RollingArt

Yeah, I'd actually thought about the GT3 as I was typing that and figured that they did offer a lease on it. Which does seem odd from where I'm sitting, but I don't see the whole story. Maybe it's because a much higher percentage of RS's go tracking or are otherwise damaged. Who knows?



Phil

mooty

there are many reasons to lease or not to lease, one can argue every which way, but the simplest way to see it is that if you keep the car over 5 years, then it's no longer clear which is better. if you kept it 3 years, arguable. if you swap in less than 3 years, lease is almost always better.

Carrera GT

A lease is certainly a win for the dealership and the manufacturer -- they sell not only the car, but also the lease as a product itself. For the buyer, it's a "win" insofar as it enables them to drive a car they would choose not to purchase outright (be it for cash flow, tax or simply net work considerations.)

As I understand it, the auto maker, its country distributor and its dealer network are all "pawns" to the finance companies -- the lease provider decides on the actual data and risk, they decide on their willingness to balance risk and profit to set the interest rates and residuals, etc. Supply and demand do the fine-tuning. Some companies used to thrive on risk (eg. US Bank) always having higher and higher expectations for profits with scant regard for their real exposure -- they've since contracted and become far too risk avers, so now they're missing out on the low risk business as the market expands again. Other companies continue to play a "core competency" game and sell lease products on sound products (eg. "investment grade" historical vehicles and premium new cars, such as Putnam and Manchester already mentioned in this thread.)

As for the number crunching, I think even the high-on-hog quantitative analysts have had, in Wall Street jargon, "their faces cut off." So the back room of evil math genius types has been set on a long term diet of humble pie. Not having a face probably makes that pie all the more unpalatable.

The evil strategists at JPM and GS, however, have taken money to (their) bank and left only scorched earth in their wake. The "risk assessors" at the smaller players (such as those selling money to Porsche Financial) have become so gun shy, they're huddled, trembling in the corner, afraid to do anything (resigned to "lose little") rather than find the courage to risk doing anything except the most risk-free business (and the least profitable.)

cgomez

I always view a lease in the same way as long term financing (lease period + as long as you want to hold on the car). Therefore, so long as implied interest rates of lease vs. financing are similar, the lease (not considering tax considerations as explained in depth before here) is ALWAYS better b/c you always have the option of walking away from buying the car at the end of the of the lease. So if interest rates are similar that option comes basically FREE, and in practical term it does have some real value.

Sure, it is great to have the bank or PFS take greater risk by assuming a high implied residual, so you end up paying less of what the car REALLY DEPRECIATES. In the case the residual is lower than what fair market value is, then it makes the most sense to purchase the car (so you recoup what you overpay in the lease) and sell it in the used car market to get some of your excess capital back. If the FMV is lower than the residual (which was almost always the case pre 2008), then buy a nice bottle of single malt and toss to yourself for having paid a lot less for the ownership of your GTx.

The ONLY downside to leasing is if you end up not wanting the car for the period of your lease term contract.

IMO, cars aren't assets (unless is a really rare thing that you cant drive anyways), they are depreciating capital goods, so its always better to accept upfront the true future COST of ownership and pay as you go. From my experience (of buying and owning financial services companies), most of the people that choose financing over leasing (other than those who swap in short terms of <24mo) are people that overstreche their purchasing power and buy based on the capital they have and not on the cashflow they make. IMO, you should consider what you make (including return in your capital) to make such expense decisions.

Racecars are different b/c the probability of total loss is real so you should book that into consideration as it can happened in Year 1 (and if unlucky consecutively for a few years), plus if you really commit yourself to racing (8+ weekends a year) you also spend 50% of the car cost (at least) every year on variable expenses.

i.e. I lease ALL my streetcars (a expense on depreciating goods) and buy my racecars.

just my 0.02

Carrera GT

I'm guessing this was a simple typo/spell checker error ... : )

rodsky

Unless the resale value (residual) is set way too low, and the money factor is high - leasing is always a great way to go. You only pay sales tax on the portion you use. You can have the capital work elsewhere. Plus you can buy it at lease end if you want to keep it or walk away. The other downside to leasing, is generally if you want to get out early as you are normally underwater until realtively close to the end.

In the really bad times (last year), i got a 1.9% lease rate. My residual i believe is 56K on a 2009 C2S on a 3 year lease. My buy out right now (6 months into it) is roughly what the car is worth ($78K for a 3000 mile 2009 C2S) but thats rare due to all the discounts they were giving away LY.

If I had put the $100K cash down in Sept last year - my opportunity cost would have been high. I've made more than my payments (granted thats not the norm) on that money.. So its sorta been free so far