One-pay lease and account balance? SOLVED!

[tmrqs]

Edit:
Explanation is in post 5 below.

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Original post:
I got my Turbo on a 24mo one-pay lease as I've detailed in other threads.
Signed a check for $50k+ and in a couple of years, I can choose to keep the car (and pay $70k+) or return it at likely no cost.

Looking at my first statement from PFS, I noticed the line that shows:

Account Balance

$ 61,035.18

What is that? Can't be the balance left on the lease, paid it all upfront.
Is this what I have left to pay on the car if I were to buy it right away? If so, is that all in or is there anything else that gets added to it?

First time Porsche leaser and this may be a very stupid question... thanks!

 

[Toytruckmike]

My guess is that is the principal owed, and the rest is going to be interest you are going to pay on the balance owed at the end of the lease. Smarter people than me will likely clarify, but I'm on the forum now instead of doing the household projects I should be.

 

[dgkhn]

I got my Turbo on a 24mo one-pay lease as I've detailed in other threads.
Signed a check for $50k+ and in a couple of years, I can choose to keep the car (and pay $70k+) or return it at likely no cost.

Looking at my first statement from PFS, I noticed the line that shows:

Account Balance

$ 61,035.18

What is that? Can't be the balance left on the lease, paid it all upfront.
Is this what I have left to pay on the car if I were to buy it right away? If so, is that all in or is there anything else that gets added to it?

First time Porsche leaser and this may be a very stupid question... thanks!

Don't take my word for any of this; you can call Porsche easily enough and they will tell you for sure. Do NOT ask the dealer; speak with Porsche Finance directly. Below is my understanding, not Gospel truth.

I am 95% sure that number is the full balance you would owe at that date to buy the car outright. On a regular 24-month lease (which I have), my understanding is that the balance would decrease each month as I pay down the depreciation. IT IS NOT TRUE, as many people seem to believe, either that you would be charged back for the $7500 tax incentive, or that you would owe any part of unearned interest. But:

That said, I am not certain how one-pay leases work (I see your statement says you have made 24/24 payments, which is an interesting way of calculating this), but I assume you've paid all depreciation and interest for the 24 months up front. I don't know how Porsche would apply that prepaid interest to the account balance, but at least at first glance I would think they should subtract it out up front and take it as earned over the course of the lease. If that's the case, then I expect you would actually see that balance increase each month as the interest for the borrowed residual value is added back in. Honestly though, I have no idea what they actually do with that prepaid interest.

 

[dgkhn]

So I could buy it now for $11k less than initially quoted?? No tax??

Again, guessing: that amount would not include any tax you owe, which would be additional. Don't forget, tax could change and is out of Porsche's control.

 

[tmrqs]

Ok, clarified with PFS: the $61k is the actual balance if I wanted to buy the car today... and it includes tax!

This amount will increase monthly with the rent charge: $578 next month, and a little more every month after that until it gets to the amount I was quoted initially ($72k).

If I were to pull the trigger today, the Turbo would cost me $51k + $61k = $112k with all fees, taxes and registration included. That's a full $1k less than my window sticker PRE-TAX.

Caveats are:

1. PFS doesn't have the title yet. It can take 3 months for them to receive it from the DMV and paying off the car today will make things difficult... but as soon as they have it, PFS told me to go crazy if I want to.
2. While I will save a pretty penny vs buying in 24 months, buying now also means I'm "stuck" with the car if it devaluates like crazy or it has tons of issues... all things the lease protects me from.

Food for thought y'all, this one-pay lease keeps getting sweeter!

 

[nerv]

Wow. Thanks for the update. I’ve been planning to lease and this helps that decision even more.

 

[cottony]

I also found this thread in the taycan forum which covers buying out lease

https://www.taycanforum.com/forum/t...ring-buying-out-their-lease.12317/post-184823

 

[bbmertz]

Another benefit of the one-pay lease is that it has a lower money factor (interest rate). In my case it decreased from .0043 (10.3%) to .0035 (8.4%) on a 12-month lease which reduces the amount of interest paid over the course of the lease.

 

[tmrqs]

Another benefit of the one-pay lease is that it has a lower money factor (interest rate). In my case it decreased from .0043 (10.3%) to .0035 (8.4%) which reduces the amount of interest you pay over the course of the lease.

That’s a significant drop but man, that’s still high. When did you get these numbers?

My MF was lower than that a month ago.

