Spec a 992 with resale value in mind
02-07-2021, 10:53 PM
#31
RL Community Team
Rennlist Member
Rennlist Member
Lots of people don’t really understand that the residual at the end of a lease - which in the case of 911s is purposely set low - is simply the outstanding amount owed to Porsche. If one just gives back the car at lease end, then yes, it’s a pretty expensive way to have a Porsche in the garage. At any time prior to lease end though you can sell the car for its market value, which in the case of a 911 could be tens of thousands more than what’s owing on the lease. You pay out Porsche (dealers facilitate early buyouts of leases all the time, and don’t care where the money comes from), and pocket the difference. Alternatively, you can buy out the vehicle at lease end and sell it yourself privately, again pocketing the difference between the residual/buyout and market value. With my last 911 I sold it privately a couple of months before lease end, and the dealer cut me a cheque for about $38,000, which was the difference between the residual and what I sold it for.
Of course with a 911 purchase you can sell whenever you want and pay off the loan, but a lease has some built-in safeguards that an outright buy or a term loan don’t, the most important being that in the event of a serious accident where the diminished value (even if the car is properly repaired at a Porsche Certified body shop) is less than the residual, you can (and should) just give the car back and it becomes Porsche’s problem, not yours. In Canada at least, I also have an inexpensive insurance rider that gives me original replacement value for the entire term of the lease in the event of a total write off. With this rider in place, I have no problem putting a substantial down payment of my leased cars as - unlike many people believe - I won’t lose the DP in a write off scenario.
Yes, the MF on a lease is typically higher than a loan (the difference in Canada and some other countries isn’t nearly as large as in the U.S) but you’re only paying down the principal on a portion of the value of the car, so “costs” on a cash-flow basis are substantially lower, and you still retain all the upside in the equity of the car...assuming you’re not foolish enough to give it back to Porsche at lease end.
Leasing and selling privately don’t work for everyone, but it’s an alternative way to drive a 911 at a substantially lower overall costs - and reduced monthly costs if the alternative is financing - than many people think. The wrinkle is you have to sell the car privately at or near lease end rather than trade it or give it back. Or you can just buy it out at the ridiculously low residual value and keep it if you want. I did this with a Cayman S, then drove it another 3 years and still sold it (as I recall) for $16k or maybe $18k more than the residual buyout.
Of course with a 911 purchase you can sell whenever you want and pay off the loan, but a lease has some built-in safeguards that an outright buy or a term loan don’t, the most important being that in the event of a serious accident where the diminished value (even if the car is properly repaired at a Porsche Certified body shop) is less than the residual, you can (and should) just give the car back and it becomes Porsche’s problem, not yours. In Canada at least, I also have an inexpensive insurance rider that gives me original replacement value for the entire term of the lease in the event of a total write off. With this rider in place, I have no problem putting a substantial down payment of my leased cars as - unlike many people believe - I won’t lose the DP in a write off scenario.
Yes, the MF on a lease is typically higher than a loan (the difference in Canada and some other countries isn’t nearly as large as in the U.S) but you’re only paying down the principal on a portion of the value of the car, so “costs” on a cash-flow basis are substantially lower, and you still retain all the upside in the equity of the car...assuming you’re not foolish enough to give it back to Porsche at lease end.
Leasing and selling privately don’t work for everyone, but it’s an alternative way to drive a 911 at a substantially lower overall costs - and reduced monthly costs if the alternative is financing - than many people think. The wrinkle is you have to sell the car privately at or near lease end rather than trade it or give it back. Or you can just buy it out at the ridiculously low residual value and keep it if you want. I did this with a Cayman S, then drove it another 3 years and still sold it (as I recall) for $16k or maybe $18k more than the residual buyout.
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r2thek (10-31-2021)
02-07-2021, 11:22 PM
#32
Rennlist Member
That would probably be the route I'd go if I lived in the U.S., but interest rates for car loans (outside of the subsidized deals at BMW, Mercedes, etc.) in Canada are more than double what they are there. Even a Private Banking LOC at prime isn't as cheap as some of the loan deals south of the 49th.
