No since his total payments also include sales tax on each one. You need to consider that since you pay that no matter which way you buy. And you included all the interest he pays. You would also pay interest on financing, so consider that.
$7,500 on leases are back!
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They don’t refund all interest when you pay… they refund a prorated amount when you buyout.
They reduce the MF because in theory you’re only financing the residual and not the depreciation, since you’re paying completely upfront… so the financing risk to them is lower. The lease contract details all this… if you buyout at the end, you pay the buyout fee + residual. If you buyout early, the residual is reduced by a prorated amount of the rent charge. Your total buyout cost is the residual minus the full rent charge right at the start of the lease and increases through the lease term until it hits the full residual at the end of the lease.
I actually went through all this on my 2021. You buy it out on the VW Credit site at the residual, and then a few weeks later VW Credit sends you a check for the prorated rent charge due back to you.
Thanks for sharing. Did VW Credit make your wait 12 months before you could buy out? When you did your math at the time of the purchase, was going through One-Pay-Lease-Buyout similar to traditional purchase and take $7500 credit later? What was your $ difference?
Thanks.
Not quite. If you total a car that you own, insurance pays you what the car is worth. If you total a leased car, insurance pays the bank. And the bank won’t pay you back. So say you total after one month of leasing, that one month costs you your entire down payment.
Gap insurance works for the other way around, when you have underpaid.
No, there was nothing in the lease agreement that required waiting 12 months before buy out.
I did the single pay lease because the numbers made sense at the time. It was a unique situation in that I think the dealer messed up the numbers they quoted me and then were good enough to honor them. The numbers came out to them giving me enough of a discount off MSRP that I thought taking the lease made sense to keep my options open. If they had quoted me correct numbers at MSRP, I probably would have just financed with a credit union instead.
So assuming I had leased at MSRP, the single pay lease would have cost about $3075 more than paying cash upfront ($1980 rent charge + $699 lease acquisition fee + $395 buyout fee), all else being equal. Obviously, that rent charge (interest) is going to be much higher now than it was 15 months ago.
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Not sure if this has already been asked. But how do you determine the "buyout amount"? Is if the remaining lease payments + the residual value? So say it's $100/mo lease for 48 months with a $1000 residual value. Does that mean the buyout amount is $4,800 + $1,000?
Are "early lease termination" vs "buyout" 2 different things? Thank you for your replies.
Are "early lease termination" vs "buyout" 2 different things? Thank you for your replies.
No. The buyout is the remaining principal + residual value. The VW website calculates it for you.
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Please keep us posted if you figure out the buyout price. I am very interested to find out.
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So in that case the dealer is lying? Coz they are telling me it's the remaining lease payments + residual.
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Thank you! I really hope so because if what they're saying is right, you end up paying way more for the car.
My dealer said the same thing, that all the finance charge is pre-set and no interest refund for early buyout. It's entirely possible they were wrong, but it's also possible that this is a recent change to VW Credit's terms. I hope to be able to look over an actual contract, but my dang car is still in queue to be built. If it turns out to be pre-paid interest, I'll go for a 24 month lease and a sizeable down payment. 24 months is the minimum term for the Oregon tax credit. If the car is totaled with a higher value than the residual+remaing payments, the lease company is supposed to cut you a check for the difference, but lots of room for shenanigans there I'll admit.
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If this is the case (which may be) - there is no reason to lease for the purpose of getting 7,500 - you will pay more interest and fees than 7,500. After a year, if all looks great you may get 3,500 from this exercise, but if interest needs to be paid off for the whole period, this will remove another ~3,000 from your "profit", leaving you with maybe 500$...
Nominally, that's true. But the opportunity cost of the money is also worth something. E.g. you can put the financed portion into a 4.6% CD ladder and shave that much off the finance charge. Roughly calculated on a 8.6% lease APR, I'd say a 2 year lease (with max down) you net a little more than half the $7500. Not great, but better than nothing if like me you don't qualify for the federal tax rebate or you really want a 2022.
I highly doubt that VW Credit’s terms have changed. In a monthly lease, their terms state that the buyout amount is basically the Adjusted Cap Cost minus any depreciation/principal you’ve already paid. I wouldn’t trust anything that a dealership says… they aren’t the ones funding or administering the lease; they’re just middle men. You would think the finance person would be well versed in this stuff, but that’s not always the case.
I took advantage this weekend and got my id.4 finally. Canceled my reservation and drove off the very wet lot with a 22 Pro in Silver.
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Nice, congratulations! I haven't previously seen one in my small city of Winchester, VA, but the day after driving it home I saw three at one intersection and charged next to one at our local EA station, lol. Loving the car so far a few days in, hope you are, too.
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Not sure what the consensus is, but the dealer I'm working with just told me I'd be able to buy out the lease after 120 days. Like everyone else, I'm still waiting for the actual contract, but wanted to add the data point.
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They all read VW documents differently - one of the dealers told me I can do it right away, but 2022 are not included. Crazy
I called VW Credit today. For California, there's no waiting period. I could start the buy out process as soon as the account is created on the website. However, VW will not able to send the title until they received it from DMV, and this could be 60-90 days.
Another thing that I got through the rep was, no interest will be refunded for leases. I am surprised to hear that. She basically said that there's no benefit on paying the lease early and buy out, as VW Credit will not refund any interest.
There are many different data points so far. Some said tax will be prorated and refunded, now this VW rep is saying no.
My plan is to lease and get the tax credit, as my tax situation will not allow me to claim 2023 EV tax credit. So, the best course of action for me is to put a substantial down payment, like a one-pay. Then the tax on the lease monthly payments will be a lot smaller, while able to get the $7500 lease credit now.
Another thing that I got through the rep was, no interest will be refunded for leases. I am surprised to hear that. She basically said that there's no benefit on paying the lease early and buy out, as VW Credit will not refund any interest.
There are many different data points so far. Some said tax will be prorated and refunded, now this VW rep is saying no.
My plan is to lease and get the tax credit, as my tax situation will not allow me to claim 2023 EV tax credit. So, the best course of action for me is to put a substantial down payment, like a one-pay. Then the tax on the lease monthly payments will be a lot smaller, while able to get the $7500 lease credit now.
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