Buying vs leasing (and possibly buying then): my numbers

[USMA81]

Buried in the PFS lease terms is a small, but key fact that benefits PFS. The interest is computed using the actuarial method, not via simple interest. Many people often pay more or sooner to lower their principal balance, saving interest cost. That works with simple interest, but not under the actuarial method. Under the actuarial method, the “more or sooner” payments mostly go toward future interest, not principal, and so it doesn’t benefit the borrower. Under the actuarial method, pre-paying only works well for you when you pay off the loan completely. In that situation, you do get credit for paying early in the form of returned interest that was pre-computed as being owed by you. This is the formula cottony gave you in his post above, the interest savings you’d get by paying off completely and early.

https://www.federalreserve.gov/pubs/leasing/resource/different/early_exp5.htm

It’s unlikely with a single pay lease that you’d make a partial payment on the outstanding balance, but others reading this might.

Also include in your savings the following: buying outright costs 118,000. Leasing Day 0 the payment is 45,300. Investing the difference of 72,700 at, say, 4% for three months gives you an interest income of $970 (less income taxes, if you really want to be exacting).

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[adamjay79]

So I have a quote for a 1 pay 12 month lease. To buy outright is 118,000. Total paid buying the car with single pay of 45,300 and 80,800 buyout at the end is 126,200. My trade in will be 44,000.
So paying the lease off after 3 months would save about how much? How much per month is the “renting” in other words?
Thanks

That is 3775 a month - that is very high.

 

[PanameraFrank]

That is 3775 a month - that is very high.

This. The one pay they sent you is bogus, massive dealer markup. That's closer to what a 2 year one pay should be.

Ask them if that quote is at Porsche Financial Service buy rate and tell them you want it in writing.

 

[tmrqs]

So I have a quote for a 1 pay 12 month lease. To buy outright is 118,000. Total paid buying the car with single pay of 45,300 and 80,800 buyout at the end is 126,200. My trade in will be 44,000.
So paying the lease off after 3 months would save about how much? How much per month is the “renting” in other words?
Thanks

$45k for 12 months for what mileage?

My one pay offer for 12 mo was $38.8k and for 18 mo was $46.7k, both with 15k miles annually.

These guys are thieves…

 

[adamjay79]

My one pay for 2 years at 15k on a Turbo is around $54k

 

[DTaxman]

Question on leasing as I've never leased before. I've gotten quotes from Porsche on various lease options (one pay, regular lease, etc.) I've asked for what the residual value value to purchase would be at the end of each lease option, but have yet to get that from them. I'm assuming in an actual lease agreement they are required to disclose the rental charges and final residual value at the end if I want to purchase. Is there any reason they will not give me that residual value now as I'm trying to make a decision? I'm just trying to figure out if they are playing games with me or if this is standard practice.

 

[PanameraFrank]

The residual value should be the % they give you. It should be between 48% and 68% depending on your lease terms.

So the simple leases terms are usually something like 2 years / 10k miles a year / 68% residual value.

The end of lease buyout is simply the MSRP x that % + relevant local sales tax. So using the above example the end of lease buyout on a 100k MSRP car would be 68k + tax. That's it. Buying out at the end of lease also avoids any mileage overage fees/damage fees/etc.

And yes, they hide as much info as possible to play games. It's like pulling teeth getting fully transparent lease info.

 

[alxman]

The residual value should be the % they give you. It should be between 48% and 68% depending on your lease terms.

So the simple leases terms are usually something like 2 years / 10k miles a year / 68% residual value.

The end of lease buyout is simply the MSRP x that % + relevant local sales tax. So using the above example the end of lease buyout on a 100k MSRP car would be 68k + tax. That's it. Buying out at the end of lease also avoids any mileage overage fees/damage fees/etc.

And yes, they hide as much info as possible to play games. It's like pulling teeth getting fully transparent lease info.

Could I agree to a 24 month lease, 10k miles per year, and in 3-6 months pay off the lease without having to disclose that I’m doing that? That way I can get the 7,500 tax deduction and perhaps come ahead when compared to just buying the 4S… enclosed is the offer from the Porsche dealership.

 

[DTaxman]

The residual value should be the % they give you. It should be between 48% and 68% depending on your lease terms.

So the simple leases terms are usually something like 2 years / 10k miles a year / 68% residual value.

The end of lease buyout is simply the MSRP x that % + relevant local sales tax. So using the above example the end of lease buyout on a 100k MSRP car would be 68k + tax. That's it. Buying out at the end of lease also avoids any mileage overage fees/damage fees/etc.

And yes, they hide as much info as possible to play games. It's like pulling teeth getting fully transparent lease info.

Awesome... thank you. As a general question, would I expect that Porsche has a standard % residual value schedule by term (for any given model/options included) and it's only adjusted based on the lease mileage assumption? In other words, am I only negotiating/evaluating the lease rent charge, or do I need to push back/negotiate on the % residual value quoted in the lease?

 

[cottony]

Could I agree to a 24 month lease, 10k miles per year, and in 3-6 months pay off the lease without having to disclose that I’m doing that? That way I can get the 7,500 tax deduction and perhaps come ahead when compared to just buying the 4S… enclosed is the offer from the Porsche dealership.

yup, you can also ask for 1-pay lease quote; you'll save some money on lease payments if you do 1-pay

 

[rmwrip]

This is just all too ridiculous. I’m just going to buy the damn car tomorrow.

 

[DTaxman]

This is just all too ridiculous. I’m just going to buy the damn car tomorrow.

I'm right there with you.... I've just got a couple more weeks to make a decision. I've never been a fan of leasing and never aim to hold any vehicle for just a couple years so a steep depreciation doesn't bother me much. However, the 7.5K EV credit is the only thing I'm trying to understand if I can reasonably get it.

 

[PanameraFrank]

It's not really as complicated for the "I want to buy the car" crowd.

Any lease + buying out after 3 months will get you between 5k to 6k of savings over buying cash, assuming you check all terms.

Just ask for 2 years/7.5k miles. Make sure there's no buyout penalty clause (shouldn't be) pay for 2 additional months, then you can just buy out through the Porsche website. It's quite easy.

The different lease terms are only saving you an additional 1k at the very most aka 3 months of rent charge.

 

[dgkhn]

Could I agree to a 24 month lease, 10k miles per year, and in 3-6 months pay off the lease without having to disclose that I’m doing that? That way I can get the 7,500 tax deduction and perhaps come ahead when compared to just buying the 4S… enclosed is the offer from the Porsche dealership.

I am just answering your question here, not reviewing your deal. The answer is "Yes, you can do exactly that."

Edit: I should add, you can do that with all the Porsche leases I have seen. Read through your actual agreement language to be sure.

 

[PSPJames]

I just spoke to the dealer I'm working with and asked if the dealer had a penalty if we were to buyout the lease early. He said they get charged back if I don't make three full payments. That's fine with me! I'm attaching the residual calculator I found on another website, which seems to be accurate as far as I can see.. this is for a 2025 4S.

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