Lease C4S - Residuals and Money Factors?
02-16-2013, 11:32 PM
#31
Yup - the no-lease argument is only valid (if at all) from a parochial point of view ... for example it doesn't take into account risk! (amongst a zillion other things)
Said simply - Why, oh why, would ANYBODY lock up $100k+ in a freakin car??? That depreciates!
Who the hell is this advisor? Teach him/her a new word: liquidity.
Said simply - Why, oh why, would ANYBODY lock up $100k+ in a freakin car??? That depreciates!
Who the hell is this advisor? Teach him/her a new word: liquidity.
What does the market hold for investors in 2013? I don't claim any insights, but I do know that there are lots of risks with the US unable to get a handle on their debt, and with the PIGS in Europe hanging by a thread. So if I spend a $100K on a Porsche I own an outstanding car. If I invest in the stock market, maybe the $100K will grow to $120K in a couple of years or maybe it sinks to $80K.
02-17-2013, 08:41 AM
#32
Rennlist Member
No offense to anyone and not pointing anyone out. But I never use credit and never been in dept of any kind for 25+ yrs luckily I learned my lesson early . I quote Dave Ramsey "Its a called a fleece NOT a lease" and its a fact only 10% of multi millionaires lease vehicles.
From a article my investment adviser did a while back. I know most people won't believe me nor do I care if they do. I just don't like seeing people getting ripped off.
"Leasing is just about the most expensive way on the planet to have a car...
Statistically, leasing is the most expensive way to have a car. Think about it: the company leasing the car to you has to not only pay for depreciation, but they also have to make a profit or they are out of business. That profit can only come from one place--you! Can you imagine what it would cost you to drive a rental car every single day? Well, leasing a car is basically just a very longterm rental agreement. You give them cash up front, you pay a fee (lease payment) during the time you have the car, then you give the car back to them at the end of the lease and pay any damages or excessive mileage. Sounds like a rental to me!
And about that excessive mileage: I know of a family who leased a car and ran the mileage up very quickly. The over-mileage fee at that time was about seventeen cents per mile. The average car is driven 15,000 miles per year, so their over-mileage fees would have come to $2,550 per year which is $212.50 per month on top of their lease payment expense. For the last year they had the car (waiting for the lease to end) they had to park the car in the garage and buy an old junker to drive because they couldn’t afford both the lease payment and the over-mileage fees. Statistics have shown that the average person who leases a car pays an additional $1,000 in fees and expenses when they turn the car back in at the end of the lease.
The reason leasing looks good to so many people is because they are thinking short term. You lease a car for three years, make a lower payment than if you had bought the car, turn the car back in at the end of the lease, and start another lease on your next car. Any advanteges to leasing a car pretty much disappear after the first three-year lease. The dealer leasing you the car will tell you that it costs less to lease a car than to buy one, and that is correct--but only for the term of the lease. After that, leasing a car gets more and more expensive while a purchased car gets cheaper and cheaper. Remember that in a lease you are pretty much just renting the car, and renting is an expensive way to have a car.
Put it this way. You ask a close friend of yours if you can borrow his car. He says to you "sure, you can borrow the car, but you’ll have to make my car payment during the time you drive the car, pay me a small fee up front, then pay a fee for mileage when you return it." Would you borrow a car under those conditions? I certainly wouldn’t; but, that’s exactly what you’re doing when you lease a car.
Let’s look at the math involved in buying a car versus leasing, assuming the life of a car is about 9 years (it’s actually more like 10 years, but we’ll use 9) and we’re going to sign up for a three-year lease. We are looking at a car that sells for $23,000 new.
If we lease:
We have a lease payment of say $350 per month. We pay the lease company $1,100 in ’due at signing’ costs and we drive the car for the entire trhree-year lease. During that 3 years, we have paid 36 payments of $350 which comes to $12,600. We add in the $1,100 we paid up front to bring it to $13,700. When we return the car, we pay the statistical average of $1,000 in mileage, wear and tear, and cleaning fees. So, at the end of three years, we have paid a total of $14,700 to drive our leased car. At the end of the three years, we do it all again to lease another nice, new car. Using the same numbers we just calculated, over nine years of driving (three different car leases) we have spent $44,100 to have a car for nine years. We are averaging a cost of $4,900 per year to drive a leased car.
