Macan EV: Who is leasing vs buying?
09-08-2024, 08:37 PM
#106
I ran the numbers and it's hard to justify buying in the US given the $7,500 lease incentive. Here's my logic:
If I buy the car for $105,000, I pay $114,181 (with tax).
If I lease with the following terms, I pay $63,167 over the life of the lease:
- Down payment: $37,697 + $3,942 tax: $41,639
- 39 month lease payments at $552 (including tax): $21,528
In addition, if I lease (compared to buying), I will earn about $9,839 in interest over the 39 months given the above terms and 5%.
So, if I lease, I will have $72,542 more in my bank account on day 1 of the lease. At the end of the lease, I will still have $60,853 (original amount + interest earned - 39 lease payments). If the residual is $59,913 (57% residual) and I still love the car, I can buy it with the money I saved (I would still have to kick in the sales tax of around $4,000).
Given the following facts, I prefer Porsche to take on the risk of my long term ownership. If we end up loving the car after 39 month, then I'll pay $4,000 more than what I would have if I'd purchased outright. If I don't, Porsche can keep the car and I can drive something shiny and new:
1. This is the first version of any car on the new PPE platform, what could go wrong? And, if there are problems, I don't know how responsive our local dealership will be. So far, we haven't been super impressed with them.
2. I haven't got to drive the car yet in my city to know how it feels and behaves on our terrain.
3. I haven't seen what it looks like with my options. One of us might dislike it in the flesh.
4. I don't know if my partner and I will be happy with squeezing it into our garage over the long haul, time will tell. But we aren't getting more agile as we age
If I buy the car for $105,000, I pay $114,181 (with tax).
If I lease with the following terms, I pay $63,167 over the life of the lease:
- Down payment: $37,697 + $3,942 tax: $41,639
- 39 month lease payments at $552 (including tax): $21,528
In addition, if I lease (compared to buying), I will earn about $9,839 in interest over the 39 months given the above terms and 5%.
So, if I lease, I will have $72,542 more in my bank account on day 1 of the lease. At the end of the lease, I will still have $60,853 (original amount + interest earned - 39 lease payments). If the residual is $59,913 (57% residual) and I still love the car, I can buy it with the money I saved (I would still have to kick in the sales tax of around $4,000).
Given the following facts, I prefer Porsche to take on the risk of my long term ownership. If we end up loving the car after 39 month, then I'll pay $4,000 more than what I would have if I'd purchased outright. If I don't, Porsche can keep the car and I can drive something shiny and new:
1. This is the first version of any car on the new PPE platform, what could go wrong? And, if there are problems, I don't know how responsive our local dealership will be. So far, we haven't been super impressed with them.
2. I haven't got to drive the car yet in my city to know how it feels and behaves on our terrain.
3. I haven't seen what it looks like with my options. One of us might dislike it in the flesh.
4. I don't know if my partner and I will be happy with squeezing it into our garage over the long haul, time will tell. But we aren't getting more agile as we age
09-08-2024, 08:46 PM
#107
If I buy outright, I pay $114,181.
If I lease, at the end of 39 months, I will have paid $63,167 and earned interest on the difference of $9,839. Therefore I will have defacto paid $53,328 (compared to buying), thus saving $60,853 over the cost of buying. If the residual is $59,913 and tax is $4,793, I'd have to pay $64,706 at lease end to buy the car (plus some other fee I'm sure). $64,706 - $60,853 = $3,853.
If I lease, at the end of 39 months, I will have paid $63,167 and earned interest on the difference of $9,839. Therefore I will have defacto paid $53,328 (compared to buying), thus saving $60,853 over the cost of buying. If the residual is $59,913 and tax is $4,793, I'd have to pay $64,706 at lease end to buy the car (plus some other fee I'm sure). $64,706 - $60,853 = $3,853.
09-08-2024, 10:15 PM
#108
If I buy outright, I pay $114,181.
If I lease, at the end of 39 months, I will have paid $63,167 and earned interest on the difference of $9,839. Therefore I will have defacto paid $53,328 (compared to buying), thus saving $60,853 over the cost of buying. If the residual is $59,913 and tax is $4,793, I'd have to pay $64,706 at lease end to buy the car (plus some other fee I'm sure). $64,706 - $60,853 = $3,853.
If I lease, at the end of 39 months, I will have paid $63,167 and earned interest on the difference of $9,839. Therefore I will have defacto paid $53,328 (compared to buying), thus saving $60,853 over the cost of buying. If the residual is $59,913 and tax is $4,793, I'd have to pay $64,706 at lease end to buy the car (plus some other fee I'm sure). $64,706 - $60,853 = $3,853.
