Lease Financing Question
04-25-2023, 03:48 PM
#1
Lease Financing Question
Hi all,
I don't have much prior history with leases, as I usually buy cars.
I asked the dealer for a one time lump sum lease cost payment on a custom order Panamera 39 month lease with an MSRP of $122K
They are asking for $80K lump sum payment with an opportunity to buy back for $74K. -$154K in total.
This seems to make no sense, as the Trade in value for a 2020 Panamera today is $66K.
What am I missing in their lease financing?
Does everyone lease with PFS?
Thanks much!
I don't have much prior history with leases, as I usually buy cars.
I asked the dealer for a one time lump sum lease cost payment on a custom order Panamera 39 month lease with an MSRP of $122K
They are asking for $80K lump sum payment with an opportunity to buy back for $74K. -$154K in total.
This seems to make no sense, as the Trade in value for a 2020 Panamera today is $66K.
What am I missing in their lease financing?
Does everyone lease with PFS?
Thanks much!
Last edited by kzfm; 04-25-2023 at 03:52 PM.
04-26-2023, 11:09 AM
#2
Rennlist Member
You're not missing anything. This is a horrible deal. I'm not sure whether it's different with the Panamera, but leases are notoriously bad deals compared to purchase financing on the Porsche sports cars.
For any lease, make sure you know the capitalized cost you are paying for the car, the residual value, and the money factor. Cap cost minus residual equals the amount of car value you are leasing. The money factor is really just the interest rate - multiply the money factor by 2400 to get the more understandable number of the APR.
Lease contracts often manipulate one of these variables in order to get to a desired objective. For example, BMW Financial often puts artificially high residuals on their cars. That allows them to offer low monthly payments to push cars out the door but they are a terrible deal to buy at the end of the lease and recircle to the dealers as pre-owned for resale.
All this being said, Panameras are one of the few Porsches that depreciate like 'normal' cars. Have you considered buying a certified pre-owned? You will likely find a better deal. A quick look shows 2020 cars out there with 10,000 miles for about $70 - 75k - half of what you would pay with this lease and pretty much the same usable life of the car and four years of warranty.
For any lease, make sure you know the capitalized cost you are paying for the car, the residual value, and the money factor. Cap cost minus residual equals the amount of car value you are leasing. The money factor is really just the interest rate - multiply the money factor by 2400 to get the more understandable number of the APR.
Lease contracts often manipulate one of these variables in order to get to a desired objective. For example, BMW Financial often puts artificially high residuals on their cars. That allows them to offer low monthly payments to push cars out the door but they are a terrible deal to buy at the end of the lease and recircle to the dealers as pre-owned for resale.
All this being said, Panameras are one of the few Porsches that depreciate like 'normal' cars. Have you considered buying a certified pre-owned? You will likely find a better deal. A quick look shows 2020 cars out there with 10,000 miles for about $70 - 75k - half of what you would pay with this lease and pretty much the same usable life of the car and four years of warranty.
Last edited by ldamelio; 04-26-2023 at 11:21 AM.
04-26-2023, 09:17 PM
#3
You're not missing anything. This is a horrible deal. I'm not sure whether it's different with the Panamera, but leases are notoriously bad deals compared to purchase financing on the Porsche sports cars.
For any lease, make sure you know the capitalized cost you are paying for the car, the residual value, and the money factor. Cap cost minus residual equals the amount of car value you are leasing. The money factor is really just the interest rate - multiply the money factor by 2400 to get the more understandable number of the APR.
Lease contracts often manipulate one of these variables in order to get to a desired objective. For example, BMW Financial often puts artificially high residuals on their cars. That allows them to offer low monthly payments to push cars out the door but they are a terrible deal to buy at the end of the lease and recircle to the dealers as pre-owned for resale.
All this being said, Panameras are one of the few Porsches that depreciate like 'normal' cars. Have you considered buying a certified pre-owned? You will likely find a better deal. A quick look shows 2020 cars out there with 10,000 miles for about $70 - 75k - half of what you would pay with this lease and pretty much the same usable life of the car and four years of warranty.
For any lease, make sure you know the capitalized cost you are paying for the car, the residual value, and the money factor. Cap cost minus residual equals the amount of car value you are leasing. The money factor is really just the interest rate - multiply the money factor by 2400 to get the more understandable number of the APR.
Lease contracts often manipulate one of these variables in order to get to a desired objective. For example, BMW Financial often puts artificially high residuals on their cars. That allows them to offer low monthly payments to push cars out the door but they are a terrible deal to buy at the end of the lease and recircle to the dealers as pre-owned for resale.
All this being said, Panameras are one of the few Porsches that depreciate like 'normal' cars. Have you considered buying a certified pre-owned? You will likely find a better deal. A quick look shows 2020 cars out there with 10,000 miles for about $70 - 75k - half of what you would pay with this lease and pretty much the same usable life of the car and four years of warranty.
05-01-2023, 02:56 PM
#4
For leasing, you don't want to do lump sum (one time payment on full amount) at signing unless you have low credits (foreigners for example). Let's say if the vehicle is totaled in a car accident within the lease period, you would not get any remaining amount back. With monthly lease payment, if you total the vehicle, you are not obligated to pay the remaining lease payments as your auto insurance would pay for it.
Porsche FS tends not to have good lease deals but if you insist to lease, Porsche FS allows multiple security deposits (MSD) that would drive the money factor (MF) down and you would get the deposit back when the lease is done.