If we buy:
We can reasonably assume a payment of somewhere around $400 per month. That’s $50 more per month than the lease payment, so at this point the lease is still looking pretty good. We drive that same car for it’s entire nine year life. In six years, the loan is repaid and we have made $28,800 in payments. Lets say that during the nine years we’ve owned the car, we have put $6,000 into repairs. When we are done with the car at the end of our 9 years, we manage to sell it for $500. So, we made $28,800 in payments, paid out $6,000 in repairs, and got back $500 when we sold it. $28,800 + $6,000 - $500 = $34,300 we have paid to drive the car for nine years--an average cost of $3,811 per year. The leased car cost us $1,089 MORE per year. Plus, when we buy a car, we get to drive it with no payments whatsoever once the loan is paid. With a lease, you have payments each and every month for the entire time you drive leased cars.
My investment counselor always always says to NEVER lease a car nor loan a car. But that's a whole other game there. In any case fortunately Im lucky enough never do both with anything I buy with a debit card, be it cars or homes.
Whatever you decide is you're choice. I'm not saying what to do or not to do. It just one man's opinion. Good luck.
From a article my investment adviser did a while back. I know most people won't believe me nor do I care if they do. I just don't like seeing people getting ripped off.
"Leasing is just about the most expensive way on the planet to have a car...
Statistically, leasing is the most expensive way to have a car. Think about it: the company leasing the car to you has to not only pay for depreciation, but they also have to make a profit or they are out of business. That profit can only come from one place--you! Can you imagine what it would cost you to drive a rental car every single day? Well, leasing a car is basically just a very longterm rental agreement. You give them cash up front, you pay a fee (lease payment) during the time you have the car, then you give the car back to them at the end of the lease and pay any damages or excessive mileage. Sounds like a rental to me!
And about that excessive mileage: I know of a family who leased a car and ran the mileage up very quickly. The over-mileage fee at that time was about seventeen cents per mile. The average car is driven 15,000 miles per year, so their over-mileage fees would have come to $2,550 per year which is $212.50 per month on top of their lease payment expense. For the last year they had the car (waiting for the lease to end) they had to park the car in the garage and buy an old junker to drive because they couldn’t afford both the lease payment and the over-mileage fees. Statistics have shown that the average person who leases a car pays an additional $1,000 in fees and expenses when they turn the car back in at the end of the lease.
The reason leasing looks good to so many people is because they are thinking short term. You lease a car for three years, make a lower payment than if you had bought the car, turn the car back in at the end of the lease, and start another lease on your next car. Any advanteges to leasing a car pretty much disappear after the first three-year lease. The dealer leasing you the car will tell you that it costs less to lease a car than to buy one, and that is correct--but only for the term of the lease. After that, leasing a car gets more and more expensive while a purchased car gets cheaper and cheaper. Remember that in a lease you are pretty much just renting the car, and renting is an expensive way to have a car.
Put it this way. You ask a close friend of yours if you can borrow his car. He says to you "sure, you can borrow the car, but you’ll have to make my car payment during the time you drive the car, pay me a small fee up front, then pay a fee for mileage when you return it." Would you borrow a car under those conditions? I certainly wouldn’t; but, that’s exactly what you’re doing when you lease a car.
Let’s look at the math involved in buying a car versus leasing, assuming the life of a car is about 9 years (it’s actually more like 10 years, but we’ll use 9) and we’re going to sign up for a three-year lease. We are looking at a car that sells for $23,000 new.