Last edited by gcurnew; 02-07-2021 at 11:32 PM.
02-08-2021, 04:44 AM
#33
I think there is a market for the aerokit, but it is not as broad as the typical 911 lines. When I was a kid I thought 911s with the whale tail was just about the coolest thing. I don't think the aerokit is that sought after, and currently there are delays on it, so any allocation order with it will take months longer.
EDIT: I will also add that I don't like the aerokit for these reasons too.
1. It adds the sport design package - which means the front which looks nice is more scrape prone, but worse, the fins in the front that open and close for airflow in the cold are removed.
2. The rear sport design package put the license plate up in the bumper which I personally don't care for and if you look at them side by side I think the rear looks better without the sport design package. The front looks good both ways, but you lose the fins.
3. The rear wing is not only fixed. I happen to like the speed driven wings on 911, but the wing is angled down and while that I'm sure has a performance aspect to it, I think it looks off in how it is angled.
So maybe I just don't like it and it is a preference thing.
EDIT: I will also add that I don't like the aerokit for these reasons too.
1. It adds the sport design package - which means the front which looks nice is more scrape prone, but worse, the fins in the front that open and close for airflow in the cold are removed.
2. The rear sport design package put the license plate up in the bumper which I personally don't care for and if you look at them side by side I think the rear looks better without the sport design package. The front looks good both ways, but you lose the fins.
3. The rear wing is not only fixed. I happen to like the speed driven wings on 911, but the wing is angled down and while that I'm sure has a performance aspect to it, I think it looks off in how it is angled.
So maybe I just don't like it and it is a preference thing.
02-08-2021, 12:38 PM
#34
Lots of people don’t really understand that the residual at the end of a lease - which in the case of 911s is purposely set low - is simply the outstanding amount owed to Porsche. If one just gives back the car at lease end, then yes, it’s a pretty expensive way to have a Porsche in the garage. At any time prior to lease end though you can sell the car for its market value, which in the case of a 911 could be tens of thousands more than what’s owing on the lease. You pay out Porsche (dealers facilitate early buyouts of leases all the time, and don’t care where the money comes from), and pocket the difference. Alternatively, you can buy out the vehicle at lease end and sell it yourself privately, again pocketing the difference between the residual/buyout and market value. With my last 911 I sold it privately a couple of months before lease end, and the dealer cut me a cheque for about $38,000, which was the difference between the residual and what I sold it for.
Of course with a 911 purchase you can sell whenever you want and pay off the loan, but a lease has some built-in safeguards that an outright buy or a term loan don’t, the most important being that in the event of a serious accident where the diminished value (even if the car is properly repaired at a Porsche Certified body shop) is less than the residual, you can (and should) just give the car back and it becomes Porsche’s problem, not yours. In Canada at least, I also have an inexpensive insurance rider that gives me original replacement value for the entire term of the lease in the event of a total write off. With this rider in place, I have no problem putting a substantial down payment of my leased cars as - unlike many people believe - I won’t lose the DP in a write off scenario.
Yes, the MF on a lease is typically higher than a loan (the difference in Canada and some other countries isn’t nearly as large as in the U.S) but you’re only paying down the principal on a portion of the value of the car, so “costs” on a cash-flow basis are substantially lower, and you still retain all the upside in the equity of the car...assuming you’re not foolish enough to give it back to Porsche at lease end.
Leasing and selling privately don’t work for everyone, but it’s an alternative way to drive a 911 at a substantially lower overall costs - and reduced monthly costs if the alternative is financing - than many people think. The wrinkle is you have to sell the car privately at or near lease end rather than trade it or give it back. Or you can just buy it out at the ridiculously low residual value and keep it if you want. I did this with a Cayman S, then drove it another 3 years and still sold it (as I recall) for $16k or maybe $18k more than the residual buyout.
