[PJStyles]

Need some serious and unbias feedback on this. I began leasing a 2003 Audi A4 1.8T Quattro fully loaded 5 months ago and put $12,500 downpayment and my payments for the 4 years are $403/mth taxes included.

Fast-forward 5 months into the lease and I find out that my situation has changed drastically, not just from a career standpoint but family standpoint too.. I'm married with a child and looks like we may have another one on the way...

My question is simple... I have someone who is interested in taking over the lease of the car by paying me $7,000 cash. In other words, I give them the car, they make the remaining payments and I walk away with $7,000 which means in 5 months I lose $5,500!

However, I can do a purchase finance deal with Mazda for a new 2004 Mazda 3 w/GFX Package GT Auto Tranny for $405/mth taxes included over 5 years.

Financially, what would you guys do? I'm looking to get as much feedback on this as possible. On the one hand, with the Audi, I wouldn't pay for any maintenance/tune-ups in the first 4 years, not even oil changes... with Mazda I would. However, after 4 years with the Audi, the residual value is $18,425 + Taxes. At least with the Mazda, after 5 years the car is paid for and I own it.

I'm looking for as much honest and unbias feedback as possible...

Thanks,

PJStyles

 

[vartex]

umm i say just keep the audi. i see you losing more money going out and getting the 3. and it seems like you have more than enough money (you know willing to let 5500 go to waste) thats 5500 you can use to add the 3 to your family car.

405 over 5 years is a crap load.

just keep the lease with the audi

 

[dinu01]

Tough one - on one hand you lose $$$ giving away your lease

BUT

giving the Audi back in a few years is worse IMO than keeping that 3 - as you'll own it.

Not sure what you feel better doing:

wasting more $ on a lease

or

losing right away $5000+ and ending up with a car worth about $10-12K Cad in 5 yrs...

 

[vartex]

you know what...on second thought get rid of the audi and do it quick. yeah this way you will have a car for good. unless you get sick of cars quick and wouldnt mind getting rid of that car and leasing another decent one, if you know what i mean. that part is up to you. but if you want a secure car for good, get the 3! money wise, im pretty sure maintenance on the 3 wont be that bad. i know that audi is taken care of and all, but how often do you go for repairs? so that issue isnt that big of a deal. but IMO i still think 405 for 5 years to own that car is too much. if its going to take 5 years to own, then might as well stick with the lease cause either way you will get a car. man i have no clue. financially, the 3 sounds better for the long run.

 

[PJStyles]

Vartex... $405/mth is taxes included and that's CDN$... which I think is reasonable for ownership... that's with a 5.9% financing rate. I would buy one used but there are no used cars I really like at the moment that are reasonably priced...

I thought of waiting another year and getting a used 2004 Mazda 3 but then I won't be able to get the $7,000 cash right now for someone to take over my lease...

PJStyles

 

[LeeLee]

Getting rid of the Audi and going for a Mazda3 is absolutely the better financial decision.

In the first scenario, you carry through the payments for the term of the lease on the Audi, making $17329 in total payments. In the end you have the choice of buying the Audi for $18,425 or walk away. I doubt that Audi is going to retain that much value after 4 years, so you'll most likely walk away. Your value for this position is -$17,329.

In the second scenario, you get $7000, pay out $24300 over 5 years, and end up with a car that I am going to assume to retain 30% of its value ($7290). Thus your value for this position is $10,010. Not only is your net expense lower, you have gotten 5 years out of the car, instead of 4 years with the Audi. If you extrapolate another year of payments at $400 per month, that adds $4800 to the difference of $7319, meaning you would have spent over $12,000 less by going to the Mazda3.

The above calculations are simplified in that they don't consider time value of money, but interest rates are low these days and any effect there may be is miniscule compared to the dollar difference between the two scenarios here. In the end, I think the Mazda3 route is going to save you more than $12,000 over 5 years, and you are the one who has to decide whether or not that's worth "trading down" from an Audi to a Mazda3.

Aside from the pure value calculations, there are other benefits to the Mazda3 route. Instead of a lease, you own your vehicle, meaning you will not have to be extra careful with it in fear of incurring penalties at time of lease maturity. You are also in the much more flexible position of holding the ownership to the car after 5 years. You can either keep it or sell it at a time of your convenience.

 

[PJStyles]

Leelee,

Awesome reply... exactly the kind of comparison I was looking for... Thanks a lot!! You made my decision a lot easier to go through with... Looking forward to getting the Mazda 3 and although I'll have to get over the fact that it's not an Audi, at least it's mine

PJStyles

 

[SyChO]

huh.... Aside from money the Audi is farrrrrrrrrrrrrrrrrr better than a 3! My god its not even comparable. If I could afford an Audi instead I would with out hesitation. Audi's are just like wow...! I love the new A4 its beautiful and its better then any Mercedes or BMW out there... But that's me. :lol:


By the way the A4 is my dream car, so my opinion will be a "wittle" biased...

Oh and I love the MZ3 so huh...good luck! :?

 

[FR3D]

A4 is great! just a little bit high on price, so if you are thinking long-term, get rid of it

 

[Black7]

Getting rid of the Audi and going for a Mazda3 is absolutely the better financial decision.

In the first scenario, you carry through the payments for the term of the lease on the Audi, making $17329 in total payments. In the end you have the choice of buying the Audi for $18,425 or walk away. I doubt that Audi is going to retain that much value after 4 years, so you'll most likely walk away. Your value for this position is -$17,329.

