winkingchef

Agreed.
New car smell is available retail for $11.50
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jk335

WAYYY off. try 800s for a 911 now. Its smarter to lease than buy. Depreciation is your friend on a lease. After three years, you do not have a car that has lost 40 percent of its value.

best thing to do, buy a used p car.

gravedgr

My money earned 16.5% last year, while my loan costs me 1.99%. Easy math for me.

403portside

Greater expected depreciation = lower residual which is bad for you if you lease. Leasing means paying for (expected) depreciation.

boolala

I'll give you another reason why leasing may be the better option: when purchacing your next car you only have to concentrate on negotiating the purchace price of the vehicle and not your trade in value which the dealer will always low ball you on. He will always play off the "discount" given on the new car with a comparbale reduction in your trade in value. If you think you can sucessfully negotiate both ends of the deal and do well then you're a much better negotiator than me.

Also you can lease the car for a period short enough that major maintanence is not yet due on the car such as a brake job etc. Say 42 months or so.

Certainly whether you lease or buy outright, trading a car in after only 3 - 3.5 years is a losing proposition as you have shouldered the bulk of the depreciation. This is not something that is unique to leasing but is a problem whenver you buy (or lease) a NEW car. let's compare apples to apples here: buying a new car vs leasing a new car: same brutal depreication. buying a used car vs leasing a used car: better value but not everybody wants a used car.

purrybonker

About the same return for me, but 2010 was a bit like falling off a turnip truck.

So, why not add up your estimated comcast, stoli and Hy's Steakhouse expenditures for the next three years and hit up your HELOC at say, 3%? Plunk all that cash into the markets and take a free ride for 1300 basis points - sounds like a no brainer. Why waste your own money to finance your lifestyle at all?

I'm just having fun here.

But I remember when I was a consumer lender straight out of business school - it struck me then how it was predominantly the middle class that had no qualms about financing luxuries and indulgences. They were the guys with the vacation loans and jewelry loans and higher end American cars and trucks flipped out every couple of years.

The poor financed the necessities while the wealthy only financed investments.

But that was a billion light years ago. What do I know...

There is another factor here, though. Its probably even more important.

The manufacturers love to see consumers denominate cars in terms of monthly payments rather than ticket-cost. When you're making a $1500 lease payment on a three year old car it seems very rational to flip that same payment into a new one.

Its amazing how much easier it is to apply self-control when you need to write the big check for your indulgences. (Best marketing slogan ever: "because you're worth it...")

Quadcammer

I don't really see how you can base 997 longevity on 993 longevity since they are such different cars.

That said, everybody is different and wants different things. I don't mind owning cars for a decade, but one of my closest friends wants a new car every 3 years. He gets a good deal on his leases and he gets a new car every 3 years. For him, it makes sense, for me, it wouldn't.

Also, I think financing part of a car purchase is fine if you can earn more than the rate on the loan with investments.

Quadcammer

Any example when taken to the extreme can look silly...like buying a new porsche with cash every 6 months.

Then again, taking a heloc to pay for certain larger purchases can make a lot of sense.

pissedpuppy

yep - I did this too

mdwac

I actually think there is as much human psyche as financial theory in all of the above. Here is may story, my name is Mark....I am a car addict. I used to pay cash for all of my cars, sometimes I now lease and here is why

(1) When you lease you have a downside protection from the lender in terms of the depreciation. Sometimes that isnt worth anything (like my good old '96 M3 which was worth tons more than the residule), other times (like a 911TTS i had) it is worth a lot. But it is a nice option to have...if you love the car and want to keep, buy it then...if you don't and market value moved against the car, give it back having "amortized" less than you should.
(2) While I begin each year with a promise to be more disciplined with cars, it really has never happened. I always seem to have a sports car (like 997TT) and a family car (currently Audi s8). The problem is that i turn them all of the time....i dont think i have hit 10K miles on any car in last 5-6 years. But recently, I have gone back to leasing....might least the 2011 CTT i have on order (depends on interest rate) just because it keeps me in the vehicle until lease term. I know you can always terminate early (done that), but mentally for me it keeps me committed. I have saved a ton more from not switching cars, than I have ever spent from the financing cost aspect of the lease.
(3) a little easier tax justification

Each to their own. But the truth is when they come out with a new CTTS with 600hp, the fact that I am only 12 months into a lease might be the thing that keeps me from trading my 2011 in on the new car. Stupid i know.

purrybonker

Actually, I think you're hitting the nail right on the head. There's no pragmatism in buying a Porsche, why should there be any in the funding mechanism?

It's about the cars, not the numbers - we've already made that decision when we walk into the dealership, otherwise we'd be at the Hyundai place down the road.

I'm a keeper and I like to mold my cars to make them mine. I leased a 2001 Focus wagon - just to try leasing a disposable daily beater. By the time the lease matured I'd spent about 10k on supercharging and brakes and suspension and never wanted to part with it.

But the lease residual was about 2k over street when it came due, so I had to pay the lease guys a nice bonus to keep my own car.

So I guess I use cash as my discipline, you're right - each to their own.