Custom Build 991.2 GTS Buy vs Lease Help
01-04-2018, 10:08 PM
#1
Advanced
Thread Starter
Custom Build 991.2 GTS Buy vs Lease Help
Hi Everyone,
I am in the process of placing a custom order for a 991.2 GTS Coupe and need your help/advice as to when it makes sense to lease vs buy. I've never leased a car before in my life. I have all the numbers I just don't know if my analysis is accurate. Many folks out there swear leasing is better...others (myself included) steer clear of leases like the plague. Here's the details...I very much appreciate your advice:
Car details:
-2018 GTS Coupe RWD
-MSRP $154,750 (custom build - April delivery)
-Dealer offering 6% off MSRP
Purchase Option:
-72 month loan @ 2.69% APR through my credit union
-Undecided about down payment, but probably something like $25K
-Monthly payment (assuming 0 down to compare apples to apples is $2210
-Loan balance at the end of 39 months (assuming 0 down) is $71k
-Total monthly payments = $2210 * 39 = $86,190
-Assume car market value at end of 39 months is $100,000. (based off current MV of 3 year old 991.1 GTS for sale today)
-If I sell the car at 39 months of ownership I net back $29k ($100k sale - $71k loan payoff)
-Total cost of ownership = $86k - $29k = $57k
Lease Option:
-39 month lease @ 10k miles/year
-down payment = $2,558
-monthly payment = $2,558
-money factor = .00250 (dealer said this MFis left at "retention" set by Porsche and not marked up by the dealership)
-residual = 52% or $76,336
-total payments = $2,558 *39 = $99,762
-Assume car market value at end of 39 months is $100,000.
-buy car at residual value and sell on open market = -$76,336 (purchase) + $100,000 (sale) = $23,664 net gain
-total cost of ownership = $99,762 - $23,664 = $76,098
So here is all the data...my analysis shows cost of ownership is much less by buying verse leasing...even for 39 months. Then again, I have no idea if my analysis is right...asmost many folks out there say it makes sense to lease these cars unless you plan to keep for 8+ years. In this case, the buy option looks better even at 39 months.
The idea of a lease is somewhat intriguing as I'd like the option to buy a custom 992 GTS when they become available. Then again, even assuming I buy a 992 in 3 years, if the cost of ownership is cheaper buying now...why not go that route?
What am I missing???
Thanks in advance for your help!
I am in the process of placing a custom order for a 991.2 GTS Coupe and need your help/advice as to when it makes sense to lease vs buy. I've never leased a car before in my life. I have all the numbers I just don't know if my analysis is accurate. Many folks out there swear leasing is better...others (myself included) steer clear of leases like the plague. Here's the details...I very much appreciate your advice:
Car details:
-2018 GTS Coupe RWD
-MSRP $154,750 (custom build - April delivery)
-Dealer offering 6% off MSRP
Purchase Option:
-72 month loan @ 2.69% APR through my credit union
-Undecided about down payment, but probably something like $25K
-Monthly payment (assuming 0 down to compare apples to apples is $2210
-Loan balance at the end of 39 months (assuming 0 down) is $71k
-Total monthly payments = $2210 * 39 = $86,190
-Assume car market value at end of 39 months is $100,000. (based off current MV of 3 year old 991.1 GTS for sale today)
-If I sell the car at 39 months of ownership I net back $29k ($100k sale - $71k loan payoff)
-Total cost of ownership = $86k - $29k = $57k
Lease Option:
-39 month lease @ 10k miles/year
-down payment = $2,558
-monthly payment = $2,558
-money factor = .00250 (dealer said this MFis left at "retention" set by Porsche and not marked up by the dealership)
-residual = 52% or $76,336
-total payments = $2,558 *39 = $99,762
-Assume car market value at end of 39 months is $100,000.
-buy car at residual value and sell on open market = -$76,336 (purchase) + $100,000 (sale) = $23,664 net gain
-total cost of ownership = $99,762 - $23,664 = $76,098
So here is all the data...my analysis shows cost of ownership is much less by buying verse leasing...even for 39 months. Then again, I have no idea if my analysis is right...as
The idea of a lease is somewhat intriguing as I'd like the option to buy a custom 992 GTS when they become available. Then again, even assuming I buy a 992 in 3 years, if the cost of ownership is cheaper buying now...why not go that route?
What am I missing???
Thanks in advance for your help!