Of course with a 911 purchase you can sell whenever you want and pay off the loan, but a lease has some built-in safeguards that an outright buy or a term loan don’t, the most important being that in the event of a serious accident where the diminished value (even if the car is properly repaired at a Porsche Certified body shop) is less than the residual, you can (and should) just give the car back and it becomes Porsche’s problem, not yours. In Canada at least, I also have an inexpensive insurance rider that gives me original replacement value for the entire term of the lease in the event of a total write off. With this rider in place, I have no problem putting a substantial down payment of my leased cars as - unlike many people believe - I won’t lose the DP in a write off scenario.
Yes, the MF on a lease is typically higher than a loan (the difference in Canada and some other countries isn’t nearly as large as in the U.S) but you’re only paying down the principal on a portion of the value of the car, so “costs” on a cash-flow basis are substantially lower, and you still retain all the upside in the equity of the car...assuming you’re not foolish enough to give it back to Porsche at lease end.
Leasing and selling privately don’t work for everyone, but it’s an alternative way to drive a 911 at a substantially lower overall costs - and reduced monthly costs if the alternative is financing - than many people think. The wrinkle is you have to sell the car privately at or near lease end rather than trade it or give it back. Or you can just buy it out at the ridiculously low residual value and keep it if you want. I did this with a Cayman S, then drove it another 3 years and still sold it (as I recall) for $16k or maybe $18k more than the residual buyout.
- Depending on which state you are in, you only have to pay sales tax on the part of the car that you lease. In California and Arizona, the 2 states I've lived in, we are only required to pay sales tax in each lease payment. So if you start your lease and your car gets totaled in 1 month, you pay only 1 month of sales tax). Also, at lease end, if you don't want to keep the car and just turn the car back into the dealer, you've effectively escaped having to pay sales tax on the lease residual. So if the residual is 55%, you've only paid sales tax on 45% of the car. This is very advantageous for people (like many on this board) who upgrade their cars every couple of years. On a $150K porsche at 8% sales tax, we're talking about $12K. Some other states allow you to claw back some of the sales tax when you sell the car, but some have restrictions requiring you to sell it back to a dealer to recoup your sales tax. Bottom line is, for the 2 states I've lived in, leasing provides a significant sales tax advantage over buying.
- Lease contracts have gap insurance. So, the smart thing to do is always do a zero dollar down lease. When you drive the car off the lot, many times, the car will immediately depreciate 10% or even more. With gap insurance, if your car gets totaled within the first few months or the first year, you simply walk away from the lease because the gap insurance covers the shortfall between the market value of the car and the amount of the lease residual. If you buy the car and finance part of the purchase, your insurance company will only pay you the actual cash value of the car, not the lease residual, so some people may find themselves upside down on the payoff. Even if you are not upside down on the payoff, that typically just means you've put a large amount as a downpayment so you are still out of pocket a huge chunk of your downpayment if your car is totalled in the first year or two because of the steep initial depreciation curve. On a lease, you are not out of pocket any money at all thanks to the gap insurance.
- I see leasing as sort of a long term test drive for the car. Over the course of the 3 yr lease, I can get a very good sense of whether I want the car or not, whether it's a lemon, whether I get bored of it, etc. If for whatever reason I don't want the car at 3 yrs or even earlier, I can just turn the car in at 3 yrs or sell the car earlier if I'm bored with it. I paid cash for the last 2 cars I had before I started leasing. In both instances, I got bored of both cars within 1.5 - 2 yrs so I took a bath when I traded those cars in because I had eaten the whole sales tax for those cars but only got 1.5-2 yrs of use on those cars. When I sold or traded those cars in, I recouped zero of the sales tax.
- As for selling a leased car privately, I've done this 2x through carmax. I was in and out of there in less than an hour. It was super easy. While they may not give you top dollar for your car, they almost always beat dealer trade in offers by a large margin and it saves the hassle of selling the car yourself. I did this at 1.5 years into a 3 year lease on one of my BMWs and, because mileage was low, the market value of the car was such that I had about $1K in equity in that car so Carmax cut me a $1000 check after they paid off the amount due to BMW financial svcs.
- If you're in California, and you want to sell your leased car to a private party like a friend or someone else, you can pay off the lease residual and NOT pay sales tax on the lease residual as long as you sell/transfer the car to the buyer in 10 days.
