Lease Vs Buy

[sunracer]

I'm getting a new C4S in the next few days (see my last post in "any advice on wrecked C4S") and I've always bought my cars but I'm considering a lease this time around.

This makes my 3rd new 911 in 6 months and I expect this to be my primary car for at least a few years to come. I don't drive too much, maybe 12K to 15K per year and I'm mostly concerned about having some jerk wreck my next 911 after it's a year old and can't be totaled like my last one.

Does anyone have any advice or experience with leasing Vs buying that they can share?...

[wangt1015]

My car is arriving sometime around the 20th of this month. I am plannning to lease this time instead of buying it.

I purchased my last C4 and after driving it for a few years, I realized that the depreciation is pretty close to the cost of leasing it. Since I can use the lease payment as a tax write off and I don't plan on doing major mods to it, and I like the idea of getting a new one every few years, I decided to go with the lease.

[chance2001]

I'm getting a new C4S in the next few days (see my last post in "any advice on wrecked C4S") and I've always bought my cars but I'm considering a lease this time around.

This makes my 3rd new 911 in 6 months and I expect this to be my primary car for at least a few years to come. I don't drive too much, maybe 12K to 15K per year and I'm mostly concerned about having some jerk wreck my next 911 after it's a year old and can't be totaled like my last one.

Does anyone have any advice or experience with leasing Vs buying that they can share?...

What's going on Sunracer?! Looks like you're on your way,..good for you. I happened to know a little about leases. Here's the scoop: you need to answer a few key questions first. Like mileage, which we know (little hi for a porsche, believe it or not), length you plan to keep the car, your reason for leasing (low down payment, depreciation, ??) and probably the biggest; can you deduct it?? First, I mean no disrespect with any of the comments. Leases are becoming very popular these days because the price of cars have increased dramatically over the years and to acommodate more buyers leasing companies have stepped into the fray heavily. For the first time in history, more cars are leased than ever.

If you can deduct the car as a business expense; it being your "company" car (check with your accountant), then it makes sense. If you can't, you have a tough road to hoe here. There are cost factors (mystery multiples), residual value, depreciation recapture and residual paydowns that come into play. In many instances one or two of the factors are not known because the companies are not required to divulge them to you. ALL dealers would rather lease you a car than sell you one because the margins are significantly higher on leases than a purchase. Just so you know, the 05 and 06's are holding their values pretty well, unless you speak with a leasing company or dealer that has to resell them. For cars with high depreciation like Infinity Q45's, or BMW 7 Series, leasing probably makes sense. Generally, you are better off buying and taking your punches in depreciation. The average depreciation on a 997 is 5g a year, depending on condition, mileage and options (which help, but not nearly to the extent of their cost).

Go on-line and compare, compare if you decide to lease. It's tricky and there are many holes to fall in; more down payment, close-end payment, lower miles, weak factors, etc.. Do your homework. When you buy, you know what you'll pay and you pretty much know what you'll get when you want to sell, baring some dumb-as** in pick-up truck smashing into your rear.

Edited March 11, 2006 by happy911

[albonya]

Having leased 5 cars in the past 12 years from 4Runners, to X5's to Cayenne's to an LR3 and a 997 (both in Jan of 06) and I've learned a bit from each experience. My advice is take a lease if you plan to keep your mileage down (a 10k mile per year lease will up your residual 2-3% points) and if you do not plan to buy the car down the road and NEVER put a big down payment on a car. Depreciation in the first 2 years will kill you if you have to or want to get out of the car.

Also, secure your own financing before you go if you can get a great rate. More on this below.

Happy, Depreciation on a 997 is about 12% a year averaged right now (about 50-70% of the total in the first 2 years) and change as the market changes - sometimes daily. The best residual on a 3 yr/12k lease for a new 997 C2 is about 58% (through Porsche FS, Chase may have a slightly higher one).

There are only 4 numbers in a lease payment calculation: Cap Cost (price you pay), Residual, Money Factor (interest rate), Trade In value (cap cost reduction) and Cap Cost Reduction (money you put down). All dealer costs will be factored into the Cap Cost so that number should be negotiated first, don't let them stray off this topic, get a number in stone they're willing to sell for.

