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Old 12-31-2006, 05:03 PM   #1
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Money Factor?

What would be a good-deal Money Factor to lease a 2007 Cayman S or Boxster S in Southern California? 3-4 year lease; no, to very little, money down; 12K miles a year.

TIA

Edit: Actually, what would be a good-deal monthly lease rate for a 2007 Cayman S with an MSRP of $60K? Same terms as above.

Last edited by seventythree; 12-31-2006 at 05:12 PM.
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Old 12-31-2006, 05:08 PM   #2
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I'd like someone to splain these money factors to me. It's a term I came across a while back about car leasing and it's a mystery to me.
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Old 12-31-2006, 11:34 PM   #3
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i always tought that leasing a car is a big waste of money.
yes there are some benefits, but for me i dont think ill ever even consider this in my lifetime.
i just dont like the fact that i'd be driving a borrowed car
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Old 01-01-2007, 02:20 AM   #4
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I did an analysis on car leasing in grad school. From strictly a financial perspective, its the least desirable option vs. buying and getting a loan, or paying cash.

I once leased a Vette, and found out another undesirable effect of leasing; I was sick of the car after 1 year and could not get rid of it.

Well, there's my two cents worth.
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Old 01-01-2007, 03:42 AM   #5
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Leasing is a viable option for people who:

1) Are business owners that can then "write-off" some of the expenses
2) Or for people who want a new car every couple years

This is usually how I read it.
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Old 01-01-2007, 04:51 PM   #6
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Quote:
Originally Posted by YellowPorscheMan2002
I did an analysis on car leasing in grad school. From strictly a financial perspective, its the least desirable option vs. buying and getting a loan, or paying cash.

I once leased a Vette, and found out another undesirable effect of leasing; I was sick of the car after 1 year and could not get rid of it.

Well, there's my two cents worth.

i had 7 vehicles before the porsche, and got tired of all of them like you did, and ended up selling each one of them more than what i got them for, so for me it was more of an investment than a loss
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Old 01-01-2007, 05:27 PM   #7
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I have sold several cars that I have leased with 0 down for more than the lease payoff. Plus I saved the sales tax (the next owner paid the rest!).
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Old 01-01-2007, 04:39 AM   #8
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Quote:
Originally Posted by djomlas
i just dont like the fact that i'd be driving a borrowed car :
This is exactly the way I feel. I want the car to be mine. I also don't want to be concerned about modifications, minor damage or excessive mileage.

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Old 01-01-2007, 06:14 AM   #9
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Great opinions on leasing, but "seventythree" wanted to know a good money factor rate and I want to know what a money factor rate is in the first place! Any takers?
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Old 01-01-2007, 06:42 AM   #10
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The money factor is a number used to calculate the interest rate. This is a number supplied by the finance company. The interest rate is what's important.

Leasing is good for cash flow.

Example: I leased a $34K car for three years, but will only pay $15K and I don't have to worry about selling the car later. This is a secondary car for bad weather.

J. Paul Getty once said "I don't buy things that depreciate."
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Old 01-01-2007, 02:45 PM   #11
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Leases can be cheaper in the long run if they are negotiated correctly (I've been leasing cars since 1978).

Cars are not an investment, they are an expense. One successful formula for acquiring wealth is to minimize expenses and maximize investments. In other words spend all extra money on investments not Porsches!! So if you want a Porsche, lease it, invest the difference. IMO, You will almost always increase your net worth following this plan.
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Old 01-01-2007, 03:13 PM   #12
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Paul,

Couldn't agree with you more.
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Old 01-01-2007, 04:19 PM   #13
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Quote:
Originally Posted by Paul
Leases can be cheaper in the long run if they are negotiated correctly (I've been leasing cars since 1978).

Cars are not an investment, they are an expense. One successful formula for acquiring wealth is to minimize expenses and maximize investments. In other words spend all extra money on investments not Porsches!! So if you want a Porsche, lease it, invest the difference. IMO, You will almost always increase your net worth following this plan.
As with everything else in life, things are not that simple. Each individual financial situation needs to be considered separately and there is no universal optimal answer. Things to consider on a $60k car lease example (I use "you" below generically):
1. What returns can you reasonably expect make on a $60k investment at various levels of risk? What is your net worth? The higher your net worth, the riskier you can afford to invest the $60k, thus expecting higher returns over the long run, making leasing a better option. The ability to spread your bets and diversify is the main reason why it's easier to get richer when you are rich already.
2. What is the interest rate that you are charged on the lease?
3. Can you write-off the lease payment as an expense before your income is being taxed?
4. How much does the value of the car depreciate over the lease term?
5. How long do you plan to drive the car? The longer you plan to stick with it, the more it pays to own vs lease.

And finally, you can't look at things only from a financial point. It may not be optimal to only worry about maximizing wealth until your last day on Earth. At some point (usually called "mid-life crisis") we are all faced with our own mortality and with the fact that our bank account is worthless to us after we die. So if you really prefer to own that Porsche (despite being a depreciating asset and an expense), to love it, enjoy it, and take care of it, then so be it -- regardless of the fact that you could have saved couple of $k if you leased it instead.

Just my opinion, of course.
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