Is leasing always a bad idea?
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Don't get me wrong I'm all for buying a used car and am also in the market to purchase a used one. My whole point is not to discuss the topic of new vs used as we probably share the same perspective on such topic. 
I just want to point out the fact that the difference of cost calculated in the previous post wasn't exactly fair in regards to the lease vs purchase argument.
A more fair perspective calculating the cost of ownership through a lease program would be taking the msrp of a vehicle minus the loss from the 20% depreciation value, then using such number to plug it into a lease calculation in obtaining monthly payment, such would imo provide a better perspective.
From your previous calculation, it just happen that you gave a 20% advantage to the cost of ownership in owning a car in comparing a lease on a brand new price, hence my point that the calculation wasn't exactly fair in the lease vs purchase argument.
I just want to point out the fact that the difference of cost calculated in the previous post wasn't exactly fair in regards to the lease vs purchase argument.
A more fair perspective calculating the cost of ownership through a lease program would be taking the msrp of a vehicle minus the loss from the 20% depreciation value, then using such number to plug it into a lease calculation in obtaining monthly payment, such would imo provide a better perspective.
From your previous calculation, it just happen that you gave a 20% advantage to the cost of ownership in owning a car in comparing a lease on a brand new price, hence my point that the calculation wasn't exactly fair in the lease vs purchase argument.
What you are saying make sense, in theory. The reality however, is that the buyer ( leasee) most often moves up to a more expensive car for the same monthly payment. (this is one reason why many Americans drive new fancy cars and have limited net worth). This makes the investment issue even worse. At the end of the lease, in reality, they have limited cash for a down payment on the next car and are trapped in the new car lease again. This is why leasing, in reality, for most folks, destroys net worth or the opportunity to increase net worth. Again, this may not apply to Porsche or other higher end brand drivers, but for the avarage consumer it is a treadmill.
There's no doubt that in the long term, buying a gently used car or a deeply discounted new car and holding on to it after it's paid off (if financed) is cheaper than leasing a new car every 3 years. That's not the point of this thread though. For those of us that like to have a new car every three years, know how leasing works, negotiate price before discussing financing, and don't like selling expensive used cars every three years, leasing can be a smart decision.
I've owned German cars out of warranty, and they can get very expensive to maintain. I prefer to own cars under the original warranty, will get rid of the next one before the 40k service and move on.
Although the residuals are not great, the MF on the mid-engine models at least, is very good. I've run the numbers and the monthly payment on a lease vs financing for the length of time where the buy out is the same as the lease residual in three years is very close.
I initally was leaning towards buying a CPO '09 Cayman S and keeping it for a while, but there are hardly any out there right now and I need a car by the end of July. The long term reliability of the DFI engines was a question mark to me as well, there have been problems with carboning, HPFP in other brands, so I'd rather let someone else take the risk. Risk mitigation always costs money.
I've owned German cars out of warranty, and they can get very expensive to maintain. I prefer to own cars under the original warranty, will get rid of the next one before the 40k service and move on.
Although the residuals are not great, the MF on the mid-engine models at least, is very good. I've run the numbers and the monthly payment on a lease vs financing for the length of time where the buy out is the same as the lease residual in three years is very close.
I initally was leaning towards buying a CPO '09 Cayman S and keeping it for a while, but there are hardly any out there right now and I need a car by the end of July. The long term reliability of the DFI engines was a question mark to me as well, there have been problems with carboning, HPFP in other brands, so I'd rather let someone else take the risk. Risk mitigation always costs money.
The argument of getting into a new car every 3-4 years to avoid out of warranty issues is irrational when one can get a comprehensive extended warranty for attractive rates. Spend less money than you would on a new set of rims and get an extended 3 year/36K platinum warranty for peace of mind as myself and many others around here have done.
Exactly. Posters in this thread trying to exact profound fiscal benefits of leasing vs. buying are comical. Sure, one can conceivably make more $$ in stocks or other equities. But that is far from a guarantee and is rather short-sighted considering the economic downturn this country has faced over the past few years. That's like the gambler who bets with house money IMO. Why not buy the 911 and take a low-interest business loan from the bank instead of using saved money from leases to invest? One is still borrowing money from The Man in one form or another.
