Lease v Finance
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3rd Gear
Joined: Apr 2020
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Lease v Finance
I’m attaching 2 documents (Lease & Finance term offers. We’re still in negotiations, but I wanted to see what you all think. You may need to turn your phone horizontally to see the images clearer.
I’m trading in my 2013 Porsche Panamera S e-hybrid, which has several issues on it and 93k miles.
The car I’m thinking of buying 2021 Panamera Executive or, possibly, 2021 Panamera S.
What are your thoughts on the initial negotiations?
I’m trading in my 2013 Porsche Panamera S e-hybrid, which has several issues on it and 93k miles.
The car I’m thinking of buying 2021 Panamera Executive or, possibly, 2021 Panamera S.
What are your thoughts on the initial negotiations?
Racer
Joined: Sep 2012
Posts: 302
Likes: 34
I think leasing is best if you can write it off on your business, and it's good if you want a new car after 3 years. You can always buy it after 3 years of leasing it, but financing s car you want to keep would probably be best if you can't write most of the lease off.
Thread Starter
3rd Gear
Joined: Apr 2020
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I think leasing is best if you can write it off on your business, and it's good if you want a new car after 3 years. You can always buy it after 3 years of leasing it, but financing s car you want to keep would probably be best if you can't write most of the lease off.
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
Aside from the business write-off consideration, it also depends on a number of other factors but I’d argue to buy/finance based on the deal sheets you got (again, not considering business write-offs as I’m not an expert on that).
If you decided to lease for 3 years, it would cost you $67,000 (when factoring in your trade, down payment, monthly payments, and disposition fee). If you were to buy it at lease end, you’d pay a total of $133,000.
If you decided to finance (even assuming with the 2.99%—you can do better), to get a fair comparison, let’s assume you can pay off your loan early in 3 years (same amount of time as the lease) and sell the car at the end of the 3 years. In that case, the full cost to own would be about $125,000. If you were to turn around and sell the car, it should have a residual of about 60% of MSRP (I think this is conservative), so you’d get about $72,500, meaning that your cost of driving the car for 3 years was only $52,500 ($14,500 less than leasing). And if you decided to keep the car for longer (say, 5 years and if you paid the loan off per the original 5 year plan), then the total cost to own would be about $128,000 at the 5-year mark (which would be slightly lower if you got a better interest rate), and if you sold at the end of 5 years with even a residual of about 45%, you would’ve paid a total of about $73,500 to drive the car for 5 years, which is only $6,500 more than you would’ve paid to lease for 3 years!!
Someone please check my math
If you decided to lease for 3 years, it would cost you $67,000 (when factoring in your trade, down payment, monthly payments, and disposition fee). If you were to buy it at lease end, you’d pay a total of $133,000.
If you decided to finance (even assuming with the 2.99%—you can do better), to get a fair comparison, let’s assume you can pay off your loan early in 3 years (same amount of time as the lease) and sell the car at the end of the 3 years. In that case, the full cost to own would be about $125,000. If you were to turn around and sell the car, it should have a residual of about 60% of MSRP (I think this is conservative), so you’d get about $72,500, meaning that your cost of driving the car for 3 years was only $52,500 ($14,500 less than leasing). And if you decided to keep the car for longer (say, 5 years and if you paid the loan off per the original 5 year plan), then the total cost to own would be about $128,000 at the 5-year mark (which would be slightly lower if you got a better interest rate), and if you sold at the end of 5 years with even a residual of about 45%, you would’ve paid a total of about $73,500 to drive the car for 5 years, which is only $6,500 more than you would’ve paid to lease for 3 years!!
Someone please check my math
Thread Starter
3rd Gear
Joined: Apr 2020
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Aside from the business write-off consideration, it also depends on a number of other factors but I’d argue to buy/finance based on the deal sheets you got (again, not considering business write-offs as I’m not an expert on that).
If you decided to lease for 3 years, it would cost you $67,000 (when factoring in your trade, down payment, monthly payments, and disposition fee). If you were to buy it at lease end, you’d pay a total of $133,000.