 

[USMA81]

I just did exactly this: 24 month lease with a buy-out in the first month. I saved money going this route.

This is still in process as I post this. Getting the title on a timely basis could be an issue, compounded by the fact that the bill of sale was delayed going from the dealer to PFS by a couple of weeks. I think once PFS gets that, then they send the title application and paperwork to the state, then the state sends the title back to PFS, and finally PFS sends it to me so that I can get a permanent plate. I have a temporary plate that expires in five weeks. I might need an extension on the temporary plate, but the dealer is in a different state and they are disappointed I bought out the lease so soon. Without some bureaucratic expediency or a plate extension, I will be parking the Macan after that until it is sorted.

I have always owned my vehicles. I’m relatively unconcerned about residual value as I keep vehicles more than a few years. Leasing has its own set of risks and issues, IMO, but that’s for another thread.

 

[bbmertz]

That’s a significant drop but man, that’s still high. When did you get these numbers?

My MF was lower than that a month ago.

Yesterday — Porsche Financial Services quote from my SA.

 

[OutofSpecDave]

Edit:
Explanation is in post 5 below.

--

Original post:
I got my Turbo on a 24mo one-pay lease as I've detailed in other threads.
Signed a check for $50k+ and in a couple of years, I can choose to keep the car (and pay $70k+) or return it at likely no cost.

Looking at my first statement from PFS, I noticed the line that shows:

Account Balance

$ 61,035.18

What is that? Can't be the balance left on the lease, paid it all upfront.
Is this what I have left to pay on the car if I were to buy it right away? If so, is that all in or is there anything else that gets added to it?

First time Porsche leaser and this may be a very stupid question... thanks!

The $61k is most likely the amount you could write them a check (most likely with tax but check with Porsche Financial directly) to be the owner of the car now. Be careful though if you got the $7,500 Fed Tax Credit as a cap cost reduction. Most people who plan to buy the car for cash lease them in order to capture the $7,500. I would wait at least 3 months to do this though as you don’t want to lose the $7,500. Ask Porsche financial for details on how long you should wait to safely avoid having the Govt recapture and invalidate your Fed tax credit

 

[dgkhn]

Another benefit of the one-pay lease is that it has a lower money factor (interest rate). In my case it decreased from .0043 (10.3%) to .0035 (8.4%) on a 12-month lease which reduces the amount of interest paid over the course of the lease.

Be careful: dealers are permitted to mark up the money factor. I would ask the SA to put in writing that they are charging you the PFS "buy rate" money factor.

 

[USMA81]

I would wait at least 3 months to do this though as you don’t want to lose the $7,500. Ask Porsche financial for details on how long you should wait to safely avoid having the Govt recapture and invalidate your Fed tax credit

I posed this question to Chat GPT. Here is its answer:

No, there is no tax credit recapture if you lease a vehicle, receive the $7,500 federal EV tax credit, and later buy out the lease. Here’s why:

1. Tax Credit During the Lease:

• When you lease an electric vehicle (EV), the leasing company (lessor) is technically the entity eligible for the tax credit, as they are considered the owner of the vehicle for tax purposes.

• Many lessors pass this credit along to lessees in the form of reduced lease payments or a capitalized cost reduction.

2. Buying Out the Lease:

• If you buy out the lease, it’s treated as a separate transaction. The tax credit is not tied to the lease buyout because you are now purchasing the vehicle directly.

• The IRS does not require recapture of the tax credit in this situation because the original transaction (the lease) was properly eligible for the credit.

3. Eligibility on Purchase:

• If you buy the vehicle at the end of the lease, you won’t be able to claim the tax credit again, as it’s only available once per qualifying vehicle. However, no repayment or “recapture” of the credit is triggered.

Important Notes:

• Ensure the leasing company actually passed on the benefit of the credit during the lease.

• Check any specific lease terms regarding financial implications of the buyout.

Always consult with a tax advisor for guidance on your specific situation.

 

[PanameraFrank]

There is no such thing as a govt recapture of a tax credit. It's fake news.

You are !!!!!NOT!!!!! getting a tax credit when you lease a car. You are getting a DISCOUNT. Discounts cannot, by federal law, be "clawed back".

The tax law is completely irrelevant to you as a leasee (even though the tax law is perfectly irrelevant to this case either way, there is no stipulation preventing a lease from being bought out in US tax law.)

Porsche makes less money if you buy out early. That's why they don't want you to do it.

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