Thoughts in leasing vs purchasing

[zer0t]

We are getting a Taycan 4s today and I was initially going to lease it, because that’s kind of just what we do, but BofA will give us 1.89% for 60 months. With no money down other that fees and DMV would leave us with a payment about 90 bucks / month more than the lease. As a side note, I refuse to put cash down on a lease because it’s just pre-paying the payment and doesn’t positively effect the total paid.

The initial out of pocket total would be 3100 less (no first months payment and no bank fee) that is I added that in would make the payments even closer.

My thought is this: after 36 months of lease payments I can just return the car and I’ve spent about 75 grand to do so (paying 134) with interest, the residual I was told is 53% leaving about 71k in value if the predicted residual is actual. If I buy it with really cheap financing my monthly is roughly the same and after 36 months I would owe about 53,000 and could potentially have 18k equity if I wanted to move in from the car. The net would be 13k as a result of paying ~5k in finance charges through the life of the loan at that point. At the 36 month point there is also a significant drop in interest payments. At the 48 month mark the principal amount left is 27k. I will have paid ~800 more in interest at that time.

In case anyone is wondering I am prone to overthink things as simple as financing a car. What are peoples thoughts on purchase vs lease given even just a 36 month horizon?

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[SRQ661]

We are getting a Taycan 4s today and I was initially going to lease it, because that’s kind of just what we do, but BofA will give us 1.89% for 60 months. With no money down other that fees and DMV would leave us with a payment about 90 bucks / month more than the lease. As a side note, I refuse to put cash down on a lease because it’s just pre-paying the payment and doesn’t positively effect the total paid.

The initial out of pocket total would be 3100 less (no first months payment and no bank fee) that is I added that in would make the payments even closer.

My thought is this: after 36 months of lease payments I can just return the car and I’ve spent about 75 grand to do so (paying 134) with interest, the residual I was told is 53% leaving about 71k in value if the predicted residual is actual. If I buy it with really cheap financing my monthly is roughly the same and after 36 months I would owe about 53,000 and could potentially have 18k equity if I wanted to move in from the car. The net would be 13k as a result of paying ~5k in finance charges through the life of the loan at that point. At the 36 month point there is also a significant drop in interest payments. At the 48 month mark the principal amount left is 27k. I will have paid ~800 more in interest at that time.

In case anyone is wondering I am prone to overthink things as simple as financing a car. What are peoples thoughts on purchase vs lease given even just a 36 month horizon?

A benefit of leasing is that the leasing company takes the hit if you have an accident that results in a CarFax report...

 

[zer0t]

A benefit of leasing is that the leasing company takes the hit if you have an accident that results in a CarFax report...

Yes I should’ve acknowledged that in the OP—it’s the first thing I said to my wife. One can look at that as the risk premium built into the lease. That safety net will cost ~9,000—the difference in finance charges over 36 months.

Did you lease yours?

 

[Fish Fingers]

I suppose it all depends on personal circumstances and individual tax laws in each country.

Personally, I am buying over 48 months with a large deposit.
I have purchased all my cars recently and (luckily) each has worked out considerably cheaper than leasing at the end of the term.

Lots of people say to always lease a depreciating asset, which is often true. But lease companies (like bookies) are in it to make a profit and dont often get it wrong.

The biggest drawback for me buying (purchasing with a large deposit) is what the monies could be doing invested elsewhere over the next 4 years.

As I say, horses for courses and no right or wrong answer.

 

[SRQ661]

Yes I should’ve acknowledged that in the OP—it’s the first thing I said to my wife. One can look at that as the risk premium built into the lease. That safety net will cost ~9,000—the difference in finance charges over 36 months.

Did you lease yours?

I bought my 2020 4S in August, 2020 (custom order), which I usually don't do. But I got tired of taking huge hits from bailing on 36 month leases after two years (I get interested in new cars too quickly, I think). I have a 2021 4S Cross Turismo on order - and the dealer is trying to convince me to lease it when it arrives in late October. Decisions, decisions...

 

[zer0t]

I bought my 2020 4S in August, 2020 (custom order), which I usually don't do. But I got tired of taking huge hits from bailing on 36 month leases after two years (I get interested in new cars too quickly, I think). I have a 2021 4S Cross Turismo on order - and the dealer is trying to convince me to lease it when it arrives in late October. Decisions, decisions...

This is also part of my problem. I also forgot to add if I buy it I get the 7500 tax credit and not the bank—yes I know it’s applied to my payment. I am currently trading in a lease that’s 18 months into a 36.

 

[zer0t]

I suppose it all depends on personal circumstances and individual tax laws in each country.

Personally, I am buying over 48 months with a large deposit.
I have purchased all my cars recently and (luckily) each has worked out considerably cheaper than leasing at the end of the term.