If you decided to finance (even assuming with the 2.99%—you can do better), to get a fair comparison, let’s assume you can pay off your loan early in 3 years (same amount of time as the lease) and sell the car at the end of the 3 years. In that case, the full cost to own would be about $125,000. If you were to turn around and sell the car, it should have a residual of about 60% of MSRP (I think this is conservative), so you’d get about $72,500, meaning that your cost of driving the car for 3 years was only $52,500 ($14,500 less than leasing). And if you decided to keep the car for longer (say, 5 years and if you paid the loan off per the original 5 year plan), then the total cost to own would be about $128,000 at the 5-year mark (which would be slightly lower if you got a better interest rate), and if you sold at the end of 5 years with even a residual of about 45%, you would’ve paid a total of about $73,500 to drive the car for 5 years, which is only $6,500 more than you would’ve paid to lease for 3 years!!
Someone please check my math
If you decided to lease for 3 years, it would cost you $67,000 (when factoring in your trade, down payment, monthly payments, and disposition fee). If you were to buy it at lease end, you’d pay a total of $133,000.
If you decided to finance (even assuming with the 2.99%—you can do better), to get a fair comparison, let’s assume you can pay off your loan early in 3 years (same amount of time as the lease) and sell the car at the end of the 3 years. In that case, the full cost to own would be about $125,000. If you were to turn around and sell the car, it should have a residual of about 60% of MSRP (I think this is conservative), so you’d get about $72,500, meaning that your cost of driving the car for 3 years was only $52,500 ($14,500 less than leasing). And if you decided to keep the car for longer (say, 5 years and if you paid the loan off per the original 5 year plan), then the total cost to own would be about $128,000 at the 5-year mark (which would be slightly lower if you got a better interest rate), and if you sold at the end of 5 years with even a residual of about 45%, you would’ve paid a total of about $73,500 to drive the car for 5 years, which is only $6,500 more than you would’ve paid to lease for 3 years!!
Someone please check my math
I do have to explore the write offs since I own a business. I think I can do the same with a financed car, but I’m not fully sure.
Racer
Joined: Sep 2012
Posts: 302
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Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
Yea, look into it. I’m not an expert but I think with a financed car, you can write off the interest and depreciation as well as mileage/maintenance of course (portion attributed to business). So there is marginal difference but factoring in the savings from buying and depending on other factors unique to you will determine which route you should take. For example, consider how many miles you’ll drive (obviously lease is limited and can be expensive if you drive a lot), whether you’d want to buy at lease end, and what percentage of your use will be for business (the lower, the more it’d make sense to finance I think).
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Racer
Joined: Sep 2012
Posts: 302
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I don't know if this works with Porsche leasing, but for a car I wanted to keep I've leased at a higher than required payment which lowered the residual, and then bought at that lower residual. That essentially gave me accelerated depreciation.
Racer
Joined: Jul 2017
Posts: 261
Likes: 54
From: MA
Really you do need to consult a CPA or other expert. People here do not know your situation well enough to give you definitive advice.
For instance the answer, "Nope. You can write off the interest but you'll have to depreciate the vehicle over many years as opposed to writing off the entire lease cost (both minus personal use of course)." may not apply to you. A Section 179 deduction may allow you to deduct a large part of the entire cost of the car in the first year. There are qualifications, one of which the car has to be used primarily for business.
Again, getting tax advice on here is problematic in that if you take someone's advice and get audited, that member is not going to defend their advice to you in front of the IRS. But Agent Smith this guy called panamerafanaticandknowitall on Rennlist said I could do it.
For instance the answer, "Nope. You can write off the interest but you'll have to depreciate the vehicle over many years as opposed to writing off the entire lease cost (both minus personal use of course)." may not apply to you. A Section 179 deduction may allow you to deduct a large part of the entire cost of the car in the first year. There are qualifications, one of which the car has to be used primarily for business.
Again, getting tax advice on here is problematic in that if you take someone's advice and get audited, that member is not going to defend their advice to you in front of the IRS. But Agent Smith this guy called panamerafanaticandknowitall on Rennlist said I could do it.
Last edited by knowspin; Aug 13, 2021 at 04:03 PM.
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
Really you do need to consult a CPA or other expert. People here do not know your situation well enough to give you definitive advice.
For instance the answer, "Nope. You can write off the interest but you'll have to depreciate the vehicle over many years as opposed to writing off the entire lease cost (both minus personal use of course)." may not apply to you. A Section 179 deduction may allow you to deduct a large part of the entire cost of the car in the first year. There are qualifications, one of which the car has to be used primarily for business.
