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    Buy? Lease? Finance?

    hello all! So my TT will be here in about a month. I am quite perplexed on what I should do for payment. I usually pay cash for cars or put a substantial amount down and finance.

    This case is a bit different for me. I have never bought a car this expensive. As well, I have many cosmetic options (ie, stitching, painted exterior and int pieces, leather etc) that have really jacked the sticker price of my car up towards 140k. I very well know that these options, although costing money, will do NOTHING when it comes to resale value. This is why I am so tempted to lease, as I will likely not feel as much of an impact.

    I have never leased a car before so I really dont know the inner workings of those types of deals. I know that you dont pay the full tax or gas guzzler taxes like you would if you pay cash or finance.

    So, I am asking peoples opinions based on your experiences. I have enough cash to buy the car, but would obviously not do that as my cash earns me money through my investments, and a car is a depreciating asset. (if a car is 40k I dont mind paying cash, but this being 140k is a different story!). I could finance, but I owe the full tax and gas gizzler up front. plus, I take the depreciation hit on the "Extras" that really add no value.

    Can someone explain the pros/cons of a lease for this type of car and clarify any errors I may have in my understanding of what I spoke of above?

    thanks!!

    Re: Buy? Lease? Finance?

    Quote:
    avi8tir said:
    hello all! So my TT will be here in about a month. I am quite perplexed on what I should do for payment. I usually pay cash for cars or put a substantial amount down and finance.

    This case is a bit different for me. I have never bought a car this expensive. As well, I have many cosmetic options (ie, stitching, painted exterior and int pieces, leather etc) that have really jacked the sticker price of my car up towards 140k. I very well know that these options, although costing money, will do NOTHING when it comes to resale value. This is why I am so tempted to lease, as I will likely not feel as much of an impact.

    I have never leased a car before so I really dont know the inner workings of those types of deals. I know that you dont pay the full tax or gas guzzler taxes like you would if you pay cash or finance.

    So, I am asking peoples opinions based on your experiences. I have enough cash to buy the car, but would obviously not do that as my cash earns me money through my investments, and a car is a depreciating asset. (if a car is 40k I dont mind paying cash, but this being 140k is a different story!). I could finance, but I owe the full tax and gas gizzler up front. plus, I take the depreciation hit on the "Extras" that really add no value.

    Can someone explain the pros/cons of a lease for this type of car and clarify any errors I may have in my understanding of what I spoke of above?

    thanks!!



    One thing you have to watch for with leasing is the MRM--Maximum Residualizable MSRP. Basically if the car has a 50% residual, $100k MSRP, and $90k MRM, then the residual will be $45k ($90k * 50%). In essence, you are paying for a lot of the depreciation of these options on the lease. Is your car a Tip or Manual--they have different MRMs that will change the amount of depreciation you are paying.

    The new Turbo doesn't have a Gas Guzzler tax, so you don't have to worry about that, but if it did, this would be included in the MSRP calculation. Regarding taxes, it depends on the state. In Illinois, you pay the tax on the purchase price of the car, even if it is a lease (then if you buy it at the end, you pay the tax on the purchase price at that time!).

    Re: Buy? Lease? Finance?

    If the car is over us$50K it's a luxury car. IMO, financing or leasing luxuries is an oxymoron. Pay cash or forget about it.

    Re: Buy? Lease? Finance?

    MRM for a turbo coupe is $142,300 so you should be safe on that. Can you write off your lease payment? Do you own your own company? There are a lot of things that can make up your mind... you should talk to your accountant to see what can make a bigger difference come year end.
    Many of my customers do lease if they can write it off... or if you make more than 7% on your money with your investments, finance the car at 7% and keep making 12% on your money.

    Re: Buy? Lease? Finance?

    With respect, it's something you should maybe have thought of before ordering the car.

    I tend to agree with MMD on this. Also IMO, I don't think by leasing you would get the full enjoyment of ownership of, and relationship with, such a vehicle.

    Re: Buy? Lease? Finance?

    I am curious about this one. This may sound like I am being an a$$hole, but my thinking is along the lines of:

    Firstly: If you can afford this car in the first place, you have probably done well financially so far and don't need anyone elses help (remember this is the internet, I may be giving you advice and I am $10 billion in debt and everything I do is insane, financially speaking).

    If you have done good financially so far, you have gotten there by being smart financially or you were very lucky.

    If you have gotten there by being smart financially, then you probably can answer your own question.

    If you have gotten here by being lucky, then you might not be smart enough to hang on to your money; and should watch out for "A fool and his money are soon parted".

    There are no directions when it comes to money and what works for me, for sure will not work for others.

    Sorry for being so direct...