The financing is where they can screw you. This is the only area of a lease where they don't have to divulge the best residual/MF combo to you. They have incentives to put you into Porsche Financing which may not be the best rate so be careful here. They can also try to pad the rate (Rusnak in CA does this shamelessly) This is why it is important to get your own financing before going in. Try to obtain as much current residual info as you can before going in too. It's not too hard to find on the net (cars.com, leasecompare have decent info although it's not always accurate.)

Negotiate your deal with $0 down first and then discuss cap reduction after your deal is in place. After you say you now want to put money down, don't let them change ANYTHING in the deal in terms of the financing, they will try and screw you.

After you've collected as much info as possible, go to carbuyingtips.com and download the Xcel spreadsheet from their Lease section. This form is based on the Federal Lease Act and calculates everything for you and gives you a good idea about what you should pay (if you have a lease now, take your yellow lease paperwork and plug it into this spreadsheet, you may be surprised - or shocked!). I walked in with one of these when going to get my 997 and said "This is the deal I want" and handed them the sheet. Deal I got was darn close and that way they know you are informed about the car/lease and won't waste time trying to screw you.

Other things to try and do before leasing:

-Make sure your credit is top tier. Anything below 720-740 and you're going to pay more.

-Take a 36 month lease or more but never a lease term longer than the warranty (48 months). This is just not smart if there are mechanical problems in your 5th year. Also, Porsche (only company I know of with 24 month terms on a 997) will penalize you with a high cost of borrowing (10% +) if you take this short term simply due to the depreciation they have to absorb. They will give you good residuals to try and cover this up but you're getting screwed.

-Get a car that's already on a lot, don't order one (unless you absolutely have to). You will get a better deal on a car that is spec'd for your state that the dealer has to pay to keep on his lot everyday than you will a one off car spec'd to your racecar tastes that the dealer is going to have a tough time selling if you decide to back out. Also, financing terms can flucuate quite a bit from time of order to delivery and you cannot do your financing until the car arrives at the dealer.

-Sell your current car if you have one. DO NOT trade it in. They will try and give you auction rates. Even if you have a current lease you can sell that car at any time and simply pay the bank off like any other vehicle.

-Mark up on a 997 is about 12-14% over sticker. That's what they're making on the deal. This margin is what you want to negotiate. Expect to pay 7% of this at least (most dealers are getting sticker for their cars).

-If you want a great deal, get a stick. There are far more of those than Tiptronics.

-If you have a few extra $$$ buy Expert Lease Pro from Chart Software to help with your research. Great Tool. $70, will save you thousands. Calculates margins and cost for every option (kbb does not do this for Porsche).

-Don't fall for the line "Every $1000 is about $30 a month on your payment so if you want this deal I'm offering at $1400 a month for $1250 a month, you're asking for another $5000 off the car". This is BS and is an attempt to manipulate you. This "calculation" doesn't take into account the residual or MF and is not spread out over time (the way a lease is structured).

At the end of the day a car is a bad investment and depreciation is severe and quick. If you buy the car outright and drive it for 10 years (with no major service - important) then you can get value. It is rare that you will not need major service on a Porsche at some point. If you lease or buy with the plan to maybe sell in a few years, don't put a lot of money down. Put that money you were going to put down in the markets and try for 5% or if you're lucky the market average of 10%. You have a chance of getting enough return to offset your financing costs and if you get some great returns, you can offset some depreciation.

Sorry for long post but I've learned a lot from intially paying $5k over sticker for a 4Runner in 1997 (!!) to getting $5k off sticker on a 997 (and even better an LR3 for my wife at $700 above dealer cost) and since it's easy to get ripped off when doing any car deal, I feel any information you can get empowers you and helps you get a good deal.

good luck.

Edited March 11, 2006 by albonya

[sunracer]

Great info thanks for the posts!

After reading these I'm even more nervous about leasing than before. I've never leased a car and I've done okay on resale. In my case I need to drive 10K to 15K a year and my biggest concern is that I get another idiot on a cell phone plow in to my back end doing serios damage. With a lease I wouldn't really care too much because it's not really my car. If I own it then I'm stuck.