01-04-2018, 11:32 PM
#2
Rennlist Member
Well the base PFS MF on the lease is .0020, or was 4 months ago so they are marking it up a bit, also the residual looks low, my 2018 C2 on 39 month lease 10k has a 60% residual. Perhaps the GTS does not hold its value, doubtful but a 8 point drop is pretty big? Residual and MF have huge impact in determining lease payments, porsche clearly does not want to lease GTS models. BMW does the same on the M2. Example, BMW MF and residuals on the M2 make the monthly payment about the same as a M4 which has an MSRP of $18,000 more! Why? BMW M2s are much lower production than the M4, and BMW purposefully lowers the residual and jacks up the MF. Same thing may be happening with the GTS.
Also you are forgetting your $8-$10k is sales tax paid in full at time of sale for financing, with leasing in “most states” you pay tax monthly for only the time you have the car. If you could get base MF @ .0020 and a “real” residual your lease payment would be about $1,950 per month. That’s almost $24k less in lease payments over the term. Combine this with the sales tax difference, it’s real close, and there are other pros/cons to both.
Leasing works for many but not for everyone, ymmv
Also you are forgetting your $8-$10k is sales tax paid in full at time of sale for financing, with leasing in “most states” you pay tax monthly for only the time you have the car. If you could get base MF @ .0020 and a “real” residual your lease payment would be about $1,950 per month. That’s almost $24k less in lease payments over the term. Combine this with the sales tax difference, it’s real close, and there are other pros/cons to both.
Leasing works for many but not for everyone, ymmv
Last edited by titan7; 01-05-2018 at 12:36 AM.
01-05-2018, 10:34 AM
#3
When I did this assessment last year when buying my car, the leasing option just didn't make economic sense. The residuals on the specialized models are artificially low, which increases the payment to cover that additional projected depreciation.
01-05-2018, 10:51 AM
#4
That is correct, I did the same math and came to a conclusion that you either buy in cash or finance if you you can make more on your $ than the interest you’ll be paying.
2.x is a very good rate, so you can use the banks $ and get more for yours elsewhere.
2.x is a very good rate, so you can use the banks $ and get more for yours elsewhere.
01-05-2018, 12:41 PM
#5
Buying is better than lease in this situation for sure, but just keep in mind that your MSRP is very high considering that it's just a coupe. I would keep the MSRP closer to 140K mark as that's what most GTS builds are, so when you are selling it back to dealer or private in a few years, your selling price is close to what the market value is and you end up taking a lower loss. You can easily save an extra 10-15K on your overall loss (3-4 years) if you keep your MSRP average. Another thing to consider is also if you not very specific about options, find a slightly used one to buy at around 120-130K that has a high MSRP, there is over 40 used GTS on autotrader now, or even a new one, some dealers will probably do a good 10-12% discount on those specially if it's a '17.
01-05-2018, 12:56 PM
#6
I think in your buy example you left off the tax so you need to add another $6k. So that brings your cost of ownership to $63k.
You can also look at Penfed as an option. Their payment saver loan is a balloon loan, so similar to an open end lease. The max loan is $100k, so you would need a lot more down initially. The rate is 1.74% and payments are $908/month with a $72k balloon after 3 years. At $100k sales price in 3 years your total cost of ownership is roughly $56k.
You can also look at Penfed as an option. Their payment saver loan is a balloon loan, so similar to an open end lease. The max loan is $100k, so you would need a lot more down initially. The rate is 1.74% and payments are $908/month with a $72k balloon after 3 years. At $100k sales price in 3 years your total cost of ownership is roughly $56k.
01-05-2018, 01:37 PM
#7
Burning Brakes
Consider this, $150+ car. You buy it, it's yours. You drive off the lot and get t-boned by a drunk, too bad, that car is still yours. Same thing happens in a leased vehicle and at the end of the lease you can hand it back, let them deal with the diminished value and order yourself another undamaged car to try again.
In many cases it might be financially better (cheaper) to buy rather than lease but there are other advantages to a lease.
In many cases it might be financially better (cheaper) to buy rather than lease but there are other advantages to a lease.
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01-05-2018, 02:10 PM
#8
Advanced
Thread Starter
All - thanks for your insights.
Titan7 and ShaunP - WRT taxes, for leased vehicles Virginia charges the full 4.15% vehicle sales tax up front as if it were a purchase, so from a tax standpoint, lease vs buy is a wash (which is why I left it out). No tax savings by leasing unfortunately. Apparently Virginia is one of the few states in the country that applies taxes this way. I am meeting with the new car sales manager this afternoon and will inquire about the .0020 baseline MF. PFS may have changed it...I'll try to find out and let everyone know. I'll call PFS directly and another dealer to get multiple data points.