Negotiate lease deals like you are paying cash/financing a car, always drive down the selling price the vehicle, don't let Sales walk you around. Do research on typical selling price of the model, manufacturer incentives (trunk money in forum terms), duration (24, 30, 36, months etc.), MF and residual value (Sales can raise above Porsche FS' numbers to gain more profit), Add MSD to lower the MF. With the residual value and MF, you can decide leasing vs. purchasing.
My general rule of thumb for leasing major European vehicles is $1 to $1.25 per every $100 of the vehicle with 7% tax included, so $100k vehicle means $1000-1250/month taxed (YES, including Porsche!) but it is probably very hard to get since 2nd half of 2021.
Porsche FS tends not to have good lease deals but if you insist to lease, Porsche FS allows multiple security deposits (MSD) that would drive the money factor (MF) down and you would get the deposit back when the lease is done.
Negotiate lease deals like you are paying cash/financing a car, always drive down the selling price the vehicle, don't let Sales walk you around. Do research on typical selling price of the model, manufacturer incentives (trunk money in forum terms), duration (24, 30, 36, months etc.), MF and residual value (Sales can raise above Porsche FS' numbers to gain more profit), Add MSD to lower the MF. With the residual value and MF, you can decide leasing vs. purchasing.
My general rule of thumb for leasing major European vehicles is $1 to $1.25 per every $100 of the vehicle with 7% tax included, so $100k vehicle means $1000-1250/month taxed (YES, including Porsche!) but it is probably very hard to get since 2nd half of 2021.
05-05-2023, 04:21 PM
#5
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You can write off 100% of a lease if used in business. That's why company's lease expensive cars.
Even though leases are more $$/month than typical financing, that Tax Incentive is huge to a company as opposed to depreciating the car over 20 years (or whatever the tax law is today concerning that).
The other advantage is that you can just turn the car in at lease end without the hassle of selling it, and quite often, there is still equity left in the car, so purchasing at lease end at residual value can really be a bargain.
I had a 991.2 Turbo S Cab on a 3-year lease with 10 miles/year that ended about 14 months ago. Residual was $117K (way too low, but this was pre covid) per the lease on a sticker of $256K. My P dealer offered me $200K flat (they pay me $83K to NOT buy the car) at lease end.
Knowing how slow new P cars are to get produced these days, and how much I absolutely loved that car as my DD, I kept the car for the $117K. I could have flipped it back to the dealer the same day for probably $225K.
That all being said, the above lease deal does indeed suck!!
Even though leases are more $$/month than typical financing, that Tax Incentive is huge to a company as opposed to depreciating the car over 20 years (or whatever the tax law is today concerning that).
The other advantage is that you can just turn the car in at lease end without the hassle of selling it, and quite often, there is still equity left in the car, so purchasing at lease end at residual value can really be a bargain.
I had a 991.2 Turbo S Cab on a 3-year lease with 10 miles/year that ended about 14 months ago. Residual was $117K (way too low, but this was pre covid) per the lease on a sticker of $256K. My P dealer offered me $200K flat (they pay me $83K to NOT buy the car) at lease end.
Knowing how slow new P cars are to get produced these days, and how much I absolutely loved that car as my DD, I kept the car for the $117K. I could have flipped it back to the dealer the same day for probably $225K.
That all being said, the above lease deal does indeed suck!!
05-09-2023, 05:58 PM
#6
Advanced
For leasing, you don't want to do lump sum (one time payment on full amount) at signing unless you have low credits (foreigners for example). Let's say if the vehicle is totaled in a car accident within the lease period, you would not get any remaining amount back. With monthly lease payment, if you total the vehicle, you are not obligated to pay the remaining lease payments as your auto insurance would pay for it.
I'm sure this varies from mfg/dealer, but you are also generally offered a more favorable money factor rate on single pays as well since you are eliminating bank risk, albeit hard to tell when you are writing a check for the full amount.
05-10-2023, 02:24 PM
#7
You would get the remaining amount back less of the finance charge, which is likely what OP is talking about that doesn't make any sense. Unless of course you insure at agreed upon value, in which case you could potentially insure the full finance cost as well, or incrementally drop the value each year. I've done single pays on the last 2 leases I did for business/tax write off purposes and there is definitely a way to structure insurance so you don't get burned in the beginning.
I'm sure this varies from mfg/dealer, but you are also generally offered a more favorable money factor rate on single pays as well since you are eliminating bank risk, albeit hard to tell when you are writing a check for the full amount.
I'm sure this varies from mfg/dealer, but you are also generally offered a more favorable money factor rate on single pays as well since you are eliminating bank risk, albeit hard to tell when you are writing a check for the full amount.
From a cash flow standpoint, single pay lease reduces cash flow liquidity, 39 months worth of lease payments + tax in single pay vs. 7 months worth of lease payments (no tax and Porsche FS allows 7 MSD) as security deposit, that's 32 months worth of lease payment + 39 months of lease payments worth of tax in cash flow off from the book in that fiscal year.
I am talking extremes here (total loss of the vehicle) which no one wants to get into but it can happen. In MSD lease, financial institute will refund the MSD after the insurance pays off the totaled vehicle, quite straight forward and hassles free. In single pay, the remaining prepaid tax amount of the vehicle is gone while the leaser has to work with both FS and insurance to get the remaining amount back.
At the end It's more of what works the best for you, pre-paid everything including tax up front or pay it as you go. In my cases, pay it monthly with MSD works best for me.