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

[nischalr]

I’m trying to figure out whether it’s worth scheduling an appointment with Porsche finance ahead of time to discuss my options, buying vs short term leasing (to take advantage of the tax rebate). We have always bought our cars and that was always my intention but now I’m reconsidering after some opinions in this forum. My car is not expected to arrive until the end of the month. I have tried to get some information from my SA but it’s like pulling teeth. Do you guys think is worth it or should I just wait until the delivery date to negotiate? My prior experience when buying a car is that it tends to be a back and forth situation. They offer a deal and then go to “consult” with someone when you have objections. I don’t want to waste my time if they are not going to be clear until the day you receive the car.

It will be difficult to negotiate sale price on an ordered car on the day of delivery, likely they are going to charge you MSRP unless you pre negotiated a discount when you ordered.

On the other hand, trying to negotiate a discount on a car that is in stock already might be doable.

As for dealing with finance rates and lease deals, the lease money factor rate is fixed by Porsche and you just have to make sure they are not marking up that rate and that they give you the "buy" rate for the lease.

Porsche financial may give you a competitive rate on a loan for a purchase or you can come in with your own financing though your bank or credit union.

As for the sale price, if you custom ordered the car and didn't agree on a discount, good luck with that on delivery day. They will assume you are invested enough in the custom order that you may not walk away.

You could walk away and in the US, I believe they have to give your deposit back (assuming you gave one) and you could then negotiate with that dealer or another dealer for a vehicle that is in stock.

 

[rmwrip]

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

 

[cottony]

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

you'll need to look up the lease contract for "Rent Charge" under the itemized amounts; you then pro-rate it based on how early you buy out. in your example, if you buy out after 3 months, you'd save $RENT_CHARGE * (9/12)

 

[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, 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).

Sponsored