If we lease:
We have a lease payment of say $350 per month. We pay the lease company $1,100 in ’due at signing’ costs and we drive the car for the entire trhree-year lease. During that 3 years, we have paid 36 payments of $350 which comes to $12,600. We add in the $1,100 we paid up front to bring it to $13,700. When we return the car, we pay the statistical average of $1,000 in mileage, wear and tear, and cleaning fees. So, at the end of three years, we have paid a total of $14,700 to drive our leased car. At the end of the three years, we do it all again to lease another nice, new car. Using the same numbers we just calculated, over nine years of driving (three different car leases) we have spent $44,100 to have a car for nine years. We are averaging a cost of $4,900 per year to drive a leased car.
If we buy:
We can reasonably assume a payment of somewhere around $400 per month. That’s $50 more per month than the lease payment, so at this point the lease is still looking pretty good. We drive that same car for it’s entire nine year life. In six years, the loan is repaid and we have made $28,800 in payments. Lets say that during the nine years we’ve owned the car, we have put $6,000 into repairs. When we are done with the car at the end of our 9 years, we manage to sell it for $500. So, we made $28,800 in payments, paid out $6,000 in repairs, and got back $500 when we sold it. $28,800 + $6,000 - $500 = $34,300 we have paid to drive the car for nine years--an average cost of $3,811 per year. The leased car cost us $1,089 MORE per year. Plus, when we buy a car, we get to drive it with no payments whatsoever once the loan is paid. With a lease, you have payments each and every month for the entire time you drive leased cars.
My investment counselor always always says to NEVER lease a car nor loan a car. But that's a whole other game there. In any case fortunately Im lucky enough never do both with anything I buy with a debit card, be it cars or homes.
Whatever you decide is you're choice. I'm not saying what to do or not to do. It just one man's opinion. Good luck.
This guy is stuck in a 1980s time warp. Seriously.
Leasing is no different than a balloon payment. Often manufacturer's leasing programs are designed to provide certain incentives over and above the purchase alternative. The real unique advantage is that leasing explicitly quantifies the cost of the car. Cost of funds, depreciation, residual value etc. all wrapped into a neat monthly payment. More than 90% of the time, the residuals set at the end of the lease are a fair amount higher than what it will be worth. Ask someone who owned an audi and tried to trade it in after sudden acceleration. More recently, a Toyota. Have a serious accident when your car is totaled, who runs the risk that the insurance will not adequately cover the value. Leasing has GAP insurance. Leasing locks in the residual and the RISK of ownership is not on your shoulders.
Leasing is not for everyone. If you are planning to own your car for 10 years, leasing is likely not for you. If you plan to hold onto the car for 3 years, and move on to something new, then leasing MIGHT make sense depending on the programs, etc.
But to say leasing is not an effective way to have a car is simply wrong.
02-17-2013, 08:47 AM
#33
A very commonly misused phrase that drives me crazy.
To steal from Dilbert "It wouldn't be called "sales" if both sides won."
02-17-2013, 09:07 AM
#34
Three Wheelin'
Zipgun - While you make some interesting (and valid) points, your explanation is simply too general. You neglected to mention "tax treatment" (which is way more expensive on a purchase), tax write-offs (which you get when you lease and can run a car through a business), and you simply cannot make this comparison using "made up" numbers.
I own a business, make north of a million dollars a year, run my car through my business and enjoy the flexibility of leasing. I think the main point is that people should simply "live within their means." Based on my finances, I could drive almost any car on the road...but at what expense am I comfortable? I decided on a nice middleground, and just ordered a Panny GTS (no need to take us off topic on this one given the forum I am posting in now... ha).
As you stated, to each his own. I just wanted the other readers to know that leasing / buying is not a clear loser / winner proposition as your post made it out to seem. Thanks
I own a business, make north of a million dollars a year, run my car through my business and enjoy the flexibility of leasing. I think the main point is that people should simply "live within their means." Based on my finances, I could drive almost any car on the road...but at what expense am I comfortable? I decided on a nice middleground, and just ordered a Panny GTS (no need to take us off topic on this one given the forum I am posting in now... ha).
