Q4e Lease to buy for using the $7500 credit

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I originally posted this in a thread meant for a different topic so posting the question(s) here instead.

I read this post about redeeming the $7500 incentive with a VW/Audi lease and then "buying out the vehicle immediately to save on the hefty finance charges ".

I am super new to leasing so pardon all the dumb questions. Can someone help me understand this? I looked at Audi’s website, I see the MSRP, the $7500 deduction, some of those fees for documents etc but I don’t see a variable for MF or “Interest”. So I am not getting where I am paying the finance charges here.

Here is the breakdown I am seeing for Q4e/36/10k:
MSRP: 57,790
Lease Bonus: 7,500
Due at signing: 0
Taxes & Fee: 2150 (Up-front: 482, DMV fee: 688, Documentation fee: 85, Acquisition Fee: 895
First month payment: 1054
Eat Adjusted Cap Cost: 53,494

Fineprint: Total monthly payments equal $37,944. Due at signing includes $4,297 capitalized cost reduction, a required security deposit of $0, and first month’s lease payment of $1,054.

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Hi welcome, I highly recommend reading leasing 101 in the top right to understand the components of a lease.

TLDR; you have depreciation and rent charge, which represents the hefty finance charge referenced in that post. Audi currently has a very high money factor, or the rate they charge rent charge at on the Q4 etron.

Just because you don’t ‘see it’, doesn’t mean it’s not there. That MF or interest is being used to calculate the rent charge - which is rolled into the monthly payment.

You can see this as the total cost of payments is 38k + 4300 in cap cost reduction/downpayment, which means you’re paying over 42k to lease this 58k car across 36 months, even after the 7500 rebate - meaning you should buy it out immediately with a loan from a CU like the one on my spreadsheet to minimize your costs.

We have recommended this in the past, a prime example was the Kia stinger, which had huge lease rebates representing if my memory serves correctly a huge percentage like 20% of the MSRP of the car available only as a lease rebate - individuals got a discount on the car, the lease rebates, and paid a higher MF - but purchased the car to be ahead of simply purchasing the car conventionally and forgoing those higher rebates.

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Thanks for the info. I am interested in something similar. Is there a way to calculate what the buyout will be after say 3 months?

Yes, if you calculate out the lease payment as the MF is applied monthly. Current base MF for the Q4e is around .00305, so almost 8% APR. A quick guesstimate would be $250-$300 per month strictly for rent for a Q4e.

You would also need to know what is being rolled into the lease (bank, dmv, doc fee) as that would be part of the cap cost that the MF would be applied to.

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Make sure there isn’t any penalty for early buyout as well based on your lease contract.

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And don’t forget to include how both leases and buyouts are taxed in your state, in your calculation.

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Thanks all, this has been very informative.

Going with the follow up questions, if my monthly lease amount is already set, how does paying it off matter since I am still obligated to pay for the remainder of the lease when I buy out?

Strategy: And what’s a good strategy in this case to get a lease and then do a quick buy-out to maximize the $7500 ‘discount’? Should I be shooting for a lower monthly rate by putting down a bigger deposit or is a 0 Drive away cost still recommended in such a case?

Negotiating: I’m also curious what folks think are good negotiation tactics here (because I am pretty terrible at it and want to arm myself with the knowledge of the folks here) - Should I be pressing on a lower MF (not sure if that is something that is negotiable) and demand more transparency in the breakdown of the lease monthly cost? I’m assuming there may be a very small leeway on MSRP if any at all for Q4E or Q5 Hybrid.

The buyout statement will show a credit for unused rent. You would pay the residual + remaining payments - unused rent.

The money factor is not necessarily negotiable but the dealer can mark it up. Since you are going to buy it out almost immediately, not worth pressing too hard on this since it’s likely a difference in a few bucks. On that note, I wouldn’t make it obvious you are buying it out immediately to the dealer as it could result in a penalty to them.

The most important numbers to check would be the selling price (5% discount seems to be the going discount on LH) and ensure to avoid any dealer add-ons.

Unfortunately you won’t be able to avoid the bank fee of $895 which is throw away to get the $7,500. No point in putting more money down since there is little savings and you could lose it in the small chance the car is totaled while it’s leased.

Youre not obligated to pay for the rainder of the lease when you buy it out. Youre obligated to pay for the remained of the depreciation.