I'm in the market for a Cayenne S and I'm wondering what everyone's thoughts on purchase or lease are. What route did you guys go?

 

Really matter of personal preference. I've leased a couple cars in the past, and it's great for getting into a nice, new vehicle without a big down payment. And if you're the type to want something new every few years and not deal with the car in it's older years, leasing is great. What I didn't like was turning in the car after 3 years and having nothing to show for it.

I have a Cayenne on order and am purchasing. A couple dealers mentioned that 70% of their business is through lease, which I think is common for higher end cars.

 

I'm also looking into a new Cayenne S. I've always leased my vehicles because I like to change cars every few years and since cars depreciate, I never like to put more money into a car than I have to. Lastly, I don't like to keep a car after the warranty is up, so 3 to 3 1/2 lease always works for me.

 

My understanding is that you can write off a larger amount on a lease than on a loan when the car is used for business purposes.

 

Comes down to preferences and dollars. I made a list of pros and cons, in no preferential order.


Lease pros:

-Lower outlay of initial capital.
-Preferential if you like to trade to a new vehicle every few years, best option. There is a great emotional satisfaction in owning a new latest state of the art vehicle. Simpler than buying and selling every few years.
-Tax advantage for business write off. (Not as familiar with this, so maybe someone can expand on this issue.)
-Vehicle still in warranty. For a Porsche, 4 years

Lease cons:

-Own nothing at end of lease.
-Shoulder the high depreciation of the vehicle in the first few years. So much more costly to lease vs buy, in the long run. So, the most costly option.
-Confusing financial terms of lease. My Harvard MBA friend was not able to figure out the terms of his auto lease. Maybe he wasn't that smart?
-Car payments do not end.


Outright purchase pros:

-Own vehicle, but a depreciating asset.
-Clear understanding of financial terms. Cash or car loan.
-Beneficial if one keeps the vehicle for a long time. Lower cost of ownership because of declining exponential decay of car depreciation in later years
-In some states, a vehicle is considered property subject to property tax (i.e. CT), so in later years, as car depreciates, the tax becomes de minimis.
-If on a car loan, the loan will eventually end. No loan payments! Woo hoo!

Purchase cons:

-Higher maintenance costs as vehicle ages. However, still cheaper than purchasing a new vehicle, depending on the reliability of the vehicle.
-High outlay of cash if purchase outright.


Third option:

Buy used. Lowest cost of ownership, because the first owner takes a beating on the initial depreciation. However, one subjectively does not have the emotional or olfactory satisfaction of owning a new car.


A car is a depreciating asset. It is not an investment in most cases. A car is a non-discretionary necessity as a mode of transportation for most. However, a Porsche is an emotional discretionary purchase. So, according to a financial guru that I read, take out a loan for appreciating assets (i.e. home [However, read this pre-AIG, pre-default credit swaps]). Pay cash for depreciating assets (i.e. cars, boats).


I buy all my vehicles, and keep them for a long time. So, I am purchasing my Cayenne.

 

You can't compare apples with oranges. If you are going to compare lease to buy, then you need to assume that with the "buy" you are going to sell the car at the same point you would have had to turn the lease back in. At the end of the day, the real benefit of a lease is trading out of the car in 3/4 years. If you are going to keep the car 5+ years, then lease is not the way to go clearly.

Some comments..the lease offers the security of knowing exactly how much depreciation you will take - i.e. the total of your payments vs. residual. With the buy new and then sell scenerio, you might end up selling the car for LESS than what you owe on your loan at that point - in which case you are under water.

If you are going to keep the car for longer than 3/4 years, no point in even talking about a lease. Then it is just a cash vs loan discussion.

With a cash purchase, you would need to account for several things:

1) What is the opportunity cost of your cash if you could have invested it. Lets say you have $100k available to buy the car. Why would you sink that into the car, risk the downside depreciation, miss out on the upside of that money invested, etc.
2) How much potential down side is there if you want to get rid of the new car after 3-4 years? (With the lease, this is stipulated in the contract. Your depreciation is set and the company takes the downside risk.)
3) Different tax deduction structure. A cash purchase will net you no tax savings other than mileage deduction (for business use). A lease will offer FULL deduction of the payment. A car loan will allow deduction of only the interest plus mileage (I believe).

So bottom line, way more goes into the comparison than economics. I "bought" my wife's Denali XL because we were going to drive the crap out of it and likely keep it for 5+ years. I leased my 335 because I knew I would want something else in a few years and I didn't want to worry about what I could sell it for at that point. Now I am looking for a Used Cayenne and will likely buy it and either pay cash or finance it depending on the situation - if the car is already well depreciated then cash buy might make sense because I don't have a lot of back end risk. Also, not much out there investment wise to get a return on my money these days.

All three options can make sense in different situations - but you have to compare apples to apples and take all into account to properly compare.

 

Bottom line is this--if you plan only only keeping the vehicle for 3 years or so, then lease. Also as has been stated already, with a lease you can write off the monthly payments. My personal LLC "owns" the lease on my Cayman S as most of the mileage is used for commuting--huge tax break there
I bought my former car and only had it for 2 years and took a big hit. I would have been much better off if I had just leased. You have nothing to show for it at the end of the lease, bit you can still come out with less cash invested. That is, unless you buy a car and keep it forever and repair costs down the line aren't excessive

 

You can still write off purchasing a car vs leasing. Leasing is like rental payments+tax each month. Purchasing must be depreciated over time like an asset. Payment write off is the same. In the end, the business "owns" the vehicle asset

 

For me it's about keeping the car longer than 3-4 years or like something new within 3-4 years. Personally I don't like having a car without the warranty, but that's just me.

 

I will probably never (I will never say never) lease again. I've had cars I loved and wanted to keep yet the lease was up. I also have had cars I really wanted to dump and was stuck in a lease. In the past, with the subsidized residuals, some cars almost had to be leased. The car companies got so burned on artificially high residuals that I think it will be a long time until we see that again.

 

Well if you like a car and want to keep it after the lease, you always have the option to buy it out. Also, you're never stuck in a lease; there are options to get rid of it