At this point the car I'm getting will be at the dealer soon and I'm actually getting more than $8K off a brand new 997 (albeith the sticker is a bit over $100K). This seems like a great deal to me but the finance manager spent a lot of time discussing lease Vs buy with me and he was definitely biased towards leasing. This makes me feel a bit like I'm being sold on a lease and that makes me wonder what I'm missing.

My preference by far is to buy the car and insure the hell out of it so that it's easy to get whole if it get smacked, even a year or two down the road. IOW, I'd like apolicy that explicitly states replacement, not repair or replacement - I'll have to check with my insurance rep.

As far as the tax situation, I already write-off my mileage in full since my car is used almost exclusively for business. If I could write-off the lease payments and not just the mileage then we're talking...

The other comment about Porsches needing major service sometime in 10 years has me wondering...a clutch or exhaust or brakes are not a problem but what do you mean by "major?" I've had plenty of BMWs run more than 10 years with no major and almost no minor service at all...

[albonya]

sunracer

Dealer may prefer you lease for several reasons, one being that you'll be back in 3 years and hopefully get another car from them and another being that they will most likely be able to sell your return for above payoff. He may have just been being straight with you and recommended leasing due to the depreciation you incur

Your car may never need service. Major service I would put at 3k or more. The only reason to mention this is that everytime you need expensive service you are adding cost to an already depreciated asset and value plummets even further. Porsche parts, though they are made to last, are also made for peformance and if you drive it for performance, you take a bigger toll on the parts. Impossible to tell if/when they'll go out.

Some finance companies (I know Porsche does) include Gap Insurance on your lease as well. Though this isn't total replacement, it covers any gap between the value of the car at time of an accident and what you owe on it (which is important since it is estimated that most cars lose as much as 20-30% of their value after 3 months).

[chance2001]

Having leased 5 cars in the past 12 years from 4Runners, to X5's to Cayenne's to an LR3 and a 997 (both in Jan of 06) and I've learned a bit from each experience. My advice is take a lease if you plan to keep your mileage down (a 10k mile per year lease will up your residual 2-3% points) and if you do not plan to buy the car down the road and NEVER put a big down payment on a car. Depreciation in the first 2 years will kill you if you have to or want to get out of the car.

Also, secure your own financing before you go if you can get a great rate. More on this below.

Happy, Depreciation on a 997 is about 12% a year averaged right now (about 50-70% of the total in the first 2 years) and change as the market changes - sometimes daily. The best residual on a 3 yr/12k lease for a new 997 C2 is about 58% (through Porsche FS, Chase may have a slightly higher one).

There are only 4 numbers in a lease payment calculation: Cap Cost (price you pay), Residual, Money Factor (interest rate), Trade In value (cap cost reduction) and Cap Cost Reduction (money you put down). All dealer costs will be factored into the Cap Cost so that number should be negotiated first, don't let them stray off this topic, get a number in stone they're willing to sell for.

The financing is where they can screw you. This is the only area of a lease where they don't have to divulge the best residual/MF combo to you. They have incentives to put you into Porsche Financing which may not be the best rate so be careful here. They can also try to pad the rate (Rusnak in CA does this shamelessly) This is why it is important to get your own financing before going in. Try to obtain as much current residual info as you can before going in too. It's not too hard to find on the net (cars.com, leasecompare have decent info although it's not always accurate.)

Negotiate your deal with $0 down first and then discuss cap reduction after your deal is in place. After you say you now want to put money down, don't let them change ANYTHING in the deal in terms of the financing, they will try and screw you.

After you've collected as much info as possible, go to carbuyingtips.com and download the Xcel spreadsheet from their Lease section. This form is based on the Federal Lease Act and calculates everything for you and gives you a good idea about what you should pay (if you have a lease now, take your yellow lease paperwork and plug it into this spreadsheet, you may be surprised - or shocked!). I walked in with one of these when going to get my 997 and said "This is the deal I want" and handed them the sheet. Deal I got was darn close and that way they know you are informed about the car/lease and won't waste time trying to screw you.

