Complaint Review: VW Credit

I will not mention the specifics...but I saw a lease agreement from someone who was leasing a Lamborghini.  It was $3,500 a month (but I do not know what he put down if anything).

I then looked online for what used Lamborghini's sell for on average vs. what they cost new. I was amazed that the loss was LESS if leasing in that case then buying new and reselling after 3-5 years.

But for a VW or similar? I just don't see a reason to be trapped and then they hit you up with "oh you drove it too much..there is a scratch, oh you installed an aux?. tires look worn....oop I see the exhaust pipe looks bent....oh would you look at that, there is a chip in the windshield, etc etc etc"..

No WAY I would EVER sign up for that..unless I could afford a Lamborghini lol.

Dead on about the depreciation - I guess my point was that leasing was the equivalent of buying new and selling a few years later, which are both equally expensive decisions. Whether it is "worth" it depends on personal values, but it certainly delivers less value than buying used (though I do prefer to pay a premium for certified used cars). I guess there is a misconception that leasing is somehow worse than buying new. Though to be fair, a lot more people who lease a car turn it in at the end (i.e. "sell it") than people who buy a new car that sell it after a couple years and buy another new car, so leasing probably does end up, in practice, being worse than buying new.

The big difference, as I mentioned before, is that with leasing you do get that guaranteed selling price, which is good if you end up hating the car for whatever reason, or the market prices for cars tanks, etc. Now you do pay for that in the initial "leasing fee" which is a few hundred bucks, but that is sort of like buying a stock option; you pay a premium for the protection against future market changes. 

The only correction I have is your comment about luxury cars. The residual value ("guaranteed selling price") is determined by how much the car is predicted to depreciate, so if it is predicted to depreciate quicker than average, the residual price will be set lower, which will increase your payments accordingly. A credit company will never allow you to pay for less depreciation than you use!

Depreciation.  I don't really understand why anyone would lease a car unless it was a high dollar exotic where even after 2-3 years you would LOSE less in depreciation even if you were paying $3,000 a month to lease vs buying and then trying to resell it. Lose. 

What I did is purchased my last car used, with very low miles and still under warranty. Granted it is not as nice as a new car but it was ZERO down, and I did not let them sucker me into all the extra add-on crap. 

I will own the car outright in a few years and then have the choice to accept what the stealership offers for a trade in when I go to replace it, or sell it private.  Oh I expect to lose something as that is what happens as you use a car and it gets older and you put mileage on it, but at least I am not trapped into anything since when push comes to shove..I own the car, not the dealer or some lease company.

 When you buy new..it depreciates the minute you drive it off the lot...average 20% the first year...65% after 5 years. If you get a good deal on a used car...(or pre-owned as the dealerships like to call them), play your cards right and your losses will be far less.  Research the book values (I used my cell phone to have someone do this for me while I was at the dealer)...and then be prepared to walk out the door if they are pressuring you or not dealing. If they can meet your expectations and are ready to deal, trust me...they will stop you before you get to the door to tell you this.

 Way to go Ken and Steve, double teaming comments :(~

As I said in my previous posts, leasing a car is not like, say, renting an apartment - it is basically buying with a guaranteed selling price down the road if you wish to sell it, along with a balloon loan whose balloon loan amount coincides with said guaranteed resale  value. The advantage of this is if your car turns out to be less than you expected, or the market for your car tanks, you have that guaranteed sale. The latter applies to the OP, since her Jetta sells new for less than she is able to "sell" it for. 

Here are the corollaries between buying and leasing:

Buying

Leasing
Sales Price

Cap Cost
Loan interest rate Money Factor
Time before resale Lease Term
Guaranteed Resale value    Residual

Note that, unlike an apartment, the cost of the lease is not really in payments, but it is determined by the factors above, in the same way that even though you (usually) make payments when you BUY a car, those payments are not the intrinsic cost of the car, they are calculated from the above factors.

Note that, just like you negotiate sales price when you buy, and not payments, you should negotiate Cap Cost when you lease, and not payments. The other things you can't negotiate, but you should still know them; would you buy a car without knowing the interest rate you are paying, or the guaranteed resale value?

So, constantly leasing as the OP does is equivalent to buying a new car every 2 years. This is indeed not a great idea because that is when there is the most depreciation. Then again, if you have the $$, why not?

i will never get it why people lease cars it is in a nutshell a rental car for 2-3 years. of course they are gonna nail you for stuff. you just paid for a total refurb to practically new for the next buyer. why do you think VW has such a high resell value? for what you wasted on that lease 2 more years you could have bought it outright.  did you not read the VW credit agreement and lease addendum when you signed for the car. VW wants their cars back ready to sell the same day.