That’s an interesting approach. Idea is usually to pay as low a down payment as possible, in case something happens to the car - I’ll have to dig more into this one with my SA to see what the numbers show.
09-09-2024, 05:55 PM
#110
I think that what’s making the lease cost this low is the very high down payment you’re putting - lowering the interest you’re paying over 39 months.
That’s an interesting approach. Idea is usually to pay as low a down payment as possible, in case something happens to the car - I’ll have to dig more into this one with my SA to see what the numbers show.
That’s an interesting approach. Idea is usually to pay as low a down payment as possible, in case something happens to the car - I’ll have to dig more into this one with my SA to see what the numbers show.
However, to expand on your comment a bit, the main reason down payments on leases are not recommended is the risk of losing the down payment if the car is stolen or a total collision loss. With such a high down payment, that seems to me to be a major concern. Is there any protection against that here?
One additional point: that earned interest is taxable; the lease interest is not deductible for a personal lease, so that reduces the advantage a bit.
Last edited by Dgkli; 09-09-2024 at 05:57 PM.
09-09-2024, 06:02 PM
#111
Racer
Before doing a one-pay lease on my iX (which got us a net of -$11,500 on its MSRP), and yes it took a monster initial and only least payment, I inquired and two things came into play for the necessary protections you excellently inquired about.
First our car insurance would protect us against theft (as it would on every single vehicle so insured with any/all reputable insurance companies). Second, at least with our BMW lease, it was protected against an catastrophic damage accident for catastrophic, e.g like a form of GAP insurance. Of course both of these protection would need to be run down in writing to our satisfaction before we were to do same if we choose to do a similar one-pay lease for our Macan EV
First our car insurance would protect us against theft (as it would on every single vehicle so insured with any/all reputable insurance companies). Second, at least with our BMW lease, it was protected against an catastrophic damage accident for catastrophic, e.g like a form of GAP insurance. Of course both of these protection would need to be run down in writing to our satisfaction before we were to do same if we choose to do a similar one-pay lease for our Macan EV
09-09-2024, 07:49 PM
#112
Interesting. I have a 50K trade and 70K set aside for a new car purchase. One pay lease seems to eliminate most of the interest payment cost and allows the car to qualify for the 7500 credit. Then I get to keep the 70K at 4-5% return (depending on rates). Sound right?
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PSPJames (09-09-2024),
TC Cruising (09-09-2024)
09-09-2024, 09:22 PM
#113
Before doing a one-pay lease on my iX (which got us a net of -$11,500 on its MSRP), and yes it took a monster initial and only least payment, I inquired and two things came into play for the necessary protections you excellently inquired about.
First our car insurance would protect us against theft (as it would on every single vehicle so insured with any/all reputable insurance companies). Second, at least with our BMW lease, it was protected against an catastrophic damage accident for catastrophic, e.g like a form of GAP insurance. Of course both of these protection would need to be run down in writing to our satisfaction before we were to do same if we choose to do a similar one-pay lease for our Macan EV
First our car insurance would protect us against theft (as it would on every single vehicle so insured with any/all reputable insurance companies). Second, at least with our BMW lease, it was protected against an catastrophic damage accident for catastrophic, e.g like a form of GAP insurance. Of course both of these protection would need to be run down in writing to our satisfaction before we were to do same if we choose to do a similar one-pay lease for our Macan EV
Now what if you've paid a big down payment (capitalized cost reduction), such that the ACV is more than you owe on the lease? From what I read, in that case it depends on the lease language. Apparently a lot of leases say the leasing company gets to keep the full payout; in that case, you lose your down payment. Even if that's not what the lease says, the next question is, how is what you owe on the lease calculated? It's possible/likely that "what you owe on the lease" if the car is totaled is your remaining payments plus the residual value. If that is indeed the case, even if ACV is more than that number, that's going to very seriously eat into the down payment you paid. Only if "what you owe on the lease" is remaining payments plus residual minus remaining rent charge would you be in a position similar to if you totaled a car you owned. I think a lot of care and research is due here; I wouldn't just assume your down payment is covered just because you have full insurance. I don't have expert knowledge on this subject, but a quickish web search suggests there's a tremendous amount of misinformation out there on this subject. Also, it's not clear to me whether a one-pay lease is different from a big down payment on a monthly pay lease in this aspect.
In any case, the number one rule is read that lease carefully before you commit, and don't take anyone's word for it.
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TC Cruising (09-09-2024)
09-09-2024, 10:16 PM
#114
The idea mentioned above to avoid (lower really) the interest of the lease is to pay a massive down payment. You could still do a one time payment for the balance of the lease as well.