    Re: Buy? Lease? Finance?

    jplanaux, hope you're not having a bad day. No offence intended my friend but even the best of us can learn from others and need guidance from time to time.

    Re: Buy? Lease? Finance?

    my question is on the lease itself I guess. I currently am getting growth/returns of about 18-22% on my money. so obviously (being financially smart) it would NOT be wise to take money out and invest it into something that depreciates. since I have never leased a car (like I said above) I am not familiar with how they truly work. surely there are other people on this board who are in the same position.

    Re: Buy? Lease? Finance?

    I hope I didn't sound snobby. It's just a matter of scale. You're _blowing_ money by buying any luxury or high-perf car. So it seems crazy to borrow or pay interest on money you're throwing away.

    Some will say get a low interest loan on the car and use the cash for investments with better rates of return. I see that logic as subtle way of disguising not-being able to afford throwing the money away.

    Re: Buy? Lease? Finance?

    I lease and I enjoy the flexibility. No apologies. =)

    Re: Buy? Lease? Finance?

    Quote:
    Whirlinturbin said:
    I lease and I enjoy the flexibility. No apologies. =)



    I got it! Consider _leasing_ a luxury conveyance like _chartering_ a luxury conveyence. I got no problem with that.

    Re: Buy? Lease? Finance?

    If it FLIES, FLOATS or Fu*ks, RENT IT!

    Free advice, worth what you paid for it!

    Re: Buy? Lease? Finance?

    hey don't haze the fellow. i find myself in the same boat. yeah, I can pay cash, can finance, and have never leased a car.

    delivery of my new car is around the corner, and it's a major gutcheck. . . a lot of cash to part with.

    Re: Buy? Lease? Finance?

    Maybe consider this. You might sleep better owning a base Carrera outright instead of leasing a TT. The base 997 Carrera is half the price of the TT you have spec'd and almost as fun, but with way less depreciation and less potential financial guilt.

    If you have never leased a car before, leasing might seem more like a rental and not the ownership experience you seem to prefer.

    Re: Buy? Lease? Finance?

    Personally, I loathe paying interest on a depreciating asset that is not tax deductible... so cash.

    Re: Buy? Lease? Finance?

    I am just completing my first lease so maybe this helps.
    The car I leased was a 997 s 05' at the time of leasing my accountant told me that the lease was more deductable in my circumstances plus it would free my capital for other things (like investing in things that yield more than the interest paid on the lease) Plus not being in the used car business, the sale price or residual would be set and I could walk away at the end, knowing at the start of the lease what my maximum loss on the vehicle could be. It sounded good but at the time of leasing I made two errors first I didn't drive the car as much as I thought I would and second I take much better care of my cars than most do. So now at the end of the lease I am discovering that my low miles, well cared for car is worth well over the turn in price, therefore if I turn it in I lose my equity in the vehicle! At this time I am forced to buy the car from the leasing company.
    The bottom line is this, I did make money with the money I saved by not buying the car initially. I like the car and it is no punishment to keep it. If I didn't like the car. I could drive the crap out of it up to the alloted miles and turn it in for no cost or penalty.
    Even with the errors made going in leasing worked for me.

    Re: Buy? Lease? Finance?

    To estimate the interest rate out of a lease, simply multiply "money factor" by 2400.
    Generally, the higher the residual, the higher the money factor (the lender takes on the higher risk of the vehicle getting depreciated, the loaner pay more interest, pay less monthly payment, pay more totally if buy off the lease at the end)

    Re: Buy? Lease? Finance?

    Quote:
    Ludikrisspeed said:
    MRM for a turbo coupe is $142,300 so you should be safe on that.



    You're right, I forgot that... for some reason thought it was lower.

    Re: Buy? Lease? Finance?

    Basic question: Do you intend to keep the vehicle beyond the factory warranty period? If yes, pay cash and enjoy. If no, lease.

    Re: Buy? Lease? Finance?

    Quote:
    connoisseur said:
    Basic question: Do you intend to keep the vehicle beyond the factory warranty period? If yes, pay cash and enjoy. If no, lease.



    I'll dump it the minute (or a month before) the end of term. I have a love affair for the length of the lease and never consider it "rented" in my mind. But, I know the day that sign the lease agreement that she and I will break up in 3 years, only to be replaced by a newer model. =)

    Re: Buy? Lease? Finance?

    Depends on how long you want to keep the car and how much you will use it. If you can't deduct the lease payments through a business, have low annual usage, just pay cash (if you can afford to) as there is no use to paying a high interest rate and for high projected depreciation.

    Re: Buy? Lease? Finance?