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look at this used 09 on ebay, buy it now 80k ..will guess msrp was around 115K
lets assume they got 5 grand off..so 110 plus tax of 10 figure the dealer bought for 75k
so 45k gone in 2 years ..2 year lease will run you the same amount
MF from porche best i have been quoted this month was .0020
http://cgi.ebay.com/ebaymotors/PORSCHE-911-S-PDK-CABRIOLET-SPORT-CHRONO-1-OWNER-/170643251682?pt=US_Cars_Trucks&hash=item27bb2161e2
lets assume they got 5 grand off..so 110 plus tax of 10 figure the dealer bought for 75k
so 45k gone in 2 years ..2 year lease will run you the same amount
MF from porche best i have been quoted this month was .0020
http://cgi.ebay.com/ebaymotors/PORSCHE-911-S-PDK-CABRIOLET-SPORT-CHRONO-1-OWNER-/170643251682?pt=US_Cars_Trucks&hash=item27bb2161e2
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A sports car is not a necessity, it is a luxury. If you need to lease so that you can invest the money that you are not putting down, then you should really question the affordability of your purchase. Having said that, if you can earn more interest on your investments than the interest rate on the loan/lease then it makes less sense to purchase outright. Of course investment return is not guaranteed, ever, period. A money factor of 0.002 equates to 4.8%.
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I was waiting for someone to say this! My CPA told me it would be better to lease a car, or buy an SUV purely for tax purposes. I have an S Corp and the car was purchased (leased) through the corp. I could have written a check for the car, but would rather pay incrementally. I understand the reasoning for both sides of the argument, as I own my other car.
A sports car is not a necessity, it is a luxury. If you need to lease so that you can invest the money that you are not putting down, then you should really question the affordability of your purchase. Having said that, if you can earn more interest on your investments than the interest rate on the loan/lease then it makes less sense to purchase outright. Of course investment return is not guaranteed, ever, period. A money factor of 0.002 equates to 4.8%.
A sports car is not a necessity, it is a luxury. If you need to lease so that you can invest the money that you are not putting down, then you should really question the affordability of your purchase. Having said that, if you can earn more interest on your investments than the interest rate on the loan/lease then it makes less sense to purchase outright. Of course investment return is not guaranteed, ever, period. A money factor of 0.002 equates to 4.8%.
If OP was discussing BMW lease instead of Porsche, I would say go for it.
4.8% interest. Assuming the lease is not used for business and that's after-tax dollars, that means he has to earn a 10% guaranteed return. If OP thinks that's a guarantee for 36 consective months, I have some real estate here that he may be interested in
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If OP was discussing BMW lease instead of Porsche, I would say go for it.
But as you stated .. it's not a Porsche lease and the guys asking the questions are individual owners .
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No.
depends, really..
never pre-pay a lease.
if u r considering buying outright, don't lease.
lease doesn't give u any insurance policy (i.e. peace of mind) since the car depreciates the most in the first two years.. so the resale value difference is almost irrelevant whether the 991 is a hit or a miss.
learn about money factor, residual value, APR, time value of money, etc., to see if the numbers work out for ur situation.
u can also ask ur CPA re: tax advantage of leasing but i believe u can also buy a car and use a depreciation table to write it off if u have the car registered to the business name.
Last edited by crazycarlitos; May 19, 2011 at 02:50 PM.
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I agree that most corporations do lease (said it earlier on the thread) . It works well with their balance sheets and makes it so they don't have to go into the used car business with a fleet of cars . BUT .. they don't lease Porsche 911's . They do get a corporate rate on the cars they lease . And for them it's a huge plus !!!
This is not the csae for the 23 year old liiving at home with his parents begging them to co sign the lease Or the 30 year old who is maried but still under the wing of both his and his wife's parents . Thse are examples of guys who never grww up . They never gained independence and in many cases it's this type of wreckless spendsing that takes many of them into debt and bankrupcy . Back in 2008 .. there wrre a lot of bankrupt dudes drivung Porsches in South Florida .They lost the Porsche and now live at home with their grandmother .
