Buy/Finance vs. Lease - Pros & Cons

SeattleYates

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I'll be ordering 2021 Taycan Turbo soon.
Planning to put down ~$50K and keep for 3-4 yrs, then switch to either another Taycan or 911 4S Cabriolet.

It's hard to do Apples to Apples comparison of Buy vs Lease: 🤔

BUY/Finance - Pros: Tax rebate; known (low) APR of 2.5% or less.
BUY/Finance - Cons: Unknown value after 3-4 yrs; must pay full sales tax (10%!) up front.

LEASE - Pros: Known (residual) value; lower payments; simplicity of switching to next vehicle; pay sales tax only on payments.
LEASE - Cons: No tax rebate; convoluted financing "cost" (but far higher than Buy/finance APR).

What am I missing? Any thoughts/suggestions appreciated.





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caytan

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You got it. Current money factor on Turbo is I think .002 which is 4.8%, so you are paying ~2.5% more in interest on lease and you have pre-negotiated trade-in value. Difference is then in tax. At 4 years its probably about the wash. You only gamble with the trade-in value at the time you want to sell it and ease of selling it. 🤷‍♂️
 

kort

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I'll be ordering 2021 Taycan Turbo soon.
Planning to put down ~$50K and keep for 3-4 yrs, then switch to either another Taycan or 911 4S Cabriolet.

It's hard to do Apples to Apples comparison of Buy vs Lease: 🤔

BUY/Finance - Pros: Tax rebate; known (low) APR of 2.5% or less.
BUY/Finance - Cons: Unknown value after 3-4 yrs; must pay full sales tax (10%!) up front.

LEASE - Pros: Known (residual) value; lower payments; simplicity of switching to next vehicle; pay sales tax only on payments.
LEASE - Cons: No tax rebate; convoluted financing "cost" (but far higher than Buy/finance APR).

What am I missing? Any thoughts/suggestions appreciated.
it isn't a tax rebate on your federal taxes, it is a tax credit applied against income, you need the income to get the credit.
when you lease, the tax credit is given to the lessor and is used to lower the cap cost of the car

in a car like the porsche I decided to lease, shifting the risks of newer tech making the car functionally obsolete in a couple of years. the downside of leasing for me is the mileage limits, the penalty for overrunning the limits add up fast
 
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F16HTON

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I always lease...

Pros for me: new car every two years, sales tax paid monthly instead at POS, ability to walk away form car in the event of a total loss collision, low out of pocket initial expense, I am somewhat a minimalist and do not like to own too many things, no maintenance expenses.

Cons: cost of $$ is typically higher than normal finance routes, risk of having to repair damages that are not acceptable at vehicle turn in.
 

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lease, shifting the risks of newer tech making the car functionally obsolete in a couple of years
I took this position on a 2017 EV thinking there would be substantial changes in three years of leasing. Turns out the evolution is much slower that than. There were no changes in the EV train. The changes were in the add-ons and electronics (USB-C for example).

One reason that may appeal to some is that leasing now gets one three years of Taycan driving in time to switch to the Cross Turismo in its second year of production.
 

Mr.Smith

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I see the lease as a hedge.
As @Crick stated, the EV tech hasn't changed, but it's about to. Porsche has claimed it has EV motors that's are better than the current Taycans. Plus Solid state batteries are a few years away which could be a game changer
 

kort

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I took this position on a 2017 EV thinking there would be substantial changes in three years of leasing. Turns out the evolution is much slower that than. There were no changes in the EV train. The changes were in the add-ons and electronics (USB-C for example).

One reason that may appeal to some is that leasing now gets one three years of Taycan driving in time to switch to the Cross Turismo in its second year of production.
back in the early tesla days I traded a '13 model S for a '14 when awd and AP was introduced which made my '13 functionally obsolete.
porsche is doubling tripling down on the EV thing, first there is the tourismo and there is talk of a Taycan coupe and convertible in the works.
in addition other manufacturers are going to be bring out their own versions of EVs that could render our new taycans old news real quick.
 

Kingske

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back in the early tesla days I traded a '13 model S for a '14 when awd and AP was introduced which made my '13 functionally obsolete.
porsche is doubling tripling down on the EV thing, first there is the tourismo and there is talk of a Taycan coupe and convertible in the works.
in addition other manufacturers are going to be bring out their own versions of EVs that could render our new taycans old news real quick.
Let's hope I own a 'classic' then.
 

PanameraFrank

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I see the lease as a hedge.
As @Crick stated, the EV tech hasn't changed, but it's about to. Porsche has claimed it has EV motors that's are better than the current Taycans. Plus Solid state batteries are a few years away which could be a game changer
By a few years I assume you mean 10-15. Solid state batteries are nowhere near mass production. Always lots of chatter but that's the cold, hard reality.

