GSIRM3

That is exactly right, and a very good point. If you fall into the AMT, you will probably not be able to claim any interest paid on the home equity loan for the car.

jcnesq

If you lease, DO NOT use U.S. Bank - worst reputation in the industry, I know of a leasing company that used to work with them and now refuses to because of their lease-end BS.

Bum

Before I purchased my car, I already had my HELOC setup to allow me access to the equity in my house. When I did the deal, I simply contacted my HELOC holder, faxed them a form filled out with information from the dealer and they wired the money to the dealer the next day after talking to me in person to ensure the integrity of the request.
The nice part of the HELOC option is that I can send all remaining monies to the account each month and if I have an emergency I can just write a check to get some of it back. Needless to say, you need to be in good control of your finances as your note suggest you fully understand this. I should be able to pay off the loan in 3 years and again if there is an emergency, I'm paying down my loan that I could then access the money. This is not the case with a standard car loan where you send the money and that's that. And do the math with the interest rate. If you can write off the interest, the differential between the two is not worth mentioning due to the flexibility.
Oh, and I will be refinancing my mortgage in 2 years and will roll up the HELOC balance into it so that I can write it off again, regardless of AMT status. Of course I will be sending in more money than required so that I am not short-changing myself into believing I do not have a car payment.

There are many ways to be creative and smart at the same time. Write down the pro's and cons of each scenario and choose the one that best suits your taste and tolerances.

Dr. Car

I guess a lot of smart people own Porsches. Whew, I think I'm learning a lot just from the process of considering a Porsche purchase. Thanks, again, for all the good replies.

I'm in SoCal and have the good fortune of being single (not ncs. better than marriage, just better than being divorced), 30's, got a nice home which I bought 10 years ago, and have 75% equity (not 75% LTV; 25 LTV, 75% equity). As an employee and not a business owner, with a wimpy 1st mortgage and just charity donations for other writeoffs, I am far from AMT and I may be eroding my mortgage interest too quickly with principal payments (?). I'm saving for retirement, above and beyond my pension which would pay me 50+% of my last & highest salary if I remain in civil service until retirement (& I pay SS taxes).

Dave 07997S - I cannot write off lease payments. I'm in a professional in a civil servant position... good job security, fair pay and good benefits though! I'm in SoCal; I did talk to a couple mortgage brokers today. Let me know if you want to chat offline about the programs they suggested, and what you recommend (or could offer, if I'm in your region). PS - love the HAC in your avatar.

Gleek 48 - Thanks for the tip, I am a Costco member. Them's good rates.

jcnesq - I'm not going to lease, b/c I have no writeoff for it and I want to own this car a looong time. My Dad's got a Cabriolet that he's owned for 10 years and has no plans to sell, and I see lots of PCA members that are long-term owners. After owning lesser cars (including the beloved M3 I just sold this last week), I see the 997 as a destination vehicle.

Bum - I learned a lot from your explanation of how to use a HELOC, but I think I've got that kind of spending covered with non-retirement savings. I could buy the 997 outright, but I like to have 6 mos. of net salary on hand (some financial advice column that I read years ago which recommended that is etched in my memory). I don't mind paying some interest on a loan so I can leave my rainy-day fun alone.

One reason I prefer the home equity option is that I can have a lower monthly payment and bank more money in non-retirement savings. I've already got lots of home equity, lots of 401K, am in a good pension plan, but non-retirement savings is the only area I'm not livin' large. From a diversification perspective, I like the idea of using home equity to buy half the Porsche, and free up more monthly income to save in non-retirement investment assets. OK - looking forward to the latest wave of comments.

P.S. I had been considering the 996 TT but I found it floaty compared to the PASM cars, the deltoid region of my back didn't fit in the seat, my head almost touched the roof (no room for the autocross or track day helmet), and it seemed like a 120-in-a-45-zone ticket waiting to happen. Feel and steering/tracking precision of the 997 S is better; OTOH, I'd end up wanting to put a spare GT 2 suspension, or something of that ilk, in the 996TT to make it handle the way I like. Not to mention the interior, storage, and every other daily-driving metric seemed better in the 997.

Pete Lech

The thing I like about a HELOC is that is flexible. I make periodic payments and pay the car off in a relatively short time, as I do not like debt. It is a good thing to have for emergencies (like a quick car purchase ) in any case. It may or may not be deductible - check the rules covering your personal situation.

I got mine through the Internet from Charter One at Prime minus 3/4% with no fees in the Fall of 2006. Now a few local banks here are offering the same. It took less than a week to complete. Absolutely painless.

Dr. Car

Yes, HELOC is getting better the more I think about it. The high-feature HELOC products allow me to wrap up debt at a fixed rate while still leaving the remainder of the line available for borrowing (the interest rate on the line then fluctuates), and I can repay the HELOC debt at a rapid rate if I choose... both reducing my interest expense and increasing the amount available on the line. And the line can be used for short term liquidity. All good things.

Pete, is that really a photo of your driveway in Fullerton? I didn't know there was a fancy part of Fullerton. You must be king of the neighborhood there.

Hartley

Don't use house equity to finance I car! In SoCal everyone is always trying to keep up with the Jones, but many are living pay check to pay check doing so and many are in even bigger financial trouble. From what you posted, you have a fair paying job and not a great one. Wait till you save some more money or have dual incomes to play with before you purchase such an expensive car. Remember, it's likely going to loose $10-20K within the first year or so of ownership. That's a big chunk of change to be throwing away. Good luck with whatever you choose to do!

Dr. Car

Hartley, that's sound advice for sure. But, being disciplined in every other part of my life, and being car obsessed, not to mention an avid a/x competitor and instructor, I will allow motion to win this battle. At least I'm taking a good hard look at the numbers, and can stay on track for all my financial plans (e.g., early retirement, no home payment in 10 years) even if I do this.

Subplot: Many times I've sunk $$$ into track-worthy modifications on my sports cars/coupes, although I tend to buy/sell these cars intelligently (but I leave my daily driver alone). I can actually see myself leaving a PASM 997 pretty much alone, save a clear bra, fire extinguisher, second set of rims and putting my Schroth harness in it. Now, don't at me, but I have this wishful thought that 997 ownership will reduce or end that sort of spending. I luv untouched or near-virgin Porsches; I don't have any plans for mine to become all clapped out.

rome

I found one dealer who would take as much as $7K. Most I have worked with take only $2.