In the second scenario, you get $7000, pay out $24300 over 5 years, and end up with a car that I am going to assume to retain 30% of its value ($7290). Thus your value for this position is $10,010. Not only is your net expense lower, you have gotten 5 years out of the car, instead of 4 years with the Audi. If you extrapolate another year of payments at $400 per month, that adds $4800 to the difference of $7319, meaning you would have spent over $12,000 less by going to the Mazda3.

The above calculations are simplified in that they don't consider time value of money, but interest rates are low these days and any effect there may be is miniscule compared to the dollar difference between the two scenarios here. In the end, I think the Mazda3 route is going to save you more than $12,000 over 5 years, and you are the one who has to decide whether or not that's worth "trading down" from an Audi to a Mazda3.

Aside from the pure value calculations, there are other benefits to the Mazda3 route. Instead of a lease, you own your vehicle, meaning you will not have to be extra careful with it in fear of incurring penalties at time of lease maturity. You are also in the much more flexible position of holding the ownership to the car after 5 years. You can either keep it or sell it at a time of your convenience.

Nice Job!
There is no doubt that you will save money by going with the Mazda, however, considering the 2 cars you are comparing, you had better save a few dollars! The one factor that is not covered in this write up is the fact that you will be driving an Audi for 4 years which should, will, must cost more than driving a car almost half it's value - that has to be considered unless you are simply trying to cut the expense of owning a car (which, based on your post, sounds like your #1 priority). Bottom line, you can't go wrong with the MZ3 so long as you don't mind stepping down a notch or two - you wont be slummin' :wink:

 

[PJStyles]

That's exactly it..... as nice as it is to drive the Audi, which is and has always been my dream car, financial considerations are more important right now... and based on the feedback, best route seems to be the MZ3.

PJ

 

[lmp180psu]

You could do worse, like driving a Corolla or Civic The Mazda3 is as close to the Audi as you can get in the "economy car" class, it terms of style and driving dynamics. They're even similar with the red instrument panel lighting

 

[cowtown]

The real trick becomes getting someone to pull off a deal like that, often harder than one may think up front.

 

[TellyDSP]

It sems like the only advantage is owning the car in the end. Which while it makes sense, it depends on how you treat your cars. My dad does 40k miles a year. He leases a car for 2 years at a time. Although it seems rediculous, it's just not logical to buy a car over 4 years and the be stuck with a car with 160k on it. This way he drives it to 80k and then it's not his problem anymore. As far as a comparison, the AWD of the audi will probably be surely missed, ands a couple other bells and whistles. I know a guy that just bought the A4 a week before my 3. When he saw my 3, he fell in love. His biggest thing was how much room it had. I heard he still talks about it when he sees my parents and that was almost a month ago.

 

[PJStyles]

I think I'm going to do it... just have to make sure that my deal with this guy to take over my lease doesn't fall through. I think he's getting a good deal with my lease because he couldn't get this deal on a 2004 Audi A4 1.8T and my car only has 7,500km's on it... so he's getting a new car and saving himself at least $5,500 which is the difference between what I put down ($12,500) and what he's giving me ($7,000) PLUS not to mention that I negotiated a $3,000 discount off the MSRP when I bought the Audi which more than likely he wouldn't be able to get now on the 2004 models...

PJStyles

 

[SoCalMZ3]

Leelee made a very fair comparison but he did not take into account the $12,500 you spend on the down payment.

My advice: (from experience and as a father of two) either bite the bullet and keep the Audi til the end of the lease (provided you are not going to exceed your mileage agreement) or take the $7000 and buy a used mini van with no payments...

Leases, in my opinion, are a bad deal and even worse if you try to get out of them before the end of the term. Carefully read your lease agreement and make sure there are no early termination fees or tax implications. You may be responsible for the taxes upon selling the Audi. The only time leases make a bit of sense is when you can get into them with no money down.

Good Luck,
Ken

 

[rsx_r04]

4 years is a long time. Perhaps by then you'll have more money at your disposal... well i'll PM you.

 

[LeeLee]

Leelee made a very fair comparison but he did not take into account the $12,500 you spend on the down payment.

Well, sunk costs are always ignored when calculating the values of different future positions. As long as we know what his future expenditures and earnings are going to be, whether he has spent $12,500 or $1.25 on the Audi is beside the point.

Looking at it the other way, $12,500 is money he has spent whether he decides to keep the Audi or not. Someone will give him $7000 to take over payments for the Audi, but that's a different transaction, unrelated to the $12,500 he has already spent.

Leases, in my opinion, are a bad deal and even worse if you try to get out of them before the end of the term. Carefully read your lease agreement and make sure there are no early termination fees or tax implications. You may be responsible for the taxes upon selling the Audi. The only time leases make a bit of sense is when you can get into them with no money down.

I think leases are a good idea if it is a second "pleasure" car, and residual value is very generous, and interest rates are very low, and you are a careful driver, and you don't want to keep the car for longer than lease terms.

 

[cowtown]

Leases aren't a fit for everyone but they have their place. I have leased my last three vehicles now and I honestly wouldn't have it any other way. When I get a bit older I may change to purchases but it's nice being able to walk in and just hand the keys back and walk out with something else every 2 or 3 years.

If I want something to play with or modify I'll just buy something older and have fun with it like that.

I'm certainly not one of those types of people who hang onto cars for 10 years, 3.2 years is my average since I started driving methinks.

 

[sovereign82]

Good reply by Leelee...just a few things. The 30% calculation at trade is was based on MSRP + Interest Payments. It should be just based on MSRP but 30% after 5 years is about right on a Mazda.

One other thing to consider about the Mazda is town/province taxes. Im not sure if you pay these in Canada, but if you do, the Mazda will give you additional savings each year.