I am looking to get my first car and am trying to decide between leasing or purchasing. I would rather not lock away too much money right now and instead pay the monthly lease payment, but I am not totally positive that I’ll actually keep the car for the 3 year lease term. This is because I am moving to a new state for a new job and in case I hate the job or the new location, I to not be screwed by the lease. If I were to relocate again or get a new job, I most likely wouldn’t need a car, which is why I’d get rid of this one again.
This prompts the question, should I still lease a car since I prefer the monthly payments? I understand leases can be bought out, but just wondering how hard that is to do? How much money would i likely lose if I were to break my lease? If it helps in any way, I’m looking to get either an Audi A4 or Q5.
As of now, Audi has 3rd party buyout restriction for the leases. So if you need to exit before your lease term expires, then you would be left at the mercy of Audi dealers.
It is always better to buy because you can sell it to anyone at any time.
When it comes to lease, it only makes sense if there are some extra lease incentives, sales tax, lower apr etc.
Make sure you are aware of any impediments/costs/restrictions/risks if you want to transfer or return the car or sell the car to a third party.
Note that you shouldn’t make any assumptions about what your future options may be with a given lessor, as some options that people believe are a birthright are actually courtesies and can be changed at any time. You’re only entitled to what the contract says.
Thank you all for the replies, very insightful and think I’ve made the decision to buy something a couple years used.
As for the comment above, it’s not that I can’t afford the car, it’s that I would rather put the 20k down payment or whatever elsewhere as i can achieve higher returns. I can afford the car whether it comes down to lease payments or financing, it’s just a question of preference now.
The used market is so inflated you’d be much better off spending the same amount of money on something brand new. Bought right, the new car would actually depreciate less.
In terms of ease and speed of sale, nothing can beat a Toyota, Honda, Hyundai and Kia these days. You can walk into any Carmax/Carshop/Autonation etc and walk out having sold your owned/financed car in less than an hour.
Interesting, so you think the depreciation on a 2023 A4 would be less over a few years than a 2020 A4? Even if it’s a little pricier I’m willing to pay a slight premium, but just curious of what how inflated you think prices are.
As for getting a Toyota, Honda or Kia, I agree that’d probably be the smartest choice, but I’m looking to spoil myself and get any entry level luxury car.
This is probably an extremely uneducated question, but how do you find the wholesale value of a vehicle?
I am looking at Audi A4s that are ~2020 and are selling for around $33k or so, whereas the new A4s in the spec I want are around 50-51k. I understand I may be able to negotiate a good deal through some of the brokers on this website / dealers, but do you have any references to help me understand what the wholesale value is?
MMR ( Manheim Market Report ) is used to find the wholesale value. If you have access to Hackrs Lounge on LH, then you can ask for MMR. If you dont see that access available, then you may have to join the paid membership on LH so you can get access to this locked area.
FYI - Base MMR is $27,200 if that car has 28k miles ( 2020 AUDI A4 FWD 4D SEDAN PREMIUM ). Hope it helps.
Great, that’s very helpful. If you have access to this data handy, could you let me know what the 2023 Audi A4 FWD 4D Sedan Premium Plus 45 TFSI wholesale value is?
But wouldn’t your financing payment be more that just a 3 year lease payment? take a $40 car to lease for 3 years vs a $40k car that is bought/financed over 5 years. wouldn’t the lease presumably be less since you are only renting it for 3 years vs paying 40k+interest over 5 years?
Whether you lease or finance, you are always going to pay the interest for the entire balance of the car. Just because if someone does finance the car for 5 years, they dont have to keep it for the entire term. They can keep it for a month or 3 yrs or less. If they keep it for 6 months, they will pay the interest for the 6 months only. Monthly payment is not the index to compare whether the lease is better than finance.
If you’re going to lease a car but may not hold for 36-mo you could:
lease a Nissan for 18-mo
lease a number of cars for 24-mo
EQS for 13-mo I guess?
If you want to lease for 36-mo but looking for flexibility:
do not lease from a brand that restricts buyouts or charges market rate when it’s above payoff (ie Audi, VW)
do not lease vehicles whose ‘good lease deal’ is pretty much h entirely predicated on insane residual subvention - you’ll never be in the money
DO look for cars that have both a great lease deal AND are likely to either have equity or at least not likely to have negative equity
Remember any car can have positive lease equity if you put enough down, you should be looking for what you can get with no down payment, but will still likely have some equity plus has decent lease payments.
Otherwise finance something that will hold its value relative to what you pay. Meaning if you’re going to pay $2k ADM for a Camry, even if it holds value relative to MSRP, you’re already behind the 8 ball. There are a number of Hondas, Lexuses, etc that are discounted but are still likely to have a decent resale value.
Or maybe go used. But as others have said, be very wary of overpaying for a nearly new car relative to what a new one goes for. I suspect you’re better off with a discounted new car if you find the right deal, but you’ll probably need to be flexible about what you’re getting.
