d_ess

Looking to purchase a used 991.2 from a dealer with a CPO - it has about 5k miles. The original MSRP was $113k and I negotiated it down to about $92,000 excluding taxes which are 6%. Assuming I take out a loan for $95,000 and do a PenFed Payment Saver loan, my final payment after 48 months will be about $52k.

Has anyone had any experience with the payment saver/balloon financing and a Porsche? I'm assuming that after 4 years this car will easily be worth $55k so if I sell it, I'd be OK. Am I missing anything? Sounds like a nobrainer to me...

Zcobra1

I used it for the Audi Q5 purchase. Worked for me, balloon payment at the end,
and interest rates similar to straight out purchase. The value of the car does not change
so if you do a regular loan or payment saver, no difference.

I am pretty sure that I had "gap" insurance with mine, since you are "underwater"
for the first year or so if you finance 100% and car gets totalled/stolen. Make sure
it includes gap.

9914s

^ gap insurance its included with a penfed loan.

Bents

I mean...you can do it, but I'd strongly consider whether this is a wise financial decision for you.

d_ess

Ok... Elaborate...

bogdan_p

Some potential downsides:

You're on the hook for the end of term payment. You don't have the option to bounce the car back to Porsche if the "market" tanks and your 911 is only worth 45k at the end of 4 years. It's your car.

The loan term could be as long as 9 years to pay off the car. The first 4 years of payment saver, and up to 5 years afterwards for the balance. PenFed will be happy to convert your balance into another loan, I'm sure.

There will be little to no equity in the car at the end of the term. This might not matter to you.

Brantley847

If you aren't concerned with equity as the last poster said it's not a huge issue. Only down side is not being able to kick it back to Porsche. However, I'm under the impression Porsche BMW and Mercedes do deferred loans ... most likely won't get the 2.5% you'll get from penfed though.

I plan on keeping my 991.2 or 992 (if I wait a year or two ) for 10+ years like my father before me did so I have little concern for equity. Their payment saver loan allows me to keep payments down and my chunk of cash in the stock market that's pulling 10-12% instead of dropping that cash on a down payment.

if anyone tells you it's a poor financial decision just remind them ANY car purchase is a poor financial investment...especially one that depreciates from 95-100 to 50 in 5 years

d_ess

Thanks. If I plan to sell in two years, you're saying that I would be upside down in equity? Wondering if PenFed gives some kind of amortization schedule. Keeping the monthly low and having the money work for me in alternative investments is why the payment saver sounds so attractive.

trucheli

If you are planning to keep the car for at least 8 to 10 years, payment saver is a good way to finance the car in this low interest rate environment. You can always refinance for another 4 to 5 years when the balloon comes due.

d_ess

Why is it not good if I only plan to keep it for two years?

Brantley847

Regardless if you defer or do conventional you are still getting hitting harder with depreciation the first two years compared to the next 3. Even with lightly used... granted your hit isn't as bad as new but that's the drawl back to a deferred or balloon loan is your payments aren't being distributed evenly to ensure lower payments for those 5 years.

trucheli

Because you get a better interest rate on a conventional loan than the balloon.

Brantley847

penfed generally offers 2.5-3 for the time frame he would want so it's not a bad idea versus most financial institutions having 4-5% for 72-84 month conventional loans.

Granted if someone were to hold on to the car and refi after 5 years you will get hit at a used car interest rate

Cayman7

i'm a big fan of the PenFed payment saver loan and have had several over the last 8-10 years, although none on a Porsche. Last fall I had a PM exchange with a Rennlist member asking about how they calculate their rates. I pasted-in that exchange below, which includes a link to a balloon calculator. He was comparing PenFed to a lease thru Porsche and the numbers to me were way more favorable with PenFed. I hope this helps. -Randy

I assume you have already had several loans with Penfed, any idea how they get that number for monthly payment in the example? Thanks.

Hi, well, not exactly. I can tell you years ago I found a balloon loan calculator online here :http://www.vertex42.com/ExcelTemplat...alculator.html. and used this to back into their numbers. If you enter the loan amount, interest rate and number of payments you can then play with the "amortization period" to approximate the monthly payment and final balloon payment due that PenFed provides to you. In the case of my last car purchased this way, it was a 4 yr loan and the "amortization period" needed to be set at 87 months to get the correct monthly payment and final balloon payment. Not exact, but very close. And this calculator gives you a full amortization schedule, which is nice to have. Note that for a 48 month loan you enter 47 in "number of regular payments". So there's some secret sauce here in terms of how they do this and not surprised they couldn't explain it to you. Keep in mind that PenFed is estimating the value of the car at the end of the loan period, just like a leasing company would do., so this is a major factor in how the monthly payment is figured. Since I'm sure they don't use something like 5K miles per year to do this (probably use 12k-15K/yr) if you drive those kind of miles the value of the car will probably exceed the the final amount due, which benefits you and not some leasing company. Good luck!

Here's the thread that discusses PenFed in some detail https://rennlist.com/forums/991/9388...-question.html

d_ess

This is excellent, thank you. Just played around with the numbers and it looks like the balance of the loan in two years should be around $72,000 and I should be able to flip it for that much if not more considering I'm in NYC and don't plan to put that many miles on it... Thanks again.