[Chillingsworth]

So the dealer I’ve gone to in Northern California suggested I lease the ID4, then after 6 months buy out the lease.
Essentially I’d be getting the $1500 California rebate and the federal $7000 rebate all at once. This way in 6 months the car would be $9000 less. They also said that the 6 lease payments would lower the cost a bit too.
This does apply the rebate, and since it’s within 6 months it’s still the same model year to the buyout loan would still be for a new car. Has anyone done this? Is this a scam? Or is this just a way to use the tax system to get the car cheaper? Any thoughts?

 

[wtatun]

The federal rebate is $7500.

 

[Tinman]

Scam, IMHO. This is a great deal--for the dealer. You have already paid for three years of 'free milk' in the form of lease payments. You already have the $9000 in your pocket lowering the cost of the car factored into your lease payment. Now, they're trying to get you to come back and buy the cow without any advantage to you. You assume a risk you have already paid them to assume--the value of the car at the expiration of the lease.

Talk to them in three years if you want to buy the car, you already agreed on the full price to pay at that time. If it's worth more than the agreed value at the end of the lease, you got a good deal. If it's worth less and you turn it in, you get the deal you have already agreed to and are better off than if you had bought it now.

Edit: I don't know California law, but at six months, you would be buying a used car in my state.

 

[Chillingsworth]

The federal rebate is $7500.

Yes. Federal $7500 plus California $1500 equals $9000.
That would be applied to the msrp in a lease. If I buy it, it’s the state rebate, and then a $7500 tax credit later.

 

[Chillingsworth]

The dealer wants to do the buyout after 6 lease payments. This way you can get a new car loan for the buyout. the buyout would then be that $9000 less since it was already applied to the car.

Scam, IMHO. This is a great deal--for the dealer. You have already paid for three years of 'free milk' in the form of lease payments. You already have the $9000 in your pocket lowering the cost of the car factored into your lease payment. Now, they're trying to get you to come back and buy the cow without any advantage to you. You assume a risk you have already paid them to assume--the value of the car at the expiration of the lease.

Talk to them in three years if you want to buy the car, you already agreed on the full price to pay at that time. If it's worth more than the agreed value at the end of the lease, you got a good deal. If it's worth less and you turn it in, you get the deal you have already agreed to and are better off than if you had bought it now.

 

[Tinman]

The dealer wants to do the buyout after 6 lease payments. This way you can get a new car loan for the buyout. the buyout would then be that $9000 less since it was already applied to the car.

The buyout, unless they throw you some carrots, will be 30 times the full monthly lease payment, which includes a money factor plus the residual value of the car. You already have the $9000 when you sign the lease. Once you pay all the costs of leasing upfront, which pays for the risk of the car's value at the end of the lease term, why would you suddenly want to "own" the car and give up the advantages of leasing that you have already paid for? Win-win for dealer, lose-lose for you.

 

[krusshall]

Somebody on here did this a few months after taking delivery in March 2021. I can’t remember who but you could search. The values worked for him where it was almost cost neutral as I recall but a lot of process to go through the steps with lenders and DMV. That was after only a month of leasing though, not six months. You just need to run the numbers based on your scenario.

 

[kht6789]

I don't understand why you have to wait until 6 months, you can do it right now by logging into your vwcredit account and request a payoff amount. It will show you the full break down of the number which is:

Residual value + residual / payoff tax + remaining future payments - lease charge = buyout amount

They will subtract back out the interest or money factor from the remaining payments, that is the "lease charge" above.

The $9,000 is already take off from the price of the car when you sign the lease immediately. I just tested it on my account and I would be making money if I sell the car right now to a 3rd party dealer because the quote from those dealers are higher than the buyout amount VW Credit shows.

VW Credit buyout quote only good for 1 week.

Also VW right now is the only company that let you use the full tax credit through a lease. If you lease a Ford Mach E, the only thing you get is $1,500 from CA right away. You cannot claim the $7,500 nor Ford will give it to you either. You will have to buy the car to claim the $7,500 tax credit on your tax return. I'm not sure how long VW will continue to allow this, so I would definitely look into lock it up if you can.

 

[Chillingsworth]

The lease as is would not work long term for me since I drive around 30,000 miles a year. The lease only allows 15,000. This deal would get me the $9000 off the price of the car right away.

It's just more advantageous to have the money off the price of the car than to get the tax write off. This is the only reason for the lease.

The buyout, unless they throw you some carrots, will be 30 times the full monthly lease payment, which includes a money factor plus the residual value of the car. You already have the $9000 when you sign the lease. Once you pay all the costs of leasing upfront, which pays for the risk of the car's value at the end of the lease term, why would you suddenly want to "own" the car and give up the advantages of leasing that you have already paid for? Win-win for dealer, lose-lose for you.

 

[Chillingsworth]

If I was able to do it before 6 months I would, that's just what the dealer suggested. This deal would get me the whole $9000 off of the car. It just feels weird to me.

Like when I go later to refinance the lease, will that be an issue? It's all a little confusing honestly.

I don't understand why you have to wait until 6 months, you can do it right now by logging into your vwcredit account and request a payoff amount. It will show you the full break down of the number which is:

Residual value + residual / payoff tax + remaining future payments - lease charge = buyout amount

They will subtract back out the interest or money factor from the remaining payments, that is the "lease charge" above.

The $9,000 is already take off from the price of the car when you sign the lease immediately. I just tested it on my account and I would be making money if I sell the car right now to a 3rd party dealer because the quote from those dealers are higher than the buyout amount VW Credit shows.

VW Credit buyout quote only good for 1 week.