    If you lease you are tied to the car for the term of the lease. I usually lease however at the time the lease payment was $1400 times 39 months= $54,600.
    I bought the car for $81,000 with tax, cash ie no loan . The dealer recently offered me $65,000 if I want to trade it in for a newer model. This means the car cost me $16,000 over 31 months = $516 / month and am not locked in for 39 months. Even if you factor in 15 % interest on the $81,000 over 2 years which is about $24000 and divide this by 31 months= $774 and add it to the $516 for a total of $1290/month which is a savings of $100/ month x 31 months= 3100 savings -Bottom line For me, it made more sense to buy the porsche not lease as long as you do not finance the car and you are not able to right off the entire lease payment off of your buisness . I lease another car through my buisness so I could not write off the lease payment for this car. My mercedes and bmw cars in the past have made more sense to lease in the past because of the high residual value and low interest making the lease payment more attractive. If porsche had a lower lease payment I would have leased the car.

    Re: Buy? Lease? Finance?

    IMO, if you are investing your money, then leasing makes the most sense. Tax benefits (I lease through my corp.) are just a bonus. Don't forget the magic of compound interest. 997man's argument only works if after 2 years you sell the car, re-invest the money, and take the bus. If you put that $65K back into another car, it makes no money again. Plus the 15% interest lost over 2 years is misleading. That 15% itself could have made 15% a year for the next 30 years!

    If you longterm invest your money, the best option is the one with the lowest payment (assuming you really so make 15% return consistently!!) A return like that will never be beaten by current loan rates.

    Re: Buy? Lease? Finance?

    997Man,
    I don't think with Porsche leasing you are tied for the term of the lease.
    During the entire term of my lease I was able to phone Porsche financial and determine the amount of the buyout at that time. I could of bought out the lease at any time. The only penalty was I would have to pay state sales tax on the buyout amount. If I sold the car to a dealer tax could be avoided.

    Re: Buy? Lease? Finance?

    Quote:
    boardrider said:
    997Man,
    I don't think with Porsche leasing you are tied for the term of the lease.
    During the entire term of my lease I was able to phone Porsche financial and determine the amount of the buyout at that time. I could of bought out the lease at any time. The only penalty was I would have to pay state sales tax on the buyout amount. If I sold the car to a dealer tax could be avoided.



    Any US leasing company will let you payoff the lease early, the question is how much will it cost you to walk away from the car (the maximum being the total of your remaining payments). With captive financing companies, the dealers generally are required to keep the car if it is returned early and the remaining payments aren't made.

    Re: Buy? Lease? Finance?

    I've only leased once in my life, and I don't anymore because it effectively ties you to selling the car back to a single party at the end, at their time frame, on their terms. Yes, I know that technically you're just "returning" the car, but in fact, the dealer or leasing company has the right to charge you above the payments for any damage they find or excess milage, etc. So there are only two reasons to lease, IMHO:

    - when you do the financial analysis the lease offers a more attractive NPV then purchase. This could be because either you and the lessor have a different view of what the fair market value of the car is at the end of the lease, or because the interest rate they are charging is - on a risk adjusted basis - lower than what you would earn on the money (remember that stocks can go down as well as up).
    - if you don't have the available cash.

    Otherwise, buy.

    Re: Buy? Lease? Finance?

    I've leased all of my P Cars (and will lease my '08 GT3) because:

    1. I like to be forced to get a new one every 3 years.
    2. I can make more by investing my money than the lease %.
    3. I like to drive it every day and would stress if I owned it and it got dirty or I had to park it at the supermarket and risk a door ding etc. etc.
    4. I take it on the track a lot and, although I know that is what they were made for, it sure feels better knowing it's not mine.
    5. I don't want to hassle with selling it on the private market when I want a new one.

    I'll typically put more than the standard amount down just to get the monthly payments down to a somewhat reasonable amount so that I don't soil my drawers everytime that bill comes. Purely psychological.

    Just my opinion... lease.

    Re: Buy? Lease? Finance?

    Quote:
    boardrider said:
    997Man,
    I don't think with Porsche leasing you are tied for the term of the lease.
    During the entire term of my lease I was able to phone Porsche financial and determine the amount of the buyout at that time. I could of bought out the lease at any time. The only penalty was I would have to pay state sales tax on the buyout amount. If I sold the car to a dealer tax could be avoided.



    wow it this really true? why would CA tax be due in entirety? you only used a few months. Where did you verify that?

    Re: Buy? Lease? Finance?

    Quote:
    avi8tir said:
    my question is on the lease itself I guess. I currently am getting growth/returns of about 18-22% on my money. so obviously (being financially smart) it would NOT be wise to take money out and invest it into something that depreciates.



    Lease of course. 18-22% a year though? How long do you really think it will last? Just don't bet the house on it.

     
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