Other things to try and do before leasing:

-Make sure your credit is top tier. Anything below 720-740 and you're going to pay more.

-Take a 36 month lease or more but never a lease term longer than the warranty (48 months). This is just not smart if there are mechanical problems in your 5th year. Also, Porsche (only company I know of with 24 month terms on a 997) will penalize you with a high cost of borrowing (10% +) if you take this short term simply due to the depreciation they have to absorb. They will give you good residuals to try and cover this up but you're getting screwed.

-Get a car that's already on a lot, don't order one (unless you absolutely have to). You will get a better deal on a car that is spec'd for your state that the dealer has to pay to keep on his lot everyday than you will a one off car spec'd to your racecar tastes that the dealer is going to have a tough time selling if you decide to back out. Also, financing terms can flucuate quite a bit from time of order to delivery and you cannot do your financing until the car arrives at the dealer.

-Sell your current car if you have one. DO NOT trade it in. They will try and give you auction rates. Even if you have a current lease you can sell that car at any time and simply pay the bank off like any other vehicle.

-Mark up on a 997 is about 12-14% over sticker. That's what they're making on the deal. This margin is what you want to negotiate. Expect to pay 7% of this at least (most dealers are getting sticker for their cars).

-If you want a great deal, get a stick. There are far more of those than Tiptronics.

-If you have a few extra $$$ buy Expert Lease Pro from Chart Software to help with your research. Great Tool. $70, will save you thousands. Calculates margins and cost for every option (kbb does not do this for Porsche).

-Don't fall for the line "Every $1000 is about $30 a month on your payment so if you want this deal I'm offering at $1400 a month for $1250 a month, you're asking for another $5000 off the car". This is BS and is an attempt to manipulate you. This "calculation" doesn't take into account the residual or MF and is not spread out over time (the way a lease is structured).

At the end of the day a car is a bad investment and depreciation is severe and quick. If you buy the car outright and drive it for 10 years (with no major service - important) then you can get value. It is rare that you will not need major service on a Porsche at some point. If you lease or buy with the plan to maybe sell in a few years, don't put a lot of money down. Put that money you were going to put down in the markets and try for 5% or if you're lucky the market average of 10%. You have a chance of getting enough return to offset your financing costs and if you get some great returns, you can offset some depreciation.

Sorry for long post but I've learned a lot from intially paying $5k over sticker for a 4Runner in 1997 (!!) to getting $5k off sticker on a 997 (and even better an LR3 for my wife at $700 above dealer cost) and since it's easy to get ripped off when doing any car deal, I feel any information you can get empowers you and helps you get a good deal.

good luck.

Great comments. I strongly suggest negotiating on the car as if you plan to buy it; getting the best possible price on the car. Then, at the last moment, say you want to lease, knowing all your facts.

The phrase "you pay for the car you use" isn't necesarily true. Best guess estimates go into the calculations as to what the car will be worth at the termination of the lease, which goes into the calculation of your lease payment. If you drive your car (mileage on Porsche leases is generally less since it's considered a sports car and less miles are supposedly driven on it-or higher payment to account for the higher depreciation associated with a "high-milage" porsche) higher than the miles, you'll pay. I'm not a fan of leasing because even with perfect information, there is still room for manipulation. Ask yourself why dealers are so motivated to lease a car over selling them. It has nothing to do with moving units, the margin is higher (source:Finance mgr at a prestigious Dallas dealer) because they can be more creative with YOUR money. Someone is paying that margin, do you think it's the dealer?? I'll attach a coulple links that you should read carefully before considering and while considering to lease a high-end car like this. As for investing, I work for a large investment firm that manages $60bil and there's never any argument about putting your money in the market over buying anything you own beside your house. If you think you're circumventing the depreciation on a car by leasing it, you're sadly mistaken. You shouldn't buy anything and just invest the money period. Cars are fools like us who know we will lose some money on them while you own it. I've leased a dozen cars: SL500 (2), E55 (2), SL55 (1), 360 Modena (1), S55 (1) and others, before realizing that leasing is not the "best" route to go.

