP insurance would have protected maybe some but not necessarily all of the down payment.
This was discussed here:
I think dermonte wants to write off $15K, not get a $15K tax credit.
@dermonte - it sounds like you’ve discussed this with your tax preparer, or you’re at least savvy about the tax laws. If not, I would have that discussion if you’re not 100% confident in what play you make. If you make a big down payment (CCR), GAP insurance isn’t going to help you, anyway. Most lenders include it.