But as pointed out, if the car is totaled, you’re at risk of losing that down payment.
09-14-2024, 07:07 AM
#115
Unless Porsche will offer a similar lease deal as Taycan (additional 15K credit), cash or finance (not Porsche) are way better options. You can find 4% APR car finance now days.
Last edited by MadDima; 09-14-2024 at 07:23 AM.
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Awas (09-14-2024)
09-14-2024, 07:26 AM
#117
Alright let's do some quick math and assumptions.
- Car is $101,900 pre tax, would cost $110,434 with tax.
- Let's round it up to $111k to include the dealer's fees mentioned.
- We'll compare buying cash at $111k vs leasing over 39 months + investing that cash for that period.
Looking at the lease itself
The amount paid over the course of the lease will be: $10,000 down + $61,386 (1,574 over 39 months) = $71,386
If you return it then, pay some extra fees but the cost of ownership would have been about say $72k.
The residual value of the car being $58,083 (pre-tax) - if you were to keep the car at the end of the lease, the total cost of the car would be: $134,333 (+ some fees they may charge you)
But you could potentially get about $10k back investing the cash at 5% over 39 months.
Now let's say you buy it upfront but still want to sell it after 39 months
The cost of the car is $111k and you get zero interest from your savings, you paid it all upfront, taxes included.
Let's be dramatic and say the car devaluates like crazy, and it only worth $40k in three years, a much worse valuation than Porsche is giving it (at $58k). That would represent a 61% drop in valuation.
You would have paid $111k and recouped say $40k selling it.
The cost of ownership would have been $71,000. Which is about the cost of leasing the car (with the $7,500 incentive)... assuming a much worse valuation than Porsche.
- Car is $101,900 pre tax, would cost $110,434 with tax.
- Let's round it up to $111k to include the dealer's fees mentioned.
- We'll compare buying cash at $111k vs leasing over 39 months + investing that cash for that period.
Looking at the lease itself
The amount paid over the course of the lease will be: $10,000 down + $61,386 (1,574 over 39 months) = $71,386
If you return it then, pay some extra fees but the cost of ownership would have been about say $72k.
The residual value of the car being $58,083 (pre-tax) - if you were to keep the car at the end of the lease, the total cost of the car would be: $134,333 (+ some fees they may charge you)
But you could potentially get about $10k back investing the cash at 5% over 39 months.
Now let's say you buy it upfront but still want to sell it after 39 months
The cost of the car is $111k and you get zero interest from your savings, you paid it all upfront, taxes included.
Let's be dramatic and say the car devaluates like crazy, and it only worth $40k in three years, a much worse valuation than Porsche is giving it (at $58k). That would represent a 61% drop in valuation.
You would have paid $111k and recouped say $40k selling it.
The cost of ownership would have been $71,000. Which is about the cost of leasing the car (with the $7,500 incentive)... assuming a much worse valuation than Porsche.
09-14-2024, 10:07 AM
#118
I set down with my Porsche financial manager yesterday and went true all the options. I am putting about 55K down (the max I can put down for a lease for my Turbo). Even with that much money down I have to pay ~600 monthly (15000 miles a year).
Unless Porsche will offer a similar lease deal as Taycan (additional 15K credit), cash or finance (not Porsche) are way better options. You can find 4% APR car finance now days.
Unless Porsche will offer a similar lease deal as Taycan (additional 15K credit), cash or finance (not Porsche) are way better options. You can find 4% APR car finance now days.
Could you please also share the MSRP and fees for your config, as well as duration of the lease?
09-14-2024, 10:21 AM
#119
The duration of the lease was 36 months with 15000 miles annually.
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tmrqs (09-14-2024)
09-14-2024, 10:43 AM
#120
I don't have the numbers in front of me, but I believe the residual was around 61000 (I also run numbers for 2500 miles/year lease and the residual was around 68000). The MSRP with the delivery fee was 121075 (Porsche build code: PRCE6AZ3). The out of the door price was 127127
The duration of the lease was 36 months with 15000 miles annually.
The duration of the lease was 36 months with 15000 miles annually.
Option A / Buy outright
Cost is $127,127 with tax included.
Option B / Lease over 36 months
- Cost of the lease is $55,000 + 36*$600 = $76,600
- Residual being $61k, cost of the car if purchased at the end of the lease would be $137,600 (+ the tax on the residual)
That means leasing to then buy is over $10k more expensive than buying cash, and I imagine the numbers you’ve shared take into account the $7.5k EV incentive right?
Last edited by tmrqs; 09-14-2024 at 11:04 AM.