Putting a lot of money down on a car is always painful, I don't care how much money you have. Putting a little down allows the bank to (as mentioned earlier in the lease comments above) take the depreciation while you pay them 6-8% interest for doing so (leasing programs are HIGHER-it's a "service" they're providing you). But it is transparent here with no hidden formulas (I will link you to a site later that discusses the requirements, little to none, to divulging leasing factors). I fully respect the earlier comments, but why pay factors when you can buy the car for little down and actually have an asset to sell at the end of the term, during the term, or whenever. A lease is a contract and they will hold you to it.

FYI: I buy all my cars using my local bank to handle the purchase as a means of protection in case something goes awry (out of state purchases, potentially crooked sellers, etc..) then I take the note down from the bank a month later. If you have a relationship with a bank, go talk with them and tell them your story. Check back later today or tomorrow and I'll have some links for you. Gather everything you can before you make your decision.

[albonya]

>>I'm not a fan of leasing because even with perfect information, there is still room for manipulation. Ask yourself why dealers are so motivated to lease a car over selling them. It has nothing to do with moving units, the margin is higher (source:Finance mgr at a prestigious Dallas dealer) because they can be more creative with YOUR money.<<

Interesting stuff but I don't think it's entirely true.

They can only manipulate you if you don't know what 's involved in a lease calculation and you don't keep track of the cap cost through every part of the process but other than that a lease deal is no different than buying. The margins are not higher, they pay a fixed cost for the cars and finance them from Porsche just like you would, albeit at wholesale (thus the need to sell them). They only make a higher margin if you give it to them. Essentially, they can only manipulate you if you go into a dealership uninformed. This applies to both buying and leasing.

Financing is no different at a dealer for purchasing or buying. You're simply financing part of the car vs. all of the car. You can deduce the interest rate from a money factor very easily (MF (expressed as a decimal x 2400). Just don't let them talk to you about a rate of 3 like it means 3%.

The thing that should be illegal is that they don't have to give you the best rate if they don't want (even if it's available to you) when you're buying or leasing, this is why it's essential to have your own financing, one less number for them to fudge but they can only make money on the financing if you finance through the car maker (Porsche) who, ironically may have the best rates.

Edited March 13, 2006 by albonya

[sunracer]

Again, thanks for the great comments and advice! My concern around leasing is exactly what you're hitting on - the fact that it's more complex than buying and that the dealer (most likely to lease from) doesn't have to disclose all the details.

The finance officer at my dealer ran numbers for me and I was a bit shocked at the $ for leasing. A 36 month lease with 15K miles/year was going to cost within $200/month of an out right purchase. Of course after 36 months I can just walk away but I may not actually own any more of the car if I bought it anyway. Again, I'm wary of anyhting that seems to be pushed so hard and it seems like all dealers are pushing leases.

Talking with salesmen at other high end dealers it's pretty clear that most high end cars, or even mid-line cars are leased these days. I don't take this as a sign that leasing makes sense mostly because I believe that most people spend beyond their means. For example, over half the new house loans in my area are interest only loans which seems either ridiculous or unrealistically optomistic to me.

At this point I'm leaning toward buying with no cash down - something that I wouldn't normally do. The reason is that I plan to buy the gap insurance and that only makes sense if I maximize the loan amount. I hate to do it but if the car gets wrecked in a year I could end-up forfeiting all of my down payment if I have to rely on the gap insurance.

I guess that I'm just gun shy after having a 3 week old 911 get wrecked due to an idiot on a cell phone - normally I wouldn't worry about most of this stuff. Thanks again for the advice and comments.

[albonya]

It's really up to you the driver whether or not leasing is a good idea. If you like to constantly drive the latest models with the latest tech, lease. If you drive your car until the wheels fall off, buy. However I do think it's bad to buy and then trade up every few years because at that point you are experiencing the maximum amount of depreciation in the shortest period of time on your resale or even worse, a trade-in.

