What do you suggest? Brand New Porsche 911 GTS or Used Porsche?
#31
It's still two tranasctions . Matched up agaist an outright purchase and a 6 year ownership would tilt the scale tremendously away from leasing .
As for business stability .. a lot of things can occur with time . Losing the business is obviously the worst case scenario but even selling the business , partnership breakup , a bad earnsing year , or simply retiring .. leave that lease individual with a rented car .
Also what if the lease owner becomes ill ? then what ? He's locked in a contract ? I don't even like tio sign a phone contract .. much less a 100+K car.
If one adds up the cost of all the lease payments plus the buyout.. despite the residual .. it still costs more than an outright buy.
6 years of leasing two Porsches .. is enough to buy one outright .. The lease individual has nothing . The owner has 50K of equity (using todays pricing on an 06 car) , no mileage restrictions , the pride of ownership , and the ability to customize it, or even sell it on a whim without being held to that manufacturer or their contract .
As for business stability .. a lot of things can occur with time . Losing the business is obviously the worst case scenario but even selling the business , partnership breakup , a bad earnsing year , or simply retiring .. leave that lease individual with a rented car .
Also what if the lease owner becomes ill ? then what ? He's locked in a contract ? I don't even like tio sign a phone contract .. much less a 100+K car.
If one adds up the cost of all the lease payments plus the buyout.. despite the residual .. it still costs more than an outright buy.
6 years of leasing two Porsches .. is enough to buy one outright .. The lease individual has nothing . The owner has 50K of equity (using todays pricing on an 06 car) , no mileage restrictions , the pride of ownership , and the ability to customize it, or even sell it on a whim without being held to that manufacturer or their contract .
1. Buy outright $100,000
2. A 4 year loan at 4.5% for $100,000 will cost $109,456 (2,280.35/month)
3. A 4 year lease for $100,000 (10K miles per year) from PFS will cost $68,407 (1,425.15/month) w/ a 58% residual
First, a financial vacuum doesn't exist so lets assume a 6.53% percent return (approximate 20 year return of the DJIA) (and just to make things easier lets not factor in the rate of inflation and purchasing power)
If you purchase outright that $100K would have been worth $128,791 in four years. So, you are using expensive current dollars to purchase a depreciating asset (that, if you are not a business, can't even take a deduction on). Individuals make their own choices but for me, I would never use current dollars when inexpensive credit is available. To wit, the 4 year loan at 4.5% costs $109,456 and that is w/ cheaper future dollars! Personally, while I could pay cash, it's just not right for me.
In terms of a loan vs. a lease, you pay $855.20 less per month for the lease. If you're fastidious w/ your money you'll invest that surplus every month. At the end of four years with a 6.53 percent return on investment that's $46,592 that you've socked away. If you buy the car then you'll have to pony up $11,408 ($58,000-$46,592) (which is the cost of the lease vs. financing). Let's take it a step further. In order to make up that difference, you'd have to set aside $208.62/month for four years (6.53% return) - which would be the monthly cost of leasing vs. financing.
Of course the argument is that you're gambling on market returns - in a bull market leasing might be as good as or better than financing - in a bear market you could get killed (but at least got to drive a Porsche for 4 years!). Maybe it comes down to how risk averse a person happens to be.
Now, specific to the original argument above, the market and wise investing will determine if a lease is good or bad deal (and this doesn't even factor in the tax breaks that a person may be entitled to). I'd say it's far from black and white which is the better option: buying a car outright (in current expensive dollars), a loan, or a lease w/ a lower payment and a balloon (residual) in cheaper dollars.
But really, what do I know, I'm a scientist not an accountant
#32
Speculate investing Vs a car's title (a sure thing)
I can't argue w/ your logic but in all the posts on this topic I can't recall anyone ever mentioning the future value of money/rate of inflation and potential returns in taking advantage of the spread between interest rates and possible market returns. So what's the true cost of a lease vs. financing vs. buying outright? I'd say it depends on what the market does. My swiss cheese-like pea brain reasons as follows:
1. Buy outright $100,000
2. A 4 year loan at 4.5% for $100,000 will cost $109,456 (2,280.35/month)
3. A 4 year lease for $100,000 (10K miles per year) from PFS will cost $68,407 (1,425.15/month) w/ a 58% residual
First, a financial vacuum doesn't exist so lets assume a 6.53% percent return (approximate 20 year return of the DJIA) (and just to make things easier lets not factor in the rate of inflation and purchasing power)
If you purchase outright that $100K would have been worth $128,791 in four years. So, you are using expensive current dollars to purchase a depreciating asset (that, if you are not a business, can't even take a deduction on). Individuals make their own choices but for me, I would never use current dollars when inexpensive credit is available. To wit, the 4 year loan at 4.5% costs $109,456 and that is w/ cheaper future dollars! Personally, while I could pay cash, it's just not right for me.