Armin - Interesting comments about the MSRP. I have it loaded up exactly how I want it (Configurator Code: PJPGGP40) which is why the idea of a custom build is so attractive. I recognize the financial sense in buying off the lot, but that defeats the excitement of driving and owning a customized car. Your point about lowering the MSRP on the build to decrease depreciation loss later is a very good one. Thanks!
rkwfxd - Point taken...your logic is valid, however I don't think I'd base my decision to buy vs lease on the chance the car could be in an accident. If the cost of leasing is $20-30k more over the ownership of the car, the diminished value of from an accident would have to exceed that amount in order for it to make sense to lease based on your argument. That would be some serious diminished value. By buying, the money saved in monthly payments would have already compensated for any diminished value from accident. *IF* the cost of ownership was exactly the same between lease and buy, I could see where this analysis might come into play.
All good fellas. This is great info to think about. I can't thank you enough for your help!
Titan7 and ShaunP - WRT taxes, for leased vehicles Virginia charges the full 4.15% vehicle sales tax up front as if it were a purchase, so from a tax standpoint, lease vs buy is a wash (which is why I left it out). No tax savings by leasing unfortunately. Apparently Virginia is one of the few states in the country that applies taxes this way. I am meeting with the new car sales manager this afternoon and will inquire about the .0020 baseline MF. PFS may have changed it...I'll try to find out and let everyone know. I'll call PFS directly and another dealer to get multiple data points.
Armin - Interesting comments about the MSRP. I have it loaded up exactly how I want it (Configurator Code: PJPGGP40) which is why the idea of a custom build is so attractive. I recognize the financial sense in buying off the lot, but that defeats the excitement of driving and owning a customized car. Your point about lowering the MSRP on the build to decrease depreciation loss later is a very good one. Thanks!
rkwfxd - Point taken...your logic is valid, however I don't think I'd base my decision to buy vs lease on the chance the car could be in an accident. If the cost of leasing is $20-30k more over the ownership of the car, the diminished value of from an accident would have to exceed that amount in order for it to make sense to lease based on your argument. That would be some serious diminished value. By buying, the money saved in monthly payments would have already compensated for any diminished value from accident. *IF* the cost of ownership was exactly the same between lease and buy, I could see where this analysis might come into play.
All good fellas. This is great info to think about. I can't thank you enough for your help!
01-05-2018, 02:42 PM
#10
Advanced
Thread Starter
01-05-2018, 02:45 PM
#11
Porsche makes leasing difficult because of the sky high MF. I calculated tax into my calculations on the buy side, so if you go the Penfed route youre looking at that route, your total costs is then 50k to compare apples to apples
01-05-2018, 02:53 PM
#12
Advanced
Thread Starter
Thanks man. I am on the Penfed website now. Looks interesting although there is no Payment Saver Loan calculator to compare the monthly payment of a standard 60 month loan vs this Payment Saver option. I did notice the $100k loan limit, so that's something I'd have to factor in as well. Assuming interest rates are identical between the products, I'd be interested to see if there's any difference in total interest paid between the two options over the 60 month period...which option pays less interest?
01-05-2018, 03:01 PM
#13
Rennlist Member
Although I get some sales tax benefit, I was interested in leasing and came to the same conclusion. My CU went even further and offered 1.99% on a 6 year loan with 5% down so I just took their money and went with it. (Rates are higher now.) At that point the difference between my rate and the lease money factor was enough that a lease almost couldn’t make financial sense to me without an artificially high residual. The payments aren’t much different and at ~3 years I have quite a bit more equity with the purchase options, so carrying the early accident risk is about the only downside I saw.
For those that are able to heavily leverage tax advantages or those who place significant financial value on other elements of a lease such as the accident insurance the picture might change. But for me and my scenario, I couldn’t see it.
As mentioned, Porsche often offers much higher residuals with the Carrera models and for those it can be far more attractive and reasonable. Because of a low residual, the GTS models are expensive to lease as well as the turbo models, GT3 models, and any special editions.
One last piece, with Porsche leases they have Maximum Residualized MSRP. It’s a price where any additional options get zero residual credit. The idea is if I were to build and lease a $160k base Carrera, PFS wouldn’t ever get their % residual in resale as the options are too excessive for a typical buyer to pay a large premium for in the used market. So the result is if you build a highly optioned car, some of your options will be depreciated by 100% over the term of the lease. It quickly makes leasing quite uncompetitive for those types of builds. Your GTS may hit that threshold, not sure.
For those that are able to heavily leverage tax advantages or those who place significant financial value on other elements of a lease such as the accident insurance the picture might change. But for me and my scenario, I couldn’t see it.
