991.2 GT3 - Lease, Finance, or Buy Outright
03-12-2017, 04:30 AM
#46
I started this thread last year. As a follow up I've decided to buy my GT3 outright. For many reasons nothing else makes sense.
03-12-2017, 12:23 PM
#48
With rates as low as they are I look at the opportunity cost of the cash needed to buy the car outright. If I can secure a stable return greater than the 2-3% in interest then I will likely finance mine. I'm currently looking at vacation properties at the moment that would return far greater than the interest I would pay on the GT3. So the opportunity cost of paying cash for the GT3 and not investing in another property just doesn't make sense for me. I view being able to have my GT3, cover any interest paid, and still have a healthy net gain with a new property that is paying for itself while it appreciates, a win-win.
Bottom line is that each individual has to do what makes sense for them and that they are comfortable with.
Bottom line is that each individual has to do what makes sense for them and that they are comfortable with.
Last edited by jareda80; 03-12-2017 at 02:20 PM.
03-12-2017, 12:37 PM
#49
Rennlist Member
As already stated, with rates as low as they are, it is free money if you can find a nice loan. My next door neighbor is the CEO of a local credit union, and gave me 1.89% for 6 years on my current GT3. I put 30% down and used the rest as capital on a couple of my spec homes I build on the side for fun. A win-win.
03-12-2017, 01:42 PM
#50
Rennlist Member
03-12-2017, 02:05 PM
#51
For money factor? Residual? Or both?
The lease vs. finance (or cash) decision is a multi-faceted one -- there's no one-size-fits-all answer. Things like sales tax will influence what makes sense for you.
I believe Porsche sets GT3 residuals low, in part, to keep the monthly payments in line with other cars selling for equivalent $. For example, GT3s hold their value and Turbos don't in the early years. If Porsche pinned the GT3's residual to actual cash value at the end of 2 years, the monthly would be far less for a GT3 RS than any Turbo. In other words, the low residual on the Turbo kind of sets the bar for GT3 residuals.
I typically lease, because I avoid paying upfront sales tax. Especially in states like California that don't have a sales tax trade-in credit, lessors minimize sales tax, especially if you trade it in on a new one at the dealership.
Generally speaking (and this doesn't apply for GT3s for reason above), if you buy and die in the car, then it's usually better to pay cash UNLESS the factory is offering a competitive residual and money factor. Why? Leasing is like going to Vegas with the proposition: Heads I win; tails you lose. If the car is worth more than the residual, you win with the equity and exercise the buyout. If the car is worth less than the residual, you can walk and Porsche loses. In the case of GT3s, there's no real depreciation protection because the residual is artificially very low (making the payment artificially high).
As a dealer, I would incentivize all deals as leases because you've got a guaranteed return customer at the end of the 2 or 3 year lease.
The lease vs. finance (or cash) decision is a multi-faceted one -- there's no one-size-fits-all answer. Things like sales tax will influence what makes sense for you.
I believe Porsche sets GT3 residuals low, in part, to keep the monthly payments in line with other cars selling for equivalent $. For example, GT3s hold their value and Turbos don't in the early years. If Porsche pinned the GT3's residual to actual cash value at the end of 2 years, the monthly would be far less for a GT3 RS than any Turbo. In other words, the low residual on the Turbo kind of sets the bar for GT3 residuals.
I typically lease, because I avoid paying upfront sales tax. Especially in states like California that don't have a sales tax trade-in credit, lessors minimize sales tax, especially if you trade it in on a new one at the dealership.
Generally speaking (and this doesn't apply for GT3s for reason above), if you buy and die in the car, then it's usually better to pay cash UNLESS the factory is offering a competitive residual and money factor. Why? Leasing is like going to Vegas with the proposition: Heads I win; tails you lose. If the car is worth more than the residual, you win with the equity and exercise the buyout. If the car is worth less than the residual, you can walk and Porsche loses. In the case of GT3s, there's no real depreciation protection because the residual is artificially very low (making the payment artificially high).
As a dealer, I would incentivize all deals as leases because you've got a guaranteed return customer at the end of the 2 or 3 year lease.
03-12-2017, 02:15 PM
#53
One thing's for sure....I ain't getting any younger. You guys in your 20's and 30's...if you're fortunate enough..do it while you can.
One last point....I've owned my own company for 30 years and car transportation was critical. Back then I leased and deducted everything I legally could. That was then.
03-12-2017, 02:23 PM
#54
I leased my Spyder and looked at it as financing with a balloon payment. And not to be too cynical, should my Spyder get damaged, should the value diminish more than expected, I can simply return the car.
The interest rate for the PFS lease was I believe identical to their loan rate. So for me I didn't really see any downside.
03-12-2017, 03:48 PM
#55
Rennlist Member
I agree that CA sales tax is an important factor in determining whether to lease to buy. More so if you plan to turn the car in after two years or even sooner. I wonder how PFS and Dealer handle an early return of a leased vehicle?
For an example, let's assume the buyer has a two year lease and wants to trade it in for a newer model after one year on the lease. Is the payout the residual plus the one year remaining on the lease? I suppose the Dealer could buy or take the car on trade in using wholesale values. But if the buyer is getting into another model either by leasing or financing through PFS, one would thing they would work out some sort of accommodation. Anyone have experience similar to the situation I described?
One can imagine a .2GT3 buyer in CA not wanting to pay the 8.5 sales tax especially if he plans to get into a .2GT3RS after a year or so.
For an example, let's assume the buyer has a two year lease and wants to trade it in for a newer model after one year on the lease. Is the payout the residual plus the one year remaining on the lease? I suppose the Dealer could buy or take the car on trade in using wholesale values. But if the buyer is getting into another model either by leasing or financing through PFS, one would thing they would work out some sort of accommodation. Anyone have experience similar to the situation I described?
One can imagine a .2GT3 buyer in CA not wanting to pay the 8.5 sales tax especially if he plans to get into a .2GT3RS after a year or so.
03-12-2017, 04:29 PM
#56
Burning Brakes
03-12-2017, 05:34 PM
#57
Rennlist Member
03-12-2017, 10:48 PM
#59
Rennlist Member
While the IRS doesn't limit brands, one of the most common big red flags for an audit are high end cars with a high percentage write off. Remember, you do have to justify the business use portion. Anything above 70% is unrealistic.
03-12-2017, 11:20 PM
#60
Rennlist Member
When you start considering a lease simply as a loan with a future option to buy or sell at an agreed price, it makes more sense.
If you don't keep your cars for more than 1-2 year, it's actually pretty stupid to buy a car for cash in California, no matter what your business situation, because you get hit with sales tax on the full value. You would need extremely high interest rates to be ahead with buying (higher than anything today).
I rarely keeps cars for more than a year, so I never "buy."