Also VW right now is the only company that let you use the full tax credit through a lease. If you lease a Ford Mach E, the only thing you get is $1,500 from CA right away. You cannot claim the $7,500 nor Ford will give it to you either. You will have to buy the car to claim the $7,500 tax credit on your tax return. I'm not sure how long VW will continue to allow this, so I would definitely look into lock it up if you can.

 

[kht6789]

You can buyout the lease anytime. Regarding financing, you can just go to any bank or credit union and apply for the buyout amount. It will be a used car APR and for BofA right now its about 3.5%. On the buyout request they already have everything printed for you. So you just need to print then submit to your lender of choice.

I know it’s weird but that is only because for some reasons, VW allows you to claim the full tax credit right away on a lease. None of the other companies do it. This is the reason why I leased my pro S.

 

[Chillingsworth]

Thank you. So are you going to buy out your lease? Or does the lease work for you?

The dealer told me the buyout price would be around the msrp minus the $9000... I just wonder why does the dealer want me to wait 6 months to do the buyout, and why are they not quite saying what the buyout price would be, since they'll know that.

You can buyout the lease anytime. Regarding financing, you can just go to any bank or credit union and apply for the buyout amount. It will be a used car APR and for BofA right now its about 3.5%. On the buyout request they already have everything printed for you. So you just need to print then submit to your lender of choice.

I know it’s weird but that is only because for some reasons, VW allows you to claim the full tax credit right away on a lease. None of the other companies do it. This is the reason why I leased my pro S.

 

[kht6789]

Yeah, I’m going to sell it actually because of the pumps issue that you can see in the other threads. My buyout quote right now is 38k and Carmax is offering 42.5k so I will just sell it to them and take the 4.5k

 

[Chillingsworth]

That issue is bad enough to not have the car anymore?

Yeah, I’m going to sell it actually because of the pumps issue that you can see in the other threads. My buyout quote right now is 38k and Carmax is offering 42.5k so I will just sell it to them and take the 4.5k

 

[Mark Magiera]

The MF on the FE was such that IF one were to buy out the lease, they would pay $4K over sticker. Example: my lease base was off $33K (after all the rebates). With the MF, the end of lease buy out is just under $21K.

If I were to buy the car, the loan would have been for a sticker at $45K. Most would go with a 6 year loan (with the rates thrown around last March, at best would be 3.4% Although I saw lower at 2.6%) would see a $700 monthly. Even with the State & local rebates: in the form of checks after sale to the consumer & then a year later of getting some or all the federal $7500, that does not push the sale price down. You just get some $ to make toward the payments, unless you have the money on hand prior to purchase & place it as money down.

yeah, Lease was the better way to go. Hold onto your money & don't play the "be the bank" game. It is a car. It depreciates. Use it, give it back. Move on.

 

[Tinman]

1. The dealer told me the buyout price would be around the msrp minus the $9000...
2. I just wonder why does the dealer want me to wait 6 months to do the buyout, and why are they not quite saying what the buyout price would be, since they'll know that.

1. "around" means they didn't lie to you. There will be "around" $2000 in fees associated with getting in and out of the lease.
2. Because, everything about this deal works in favor of the dealer. The sad thing is that I'll bet they know you drive 30,000 miles per year and are trying to write you a lease that only allows half that many miles. Ironically, if you did the lease as structured, you'd owe them exactly the $9000 (plus termination fee) in three years if you turned the vehicle into them with 90,000 miles.

I don't think I am able to explain this any better. I wish you the best of luck.

One other thing, this may not be a mature enough vehicle to depend on driving 30,000 miles per year. It's a great vehicle, but if money is tight and your paycheck depends on the car, there are probably better choices. This, unless the dealer you are using gives you an ironclad guarantee in writing of a loaner or rental paid by VW for all in-warranty or recall service visits that last more than one business day.

 

[agzand]

I got a payoff quote on VW credit site and they subtract the lease charge (I don't believe it is a common practice). Basically VW bends over backwards to let you buy out your lease. So I believe it is a viable option to lease and then buy it after a few months. I am waiting for software update and the iD3 fire investigation result to make a decision. I believe the only downside is the acquisition fee, but having the option to keep it or sell it probably worth it for most people.

 

[kht6789]

Yes, this is what I’ve been saying. If you lease then turn around and sell it right now, you will make money. I don’t know how much longer VW will continue doing this (giving you the full tax credit right away and also refund the interest you have left). I barely leases mine for 2 weeks and my buyout quote right now is $38,000. Carmax offered me $42,500 so I would make $4,500 if I want to get rid of the car now.

I got a payoff quote on VW credit site and they subtract the lease charge (I don't believe it is a common practice). Basically VW bends over backwards to let you buy out your lease. So I believe it is a viable option to lease and then buy it after a few months. I am waiting for software update and the iD3 fire investigation result to make a decision. I believe the only downside is the acquisition fee, but having the option to keep it or sell it probably worth it for most people.

 

[wtatun]

Yes. Federal $7500 plus California $1500 equals $9000.
That would be applied to the msrp in a lease. If I buy it, it’s the state rebate, and then a $7500 tax credit later.

Right, your original post was written as “7000 federal credit.” That is what I was correcting….Not the overall math. 😁

Quote from original post: “Essentially I’d be getting the $1500 California rebate and the federal $7000 rebate all at once.”

That’s all….no worries,,,,😎

 

[Chillingsworth]

Sorry, this whole lease/buyout thing just feels weird, and I wasn’t sure my original post made sense.

cheers!

Right, your original post was written as “7000 federal credit.” That is what I was correcting….Not the overall math. 😁

Quote from original post: “Essentially I’d be getting the $1500 California rebate and the federal $7000 rebate all at once.”

That’s all….no worries,,,,😎