Riad

There are at least 2 or 3 threads on the 996 board with this question as well.

james4513

I agree that this is totally the purchase of a toy - I have one and think it's great toy. So, you should be able to pay cash.

If you argued that you should finance whatever a "regular" car would cost and pay cash for the rest, you could convince me. If you have to finance the whole deal, don't do it.

Riad

Unless I could make a hell of a lot more money than the interest on the loan. Why pay up $110,000 in cash, when I can have that money working for me, thus making the car much cheaper than it actually is.

So, if you put down $30,000 and you finance $80,000 over 5 years at say 6% interest all you need to do is make more than 6% over 5 years... with $80,000 you can practically do that with a CD, but certainly a hell of a lot more in real estate.

LuisGT3

Thank you for bringing us back to 2006 Riad. There is absolutely nothing wrong with financing.

Cogito

I think there may be two "rules" here which I qualified for:
1.) if you can pay cash for your P-car, and
2.) if you own another car for the "just in case" events/days which I've had two of in 6 months.

rbennett

Rule of thumb tought to me was,

If it depriciates, put enough down to not get upside down in the deal and finance as long as possible with a fixed rate, and save your money and invest in things that appriciate with time.

Has never failed me yet

1999Porsche911

You would have to make alot more than 6% to just rbeak even. With the alternate minimum take kicking in, you would lose the deductability of the loan but pay maximum tax on the interest earned. You would have to earn more than 9% interest to break even.

NOBLEGT3

considering 90% of high end cars are leased we either have the most dishonest people, the most insecure people or the most wealthy people in the world on this board. a friend of mine who heads a 12 billion dollar company leases his cars. he says why give my cash to someone else when i can use theirs.

boolala

I think that many high end cars are leased because of the favorable tax benefits not because the owner cannot afford to pay cash. Big difference. Take away those tax benefits (me e.g.) and it makes more sense to pay cash.

S4to911

Interest rates on car loans are approaching 7-8% as are home equity lines of credit.

Assuming the federal tax bracket of most of the people anticipating a Porsche purchase is 35% with a mean state income tax rate of 4% (39% total), you would have to earn 11-12% yearly on the $110,000 investment to break even.

If you can get 11-12% mean over a 4 year period in the current environment, brother, go for it. The only consistent way to do this with reasonable risk is all equity markets with a decent amount of international exposure. Real estate at this point in the cycle? I'm not sure. Hot pre-IPO? Man, if only I were so lucky.

I had the cash and the net worth to buy my 911 outright. Since it was such a big check for such a frivolous purchase (or so I thought at the time), I paid for about 60% of it out of a HELOC at about 5% (at the time). I pondered this decision for about 2 months, then just paid off the HELOC.

Rational? Who knows? But I do sleep better at night...

mooty

stop trying to figure out how much return you gonna get from your investment in order to balance out loan/lease pmt or h ow much opportunity cost you lose if you dump cash on cars. this is an irrational hobby. if we REALLY used our brains, none of us would be driving porsches. i have tried to justify why i dump money out the window every year. i finally gave up. just do it.

S4to911

I agree. Many people purchase their high end vehicles through a corporation or LLC and then lease back the car from the corporation.

With the "inclusion amount" and limits on the deductibilty of leases of luxury vehicles, the tax benefits are there, but on high end vehicles this can be close to a purchase and then depreciation.

gravedgr

Anyone paying more than 5.5% on a car loan probably needs to turn all their financial decisions over to someone else.

I'm not sure which is worse - 1) having to ask someone else to give you permission to buy a car (lets face it, when you ask "what do I need to do this?" you're really asking people to tell you what you want to do is "okay"), or 2) having to listen to people who think that because they have wealth, everyone else who wants similar "toys" should have similar financial status.

I can't pay cash for my 911. Well, not unless I cash out some retirement investments. Does that mean I shouldn't buy/finance a new 07 997 C2S? Of course not - I should buy whatever makes me happy so long as I am comfortable with the financial ramifications.

Anyone who disagrees is an elitest snob.

MMD

Here's another way to look at it.

If you got a repair bill for us$4500, would you freak out because you'd have difficulty loosening up the cash? If so, don't own a P-car.

robbonds

or always have a warranty!