As you stated, to each his own. I just wanted the other readers to know that leasing / buying is not a clear loser / winner proposition as your post made it out to seem. Thanks
No offense to anyone and not pointing anyone out. But I never use credit and never been in dept of any kind for 25+ yrs luckily I learned my lesson early . I quote Dave Ramsey "Its a called a fleece NOT a lease" and its a fact only 10% of multi millionaires lease vehicles.
From a article my investment adviser did a while back. I know most people won't believe me nor do I care if they do. I just don't like seeing people getting ripped off.
"Leasing is just about the most expensive way on the planet to have a car...
Statistically, leasing is the most expensive way to have a car. Think about it: the company leasing the car to you has to not only pay for depreciation, but they also have to make a profit or they are out of business. That profit can only come from one place--you! Can you imagine what it would cost you to drive a rental car every single day? Well, leasing a car is basically just a very longterm rental agreement. You give them cash up front, you pay a fee (lease payment) during the time you have the car, then you give the car back to them at the end of the lease and pay any damages or excessive mileage. Sounds like a rental to me!
And about that excessive mileage: I know of a family who leased a car and ran the mileage up very quickly. The over-mileage fee at that time was about seventeen cents per mile. The average car is driven 15,000 miles per year, so their over-mileage fees would have come to $2,550 per year which is $212.50 per month on top of their lease payment expense. For the last year they had the car (waiting for the lease to end) they had to park the car in the garage and buy an old junker to drive because they couldn’t afford both the lease payment and the over-mileage fees. Statistics have shown that the average person who leases a car pays an additional $1,000 in fees and expenses when they turn the car back in at the end of the lease.
The reason leasing looks good to so many people is because they are thinking short term. You lease a car for three years, make a lower payment than if you had bought the car, turn the car back in at the end of the lease, and start another lease on your next car. Any advanteges to leasing a car pretty much disappear after the first three-year lease. The dealer leasing you the car will tell you that it costs less to lease a car than to buy one, and that is correct--but only for the term of the lease. After that, leasing a car gets more and more expensive while a purchased car gets cheaper and cheaper. Remember that in a lease you are pretty much just renting the car, and renting is an expensive way to have a car.
Put it this way. You ask a close friend of yours if you can borrow his car. He says to you "sure, you can borrow the car, but you’ll have to make my car payment during the time you drive the car, pay me a small fee up front, then pay a fee for mileage when you return it." Would you borrow a car under those conditions? I certainly wouldn’t; but, that’s exactly what you’re doing when you lease a car.
Let’s look at the math involved in buying a car versus leasing, assuming the life of a car is about 9 years (it’s actually more like 10 years, but we’ll use 9) and we’re going to sign up for a three-year lease. We are looking at a car that sells for $23,000 new.
If we lease:
We have a lease payment of say $350 per month. We pay the lease company $1,100 in ’due at signing’ costs and we drive the car for the entire trhree-year lease. During that 3 years, we have paid 36 payments of $350 which comes to $12,600. We add in the $1,100 we paid up front to bring it to $13,700. When we return the car, we pay the statistical average of $1,000 in mileage, wear and tear, and cleaning fees. So, at the end of three years, we have paid a total of $14,700 to drive our leased car. At the end of the three years, we do it all again to lease another nice, new car. Using the same numbers we just calculated, over nine years of driving (three different car leases) we have spent $44,100 to have a car for nine years. We are averaging a cost of $4,900 per year to drive a leased car.
If we buy:
We can reasonably assume a payment of somewhere around $400 per month. That’s $50 more per month than the lease payment, so at this point the lease is still looking pretty good. We drive that same car for it’s entire nine year life. In six years, the loan is repaid and we have made $28,800 in payments. Lets say that during the nine years we’ve owned the car, we have put $6,000 into repairs. When we are done with the car at the end of our 9 years, we manage to sell it for $500. So, we made $28,800 in payments, paid out $6,000 in repairs, and got back $500 when we sold it. $28,800 + $6,000 - $500 = $34,300 we have paid to drive the car for nine years--an average cost of $3,811 per year. The leased car cost us $1,089 MORE per year. Plus, when we buy a car, we get to drive it with no payments whatsoever once the loan is paid. With a lease, you have payments each and every month for the entire time you drive leased cars.
