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Old 10-06-2005, 05:16 PM   #1
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My Situation to Ownership - Your Advice???

I am 28 and am building a house. In the 3rd bay of the garage I wanted to put a '05 or '06 boxster. My wife and I already have cars that we own and this would be our 3rd fun car (summer and such) so we are not going to be putting on a lot of mileage on it. We are planning on having kids in the next 2 years. Thus, my question is should I lease or buy? I have been reading a lot of maintenance costs of the higher mileage and I am not sure which way to go especially since the thought of walking away is attractive. Any input would be GREATLY appreciated!

Thanks!

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Old 10-06-2005, 05:37 PM   #2
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Luxury1, only you know your true financial picture. For us to give advice is difficult at best.

One question you need to answer is how long you plan on keeping a potential 3rd car. If you are planning to keep it for a long time, leasing usually makes little sense, ....to me at least. For example, you're not "leasing" (renting) your new home, are you, you are purchasing it, over a period of time.

I think leasing is for people who can take advantage of the tax implications and this is usually for people who have their own business, and can write off some of the expenses.

Leasing also works in some cases for people who want a new car every couple of years.

Lastly, having kids is a very expensive responsibilty. So work hard and save-up for them too.

Good luck in your thought process!
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Old 10-06-2005, 06:07 PM   #3
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If you really want to take advantage of leasing I would:
1) Lease the car for a couple of years
2) Write off your lease payments, thus reducing what you have($$$) in the car itself
3) When the lease is over, buy the car at a low depreciated value

But since you are still the original owner, think of it as buying the car NEW but at way below MSRP. You also still have the option to not buy it as well if you so choose. Best of both worlds I guess...

Last edited by tqtran; 10-06-2005 at 06:12 PM.
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Old 10-06-2005, 06:13 PM   #4
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Hi,

Another negative about Leasing, given your description of the Car's use is the limited, seasonal use/mileage you anticipate.

Since leasing is basically a long-term Rental, you'll be paying for something which you don't use. At least buying (Financing) it gives you an asset at the end of the term and lower mileage helps maximize the Resale value.

But, again, as was stated, only you can gauge whether your personal Financial situation favors one or the other...

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Old 10-07-2005, 05:19 AM   #5
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Thanks for the info so far! Let's say I leased it for 36 months with $5K down. At the end of the lease program, how much might it cost to buy the car if let's say it was worth $47K to begin with?
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Old 10-07-2005, 05:25 AM   #6
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I paid $31k for my 2001 that came off a similar lease to the one you described - although I didn't lease the car I bought it from a dealer who bought the off-lease car. But that should give you a ballpark figure.
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Old 10-07-2005, 06:49 AM   #7
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luxury1: You haven't written this consideration, but I'd highly recommend investigating an off-lease 05 purchase next spring or fall and holding off on buying it until then.

Our cars depreciate as much as any other car, and if you can find a 24 month leased 05 Boxster S loaded with all the goodies with low miles and a very low price, you'll save yourself tons of money (like $10k or even far more!)

I just don't buy new vehicles any longer. The depreciation hit is simply too large and so many people sell their cars after 2 years that I can find one nearly new for sometimes HALF the price of new.

But hey, sounds like you're doing very, very well for yourself at 28 and you have an extra $1000+ a month to throw into another car payment and insurance and maintenance and fuel and mods.

If I were you I'd be spying a used 05 S, and throwing the difference of the cash at any debt in my home or other cars. I hate debt. It's a self-imposed tax on ones' future. Just my 2 cent's worth.
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Old 10-07-2005, 09:50 AM   #8
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I am learning a lot and I really appreciate all of the input!

Does anyone know what they typically look at when the car is turned in? Will minor scratches cost me a fortune? Are there usually large bills at the end?
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Old 10-07-2005, 01:20 PM   #9
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At the end of a lease, if they can charge you they will. What the average person considers "wear and tear", a leasing company considers damage and they charge you about twice what it really costs to fix it.

If you are looking at keeping it, you really don't want to lease and then buy. It will end up costing you about 20%-30% more to lease then buy than it would to just buy it outright.
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Old 10-07-2005, 06:59 PM   #10
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Quote:
Originally Posted by deliriousga
It will end up costing you about 20%-30% more to lease then buy than it would to just buy it outright.
Now does it really if you can write off your lease payments for taxes? In the past, my CPA has let me write off my entire lease payment for a BMW I once leased but never kept (it had too many problems). Now if I did buy it (given it was problem free) then I would have come up a head since my lease payments were essentially not thrown away but rather used effectively.
I also know of several people on rennlist that have written off lease payments for 997s and Cayennes.


Don't hate the systems guys, know how to play it.

But as said before, we don't know your financial situation so all of these advices are basically thrown up into the air not knowing which applies to you.

edit : If you do plan on keeping extremely low miles on the car then I would suggesting buying an 05 at the begining of 06 during the 05 fire sale.

Last edited by tqtran; 10-07-2005 at 07:02 PM.
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Old 10-08-2005, 11:27 AM   #11
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So what would you guys guess would be an average bill at the end of the lease given "average" wear and tear?
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Old 10-08-2005, 01:39 PM   #12
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You can't write off the lease payments on your taxes unless you own your own business or use the vehicle in the performance of your job and are not reimbursed for it's use. The average person can't write off the lease payments anymore.
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Old 10-08-2005, 08:10 PM   #13
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Quote:
Originally Posted by mjw930
You can't write off the lease payments on your taxes unless you own your own business or use the vehicle in the performance of your job and are not reimbursed for it's use. The average person can't write off the lease payments anymore.
That must be the catch then. I have most of my assets owned by my FLP(Family Limited Partership) and my corp. My mistake, for some reason I thought most Porsche owners have their estate planning or at least tax strategy done as well.
Well I guess this is a good time to say, "If you don't have an FLP then get one. Its a good way to save on taxes and protect your assets."
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Old 10-09-2005, 05:27 AM   #14
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I recommend you simply Google "auto lease vs buy analysis."

There are a number of excellent articles that will summarize the issues for you.

Re: taxation, for most W-2 based earners, you CANNOT write off any value of the lease unless you are using the car for unreimbursed business use.

The point raised about the depreciation hit in the fists years of ownership is a valid point. I sell many late model Porsches for the simple reason that after 2-3 years, the price/value equation is much more attractive to many folks.

Good luck!


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