Again, getting tax advice on here is problematic in that if you take someone's advice and get audited, that member is not going to defend their advice to you in front of the IRS. But Agent Smith this guy called panamerafanaticandknowitall on Rennlist said I could do it.
For instance the answer, "Nope. You can write off the interest but you'll have to depreciate the vehicle over many years as opposed to writing off the entire lease cost (both minus personal use of course)." may not apply to you. A Section 179 deduction may allow you to deduct a large part of the entire cost of the car in the first year. There are qualifications, one of which the car has to be used primarily for business.
Again, getting tax advice on here is problematic in that if you take someone's advice and get audited, that member is not going to defend their advice to you in front of the IRS. But Agent Smith this guy called panamerafanaticandknowitall on Rennlist said I could do it.
Drifting
Joined: Feb 2017
Posts: 3,025
Likes: 1,486
How does writing off a lease generally work for SMB owners?
In Texas, taxes on SMB I think are ~1%. So if I can write off the expenses associated with a car lease each year (let’s say $12,000 / yr) would I save 1% of $12k? Sorry, solid info is hard to find I guess.
In Texas, taxes on SMB I think are ~1%. So if I can write off the expenses associated with a car lease each year (let’s say $12,000 / yr) would I save 1% of $12k? Sorry, solid info is hard to find I guess.
Rennlist Member
Joined: Jul 2015
Posts: 890
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From: CANADA
Depending on your jurisdiction you can depreciate a vehicle whether it's purchased with cash, financed or leased. This is a question best left with your accountant and your personal scenario.
Coles notes
1. leasing is the worst financially, you'll pay more every time but if you like to swap cars every 3-4 years, it makes the process less painful. potentially. just know that if you buy out the vehicle at the end of lease, there are usually additional exorbitant fees so keep that in mind with your calculations.
2. financing is better financially and you own the vehicle which is a plus but you also have the pain of selling it/trading it in when you want a new one. best if you plan on keeping it 4+ years.
3. cash is ideal but not always the best idea to tie up a big chunk of money into a depreciating asset if it can be put to better use elsewhere. as above, it all depends on your particular situation.
Coles notes
1. leasing is the worst financially, you'll pay more every time but if you like to swap cars every 3-4 years, it makes the process less painful. potentially. just know that if you buy out the vehicle at the end of lease, there are usually additional exorbitant fees so keep that in mind with your calculations.
2. financing is better financially and you own the vehicle which is a plus but you also have the pain of selling it/trading it in when you want a new one. best if you plan on keeping it 4+ years.
3. cash is ideal but not always the best idea to tie up a big chunk of money into a depreciating asset if it can be put to better use elsewhere. as above, it all depends on your particular situation.
RL Community Team
Rennlist Member
Rennlist Member
Joined: Jan 2021
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Depending on your jurisdiction you can depreciate a vehicle whether it's purchased with cash, financed or leased. This is a question best left with your accountant and your personal scenario.
Coles notes
1. leasing is the worst financially, you'll pay more every time but if you like to swap cars every 3-4 years, it makes the process less painful. potentially. just know that if you buy out the vehicle at the end of lease, there are usually additional exorbitant fees so keep that in mind with your calculations.
2. financing is better financially and you own the vehicle which is a plus but you also have the pain of selling it/trading it in when you want a new one. best if you plan on keeping it 4+ years.
3. cash is ideal but not always the best idea to tie up a big chunk of money into a depreciating asset if it can be put to better use elsewhere. as above, it all depends on your particular situation.
Coles notes
1. leasing is the worst financially, you'll pay more every time but if you like to swap cars every 3-4 years, it makes the process less painful. potentially. just know that if you buy out the vehicle at the end of lease, there are usually additional exorbitant fees so keep that in mind with your calculations.
2. financing is better financially and you own the vehicle which is a plus but you also have the pain of selling it/trading it in when you want a new one. best if you plan on keeping it 4+ years.
3. cash is ideal but not always the best idea to tie up a big chunk of money into a depreciating asset if it can be put to better use elsewhere. as above, it all depends on your particular situation.
Burning Brakes
Joined: Apr 2021
Posts: 1,211
Likes: 494
From: Southern California
Leasing isn't the worst financially. Leasing is honestly the best option. I've never faced any fees for buying the car out at the end. The only time I ever got a fee from leasing was when I didn't release another car from the same company. I believe it was Infinity at the time ( Remember the days when the G35x Was hot and not a pizza delivery car)