My investment counselor always always says to NEVER lease a car nor loan a car. But that's a whole other game there. In any case fortunately Im lucky enough never do both with anything I buy with a debit card, be it cars or homes.
Whatever you decide is you're choice. I'm not saying what to do or not to do. It just one man's opinion. Good luck.
From a article my investment adviser did a while back. I know most people won't believe me nor do I care if they do. I just don't like seeing people getting ripped off.
"Leasing is just about the most expensive way on the planet to have a car...
Statistically, leasing is the most expensive way to have a car. Think about it: the company leasing the car to you has to not only pay for depreciation, but they also have to make a profit or they are out of business. That profit can only come from one place--you! Can you imagine what it would cost you to drive a rental car every single day? Well, leasing a car is basically just a very longterm rental agreement. You give them cash up front, you pay a fee (lease payment) during the time you have the car, then you give the car back to them at the end of the lease and pay any damages or excessive mileage. Sounds like a rental to me!
And about that excessive mileage: I know of a family who leased a car and ran the mileage up very quickly. The over-mileage fee at that time was about seventeen cents per mile. The average car is driven 15,000 miles per year, so their over-mileage fees would have come to $2,550 per year which is $212.50 per month on top of their lease payment expense. For the last year they had the car (waiting for the lease to end) they had to park the car in the garage and buy an old junker to drive because they couldn’t afford both the lease payment and the over-mileage fees. Statistics have shown that the average person who leases a car pays an additional $1,000 in fees and expenses when they turn the car back in at the end of the lease.
The reason leasing looks good to so many people is because they are thinking short term. You lease a car for three years, make a lower payment than if you had bought the car, turn the car back in at the end of the lease, and start another lease on your next car. Any advanteges to leasing a car pretty much disappear after the first three-year lease. The dealer leasing you the car will tell you that it costs less to lease a car than to buy one, and that is correct--but only for the term of the lease. After that, leasing a car gets more and more expensive while a purchased car gets cheaper and cheaper. Remember that in a lease you are pretty much just renting the car, and renting is an expensive way to have a car.
Put it this way. You ask a close friend of yours if you can borrow his car. He says to you "sure, you can borrow the car, but you’ll have to make my car payment during the time you drive the car, pay me a small fee up front, then pay a fee for mileage when you return it." Would you borrow a car under those conditions? I certainly wouldn’t; but, that’s exactly what you’re doing when you lease a car.
Let’s look at the math involved in buying a car versus leasing, assuming the life of a car is about 9 years (it’s actually more like 10 years, but we’ll use 9) and we’re going to sign up for a three-year lease. We are looking at a car that sells for $23,000 new.
If we lease:
We have a lease payment of say $350 per month. We pay the lease company $1,100 in ’due at signing’ costs and we drive the car for the entire trhree-year lease. During that 3 years, we have paid 36 payments of $350 which comes to $12,600. We add in the $1,100 we paid up front to bring it to $13,700. When we return the car, we pay the statistical average of $1,000 in mileage, wear and tear, and cleaning fees. So, at the end of three years, we have paid a total of $14,700 to drive our leased car. At the end of the three years, we do it all again to lease another nice, new car. Using the same numbers we just calculated, over nine years of driving (three different car leases) we have spent $44,100 to have a car for nine years. We are averaging a cost of $4,900 per year to drive a leased car.
If we buy:
We can reasonably assume a payment of somewhere around $400 per month. That’s $50 more per month than the lease payment, so at this point the lease is still looking pretty good. We drive that same car for it’s entire nine year life. In six years, the loan is repaid and we have made $28,800 in payments. Lets say that during the nine years we’ve owned the car, we have put $6,000 into repairs. When we are done with the car at the end of our 9 years, we manage to sell it for $500. So, we made $28,800 in payments, paid out $6,000 in repairs, and got back $500 when we sold it. $28,800 + $6,000 - $500 = $34,300 we have paid to drive the car for nine years--an average cost of $3,811 per year. The leased car cost us $1,089 MORE per year. Plus, when we buy a car, we get to drive it with no payments whatsoever once the loan is paid. With a lease, you have payments each and every month for the entire time you drive leased cars.
