Just got a call from my sales guy that due to the Fed moving up rates, the MF is going up as well.
Anyone know anything or is this BS?
I have to get my numbers down as the car is coming in a few days to dealer.

 

Cost of credit card and auto loans/leases are the first to rise when Fed rates rise. Therefore, I'm inclined to believe that the salesperson's info may be valid.

 

The rates are good until Jan 4th. They might be going up, but nobody really knows until Porsche releases them. Dealers will repeatedly claim ignorance about what the rates will be in the future when a customer speculates they might go down. Its only reasonable that they should be equally ignorant to rate movement in the other direction. Its pure speculation either way.

 

Wondering what the money factor will be in March when I hopefully get my 991.2. First car I am planning on leasing.

 

Model it out.. if I recall, its a couple hundred dollars if it goes up from .002 to .0022, for example. Not particularly significant in the scheme of things.

 

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.

 

Contextually, I would argue that 1K is insignificant if its Porsche Financial that's raising the base rate. Would someone in the market for a Porsche wait until the fed lowers interest rates (which could a whole economic cycle) just because they can't swing the extra 1k spread out over the cost of a lease? Doesn't seem logical.

But true, if the dealer is baking in the extra 1k due to manipulation of the money factor, you can and should push back. Personally, I WOULD walk away from a deal if I felt like the dealer was being duplicitous with the money factor. Not because the money itself matters; it's the principle.

 

Agreed, it is not significant. I was simply pointing out that MF fractional increases equate to real $$$$. We fight so hard for our MSRP discounts and they can evaporate very quickly when we are overcharged on the MF due to unsavory math.

 

Do Porsche leases normally have any gap insurance or is that something I need to do with my insurance company?

 

According to this, yes:

http://www.porsche.com/usa/accessori...referredlease/

But from everything I have read to date, it will not protect your down payment (if you make one).

 

Thanks!

 

I don't get this.

Please explain how the cost of a $100K+ car is going to be affected by a simple 25 basis interest rate increase? That is $250 for every $100,000 (1%=-100 basis points is $1000).

I pay cash, and it seems to work out to about $1000 per month to own a new 991. It's the depreciation (and Porsche service) and not the interest rate that is the real cost of ownership.

I am not complaining.

 

The increase in MF or interest means nothing if you pay cash. You will be subject to market depreciation only. However, if interest rates rise to very high levels, the price buyers are willing to pay for a new or pre-owned cars will create downward pressure on price.

 

I think that there is a good probability that this economy will be back in a recession by the end of 2016. That would lower interest rates.

I would highly disagree with any high levels of interest rates in 2016.

 

It effects the total cost of the lease. Lease payment include charges for depreciation AND for holding the car in your possession (rent charge). Different paradigm entirely.