Agreed, provided that your investment interest beats the 10%. That interest is taxed as ordinary income at your marginal tax rate, and for most people here they'ere likely in the 33% or 35% tax brackets. Of course this ignores state tax as well.

Not fair to compare the tax consequences of an investment with depreciation. This is b/c whether you put the money in an investment or to pay off the car, you will feel the *same* depreciation hit. So, with a CD you get to incur both depreciation and a tax hit.

 

Frayed, we agree on most things. Obviously buying a new vs. 2 year old GT3 will have depreciation hits, but buying a GT3 in the first place is not a rational, but rather emotional buy, so you have to expect to have to pay something along the way somewhere.

BTW, no state tax in Nevada, Florida, Texas, am I missing any?

 

Agreed that these cars are not rational purchases. They are financially terrible purchases, and yet we have people who can barely afford them to people who can afford 10 of them, buy them on time, cash, or by renting.

Nevertheless, too many people finance them with fuzzy math. Nothing magical about the true cost of not paying cash. Key questions are, can you pay cash? If so would do you need that cash in reserves? Are you confident that you can beat your car's interest rate + your marginal tax rate in an investment?

I'm no financial guru, but did purchase a number of expensive cars in quick succession only to have now exited the game with the sale of my GT3. Each time I thought through the cash/finance issues.

More info here:

http://www.taxadmin.org/fta/rate/ind_inc.pdf

 

totally loaded question, especially with no information.

 

not a loaded question...and i gave plenty of information... 2 pages worth of perspectives and responses...i am not following you (?).... what other information would be helpful

thanks

 

Do whatever is best for your pocket-book

 

Without understanding your finances, that is a very difficult question. Tax bracket, self-employment, corporate structure and potential business use are very important when deciding. If none of those play a roll, the buy it cash. If you need the cash back that bad in the future, you can always refinance.

 

If you're going to take it to race tracks, DE, autocross, or any other kind of motorsport, then lease it, because it will depreciate at a faster pace than the Garage Queens.

If you're going to have a Garage Queen, then finance it with at least 30% down, so in case something bad happens, the car can be sold immediately without being upside down. Take the other 70% to combined investments in foreign currencies, and be sure to take advantage of the Cayman Islands Banking system.

 

- take it up the you know what tax bracket
- Partner at a LLP (read: self employed)
- can deduct a PORTION of the lease as business expense for travel to client sites, but not big enough $$ to really sway the decision...and not really how i will be using the car

i have the cash to do this, just not sure that tying up so much cash in a car is the right thing to do (kind of the essence of this post -- CASH buy vs. lease/finance this type of car)

 

Lease if you want to write off as much as possible to a business. Nothing else even comes close. My problem is that I always trade too soon and loos the money on early out fees +/- 2k. If you are not writing off and following through the terms, leases suck.

Best finance rates are around 7 on a Porsche. You are probably not making even close to that if the money you are talking about is truly in cash form. Probably more like 4 on a good day.

I think the smart thing to do is buy the car cash. You seem to think about things enough, so I am sure the rest of your life is in order. After all, like I said previously if something goes wrong you can re-finance the car with a local bank to pull some immediate cash.

I don't always follow the advice, but pay cash for items that depreciate and finance those that appreciate.

 

Just steal it man, it's free.

 

Cash. I don't understand paying all the financing fees & crap...

 

I agree cars aren't an investment and who cares if you lose on em. Pay cash owe nothing. sleep better. you'll live longer and prosper.

 

Put 10% down, take the rest and divide it evenly among lottery tickets and keno.

 

I would suggest you using the estimated 1st two year of depreciation as your amount for down payment and finance the rest.