Last edited by yrralis1; May 19, 2011 at 02:43 PM.
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Is leasing always a bad idea?
No.
depends, really..
never pre-pay a lease.
if u r considering buying outright, don't lease.
lease doesn't give u any insurance policy (i.e. peace of mind) since the car depreciates the most in the first two years.. so the resale value difference is almost irrelevant whether the 991 is a hit or a miss.
learn about money factor, residual value, APR, time value of money, etc., to see if the numbers work out for ur situation.
u can also ask ur CPA re: tax advantage of leasing but i believe u can also buy a car and use a depreciation table to write it off u have the car registered to the business name.
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IMO the analogy is like those short-sighted people who purchased expensive homes that were more than they could typically afford with a conventional loan by using a variable/ARM type mortgage. One friend suggested that he would use the savings from his "low at the time" ARM for investing in the stock market back in 07-08. Guess what happened when the market bottomed out and the interest rate on his ARM skyrocketed?
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What you are saying make sense, in theory. The reality however, is that the buyer ( leasee) most often moves up to a more expensive car for the same monthly payment. (this is one reason why many Americans drive new fancy cars and have limited net worth). This makes the investment issue even worse. At the end of the lease, in reality, they have limited cash for a down payment on the next car and are trapped in the new car lease again. This is why leasing, in reality, for most folks, destroys net worth or the opportunity to increase net worth. Again, this may not apply to Porsche or other higher end brand drivers, but for the avarage consumer it is a treadmill.
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BUT --
1) When i look at a leased Porsche 911 .. I see 36 Payments of 1600 with a lot of finance fluff .
2) When I see a cash purchased Porsche .. I see 100K of equity slowly eroding . but the owner still has the car .. and his name is on that title .
All those beautiful financial instutition lenders with marrble floors were NOT built on the backs of those who can pay cash for their stuff .
Cash is king !!! There is a pride of ownership by knowing that the day one drives his car home that it belongs to him.
With leasing .. he is glued to the manufacturer with following their regimen because the car never really belongs to him . the only thing that he owns is the drama created by commiting his name to their contract.
Last edited by yrralis1; May 19, 2011 at 03:19 PM.
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Simple Answer
I think in most situations, leasing a car rarely makes more financial sense than buying the same car. However, I'm sure that there are exceptions to that generalization. It's commonly viewed that leasing is more attractive for intangible reasons whereas buying is cheaper in the long run. I think the real answer to the original question is clearly, "it depends".
I've never been able to negotiate a lease cheaper than a loan and definitely not cheaper than paying cash (and believe me, I've tried). Sadly, most people don't understand all the little nuances of a lease therefore usually leave profit on the table.
I've never been able to negotiate a lease cheaper than a loan and definitely not cheaper than paying cash (and believe me, I've tried). Sadly, most people don't understand all the little nuances of a lease therefore usually leave profit on the table.
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You are correct . Perhaps he'll respond .
BUT --
1) When i look at a leased Porsche 911 .. I see 36 Payments of 1600 with a lot of finance fluff .
2) When I see a cash purchased Porsche .. I see 100K of equity slowly eroding . but the owner still has the car .. and his name is on that title .
All those beautiful financial instutition lenders with marrble floors were NOT built on the backs of those who can pay cash for their stuff .
Cash is king !!! There is a pride of ownership by knowing that the day one drives his car home that it belongs to him.
With leasing .. he is glued to the manufacturer with following their regimen because the car never really belongs to him . the only thing that he owns is the drama created by commiting his name to their contract.
BUT --
1) When i look at a leased Porsche 911 .. I see 36 Payments of 1600 with a lot of finance fluff .
2) When I see a cash purchased Porsche .. I see 100K of equity slowly eroding . but the owner still has the car .. and his name is on that title .
All those beautiful financial instutition lenders with marrble floors were NOT built on the backs of those who can pay cash for their stuff .
Cash is king !!! There is a pride of ownership by knowing that the day one drives his car home that it belongs to him.
With leasing .. he is glued to the manufacturer with following their regimen because the car never really belongs to him . the only thing that he owns is the drama created by commiting his name to their contract.
No blasphemy intended. 