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 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).

 

[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.

 

[tmrqs]

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.

They should disclose now.
If they refuse to, they are at best incompetent or at worst, shady. In both cases, run.

 

[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.

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