1. Buy outright $100,000
2. A 4 year loan at 4.5% for $100,000 will cost $109,456 (2,280.35/month)
3. A 4 year lease for $100,000 (10K miles per year) from PFS will cost $68,407 (1,425.15/month) w/ a 58% residual
First, a financial vacuum doesn't exist so lets assume a 6.53% percent return (approximate 20 year return of the DJIA) (and just to make things easier lets not factor in the rate of inflation and purchasing power)
If you purchase outright that $100K would have been worth $128,791 in four years. So, you are using expensive current dollars to purchase a depreciating asset (that, if you are not a business, can't even take a deduction on). Individuals make their own choices but for me, I would never use current dollars when inexpensive credit is available. To wit, the 4 year loan at 4.5% costs $109,456 and that is w/ cheaper future dollars! Personally, while I could pay cash, it's just not right for me.
By adding to risk exposure with credit to an already depreciating investment makes even less sense when one considers the flip side . Because even if that credit (paraphrasing) "sounds great" .. it only lasts until one misses a payment or two ,, or more. . Or when he's locked in a contract and wants out. Or when a car manufacturer tells him to fix a scratch on their car or replace their tire when he's handing it back. Because it really is .. their car !!!!
The cash buyer .. owns it . His name is on the title .. not Porsche nor a lender . He owes no "small montly fee" and faces no contractual obligation . He can keep that car as long as he wants .. or as little as he chooses . Even if he divorces .. that car is not part of a business lease . If he becomes ill ... he can sell it . If he keeps it 6 , 8, 10 years .. he still has a car and a mode of useful transportation which to most is a necessity.
Hence the phrase "cash is king" !!!
And with investments .. good ones , flat ones .. and bad ones can be cited as examples to show that an 'assumption" (of 6.53%) is not a sure thing.
Remember these days ?
http://www.youtube.com/watch?v=gUkbdjetlY8
Last edited by yrralis1; 07-31-2011 at 04:31 AM.
#33
You guys both make good points regarding leasing versus buying, which illustrates that it's not a simple decision based on financial considerations alone, and even more complicated when other factors are brought in. Everyone should think about and analyze all of these factors carefully for their particular situation when deciding. In my situation, I feel comfortable with the decision to lease, and hopefully it will work out well.
#35
My (humble) recommendation is, as my mechanic told me, buy the best that you can afford. If you can afford to buy a new one, with all the goodies you want in it, then go for it. That being said, I bought a very nice '06 C2S Cabrio with 24k miles on it, was absolutely flawless (still is), and I paid around $50k for it. I could not be happier!!!!! This was well within my budget, and I plan on keeping the car for a very long time. I also plan on enhancing the car to my own specs ( exhaust, rims, interior, body work, suspension, etc... ) as time goes by, which is a lot of fun to do, in and of itself. I strongly believe that NOW is the time to buy, and you can get EXCELLENT deals on pre-owned 911's. Do your research, look at LOTS of cars and make a well-informed and well-researched decision. That's what I did, and I have no regrets. Good luck!!!!
#36
That assumption of 6.53 % is not a guarantee and it is the foundation of your argument against using current dollars . "Inexpensive credit " is what built those beautiful marble floors of lending establishments .. not by those who paid cash.
By adding to risk exposure with credit to an already depreciating investment makes even less sense when one considers the flip side . Because even if that credit (paraphrasing) "sounds great" .. it only lasts until one misses a payment or two ,, or more. . Or when he's locked in a contract and wants out. Or when a car manufacturer tells him to fix a scratch on their car or replace their tire when he's handing it back. Because it really is .. their car !!!!