$200 less a month to lease than buy? That doesn't sound right and I wouldn't trust that dealer, sounds like he's padding rates or pushing a purchase, or he is giving you the payment on a 36 month lease and a 60 month financing (which still should probably be $600 more than a 36 mo lease). If you look at a 36 month lease vs. 36 month buy payment, the lease payment will be less than half (or should be).

There's no reason for a dealer to take a lease over a buy (other than they might think they can beat you with doublespeak and confusing terms), either way the bank owns the car until it's paid for or returned. Even though you return it to the dealer, the bank still owns it and it gets bought by the dealer (if they think they can retail it for a profit) or they auction it for the bank.

Here's a great, accurate Lease vs. Buy Calculator. If you plug in the numbers you'll see that a lease is going to be a lot less than a buy payment on a monthly basis in every instance.

http://www.bloomberg.com/analysis/calculators/leasebuy.html

Another super simple way to look at calculating the payment is:

Take the amount that you buy the car for (cap cost), subtract the residual you are getting and the amount you put down. That number is the total base amount for your lease. Add tax and interest and then divide it by however many months you want your lease to be, that is your payment.

Best of luck.

Edited March 13, 2006 by albonya

[C4S Surgeon]

I lease cars all the time, mainly because I can write the thing off. My practice(pc) makes the payments in pretax dollars, same goes for all the consumables associated with the car (tires, gas, etc). Never put down a dp on a car you are going to lease, you want to minimize your out of pocket/up front costs (that's not deductable). Roll the taxes into the lease pymnt and pay it all with pretax dollars.

Remember, negotiate down a price, zero dp, zero sd, and minimize up front costs.

Leasing isn't for everybody, if you can't write it off, I wouldn't do it, check with your accountant.

[LVDell]

I'll offer my $.02 into the fray. The reason we just leased our Cayenne is that we were NOT sure this is the SUV we wanted in the future and we just can't seem to keep our 3rd car for more than a couple years at a time. The lease allows us to drive it for 3 years (36 mos) and 12K a year in miles and that will be plenty of time to figure out if we really want one for a longer period of time and make sure we have the correct combo (e.g., engine size, options, color, etc.).

We didn't have quite the knowledge that most have n leasing but what we did know is that we sut up the scenario as follows:

**The lease payment needed to be equal to or less than what we would have paid our bank in a purchase (real) car payment. And NO it is not based on a 3 year traditional loan since a 3 year regular loan would mean I own the car after 3 years and on the lease if I wanted to own it I would have to either pay the residual amount or take out another loan.

**We were going to put ZERO down

**We estimated what the Cayenne would be worth on the backside of the term and figure out if our number meshed with theirs (residual). If it was equal to or GREATER than we did pretty good since we would have to sell it on our own and run the risk of being upside down in our loan. Not good.

At the end of the day, we got a 55K Cayenne with ZERO down 36mos 12K/year for $800 a month. I think we did quite well. (comes out to about 2% INTEREST RATE on a 36 month loan).

[albonya]

Not bad at all. if you don't mind me asking what bank offered you the 2% on a Porsche lease?

[LVDell]

Porsche. But the dealer had to take 6K off of the sticker to get that payment amount and zero down to work for us. So in reality we are paying an interest rate around 6.5% which is what we would have got at the bank for a traditional loan.

So while Porsche Financial got 6.5%, the dealer had to loose 6K off profit. Either way, good deal for us.

FYI.....the amount between invoice and MSRP on a V6 Cayenne is roughly 5.5K so by that logic I got the car at $500 below invoice and a 6.5% loan for 3 years with nothing to sell. I feel good about my purchase.

I think what helped is that fact that we bought our 996CAB from the same guy and told him that we did NOT need a new SUV (we had a great ML430 that was under warranty still and drove like a champ) as well, we basically came in with the number $800 a month 36mos 12K/yr and zero down. He came back with that payment but like 3 or 4K down to which I said "these are my requirements, if you can't meet them, just let me know so we can go...I do NOT want my time wasted."

[albonya]

Porsche. But the dealer had to take 6K off of the sticker to get that payment amount and zero down to work for us. So in reality we are paying an interest rate around 6.5% which is what we would have got at the bank for a traditional loan.