As mentioned, Porsche often offers much higher residuals with the Carrera models and for those it can be far more attractive and reasonable. Because of a low residual, the GTS models are expensive to lease as well as the turbo models, GT3 models, and any special editions.
One last piece, with Porsche leases they have Maximum Residualized MSRP. It’s a price where any additional options get zero residual credit. The idea is if I were to build and lease a $160k base Carrera, PFS wouldn’t ever get their % residual in resale as the options are too excessive for a typical buyer to pay a large premium for in the used market. So the result is if you build a highly optioned car, some of your options will be depreciated by 100% over the term of the lease. It quickly makes leasing quite uncompetitive for those types of builds. Your GTS may hit that threshold, not sure.
01-05-2018, 03:11 PM
#14
Rennlist Member
They will not budge on the residual as it's set by PFS, it's they who are artificially lowering the residual on the GTS. You are doing your homework, good job. People can get sideways leasing if you don't know what you are doing. For me and a C2 coupe, for 39 months in a lease vs your 72 month loan and sell at 39 months, it was about $3500.00 more to finance the car vs lease it here in CA. I have an excel calculator that I drop the number into. Also, in the loan I would have lost $4200 in sales tax vs the lease as well as about $4k in savings interest by having my down payment in a depreciating asset vs earning 8%-10% interest in the bank. Then there are accidents, not that we count on these to occur, but stuff happens. In a perfect world we would be 1%er, ballers and dropping cash on a GT3RS would be a drop in the bucket, lol! Until then many of us have to resort to financing and diverting (Porsche CASH Purchase $$) to our 401k/IRA to work the magic of compounding interest.
Last point, at least for me I like new cars every 3-4 years, and I would never own a Porsche or BMW out of warranty, but that's just me. Also consider mileage, my 911 is pleasure driver only, I have my Prius for commuting and my wife has a M4, 10k per year is used for fun driving only. Also with a lease you can't modify much if anything on the car but I don't do that anyhow. You certainly can't abuse the car as you will get hammered at lease turn in but, lol, I don't think that's an issue for nuts like us on Rennlist. Normal wear and tear is expected and not an issue with leasing. I am an OCD freak so may cars are pretty much as new. Tires, yeah if they are worn you will have to replace them, but you would if you owned the car outright too.
Again, leasing vs. financing vs. cash can be a very polarizing topic as everyone has their own values and opinions and more importantly different financial positions. As others have pointed out, Porsche does not have good terms for leasing specialty cars. On a C2, absolutely it can work. I will have a GT3 at some point but that will be a cash purchases several years from now and most likely pre-owned and I will keep it a LOOOONGGG time. I love my c2, it's my first 911 but it's not going to hold the value that a GT3 does overtime, the GT cars are just "special". Actually if I was really smart with money I would be driving my paid for Prius only until the wheels fall off, but life is short and what fun would that be, Right?
Good Luck!!!
Last point, at least for me I like new cars every 3-4 years, and I would never own a Porsche or BMW out of warranty, but that's just me. Also consider mileage, my 911 is pleasure driver only, I have my Prius for commuting and my wife has a M4, 10k per year is used for fun driving only. Also with a lease you can't modify much if anything on the car but I don't do that anyhow. You certainly can't abuse the car as you will get hammered at lease turn in but, lol, I don't think that's an issue for nuts like us on Rennlist. Normal wear and tear is expected and not an issue with leasing. I am an OCD freak so may cars are pretty much as new. Tires, yeah if they are worn you will have to replace them, but you would if you owned the car outright too.
Again, leasing vs. financing vs. cash can be a very polarizing topic as everyone has their own values and opinions and more importantly different financial positions. As others have pointed out, Porsche does not have good terms for leasing specialty cars. On a C2, absolutely it can work. I will have a GT3 at some point but that will be a cash purchases several years from now and most likely pre-owned and I will keep it a LOOOONGGG time. I love my c2, it's my first 911 but it's not going to hold the value that a GT3 does overtime, the GT cars are just "special". Actually if I was really smart with money I would be driving my paid for Prius only until the wheels fall off, but life is short and what fun would that be, Right?
Good Luck!!!
Last edited by titan7; 01-05-2018 at 05:50 PM.
01-05-2018, 03:11 PM
#15
Race Car
PM sent. Always curious, particularly if you used a local dealer, of what your experiences were, both for sales and service. I have heard different experiences for Tysons, Silver Spring, Arlington, and Annapolis (cannot recall anyone I know that has used Rockville).