Alan Smithee

PFS took the same stance on the 2007-08 RS...

Carrera GT

Right. At that time, the excuse was "we don't have data for residuals." Of course, that's the same idiotic excuse since, well, do they have actuarial data and residuals when they introduce the Panamera?

In the grand scheme of things, the RS is no more significant to the automotive financial industry than a Cayenne Turbo S, but somehow, there's a lease for the Cayenne hot rod, just not the Carrera hot rod. It seems clear to me that whatever Porsche Financial is doing in the US, they're not concerned about the customer or the vehicle sales.

In any case, it seems I have at least two companies willing to sell a lease product and willing to read a balance sheet and make a fair profit. So I can avoid the usury finance gouge.

And I should add I'm fortunate to have a dealer willing to afford me the time to sort out this nonsense.

10 GT3

First, I simply don't understand why you would want to lease this car. There is no way you are going to be better off leasing than buying with this car as the resale is too high and interest rates are too low.

Since I ended up deciding not to trade my Carrera and sell it myself, I ended up financing with Porsche Financial initially due to the higher loan amount. Rate was not that good but I had a plan to not pay it very long. I sold my Carrera less than 2 months later and made a big pay down on my GT3. I just refinanced with BofA with a rate of 3.84, which is basically nothing.

The fact that they don't want to do a lease is a sign to you that leasing isn't a good idea. Just finance to buy. If you decide to get rid of it in a couple of years, just sell it and keep what you get over the loan value. There should be only 2 reasons to lease: business expense or the car has terrible resale. For the latter for example, NEVER buy a new Jag also you will always be ahead of the depreciation on a lease for example.

mooty

^ 10GT3,

actually if the PROJECTED resale value of the car is high, then it is the car you want to lease.
lease in simple terms is (selling price-resale value)/term. so the higher the resale (residual) the smaller the pmt.

cgt above is a serial car swapper. and here in CA, our sales tax is 10%. and this cannot be applied to the next car you trade. say you trade in your current car for 60k and buy a 100k car. you pay full 10% on the full purchase price 100k in this case (not 40k). so for those who keeps the car 1-2 years, unless the lease rate is horrendous, it's cheaper to lease (by that i mean total $ spent during your ownership, and tax is a big deal.

say the least pmt is 2300, that's 55k
cgt's car is about 150k, so tax would be 15,000
thus tax is 27% of lease pmt over two years.
but with a lease, you pay tax only on the 55k , so that's 5500
that's 10k in tax savings over 2 years.

now, if you want to keep the car for 3+ years, it's arguable that financing is better

if you kept it over 5 years, no one would lease unless you are out of your mind. (well if you paid off your lease in full after lease end, no refi, then yes, i can see this working)

write off as company expenses is very hard. many ppl do not understand what that REALLY means. if you do it by the book, the time it takes your CPA and you to figure out % of usage for business purposes, your CPA would have charged you more in labor hours than your savings and you would most likely have had a nervous breakdown trying to determine what EXACTLY is business useage. i dont like to play russian roulette with IRS.

i dont mean to single out your post (your logic makes perfect sense if you kept the car long term), i am just thinking out loud.... well the 100% truth is that i am trying to convince myself why throwing 150k out the window on a moving toy is LOGICAL......

RollingArt

I'm no finance wizard, but it makes sense to me that Porsche doesn't want to lease out track ******. Way too risky for them. This is a case of "if ya wanna play, ya gotta pay,,, their way". Kind of like trying to lease a race car. It ain't gonna happen.

But what do I know? (you don't need to answer that!)



Phil

mooty

^ i argue on your side.

then your logic falls apart when i found that PFS will do lease on GT3, just not RS.

if i were to have both RS and GT3 at the same time, i would be whoring out the GT3 and worship the RS in the garage. no one, if you own both, will use gt3 as garage queen and abuse the RS, no?

now if there's no lease for either GT3 or RS, then it would make perfect sense.

i have always paid for toys. but when the rate drops to certain point, you GOT to take the free money.

XTC

As a degenerate car swapper, I can tell you that if you want to get out of a lease car early, you will almost certainly be underwater no matter what the residual is figured at. Used car buyers just don't seem to adhere to the straight-line depreciation model. No matter which way you go, you are taking the bulk of the depreciation hit up front, so the only issue is whether you want to pay it down heartily as you go (as with a short term finance), or pay it in a chunk when you sell it. Add to that the fact that on the lease, your total interest paid in is going to be higher, since it is figured on the unpaid balance. The unpaid balance on the lease is going to be higher during the term of the lease since you are paying it off at a slower rate.

I do agree that the reasoning behind Porsche not wanting to lease these cars is sound (even though it sucks), but their excuse of not having residual data is BS. When you have a car that 70% of the owners thrash around the track, the resale market will simply be smaller. The only other option would be to set the resale value low enough that they are guaranteed to be made whole when the car is turned back in. In that case, you would still probably be better off with a conventional finance since the resale value could be (depending on the condition of the car) better than their assumptions.