So while Porsche Financial got 6.5%, the dealer had to loose 6K off profit. Either way, good deal for us.

FYI.....the amount between invoice and MSRP on a V6 Cayenne is roughly 5.5K so by that logic I got the car at $500 below invoice and a 6.5% loan for 3 years with nothing to sell. I feel good about my purchase.

I think what helped is that fact that we bought our 996CAB from the same guy and told him that we did NOT need a new SUV (we had a great ML430 that was under warranty still and drove like a champ) as well, we basically came in with the number $800 a month 36mos 12K/yr and zero down. He came back with that payment but like 3 or 4K down to which I said "these are my requirements, if you can't meet them, just let me know so we can go...I do NOT want my time wasted."

That's not too bad and I don't mean to be disrespectful in any way but you might want to run your lease through a calculator or spreadsheet. With a purchase price of $49k, 6.5% State Sales Tax, 6.5% and $0 down (assuming a 56% residual - current ALG) the payment would be around $758 a month or $1515 less over the whole lease. Not a huge amount but it has to be hidden in there somewhere.

Edited March 13, 2006 by albonya

[LVDell]

Don't worry about it, don't feel like you are disrespecting at all.

FYI...The residual was 29,800 and our tax rate here in NV is 7.25%

Maybe they tinkered with the residual???

[sunracer]

The discussions here help me feel better about what I decided to do - buy. I picked-up my new C4S tonight - identical to the one that was wrecked a month ago and I bought it. It just wasn't worth it to lease with only $200/month difference between lease Vs buy (36 mo lease Vs 60 mo buy). I love the car and plan to keep it a long time. I can already write-off my mileage (buy or lease) so I'm not too worried about that and I wasn't thrilled about the undisclosed parts of a lease so I punted...

Thanks for all the comments and advice!

[albonya]

The discussions here help me feel better about what I decided to do - buy. I picked-up my new C4S tonight - identical to the one that was wrecked a month ago and I bought it. It just wasn't worth it to lease with only $200/month difference between lease Vs buy (36 mo lease Vs 60 mo buy). I love the car and plan to keep it a long time. I can already write-off my mileage (buy or lease) so I'm not too worried about that and I wasn't thrilled about the undisclosed parts of a lease so I punted...

Thanks for all the comments and advice!

congrats.

[hatchback]

Thanks for the great thread, guys.

To add my two cents... It's difficult to get a fair price on a new car. The more complex the transaction, the more likely you will make a mistake in the dealer's favor. I highly recommend reading Remar Sutton's "How Not to Get Taken Everytime" before you buy a car.

http://www.amazon.com/gp/product/014100149...5Fencoding=UTF8

BTW, the argument about leasing getting more favorable tax treatment is only true if your business owns the car (not recommended). If you own the car, your business can pay you an auto allowance, which is an easy way to pay for your business use of your car with pre-tax dollars. (Or so I was told, best to confirm this with your accountant.)

[C4S Surgeon]

In any lease, the bank owns the car, not the business.

[mabee]

:clapping:

Having leased 5 cars in the past 12 years from 4Runners, to X5's to Cayenne's to an LR3 and a 997 (both in Jan of 06) and I've learned a bit from each experience. My advice is take a lease if you plan to keep your mileage down (a 10k mile per year lease will up your residual 2-3% points) and if you do not plan to buy the car down the road and NEVER put a big down payment on a car. Depreciation in the first 2 years will kill you if you have to or want to get out of the car.

Also, secure your own financing before you go if you can get a great rate. More on this below.

Happy, Depreciation on a 997 is about 12% a year averaged right now (about 50-70% of the total in the first 2 years) and change as the market changes - sometimes daily. The best residual on a 3 yr/12k lease for a new 997 C2 is about 58% (through Porsche FS, Chase may have a slightly higher one).

There are only 4 numbers in a lease payment calculation: Cap Cost (price you pay), Residual, Money Factor (interest rate), Trade In value (cap cost reduction) and Cap Cost Reduction (money you put down). All dealer costs will be factored into the Cap Cost so that number should be negotiated first, don't let them stray off this topic, get a number in stone they're willing to sell for.

