I've never leased.

Will take delivery on 2005 GT3 Guards Red this week. Price $105

Option #1: Lease car for 30 - 36 months. Resiual value about 60 - 62%. Total payments come to around $65K for the 3 years. (Residual value about $62K).

I thought this would be best because my intention is to BUY the 997 GT3 when/if it comes out.

Option #2: Buy outright.

Any words of wisdom?

Thanks, Tom

 

Buy it. There is no way that your GT3 will be worth only $62K in 3 years. Damn, if you like that deal, I'll lease it to you.

 

We need to know the money factor, but at first blush the one you're using seems high.

If you keep the car a long time then buy it, but if you only intend to keep it a short time lease it and avoid the "sales tax" hit, assuming it applies in your state.

Leasing can be attractive from a non-financing (but financial)perspective if you ever get in an accident. Financially you could be better off with the lease because most of the risk of "reduced value" should lie with the leasing Company.

 

In a typical closed-end (as opposed to an open-end) lease, all "reduced value" accident risk is borne by the leasing company.

 

betting against the banks is a dangerous game. They are usually pretty spot on with their residuals.

a lot depends on what you will do with the extra money. we generally lease our cars because we can generate a very higher return on the cash saved. if cash flow is not important to you/your business then purchasing may be a better deal for you. There really is no right answer.

 

Doesn't the gap insurance on an open ended lease cover you for any difference in value as well? I think it's readily available.

 

Colm: I believe the gap insurance (if obtained with the open-end lease) is only relevant in the case of the "total" loss scenario, i.e., the insurance payoff is less than is owed on the lease. In all other scenarios with a open-end lease, where the car is kept to term, the residual is not guaranteed. If the lease company determines the car's market value (e.g., due to a major accident/repaint) at lease end is less than the stated residual, the lessee is liable for the difference if he wishes to just turn the car in. Of course, the lessee can always buy the car for the stated residual value and own a car with a "history."

 

 

Agreed. 99% of the time they are right on; the GT3 is the 1% where they are very low (by at least $10,000 IMHO). BTW I purchase everything, and for business usually get 100% financing, including the sales tax. I have never seen a lease, including any tax incentives, that can do better than that.

 

Thanks Jack, you've clarifed my thinking, as I was thinking, solely, of the total loss scenario.

 

Once in a while the factory will lease below co$ts to keep moving product! Not often on top of the line 911 Porsche's but there have been some good deals on other brands and models!

Ahh, the FALCONS didn't lose last week, Larry !!!

At least some birds still FLY !!!

 

I leased my 04 GT3 and the car was in an accident. The total bill came to about $34,000. If I was to have financed the car and I have to sell the car at any point, then I am hurting! However, because of the gap insurance, at the end of the lease, I owe nothing but the last payment. I suspect because of the reduction in value of the car, the $127,000 car dropped to maybe $70,000, if that. Leasing does have its benefits. If you are going to finance the entire amount of the car, then leasing may be the right option.

 

In my opinion leasing is never advantageous unless you are a business and you can deduct the interest. Otherwise, the money you make from the cash not tied in the car will have to return the lease interests including capital gain. So if your lease is like 8% interest, you really need to make 12% to break even. If you can do that in a reliable way, that's awesome but rare.

I understand you can save on taxes by leasing, but every time I spent hours focusing on lease versus buy scenarios, I realized that the tax savings is quickly offseted by interest payments.

My humble opinion is that leases have been invented by Banks and car companies to allow consumers to buy a car they cannot afford. The only time it is better to lease (unless you can deduct interest costs) is if you crash your car. But this is hard to predict!

Just spend an hour with Excel. Define a scenario with reasonable numbers for how long you'll keep the car and how much the car will be worth when you want change cars. Run it counting all numbers, taxes, fees.

AW

 

GT -- Your situation is a perfect example of one of the practical advantages of leasing, assuming you have a closed-end lease. However, it's not due to the "gap insurance" provision in your lease, since your car was not deemed a total loss. Your residual is guaranteed at the lease end -- your only obligation is to return the car with normal wear and tear (and w/in the mileage cap) to avoid any extra payments. As long as you had the car repaired to "customary industry standards", the lease company can't ding you for any "diminished value" due to accidents. It's the leasing company's problem, if any, to deal with the subsequent sale of the auto and any impact that the accident(s) may have on its value. In most situations, the leasing company just sells the car to a wholesaler anyway.

 

Jack,

Remember you helped through this exact situation (thanks again), had I leased I would have avoided 4 months of hassle.

Arnaud,

I know what the numbers say, and on that point you are almost completely right (rapid high inflation being the exception) but the older I get the more I realize that sometimes there's more to it than numbers. And when you hear my Cayenne collision experience I'm sure you'll agree.