Lots of people say to always lease a depreciating asset, which is often true. But lease companies (like bookies) are in it to make a profit and dont often get it wrong.

The biggest drawback for me buying (purchasing with a large deposit) is what the monies could be doing invested elsewhere over the next 4 years.

As I say, horses for courses and no right or wrong answer.

Yeah at 1.89 I’d put nothing down and basically pay what I would’ve committed to on a lease. I know payments can be emotional but purely from a financial perspective you don’t give up returns to buy down 189 bps. However we’re people and a 20-30 down payment isn’t going to make that much of a difference.

 

[SRQ661]

This is also part of my problem. I also forgot to add if I buy it I get the 7500 tax credit and not the bank—yes I know it’s applied to my payment. I am currently trading in a lease that’s 18 months into a 36.

I may be misunderstanding what you were saying - but when I was quoted lease numbers on the the 2020 that I bought, the $7,500 tax credit was deducted from the purchase price for lease calculation purposes. By choosing to buy the car, my tax credit was deferred until I file my 2020 tax return (but I did adjust quarterly estimated taxes to account for the tax credit - so I guess i got it right away, too). BTW, Porsche Financial money factor is .002 - or 4.8% interest, I think...

 

[zer0t]

I may be misunderstanding what you were saying - but when I was quoted lease numbers on the the 2020 that I bought, the $7,500 tax credit was deducted from the purchase price for lease calculation purposes. By choosing to buy the car, my tax credit was deferred until I file my 2020 tax return (but I did adjust quarterly estimated taxes to account for the tax credit - so I guess i got it right away, too)

Yes I mean this exactly. If I lease I realize the 7500 deduction immediately in the payments. If I buy i get the 7500 (which I too would adjust my quarterly estimate) but in my haste I forgot to consider that as part of the purchase. This adds to the save of purchase over lease. It’s a real check that’ll be writing a couple months from now. Purchasing will make that check 7500 smaller which is tantamount to putting it my pocket.

 

[SRQ661]

Yes I mean this exactly. If I lease I realize the 7500 deduction immediately in the payments. If I buy i get the 7500 (which I too would adjust my quarterly estimate) but in my haste I forgot to consider that as part of the purchase. This adds to the save of purchase over lease. It’s a real check that’ll be writing a couple months from now. Purchasing will make that check 7500 smaller which is tantamount to putting it my pocket.

Not to get too far into the weeds, but if I trade my car on a new purchase, I save sales tax on the value of my trade. If I lease the Cross Turismo, I lose that savings - but only pay sales tax on my monthly lease payments. It's too early in the day for me to calculate the difference, if any!!!

 

[zer0t]

Not to get too far into the weeds, but if I trade my car on a new purchase, I save sales tax on the value of my trade. If I lease the Cross Turismo, I lose that savings - but only pay sales tax on my monthly lease payments. It's too early in the day for me to calculate the difference, if any!!!

NJ is no sales tax on EV but also calculated sales tax is in the price of the new car minus the value of the trade in.

 

[jlee504]

I just picked up my CT and I purchased it. The lease payment was $2610 on a $151K MSRP for 36 months and 10K miles. Thats after the 7500 tax credit and a trade in sales tax credit of $6800. I think what killed it was the MRM. The MRM was $136K and 54% residual, so really they are locking in my value at $73K.

I just did the simple math of, at $2610 x 36 I'm at $94K after 3 years. So is the car worth more than $57K after 3 years, and I thought yes..

 

[ljump12]

Yes I should’ve acknowledged that in the OP—it’s the first thing I said to my wife. One can look at that as the risk premium built into the lease. That safety net will cost ~9,000—the difference in finance charges over 36 months.

Did you lease yours?

it’s worth mentioning that if you are not at fault for the accident, you should be compensated for the diminished value of the car. It’s not always straightforward to get though, and often times you’ll end up in court arguing it.

 

[kort]

leasing this car puts all the risk of functional obsolescence because of new/better tech onto porsche. on paper if you plan on keeping the car longer than the term it looks like owning is a better choice but I am betting that new better EV tech will evolve over the next few years and I won't be stuck with an older out of date car.

 

[nycebo]

leasing this car puts all the risk of functional obsolescence because of new/better tech onto porsche. on paper if you plan on keeping the car longer than the term it looks like owning is a better choice but I am betting that new better EV tech will evolve over the next few years and I won't be stuck with an older out of date car.

Everyone always says this but frankly, it's the same thing with gasoline engines. The technology changes over the years from turbos, twin turbos, mild hybrids, Bluetooth, Android auto, Apple carplay, navigation, lane keep, Collison avoidance, etc are no different.

The real benefit to a lease is simply the business deduction or if you plan to trade frequently. Else, buying is generally the better route.

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