The financing is where they can screw you. This is the only area of a lease where they don't have to divulge the best residual/MF combo to you. They have incentives to put you into Porsche Financing which may not be the best rate so be careful here. They can also try to pad the rate (Rusnak in CA does this shamelessly) This is why it is important to get your own financing before going in. Try to obtain as much current residual info as you can before going in too. It's not too hard to find on the net (cars.com, leasecompare have decent info although it's not always accurate.)

Negotiate your deal with $0 down first and then discuss cap reduction after your deal is in place. After you say you now want to put money down, don't let them change ANYTHING in the deal in terms of the financing, they will try and screw you.

After you've collected as much info as possible, go to carbuyingtips.com and download the Xcel spreadsheet from their Lease section. This form is based on the Federal Lease Act and calculates everything for you and gives you a good idea about what you should pay (if you have a lease now, take your yellow lease paperwork and plug it into this spreadsheet, you may be surprised - or shocked!). I walked in with one of these when going to get my 997 and said "This is the deal I want" and handed them the sheet. Deal I got was darn close and that way they know you are informed about the car/lease and won't waste time trying to screw you.

Other things to try and do before leasing:

-Make sure your credit is top tier. Anything below 720-740 and you're going to pay more.

-Take a 36 month lease or more but never a lease term longer than the warranty (48 months). This is just not smart if there are mechanical problems in your 5th year. Also, Porsche (only company I know of with 24 month terms on a 997) will penalize you with a high cost of borrowing (10% +) if you take this short term simply due to the depreciation they have to absorb. They will give you good residuals to try and cover this up but you're getting screwed.

-Get a car that's already on a lot, don't order one (unless you absolutely have to). You will get a better deal on a car that is spec'd for your state that the dealer has to pay to keep on his lot everyday than you will a one off car spec'd to your racecar tastes that the dealer is going to have a tough time selling if you decide to back out. Also, financing terms can flucuate quite a bit from time of order to delivery and you cannot do your financing until the car arrives at the dealer.

-Sell your current car if you have one. DO NOT trade it in. They will try and give you auction rates. Even if you have a current lease you can sell that car at any time and simply pay the bank off like any other vehicle.

-Mark up on a 997 is about 12-14% over sticker. That's what they're making on the deal. This margin is what you want to negotiate. Expect to pay 7% of this at least (most dealers are getting sticker for their cars).

-If you want a great deal, get a stick. There are far more of those than Tiptronics.

-If you have a few extra $$$ buy Expert Lease Pro from Chart Software to help with your research. Great Tool. $70, will save you thousands. Calculates margins and cost for every option (kbb does not do this for Porsche).

-Don't fall for the line "Every $1000 is about $30 a month on your payment so if you want this deal I'm offering at $1400 a month for $1250 a month, you're asking for another $5000 off the car". This is BS and is an attempt to manipulate you. This "calculation" doesn't take into account the residual or MF and is not spread out over time (the way a lease is structured).

At the end of the day a car is a bad investment and depreciation is severe and quick. If you buy the car outright and drive it for 10 years (with no major service - important) then you can get value. It is rare that you will not need major service on a Porsche at some point. If you lease or buy with the plan to maybe sell in a few years, don't put a lot of money down. Put that money you were going to put down in the markets and try for 5% or if you're lucky the market average of 10%. You have a chance of getting enough return to offset your financing costs and if you get some great returns, you can offset some depreciation.

Sorry for long post but I've learned a lot from intially paying $5k over sticker for a 4Runner in 1997 (!!) to getting $5k off sticker on a 997 (and even better an LR3 for my wife at $700 above dealer cost) and since it's easy to get ripped off when doing any car deal, I feel any information you can get empowers you and helps you get a good deal.

good luck.

:clapping: Well done!

[dstrimbu]

In any lease, the bank owns the car, not the business.

Absolutely, but I think that Hatchback meant that the _business_ is the lessee...

[lic265]

What about buying a low mileage car that is 2 years old?

Then you don't take the hit on the depreciation