- The interest rate argument is valid. There is no doubt lease interest rates may be higher than purchase interest rates, but not by much. My credit union is at 1.99% on car loans right now for all durations. My last lease was at 2.99% interest rate. I haven't checked out the money factors (interest rates) lately but given how cheap money is nowadays, I'm sure lease interest rates are likely also very low. When you factor in how much money you save in sales tax on a lease, the interest rate argument isn't a very compelling reason to buy with a loan over lease.
- Leasing ties up less of your money and lowers your debt to income ratio since only the lease residual counts as your debt obligations vs. if you bought a car with a 20% downpayment, 80% of the car price would show up as your debt obligation. You can obviously buy this down with a 50% downpayment... but you'd be out of pocket $75K on a $150K car so you'd have $75K less cash assets. OTOH, if I did a zero dollar downpayment lease, and the lease residual is 50%, $75K would show up as my debts owed but I would still have $75K more cash on the assets side of my balance sheet because I put zero dollars down. Yes, I know there are a couple thousand dollars in interest and lease set up fees, etc., but I've left that off to make the numbers easier in this example.
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02-08-2021, 04:17 PM
#35
Honestly, I always consider resale value when I am getting a new car. I certainly don't obsess about it, but I do think about it. There will always be depreciation, but I like to keep that as low as possible.
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Cartod (02-13-2023)
02-08-2021, 06:43 PM
#36
Burning Brakes
The interest rate argument is valid. There is no doubt lease interest rates may be higher than purchase interest rates, but not by much. My credit union is at 1.99% on car loans right now for all durations. My last lease was at 2.99% interest rate. I haven't checked out the money factors (interest rates) lately but given how cheap money is nowadays, I'm sure lease interest rates are likely also very low. When you factor in how much money you save in sales tax on a lease, the interest rate argument isn't a very compelling reason to buy with a loan over lease.
02-08-2021, 07:04 PM
#37
¯\_(ツ)_/¯
I still don't get why you'd spec a car for the next guy (or gal). Is the car too expensive for you ? Why not buy off the lot ? Much easier to negotiate a discount, instant gratification instead of waiting for build times, and the dealer is a professional at spec'ing for resale value.
I still don't get why you'd spec a car for the next guy (or gal). Is the car too expensive for you ? Why not buy off the lot ? Much easier to negotiate a discount, instant gratification instead of waiting for build times, and the dealer is a professional at spec'ing for resale value.
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997usa (02-09-2021)
02-09-2021, 10:21 AM
#38
Three Wheelin'
Look at my car and then do the opposite :-)
02-09-2021, 12:10 PM
#39
I have never, or ever will, spec a car for the next person.....if I want the items then that's how it is. Why would you not spec something if you wanted it, just because you loose a few quid later down the line? You may always regret it.
I have spec'd and bought many new cars, with only one from the dealer forecourt which was a bit of a mistake because I always regretted it not having the interior exactly how I wanted it.
If you can afford the car and are prepared to wait for it then a few quid extra on things you really want make it rather special in my opinion.
I have spec'd and bought many new cars, with only one from the dealer forecourt which was a bit of a mistake because I always regretted it not having the interior exactly how I wanted it.
If you can afford the car and are prepared to wait for it then a few quid extra on things you really want make it rather special in my opinion.
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ggreg911 (02-10-2021)
02-09-2021, 04:50 PM
#40
I agree to not spec for the next person but that wasn't the question... so here we go, on a 911 you want to grab buyers that care, and that means a couple of things:
Color: black/silver/white obviously the safe bets
Wheels: anything other than the standard wheels and I would not order black. Little nicks/dings that come with use will look worse on black and hurt resale
Interior:
-I believe you need a full leather option. I think black with crayon stitching is the cheapest safe bet. People don't want to pay top dollar for a car without leather on the dash
- You better have a visible sport chrono in your pics... buyers will care about this
- You need bose stereo
- I'd add ventilated seats here... but could maybe be convinced otherwise.
- Headrest Crest.