EV technology doesn't change as quickly as people think. I'm sure Porsche has the specifications for amazing EV motors, but that means nothing when it comes to production cars.

I would not expect any significant leaps from EVs for at least 5 years, and even that is optimistic. There aren't even any concepts with radical promises, most have started by saying "we're going to have 500 miles of range! blah blah blah" and slowly, quietly dialed back to what's being produced now.

The concern with the current gen Taycans should be how the batteries hold up and whether they suffer from degradation after a few years which lowers their value. The battery/motor technology on the Taycan is very solid; it works with all the chargers being built and it's quite efficient. There's no reason to believe a 1st gen Taycan's value is going to plummet.

It's a great, sexy car and people are going to want to snatch them up in 3-4 years once you can get one for sub 100k. I think the value will really stabilize at that point, it's too good of a car to ever be dirt cheap.
 

Kingske

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By a few years I assume you mean 10-15. Solid state batteries are nowhere near mass production. Always lots of chatter but that's the cold, hard reality.

EV technology doesn't change as quickly as people think. I'm sure Porsche has the specifications for amazing EV motors, but that means nothing when it comes to production cars.

I would not expect any significant leaps from EVs for at least 5 years, and even that is optimistic. There aren't even any concepts with radical promises, most have started by saying "we're going to have 500 miles of range! blah blah blah" and slowly, quietly dialed back to what's being produced now.

The concern with the current gen Taycans should be how the batteries hold up and whether they suffer from degradation after a few years which lowers their value. The battery/motor technology on the Taycan is very solid; it works with all the chargers being built and it's quite efficient. There's no reason to believe a 1st gen Taycan's value is going to plummet.

It's a great, sexy car and people are going to want to snatch them up in 3-4 years once you can get one for sub 100k. I think the value will really stabilize at that point, it's too good of a car to ever be dirt cheap.
Also, if five years from now a new generation of batteries (holding twice as much energy and/or weighing half as much and/or costing half as much) will be mainstream and affordable, then I would guess that either Porsche or third-party suppliers might offer a new-gen battery pack for older ‘classic’ Taycans ...
 

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I did the math on a car this expensive and concluded that it makes no sense to lease -- much more money spent and much less flexibility. Financing interest rates are so low right now, and it's just nicer to know that the car I'm driving is mine (and not a rental car, which is what a leased car is). The amount of money spent on a 3-year lease for a car this expensive is huge, and at the end of 3 years you have zero equity in it (other than the "equity" to opt to purchase the car outright at that point). Financially it's very unwise (at least for me) to lease, vs. buy/finance. Add in the tax credits and state rebates, and it even adds to the benefits of ownership vs. renting (aka, leasing). Now, if my work/company were to pay for the lease, that's a different story, but if it's my money, no way I'll ever lease.
 

PanameraFrank

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At the end of the day you're getting murdered on a lease. A 3 year old Taycan with 30k miles (or whatever terms you choose) is going to be worth a lot more than 48% of MSRP. Even Panamera Turbos, which are at the opposite end of desirable, are selling in the 60-70% MSRP at 3 years/30k.

I'm at 1 year/10k and was offered 87% MSRP on trade in (112 from 129) and that's with the $7,500 rebate loss. Take that out and it's 92% MSRP.

I'm not going to lose 40% value by putting 2years/20k miles on it, probably more like 10%. Even assuming 20%, that's a 67% MSRP on TRADE IN at 3 years/30k miles. Just by that factor alone you're eating 19% MSRP on a lease (even more if you live in a state that doesn't double dip sales tax.) Just throwing tens of thousands of dollars out the window.

Also your car is under warranty and you have insurance, the "well what if something happens to it" argument is not a good one.
 

Mr.Smith

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At the end of the day you're getting murdered on a lease. A 3 year old Taycan with 30k miles (or whatever terms you choose) is going to be worth a lot more than 48% of MSRP. Even Panamera Turbos, which are at the opposite end of desirable, are selling in the 60-70% MSRP at 3 years/30k.

I'm at 1 year/10k and was offered 87% MSRP on trade in (112 from 129) and that's with the $7,500 rebate loss.

I'm not going to lose 40% value by putting 2years/20k miles on it, probably more like 10%. Even assuming 20%, that's a 67% MSRP on TRADE IN at 3 years/30k miles. Just by that factor alone you're eating 19% MSRP on a lease (even more if you live in a state that doesn't double dip sales tax.)

Also your car is under warranty and you have insurance, the "well what if something happens to it" argument is not a good one.
If the residuals are that high on the Taycan, they lease terms will be much better (like the Macan with the very attractive leases).
You can always lease and sell the car over the buy out out of the lease term.
 

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