The cash buyer .. owns it . His name is on the title .. not Porsche nor a lender . He owes no "small montly fee" and faces no contractual obligation . He can keep that car as long as he wants .. or as little as he chooses . Even if he divorces .. that car is not part of a business lease . If he becomes ill ... he can sell it . If he keeps it 6 , 8, 10 years .. he still has a car and a mode of useful transportation which to most is a necessity.
Hence the phrase "cash is king" !!!
And with investments .. good ones , flat ones .. and bad ones can be cited as examples to show that an 'assumption" (of 6.53%) is not a sure thing.
Remember these days ?
http://www.youtube.com/watch?v=gUkbdjetlY8
By adding to risk exposure with credit to an already depreciating investment makes even less sense when one considers the flip side . Because even if that credit (paraphrasing) "sounds great" .. it only lasts until one misses a payment or two ,, or more. . Or when he's locked in a contract and wants out. Or when a car manufacturer tells him to fix a scratch on their car or replace their tire when he's handing it back. Because it really is .. their car !!!!
The cash buyer .. owns it . His name is on the title .. not Porsche nor a lender . He owes no "small montly fee" and faces no contractual obligation . He can keep that car as long as he wants .. or as little as he chooses . Even if he divorces .. that car is not part of a business lease . If he becomes ill ... he can sell it . If he keeps it 6 , 8, 10 years .. he still has a car and a mode of useful transportation which to most is a necessity.
Hence the phrase "cash is king" !!!
And with investments .. good ones , flat ones .. and bad ones can be cited as examples to show that an 'assumption" (of 6.53%) is not a sure thing.
Remember these days ?
http://www.youtube.com/watch?v=gUkbdjetlY8
OUTSTANDING!!!!! I Really like your way of thinking Larry!!!! Could not have said it better myself!!!
#38
C&D said it will be introduced in September.
#39
i never treat car as investment, it is usually a non-recoverable loss.
now it all depends if you have any free assets to spend or not. i personally always pay 100% cash for cars as i hate to deal with on-going payments.
but in current situation IF all you current money are invested into gold&silver and not into stocks and IF you sure we will be hit hard with inflation - then MAY BE it will be cheaper to deal with 4.5% loan on a $100K car.
I am still too cheap to pay that much for a bucket with wheels. when I was looking for my car my wife proposed to get a new one, instead i got this used one for $40K and it runs pretty much OK. new GTS is a great car, if I would be in same situation to buy now i could probably try to swallow it, but, honestly, there are many much more important things in my life right now to spend (actually, not to spend) $100K on.
but if oyu have free money right now i think it would be better to liqudate free assests now rather than to keep a pile of cash in unstable USA $.
now it all depends if you have any free assets to spend or not. i personally always pay 100% cash for cars as i hate to deal with on-going payments.
but in current situation IF all you current money are invested into gold&silver and not into stocks and IF you sure we will be hit hard with inflation - then MAY BE it will be cheaper to deal with 4.5% loan on a $100K car.
I am still too cheap to pay that much for a bucket with wheels. when I was looking for my car my wife proposed to get a new one, instead i got this used one for $40K and it runs pretty much OK. new GTS is a great car, if I would be in same situation to buy now i could probably try to swallow it, but, honestly, there are many much more important things in my life right now to spend (actually, not to spend) $100K on.
but if oyu have free money right now i think it would be better to liqudate free assests now rather than to keep a pile of cash in unstable USA $.
#40
There is something about taking delivery of a brand new car that has nothing to do with cost vs. value. Getting to pick exactly what YOU want for options, instead of settling for what someone else picked.
If you just want the best value, buy used. In fact, buy a Camry. Porsches are never a good value.
If you want a special experience and want a connection to a unique car, ordering new is the only choice.
If you just want the best value, buy used. In fact, buy a Camry. Porsches are never a good value.
If you want a special experience and want a connection to a unique car, ordering new is the only choice.
You can get exactly what you want and when I saw that PTS Turquiose Blue arrive at the dealer and no one else had it and it was going to be all mine.......how can you put a value on that?. The 8 month wait and the extra $$$....never crossed my mind!
Tom
Thread
Thread Starter
Forum
Replies
Last Post
2lflat4
Automotive Parts & Accessories For Sale/Wanted
2
11-18-2019 05:05 PM
AJUSA.com
997 Vendor Classifieds
4
10-08-2015 05:50 PM