First, I have searched extensively and read through some previous posts around this. So I have an idea of what I want to do (I think), but just interested in some current perspectives. My order for 08 GT3 is light optioned = $110k ish. I am selling my current Porsche ($50k net).

I am wondering whether it is better to pull the extra $60k from savings and just pay cash, put something down and finance remainder for a few years (maybe payoff early), or do some kind of lease that gives me more options 36 months from now.

I have heard all the recommendations of "well if you cant pay cash, then you shouldnt get a Porsche, etc.". Not sure that I agree. I could pay cash if I really needed/wanted to, but wrapping up $100k+ in a depreciating asset doesnt sound so smart to me. I am leaning toward either a lease or financing half of it for awhile.

I will use the car mainly as a weekend fun toy, with occasional DE. I dont intend to get rid of it in 3 yrs, but my track record on previous sports cars would indicate that it is always a possibility

Interested to hear others thoughts...

 

Just my two cents, owning a few cars, and being involved in financial wealth management....forget interest rates and cost of borrowing and opportunity costs....

buy the car and owe as few people money as you can conceivable owe. owe nothing, i say. g-d forbid something happens to you, the last thing your spouse shoudl worry about is handling your monthly check for a silly porsche. nor should you. if you cant own it with outright cash, dont own it. i agree with that 100%. its not an investment that goes up in value. and make sure you insure ti properly.

 

really??

see this is what confuses me.... half the people i hear from thinking paying $110k cash is the way to go, the other half (including my financial advisor) say that it is crazy to tie up that much cash in a depreciating asset...

what would be the downside of a 36 month option lease, whereby you can make the decision at the end of the lease whether or not to pay the remainder outright...based on residual vs. market, etc.... of course, you pay a bit for that option, but probably a few thousand $ in the scheme of things

we pay cash for everything except our house, so this would be an exception for me, but i think that it probably makes sense...

As to the issue of 'what if something happened', paying off this car/selling it would be the least of my spouses concern, given how I have set her up with savings, life insurance, etc

 

My opinion on this, with as much experience and what I've learned in my short time of being involved in financial decisions, is that the bank's money is typically cheaper than your own, so why not finance it. If you can get less than 6% or less, I don't understand how you would pay for it with your own money, when a CD gives you more back than that. As far as leases go, it only makes sense if you're going to use the payment as a deductible.

 

Your financial advisor wants your money to play with, so be careful of his advice.

Depeciating assets *should* be bought cash. There is no tax advantage, unlike real estate, of paying with some else's money. For financing to make sense, you have to be able to beat your interest rate in the stock market or other investment, net of taxes. Rough numbers. . . 33% tax bracket you have to make 10% to break even with 6.6% car interest loan *and* the 10% will certainly be more risky than paying off your car note. However, having cash available rather than tied up in a car is pretty nice for unforseen circumstances. . . if this is you, then I'd finance a portion of it.

Leases are for suckers unless (i) you can write it off through your business or (ii) if a closed end lease, you really want to shift risk of damage (e.g. accident and repair) to the lessor. Open ended leases, like those for Ferraris, are the worst.

But I have conservative views on the subject. I hate the noose of a high monthly payment. . . except on real estate where you there's an opportunity for appreciation and a tax play (intrest on up to $1MM in mortgage total b/t first and second homes, but beware of AMT).

 

put down as little as possible and lease it. its a depreciating asset. Earn some interest on your 60k if possible. this is what i have been told by a few people.

 

Lease it and invest in assets that appreciate (typically the housing market but now is not a good time)!!! The money you would've paid off the car with will be lost after driving it off the lot (i.e. instant depreciation) and continue to drop.

This country is built around debt. If we were really meant to buy everything cash, then why isn't everyone buying their houses in full?

 

cash
keep it simple

 

Another way to look at it:

-If you are going to definitely keep it, regardless of what happens to it = cash (save money on interest)

-If you are thinking about keeping it or may want to sell it due to it getting damaged/wrecked/keyed/being a lemon, let the bank take the risk and be able to give it back = lease

 

It is going to be really difficult to beat a low 6% rate, but I think you should put 10% down and finance the remainder at 72mos. Throwing that much $$ into a car is silly IMO unless you have pretty much "unlimited funds" ie.. (See speedplay's thread the 'Dirty Dozen')

 

Lease the car and put your minimum drive offs. You will have a lot more $ in the bank and you are also taxed on the cap cost reduction on a lease. ALWAYS best IF you lease a car is to put the base minimum drive offs down. (First month payment, lease ack. fee, DMV fees and any other small fees but no cap cost)

 

you ask 100 people, you'd get 100 answers. you need to evaluate each situation differently. everyone has different levels of success professionally, financially, etc. you asked , i gave my opinion on whats worked for me. it has never let me down. i look at my assets as my assets not something i partially own. i accumulate cash then shift.diversify those to other assets. some are good appreciating assets...homes, cd's, money markets. some are more speculative, stocks,e tc. and some are , hopefully ones that i dont take a bath but fullfill other components of my life, ie having fun. these cars are toys. anyone who says an investment either had the discipline to hold something for 10 years, or flipped quick, but tehy go down. end of story on that.
i've seen too many sitautions where a guy has, for example, 200k. he could guy the car outright for 120k, and then work his tush off to get the 80 back to 200. now he has 200 and the car. or he buys thec ar, putting 10% down, financing rest, and then he has 190. so he buys a boat, and he buys this and that. next thing you know he has a month stream flowing out that is difficultt to sustain.

someone might be able to dicipher or calculate a difference in net profit over the course with "base minimum drive offs down". i can dig that and that should be evaluated. i simply hold that most guys dont have the discipline to leave that 120 in a 6% CD for the course, taking advantag eof the "zero money down".

its simple, i dont like to owe anyone anything. i think we've seen in the housing market the issues that come from bloated debt. own the ting outright....call me crazy, but its worked fo rme.

 

spg993tt,

I hear you... but I am not that guy. IF I decide to finance or lease, there will be no boats or golf memberships purchased...money goes straight into investments... and I must say, I feel reasonably confident that I can beat the 5-6% auto rate from USAA (my credit union)...

(lucky for me, Porsches are my only hobby, so wouldnt know what else to spend $$ on anyway )

please keep the opinions coming, these are exactly the different perspectives I wanted to read about, then will make my own informed decision... this is good stuff though

 

You have to beat 5-6% + taxes. Tax = 15% (capital gains holding asset > 1 year) or you marginal tax rate ( for most people buying new porsces that's 33% or 35%).

 

Originally I thought "just buy it for cash if you have it". If something comes up, you can always take out a line of credit on the house. But if you can beat 5 to 6% loan, you can do the same or better in safe CD's and have the peace of mind that you have money in the bank working for you. (Yes there is a small hit on taxes on interest earnings, but you'll feel the depreciation hit much more than the tax hit).

Even if you lease and can write it off on the business, you can't write off the entire amount as a GT3 is not a "customary vehicle" used in business (unless your in the race business or similar).