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    Thread: New lease-like retail financing plans -- Audi Premiere Purchase, Porsche "Options"

    1. Member dubfan's Avatar
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      07-13-2003 12:16 AM #1
      Wondering if anyone has any experience with these, and what the financing gurus here in this forum think about these plans.

      From what I understand the terms offered are similar to a lease, except your payments build equity (albeit not very much). When the finance period is up, you have a balloon amount that you have to deal with in one of several ways. You can either:

      payoff the balloon amount and keep the car
      refinance the balloon amount
      turn the car in
      sell the car, payoff the balloon amount (and "keep the profits" Audi says!)

      Like a lease, there are mileage restrictions and the car needs to be free from excess wear & tear, if you decide to turn it in.

      When you use the finance calculator on Audi's website, you get some great monthly numbers, but for some reason they have decided not to show the final balloon amount. Also, no info on interest rates, or anything really that help you evaluate if this was a good finance plan or not. (I wonder why )

      Experiences? Opinions?

      "Personally, I believe that 'fairness' consists in the fruits of my labor not being taken by corrupt hacks to redistribute to their cronies in exchange for votes." -- Glenn Reynolds

    2. Senior Member
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      07-13-2003 01:21 AM #2
      Quote, originally posted by dubfan »

      When you use the finance calculator on Audi's website, you get some great monthly numbers, but for some reason they have decided not to show the final balloon amount. Also, no info on interest rates, or anything really that help you evaluate if this was a good finance plan or not. (I wonder why )

      Experiences? Opinions?

      Well, someone else around here seems to be saying that the Audi plan is the best thing in car financing, based on the apparently heavily subsidized interest rates (better than in a regular car loan or even most other manufacturer subsidized car loans). Odd that they don't advertise that... although obviously the best interest rates are only available to those with the best credit.

      The obvious additional pitfall is that with a balloon loan, negative equity is much more likely than with a regular car loan, since most of the principal repayment is deferred until the end (balloon payment). You either have to be prepared to pay off the negative equity (in case the car is destroyed or stolen and you get an insurance settlement less than the outstanding loan balance) or have some type of gap insurance.


      Modified by tjl at 9:23 PM 7-12-2003


      Modified by tjl at 9:24 PM 7-12-2003


    3. 07-13-2003 01:28 AM #3
      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


    4. Member dubfan's Avatar
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      07-13-2003 02:26 AM #4
      Doh, and right here in the same forum. Thanks for the thread ref and updates tjl & GT. That's the discussion I was looking for.

      Anybody know anything about the Porsche counterpart to Audi's PP?

      "Personally, I believe that 'fairness' consists in the fruits of my labor not being taken by corrupt hacks to redistribute to their cronies in exchange for votes." -- Glenn Reynolds

    5. Member VeeDubDriver's Avatar
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      07-13-2003 07:55 AM #5
      Most captive manufacturer finance companies offer some sort of balloon type program. Everything GTakacs stated is right on the money (he is our local Premier Purchase expert ). The Porsche program will work in a similar way. If you don't live in a state where the sales tax is calculated on the entire vehicle, choosing between a balloon loan and a lease may simply come down to which program will give you the best payment. There is no one right answer since even the different programs within the same manufacturer might give you different results, depending on the model and the individual program on each vehicle. For example, the balloon program on a Boxster might yield a better payment than a similar lease, but the lease program on the 911 might be better than the balloon program. Just depends on which program the manufacturer wishes to promote that month.

      As a generalization, you will have slightly better total payments if you lease, rather than do a balloon plan (again, assuming you don't have to pay sales tax on the whole leased vehicle). But the only way is to run the numbers for both.


    6. Member dubfan's Avatar
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      07-13-2003 11:50 AM #6
      Thanks!
      "Personally, I believe that 'fairness' consists in the fruits of my labor not being taken by corrupt hacks to redistribute to their cronies in exchange for votes." -- Glenn Reynolds

    7. 01-28-2009 01:41 AM #7
      good to know about 'the new cars'...............I think

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