RonCT

My 997S is here and I need to make a quick decision on how to satisfy the dealer and take home the car. I've run the financial scenarios and amazingly, they are all pretty much equivalent in terms of a net-net-net to drive the car 3 years. I ran buying it outright and the lost opportunity cost of handing over my money. I ran 3 year leases both standard and one time payment up front.

One thing that is concerning me is the projected value at the end of the 3 years whether I lease or own. Residual is about $50,000 and I can't find market information that supports a 3-year "last model" 911 supports that sort of value. I didn't bother to check listings because that's just what's on the market. So I looked at completed auctions at eBay for 3 year old 911 product and was hugely disappointed. The vast majority of auctions ended without meeting the reserve and the bids were very low. My gut thought instead of $50k it might be worth $30k.

In a lease I could walk away and lease / buy a 2010 998 if I liked the new model better - or I could keep the 997 if purchased or buy it CPO at lease turn-in. Having all scenarios pretty much equal, it feels like a no-lose situation to lease for 3 years and have the option to bail and if not, then CPO. The wild cards are actual market value in 3 years and investment yield (ie: Keep my money in the bank).

Just curious if you have any thoughts...

Moderato

If you think that there's a good possibility that you might sell it in 3 - 4 years I think you'd be better off leasing. If you think you will keep it long term 8 years or so then you should definitely buy. If you buy it and decide in 3 years you will want to sell it, I'm sure you'll lose more money then on the lease. Anyway you look at it, it's an expensive depreciating asset. But you only live once and if it makes you happy it's worth it. I'm thinking about picking up a 998 in 5 years or so, depending on when the sweet spot is for the resale on my 06 M3 & 06 STI. That's why I bought both of those cars though, so that I wouldn't be rushed or forced into a decision. If you lease you're pretty much forced to get something different or buy the car out in the end. It's a tough decision....if money's not an issue just lease. If this purchase is a stretch then maybe buy and just plan on keeping long term no matter what comes out. The 997 is a very nice car and always will be regardless of the 998. The only thing just as good as owing a 997 is having both an M3 & STI for the same price, but sometimes I think I should've just went for the 997. I guess my point is, that no matter what you do you'll always eventually wonder.."should I have done this, or that instead?" Like you said a lot depends on what you do with the money you would use as a downpayment on a purchase if instead you keep that and lease. The stock market is at a crossroads right now, will it go up or down here? Hard to say right now. So I guess I think you should decide based on how long you think you will keep the car, and how many miles you think you will drive it. So much to consider, good luck.

1999Porsche911

Depends on what your missed opportunity would be for your unused funds versus the interest rate you will pay for the borrowed money. Personally, I would never finance a depreciating asset. By paying cash, you are at least guaranteed a return of the lease rate on your money.

Chris from Cali

If you have the cash to buy it outright, do so. If not, then I use the following criteria to decide for me:

Do I plan on keeping it forever? Yes - then finance. No - then lease.

Also, if you are even THINKING of moving to a 998, etc., then most definitely lease it. You might even get a discount when you move into the next Porsche as a dealer appreciation move. They did that with the Cayman S I considered.

Good luck, Ron!

Likemystoppie?

+1 ^^^^^ to what Chris is saying. Also, if you have a business, it's best to lease it, and run it through the business, take the tax write off.

RonCT

It's between paying cash and leasing. The investment factor I've been assuming is an easy to obtain 5%. If I do better, then keeping my money could make leasing much better. It's not so much about the cost-benefit of lease vs. buy, I suppose it's more the unknown of what the 998 will bring and whether I want to be tied to a 997. With a lease, I still can buy it at the end and not "lose" much overall. So if the 998 comes out and it's a computer driven non-enthusiast car, I might opt to keep what I have and CPO it, which is not a bad option. Being able to bounce this around with you guys has me thinking that a 3 year nothing down lease is the safest way to go. Turn it in or buy it in 3 years...

Thanks!

Likemystoppie?

Another option is leasing it through a bank with a much more realistic residual value, sometimes we us U.S. Bank ; though the payment is a little higher, the 'buy out' is almost dead on what the car will be worth- to purchase it if you wish. just another thought.

ELUSIVE

Lease it.
Your money invested properly will most likely yeild a higher return than the interest rate you're paying on the lease. This will give you the most options of getting rid of the car in a shorter period of time.

The B

Lease it, you can drop it if you wish. And in the event you love the car and want to keep it forever it may not be worth the residual value to you...my residual is 50k on my 3 year lease. However, after what has happend to and with my car in the first 3 years, I am more inclined to shop for a gently used 997S with no issues than buy out my particular car.

Alan Smithee

Ron, am I understanding you correctly that you think a 997S will be worth $30k after three years? That would mean 2005 cars should be changing hands in the low $40s right now...which they certainly are not.

A car in good shape should bring well above the $50k residual after three years; I'm thinking $5-10k. All other things being equal, this would tip me in favor of leasing.

Chris C.

If you think you're going to trade or sell in 3-4 years, I'd lease it. Check leasecompare.com for latest residuals and MFs and make your dealer match them.

An added benefit is that you're residual is it's a floor for the price of the car despite what's happening in the market. You can sell if for more if the residuals are pessimistic (which they are, set closer to wholesale values depending on miles)

Keep in mind in your calculations that the effective rate on the lease is higher than the finance rate, since you're in effect financing the cap cost plus the differernce between the equivalent finance payment and the lease payments

robbonds

cant u just pay all the lease payments up front to avoid paying financing charges?

Dave07997S

Ron when I ran the numbers on lease vs. buying it really depeded on being able to take advantage of the write off from leasing. If you are self-employed and can utilize the full tax write off for leasiing I say lease the vehicle. The amount of money you save in upfront costs can be utilized else where such as short term CD's and such to offset some of the money factor you will be paying. At my tax bracket 1/3 of the payment is basically being written off making a $1100 lease payment in reality a $800 payment.

Dave

Dave07997S

With a lease this doesn't make any sense, if the car is totalled you lose a ton of money. Thats why in leases you want a minimum drive off as the finance charges are based on the amount of depreciation from MSRP to residual.

Dave

robbonds

u lose it all if you total it? what about insurance?