If the buy out cost was high, then that is a good thing, as you paid for less depreciation. The nice thing about a lease is that it is exactly equivalent to buying a car, and having the option to sell it at guaranteed price after x number of years. In this case, the price you were allowed to "sell" it for (i.e. not buy it for) was higher than than the car could normally get on the free market (since you are "selling" it for more than you could buy a new one). Granted this "selling" price is lowered by whatever fees you are paying, but it still has to be pretty darned good.

In my case, I am hardly putting any miles on the car I am leasing, so chances are I will not "sell" it (i.e. I will buy out the lease) at the guaranteed price because the low miles will make it more valuable than the residual. 

I would normally add here that leasing every 2 years is not a great financial decision, but you seem to like it, so rock on....

Unfortunately, the buy out was more than what you can buy a brand new Jetta for since VW significantly lowered their costs to compete with Chevy Cruze...

Actually, I have leased from Honda quite a few times, Chrysler,  Jeep and unfortunately VW. I have family and friends that has leased from GM, Ford, Toyota, Chevy, Nissan, etc...so I know from their experiences. We are talking over 20 years at 36 months per lease so you do the math. I like to lease, with having 2 young children it's nice to have a reliable vehicle. Never have I once had to replace tires after 36k miles or have been charged for a ding or scratch!

And I'm 100% sure that the people I've mentioned in my original email will never lease from VW...there are people within this group that lease or know someone who leases, and they've never heard of anyone having these end of lease charges. So yes, I'm pretty sure that word of mouth is enough "power" for them...thanks for asking. Not one of them had to pay a "disposition fee", gimme a break. One of them turned in a Honda almost 50k miles and never replaced the tires...they had NO issue with Honda trying to pund money out of them for new tires. They allow so many burn holes, scratches, etc...NORMAL wear and tear. Anyone I know has only been charged for over mileage.

As far as the 3000k remark...yea I realize the typo now, thanks for pointing it out.

Actually, I have leased from Honda quite a few times, Chrysler,  Jeep and unfortunately VW. I have family and friends that has leased from GM, Ford, Toyota, Chevy, Nissan, etc...so I know from their experiences. We are talking over 20 years at 36 months per lease so you do the math. I like to lease, with having 2 young children it's nice to have a reliable vehicle. Never have I once had to replace tires after 36k miles or have been charged for a ding or scratch!

And I'm 100% sure that the people I've mentioned in my original email will never lease from VW...there are people within this group that lease or know someone who leases, and they've never heard of anyone having these end of lease charges. So yes, i'm pretty sure word of mouth is enough "power" for them...thanks for asking. Not one of them had to pay a "disposition fee", gimme a break. One of them turned in a Honda almost 50k miles and never replaced the tires...they had NO issue with Honda on having to replace the tires. They allow so many burn holes, scratches, etc...NORMAL wear and tear. Anyone I know has only been charged for over mileage.

As far as the 3000k remark...yea I realize the typo now, thanks so pointing it out.

If you are 3k miles under AND in your opinion there is less wear and tear than implied by how much they want to charge you, then you would be better off exercising your option to buy the car for the residual value. 

And not for nothing, but why do people always go on here about none of their friends, family, coworkers, neighbors, etc. will ever do business with the company again? Do you really think you have that kind of power? 

That's a LOT of miles under the allowance...how unfair of them.

"..you can turn in a Honda, Toyota, Gm, Ford, Nissan, etc. even with bald tires and they won't bother you! It's normal wear and tear!!!"
You sure lease a lot of car brands to know all about the other lease plans.

" You'd think after paying the extra for the extra mileage but giving the car back early, paid off...3000k under mileage they would cut you a little slack...no, because I didn't re-lease or buy from VW so that's my punishment? So if you plan on leasing through them BEWARE!"
If ANY of this is in violation of your lease terms, report them to the auto dealers licensing board in your state.  If it's just a conspiracy, contrived to make you keep leasing from them, looks like they got you.

"I, nor my friends, family, neighbors or co-workers will EVER do business with them again!"
 That'll sure teach them to mess with you. How many are doing business with them now that you've convinced to change to someone else?

BTW, if the tires were at the point they needed replaced, you're stuck.  Normal wear and tear would still have required you to replace them if you owned the car.

My boss turned in his GMC leased truck several years ago and was charged for a new windshield, tires and cigarette burns in the drivers seat. Guess GM violated their own policy....right?