Money Factor going up?
12-22-2015, 09:29 PM
#16
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No one learned from the last recession that borrowing money or renting doesn't always work out well.
12-22-2015, 09:32 PM
#17
You probably read it a lot because that's how most automotive leases are calculated. It's an empirical fact, not so much an opinion. I'm not sure what point you're trying to make.
12-28-2015, 09:49 PM
#18
Three Wheelin'
The formula used by the entire industry is:
((Capital Cost minus Residual) divided by term of lease)) plus ((Cap cost plus residual) X (MF)) = Monthly payment.
So if the MF increases by .0002 and cap cost is 110k and residual is 76K with a 30 month lease, then the monthly payment increases by $37/mo. or $1,110 over the lease term of 30 months. Seems like .0002 is pretty insignificant, but its not.
BTW, anyone who leases should know this formula. Many dealers will quote the proper or current MF and then manipulate the outcome so that it is not correct. This is why the MF is never quoted in lease doc's. Don't let a dealer do this to you.
((Capital Cost minus Residual) divided by term of lease)) plus ((Cap cost plus residual) X (MF)) = Monthly payment.
So if the MF increases by .0002 and cap cost is 110k and residual is 76K with a 30 month lease, then the monthly payment increases by $37/mo. or $1,110 over the lease term of 30 months. Seems like .0002 is pretty insignificant, but its not.
BTW, anyone who leases should know this formula. Many dealers will quote the proper or current MF and then manipulate the outcome so that it is not correct. This is why the MF is never quoted in lease doc's. Don't let a dealer do this to you.
Now, at the end of the lease term, I will owe 15000 less than the residual of 45000
12-28-2015, 11:55 PM
#20
I assume Porsche does not offer Multiple Security Deposit to buy down the money factor like some other maker's financial service, otherwise, it can be a good tool to keep that MF down.
12-29-2015, 01:04 AM
#21
Three Wheelin'
You are definitely not wrong, but the thing is is that there are many variables that you need to consider and factor into whether or not a lease will make you money at then end of the day. Many simply look to "is A > B" and this does not even come close to giving you the big picture - I suppose there is a reason Economics is called "The Dismal Science" (and in concert with "Statistics are Lies and Damned Lies", makes it very hard to to see the forest through the trees)!
12-29-2015, 01:22 AM
#22
Well, totally agree when the recession is a Black Swan but, by definition, not every recession is a Black Swan. I may be off base in assuming that most people have no concept of the Future Value of Money, Opportunity Cost and Discount Rates but these all factor into whether or not a Lease ends up being a good idea. I bought a 2008 C2S (2/08) and made money (could have made more) in 2011 when I sold it and my 2012 GTS I can still turn a profit on if I decided to sell it tomorrow.
You are definitely not wrong, but the thing is is that there are many variables that you need to consider and factor into whether or not a lease will make you money at then end of the day. Many simply look to "is A > B" and this does not even come close to giving you the big picture - I suppose there is a reason Economics is called "The Dismal Science" (and in concert with "Statistics are Lies and Damned Lies", makes it very hard to to see the forest through the trees)!
You are definitely not wrong, but the thing is is that there are many variables that you need to consider and factor into whether or not a lease will make you money at then end of the day. Many simply look to "is A > B" and this does not even come close to giving you the big picture - I suppose there is a reason Economics is called "The Dismal Science" (and in concert with "Statistics are Lies and Damned Lies", makes it very hard to to see the forest through the trees)!
If you can write off a lease payment most folks in the market for a Porsche are in the income bracket where the math becomes pretty easy.
12-29-2015, 01:24 AM
#23
thanks for the info. I guess I should have researched before leasing again, but they treated me right the first time, and I also bought a 991 the same day I leased the Cayenne. Just realized they gave me a money factor of about .0032. Called my credit union and am buying out the lease. I have only made 6 payments on it, but I am able to finance at 2.1 for 54 months with the same payment, and completely pay it off.
Now, at the end of the lease term, I will owe 15000 less than the residual of 45000
Now, at the end of the lease term, I will owe 15000 less than the residual of 45000