My investment counselor always always says to NEVER lease a car nor loan a car. But that's a whole other game there. In any case fortunately Im lucky enough never do both with anything I buy with a debit card, be it cars or homes.
Whatever you decide is you're choice. I'm not saying what to do or not to do. It just one man's opinion. Good luck.
02-19-2013, 08:44 PM
#35
Rennlist Member
The residuals and MF are set by Porsche on PFS leases. .0020 is base unless your credit is below 680. If it is lower than 680, still fight for it. Shady dealers will manipulate the factory set residuals (unless you overspec). But until the 4-1-13 program changes, they are as follows:
C2S Coupe 78-76-71-69-56% on 12-15-24-27-36 mos
C4S Coupe 77-75-70-68-53% on " "
This is at 15k miles year.
Fight hard for 8-10% off a custom order and 12%+ off cars on a lot. 2014 cars are close and I don't think the sales of $100k cars are exactly brisk.
C2S Coupe 78-76-71-69-56% on 12-15-24-27-36 mos
C4S Coupe 77-75-70-68-53% on " "
This is at 15k miles year.
Fight hard for 8-10% off a custom order and 12%+ off cars on a lot. 2014 cars are close and I don't think the sales of $100k cars are exactly brisk.
Further, tier 1 rates are for a 740+ credit score, and even that is subject to Porsche Financial's discretion. Your 680 score gets you tier 3 at .00260 buy rate.
Lastly, I don't know where you are getting your discount figures, but personally I think it's ok for a retail business that treats a customer right to make a profit margin of a bit more than 1%. We are talking about a Porsche, people - not a 10 lb box of Cheerios bought from a crowded warehouse.
Oh, and sales of $100k cars are actually quite brisk:
http://www.usatoday.com/story/money/...ecord/1883581/
02-19-2013, 08:51 PM
#36
Rennlist Member
The marginal buyer for a Porsche is not the "cash in hand buy on a whim" buyer. The marginal buyer is the one either stretching his finances or is looking for/getting a great deal. So I would tend to believe the 12% number of the earlier poster at a time when European sales are not growing at the rate that Porsche had baked in its production numbers for the new 911, the Cayenne and the Boxster. Therefore, deals are there to be had. That is one reason they have inflated lease residuals and are advertising an $899/mo lease for the 991 for 24 months.
Porsche is not subsidizing it's residuals. The $899 is a result of a great 24 month residual value, a 5,000 mile per year lease, and a car with little to no options. The residuals are ALG's actual rates, and based on the past few years they have been pretty accurate.
02-19-2013, 08:54 PM
#37
Rennlist Member
There's risks on both ends. I can recall exchanging posts on a M3 forum in 2007, and I was told how stupid I was for paying cash for my car, rather than investing in the stock market. Who knows what people on forums do in reality, but investing a significant amount of money in the stock market in 2008 caused lots of investors heartburn. Back then it wouldn't be hard for $100K to become $60K in a relatively short period of time.
What does the market hold for investors in 2013? I don't claim any insights, but I do know that there are lots of risks with the US unable to get a handle on their debt, and with the PIGS in Europe hanging by a thread. So if I spend a $100K on a Porsche I own an outstanding car. If I invest in the stock market, maybe the $100K will grow to $120K in a couple of years or maybe it sinks to $80K.
What does the market hold for investors in 2013? I don't claim any insights, but I do know that there are lots of risks with the US unable to get a handle on their debt, and with the PIGS in Europe hanging by a thread. So if I spend a $100K on a Porsche I own an outstanding car. If I invest in the stock market, maybe the $100K will grow to $120K in a couple of years or maybe it sinks to $80K.
^Excatly. Leasing a car (assuming there are no factory subsidies built in) is paying a little more initially to carry much less risk.
