I doubt that you build equity with the Premiere Purchase option.
Here are the differences and similarities between lease and Premeire Purchase
- With PP you don't need a security deposit, there is no initiation/bank fee, it can be truly "Sign and drive" with absolutely zero down.
- In most states you only pay sales tax on the monthly payments of a lease, with PP you pay sales tax for the entire purchase price of the vehicle and it is calculated into your total loan amount. In states where tax is calculated on the entire purchase price of a vehicle on a lease as well (like TX) PP seems to be a better option since it doesn't have bank fees or security deposit.
- Lease uses money factors, PP uses interest rates, however the two seem to yield the same A.P.R. for the "renting" of the vehicle.
- Both Lease and PP residual values are the same on Audis AFAIK.
- With a PP the car is titled in your name and you "own" the vehicle. This helps lenders in states where the owner is vicariously liable if the car causes damage to anyone. In states like those most lenders will stop offering leases pretty soon.
I just did a Premiere Purchase on an A4 Avant two days ago and it yielded the best terms for me. You would have to run the numbers on both to see which one is more beneficial to you. My total interest for 39 months is $1400.
However, don't expect to have any equity in a premiere purchase after 3-4 years, you will be upside down, the only benefit is that it's the bank who will eat the difference and not you since the residuals are their estimates and they are generally higher than the resale value. Residual values reflect retail prices not trade-in prices (lucky for us, who like to get new cars in 304 years) and even at that they are a bit optimistic, it is not uncommon for a bank to lose $1K+ on a lease turn in.
With current market conditions and interest rates there is no way that I would get a new vehicle any other way but Premiere Purchase. On current 2003 Audis the premiere purchase interest rate is actually lower than their conventional loan rates which makes it a no brainer.
And as the above poster already pointed out GAP insurance is a must with Premiere Purchase, just as it is with lease, the only difference is that with Lease it's built into the terms most of the time while with Premiere Purchsae you have to get it on your own.
Here is a thread I created a couple of weeks ago regarding lease/premiere purchasing versus buying in today's economy. http://forums.vwvortex.com/zerothread?id=906203
Modified by GTakacs at 11:32 PM 7-12-2003