'08 Boxster S - Buy or Lease?

[Bob Z.]

Let me start by saying that I have never leased a car in my life as I have always paid cash. I have an '08 Boxster S on order and the sale price will be about $59k (includes tax, etc.). As of now I plan to drive it for 3 years (about 5k miles a year I guess) and sell it for something different (e.g., 911) - it would still have a year of warranty left at that point.

So, opinions on whether I should buy it outright or lease it? No idea of what the payments would be for a lease but I guess about $600. Thanks in advance for your thoughts!

[bmussatti]

I am no expert, and have never leased a car, nor do I think I would in the future. I think leasing works best for people who:

1) Own their own business, and can "write-off" some of the expenses
2) Change out their car(s) very frequently
3) Want to drive a car that is actually more expensive than they can actually afford

I don't think your lease will be <$600/month.

When I bought my car, strictly as a weekend-sunny-day-toy, I just paid cash. No sense fianacing something I truely did not need. Plus, I plan to keep it for a long time >5 years.

Good luck.

[FTD]

I leased a car once. My car was stolen and I was unemployed and Honda had a special incentive. The monthly was $200, and it turned out the car had an electrical problem that couldn't be resolved, so at the end of the lease I was happy to give the keys back. This worked out well for me at the time.

Mathematically however, leasing is the same as renting so financially it makes no sense unless you just plan to get a new car every few years. In that case the drive off depreciation might possibly be greater than the cost of leasing.

Like a lot of people, I have a personal policy "if I can't pay cash then I can't have it". [excepting the purchase of a house] This policy has amazing financial power and what I have saved in interest or lease payments probably paid for my Boxster.

[JFERR]

Bobz,

Here's the deal.

Since you plan on driving approximately 5K miles/yr and selling the car three years from now, I recommend leasing. Taking the 59K cash and invest it. Three years from now your 59K will be 62K at a 2% interest rate. What will the car be worth?

Buying a car you're going to sell in three years is a cash flow loosing proposition. The car depreciates your investment will not.

Never lease a car for longer than the waranty period. Make sure the lease agreement has insurance in case the car is totaled in an accident.

Good luck

[racer_d]

I've only leased once, and felt "used" when it was over ;)

That said, the leases are all set up to finance the depriciation and gets you to pay the difference between the MSRP and the expected resale value. So. Lease it for three years. Figure the car will loose about 40% of its MSRP.. so, you will be paying about 20-25K in payments and "capitalization" costs. Is it worth it to you to spend $25K on a car you don't plan on keeping long?

I am a bit old school. Even though cars are depriciating assets, I prefer to OWN something than "rent/lease". I say buy a used '06 or a leftover '07 instead.

[Bob Z.]

Thanks all. As I said, I never leased before and am leaning toward buying it; however, I guess I need to crunch the numbers. First I will have to see what kind of lease option the dealer will give me and take it from there.

Let's say it will be $700 a month on a lease. That comes to $25,200 although I assume I have to add tax, dealer fee, etc., which is another $4k - rounded up to $30k.

If I buy it outright for $59k, what will it be worth if I want to sell it after 3 years (Sticker is $61k)? Say it will be worth $35k so if I sell it for that I would have $24k. But if I lease it for a cost of $30k and turn it in, I will have $29k left ($59k minus $30k) - in this case I would be better of leasing.

But I am using hypothetical numbers - thoughts?

[bmussatti]

Bob, your thought process makes some sense, but you need real numbers first. Wait till you get them. Then crunch.

But the gamble will be what the car is worth in 3 years. Who really knows. Lots of other "what ifs" too. Accident, mileage, wanting to keep it longer, doing mods, getting nicked on wear & tear items when the car is returned.

And I doubt once you get the car that you will only drive about 5K miles/year. That's what I thought! Plus you have a 12 month driving season in Florida. :cool:

[bmussatti]

Like a lot of people, I have a personal policy "if I can't pay cash then I can't have it". [excepting the purchase of a house] This policy has amazing financial power and what I have saved in interest or lease payments probably paid for my Boxster.

FTD, I very much agree and applaud your statement & knowledge. I will even take it one step further, and say I will never mortgage a house again either. We paid off our 30 year fixed mortgage in less than 14 years earlier this year. I refuse to ever take another mortgage again. If we can't pay for it, we need to find another house that we can, or do a different addition that we can afford.

This is our first and only home.

Being mortgage free is very-very nice.

[Bob Z.]

Agree with all of your points - who knows what it will be worth after 3 years? I don't consider myself rich nor do I consider myself stupid but then again, I have never leased and want some opinions. And I too like to pay cash - I bought my house with cash and planned to do the same with the Boxster S; however, I want to crunch the #s when I get the lease payment/details from the dealer. I'll post the lease details here when I get them and see what everyone thinks.

[NickCats]

Bob,

I ran some quick numbers to see what's what :

From the Porsche website, to lease a new Boxster S :

$55,700 amount financed
36 mo term
10k mi / yr

$908.40

So - your out of pocket = $32,702.40

If you paid cash for the car ( $55,700 ) :

A 2004 Boxster S with 30k miles is worth between $31,215 - $33,945

So, if we take the average, $55,700 - $32,580 = $23,120

In summary :

Lease = $32,702 out of pocket

Buy = $23,120 out of pocket

( difference of $9,582 )

Let's say you finance :

$55,700 for 36 months at 6% interest = $1,694.50 per month

You pay $61,000 over 3 years and sell for $32,580 = $24,420 out of pocket

( difference of $4,282 )

Also, if you trade in the Boxster on a 911 in 3 years, you would pay tax only on the difference :

$73,500 - $32,580 = $40,920 x 7% tax = $2,464

Tax on $73,500 = $5,145 ( $2,681 additional tax savings )

( this also needs to be considered when deciding whether to trade in or sell the car private party. If you can get $35,200 pp and dealer offers $32,600 as a trade in, it is almost a wash when you consider the tax benefit ) :

http://editorial.autos.msn.com/article.aspx?cp-documentid=434850

Seems like leasing is not the best option...

Also, here's some good calculators :

http://www.edmunds.com/apps/calc/CalculatorController

Nick

[Bob Z.]

Thanks again to all and that is what I needed, to be able to hear other's opinions!

I talked to my dealer and he gave me a round number of $900 a month for 3 years so the figures presented here are real close and needless to say, buying outright is the way to go, as usual.

[MikeinLA]

One thing I didn't see mentioned is that you may find you love the S and don't want to swap it out after 3 years. Buying outright allows you more flexibility. I think you've made a smart decision.

Mike

[Bob Z.]

Very true...never know what will happen at the 3 year mark and I may want to keep it. However, I tend to get a new "nice" ride quite often (no more than every 2 - 3 years) - you only live once and I want to experience as many sports cars as I can before I am gone! And my wife could care less - she says "whatever makes me happy"...and she makes more $ than me to boot.

[xxxalexxxx]

I've only leased once, and felt "used" when it was over ;)


I am a bit old school. Even though cars are depriciating assets, I prefer to OWN something than "rent/lease". I say buy a used '06 or a leftover '07 instead.

Thats my philosophy, I've never leased I feel like I'd get ripped off because at the end of the day u can sell the car you bought even though it depreciated...but then again i never buy new cars because I think I would lose too much money so I wait a yr or two :-)

to each his own, but i would BUY

ohh and as far as I know you can't modd it when its leased...and I would HAVE to change something or lower it or anything haha

[sp330]

Porsche's rarely lease out very well.