As for the tax issue, same here in Texas. You pay full sales tax on leases (although this was just changed in the last few years), versus tax on the trade difference on conventional financing. Not sure about other states.

Carrera GT

I see you've already got a good solution for your needs, but for the sake of clearing up any misinformation or disinformation, I'll point out what matters to me. I see that Moot nailed all the major points and I don't disagree with a word, but here's my train of thought:

10% sales tax up front with no intention of this being a car I keep beyond three years. That's US$15K wasted. One need go no further in the comparison before deciding a lease is appealing except for an outright long term purchase.

$160K idle capital. The cost of opportunity is the average rate of return on your working capital. The less of my own capital I use on these discretionary purchases, the better. While I have the wild expectation of selling this RS for a number above MSRP (or returning it to the dealer as leverage to move into the next one) I am more concerned about having $160K sitting in the garage doing nothing for 300 days of the year than I am about paying a finance company 3.9%. You appear to have chosen the same way.

To the downside, there's an increase in insurance premium, but for me, my insurer offers a special deal on my low mile cars.

Also, when you suggest "The fact that they don't want to do a lease is a sign to you that leasing isn't a good idea." I think you're working solely in the context of owning these cars long term (say three years or longer.) But the real issue is, if PFS thought they could turn a profit, they'd weigh the plusses and minuses and they'd sell the product.

In short, it seems you're thinking about longer term and I'm thinking about shorter term. If someone is buying a car to own it long term, they can choose any path that fits their needs within the context of a sensible budget. If someone is buying a car shorter term, so long as they're not attempting to over-extend their real purchasing power, they can choose from a path that minimizes the "real" cost of ownership (the sum of all costs including the final resale reflecting depreciation.)

I think Porsche doesn't offer the lease because it's not a product that their money provider wants to pick up. In the grand scheme of things, Porsche is a high risk seller (many people buying their first Porsche are over-extending themselves and the lease is the poison of choice.) Understanding how Porsche "buys" it's money takes a little more understanding of how money and profit flows through this system -- I don't purport to have the answers -- but I think it's fair to say that if a company has a market offering and they decline to offer that product under specific circumstances, it's because it's not profitable or viable to their business, not because it's a bad deal for their customer! After all, Porsche, like all car makers is perfectly willing to write paper (sell leases) on cars with much worse prospects, but they take on that underlying risk as part of the profit of selling the new vehicle when the lease is required to access the buyer demographic. Quite separate from using the lease to sell the car, since all RS's will sell at full MSRP with a stroke of the pen, the risk of taking on poor risk customers is the over-riding factor -- lenders have swung the pendulum to be overly risk-averse. They're still nursing the wounds of a legion of now out of work yuppies that were "put in" cars they could never have afforded from 2005-2008.

I guess we could expand this comparison of long- and short-term buyers to consider the real thoughts of the long-term buyer. After all, if the long term buyer is paying full MSRP, it's to have the car "now" and to have a car which they bought new and will be the only driver. If a long-term buyer can set aside the intangibles of being the first owner and is willing to defer the gratification of having the car as soon as it exists, well, that buyer could be picking up an '08 RS today and own it for their long term interests.

It's all relative. : )

mooty

correct if you get out of lease EARLY.
if you use the lease to term, then no such prob
also, as far as total depreciation goes, if length of ownership is the same, cash purchase, lease or finance, you will be hit the same. of course, cash you dont have interest issue, just opportunity cost. but at 3.9% as stated above, it's better to borrow than to pay cash.

i think basically we agree, this hobby is hopelessly senseless and we just have to pony up!

mooty

as usual, your treatise on long vs short time holding is correct. i ALWAYS think i am buying the car to keep forever, and as you have seen, i am very adept at that

btw, i emailed you

XTC

Completely agree with mooty and GT. My probem has just always been going stir crazy in a car somewhere around month 24 of a 36 month lease If I can summon the dicipline to stick with it, lease is almost always better.

mooty

LOL, do 24 months lease.
the higher pmt will still come out better than 36 months upside down, i think.

XTC

Yeah, but I ALWAYS think I will want it longer than that hehe.

mooty

we must be going to the same church...
i have those faulty thoughts as well.

RollingArt

I find this discussion very interesting, as I've never quite fully understood all the ins and outs, pluses and minuses of leasing. I've also never signed on to one. Never quite trusted them. The auto manufacturers have buildings full of people armed with computers, crunching numbers, figuring better and better ways to relieve us of our money. They surely didn't start leasing cars because they thought it would be a swell way to save customers some money.

Or does leasing continue on today because it's a win win situation?



Phil