- beyond that if just for resale I wouldn't order another add on for the interior
Performance:
- Sport exhaust
- already talked about sport chrono
- I'd add nothing else...
You there have a car that checks the box for looking nice/luxurious and based on external appearance having all the performance you need
Again, for me I'd add other stuff that makes the car feel special, but this would be the ideal resell spec from what I've seen over the years.
Color: black/silver/white obviously the safe bets
Wheels: anything other than the standard wheels and I would not order black. Little nicks/dings that come with use will look worse on black and hurt resale
Interior:
-I believe you need a full leather option. I think black with crayon stitching is the cheapest safe bet. People don't want to pay top dollar for a car without leather on the dash
- You better have a visible sport chrono in your pics... buyers will care about this
- You need bose stereo
- I'd add ventilated seats here... but could maybe be convinced otherwise.
- Headrest Crest.
- beyond that if just for resale I wouldn't order another add on for the interior
Performance:
- Sport exhaust
- already talked about sport chrono
- I'd add nothing else...
You there have a car that checks the box for looking nice/luxurious and based on external appearance having all the performance you need
Again, for me I'd add other stuff that makes the car feel special, but this would be the ideal resell spec from what I've seen over the years.
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r2thek (10-31-2021)
02-11-2021, 12:06 AM
#42
Instructor
I agree to not spec for the next person but that wasn't the question... so here we go, on a 911 you want to grab buyers that care, and that means a couple of things:
Color: black/silver/white obviously the safe bets
Wheels: anything other than the standard wheels and I would not order black. Little nicks/dings that come with use will look worse on black and hurt resale
Interior:
-I believe you need a full leather option. I think black with crayon stitching is the cheapest safe bet. People don't want to pay top dollar for a car without leather on the dash
- You better have a visible sport chrono in your pics... buyers will care about this
- You need bose stereo
- I'd add ventilated seats here... but could maybe be convinced otherwise.
- Headrest Crest.
- beyond that if just for resale I wouldn't order another add on for the interior
Performance:
- Sport exhaust
- already talked about sport chrono
- I'd add nothing else...
You there have a car that checks the box for looking nice/luxurious and based on external appearance having all the performance you need Again, for me I'd add other stuff that makes the car feel special, but this would be the ideal resell spec from what I've seen over the years.
Color: black/silver/white obviously the safe bets
Wheels: anything other than the standard wheels and I would not order black. Little nicks/dings that come with use will look worse on black and hurt resale
Interior:
-I believe you need a full leather option. I think black with crayon stitching is the cheapest safe bet. People don't want to pay top dollar for a car without leather on the dash
- You better have a visible sport chrono in your pics... buyers will care about this
- You need bose stereo
- I'd add ventilated seats here... but could maybe be convinced otherwise.
- Headrest Crest.
- beyond that if just for resale I wouldn't order another add on for the interior
Performance:
- Sport exhaust
- already talked about sport chrono
- I'd add nothing else...
You there have a car that checks the box for looking nice/luxurious and based on external appearance having all the performance you need
Again, for me I'd add other stuff that makes the car feel special, but this would be the ideal resell spec from what I've seen over the years.
02-11-2021, 01:34 PM
#43
Would you apply the same thinking to a base C2? I'm asking because it's easy to push the options over $20K with the ones you provided and I'm finalizing my build now. Like you could build a C2 with full leather, black out the rear end, add 20in wheels and Bose and skip the PSE and sport Chrono?
you WILL 100% without a doubt lose money on this car. Maximizing for resale will maybe get you $2-5k less of a hit. Not saying you should go crazy and order things like leather fuse box and owners manual where you'll recoup 0%, but make sure you check the boxes that will make you enjoy.
02-11-2021, 02:52 PM
#45
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Would you apply the same thinking to a base C2? I'm asking because it's easy to push the options over $20K with the ones you provided and I'm finalizing my build now. Like you could build a C2 with full leather, black out the rear end, add 20in wheels and Bose and skip the PSE and sport Chrono?
For resale you better have a sunroof and at least 14 way seats.