Money Factor? - 986 Forum - The Community for Porsche Boxster & Cayman Owners

seventythree · 12-31-2006, 05:03 PM

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.

RandallNeighbour · 12-31-2006, 05:08 PM

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.

djomlas · 12-31-2006, 11:34 PM

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

YellowPorscheMan2002 · 01-01-2007, 02:20 AM

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.

01-01-2007, 03:42 AM

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.

Ken Corsun · 01-01-2007, 04:39 AM

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.

Ken

RandallNeighbour · 01-01-2007, 06:14 AM

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?

JFERR · 01-01-2007, 06:42 AM

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."

seventythree · 01-01-2007, 07:49 AM

This is for use in a business with significant revenue generation; so, no advice needed on the buy vs. lease topic.

FICO score is 800+, BTW.

Thanks again.

Ronzi · 01-01-2007, 08:31 AM

Good explanation of money factor, and leasing in general, is contained here:

http://www.leaseguide.com/lease07.htm

Leasing seems to me to be a good way to get screwed more than usual by a car dealer.

Paul · 01-01-2007, 02:45 PM

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.

JFERR · 01-01-2007, 03:13 PM

Paul,

Couldn't agree with you more.

z12358 · 01-01-2007, 04:19 PM

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.
Z.

djomlas · 01-01-2007, 04:51 PM

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

Paul · 01-01-2007, 05:27 PM

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!).

racer_d · 01-02-2007, 12:27 PM

I leased a car once and felt like a fool when it was all over. Why a fool? Because after all that money was spent I had nothing to show for it. From now on its "cash only" (well, finance maybe

)

However, please get a nice Cayman now so I can buy it in a 5-8 years for 1/2 or less than it cost new

Paul · 01-02-2007, 05:05 PM

People who lease new Porsches enjoy a warranty, are able to follow the minimum maintenance schedule, are able to drive the car the way Porsche intended, and generally have much more fun since who cares when you know the car is going back in 4 years!! I haven't waxed mine yet even though its been to the last 6 Porsche Parades!!!

BTW I bought mine at the end of it's lease, go figure....

NickCats · 01-02-2007, 07:03 PM

I will never lease again ! About 4 cars ago I learned a very valuable ( and expensive ) lesson. I leased a brand new Jeep Grand Cherokee from a leasing company here in Chicago. I told them I needed a 3 year 60k mile lease ( I used to drive a lot back then ). They said no problem, found me the Jeep, I signed the papers and was on my way. 3 years go by and I have 60k miles. I go to the leasing company and all the doors and windows were boarded shut. I went home and pulled the contract and instead of being on a 36 month lease I was on a 63 month lease ! I called the bank and my options were :

a. Continue driving the Jeep and pay for every mile over 60k until the lease ends.

b. Purchase the Jeep for $12k PLUS the remaining lease payments ( another $12k )

( Keep in mind I had already made $18k in lease payments ! )

My $30k Jeep was worth about $10k at the time...

So, I had to buy ANOTHER car and the Jeep sat parked in the driveway for 2 years until the lease was up ( while I continued to make $500 monthly payments and keep full coverage insurance for a vehicle I could not drive ).

If I had continued to drive the Jeep and put another 40k miles on the car I would have owed the bank $10k ( $0.25 per mi ) at the end of the lease.

The company that scammed me had done this to 300 other people, pocketed the money and filed bankruptcy and there was nothing I could do.

Needless to say, I will never again lease a car AND I read every contract IN DETAIL before I sign.

Bottom line, if you lease :

a. do not attempt to get out of the lease early
b. be very careful of the mileage restrictions
c. only lease from well established dealers
d. READ THE CONTRACT

Nick

RandallNeighbour · 01-03-2007, 05:22 AM

Nick, it sounds like they either made a mistake or purposely signed you up for that lease term... either way, had you read the contract it would have been corrected or you would have walked away from the deal. It's not the fault of leasing itself though, is it? That could have just as easily happened to you with a 63 month purchase.

I've leased two cars and won't do it again for the simple reason that I don't like restrictions on mileage. I also don't like fretting over the fact that I may get hit up for extra charges if I am not very careful to keep the car in pristine condition.

Funny story... I had a 1986 MR2 that I leased. I turned it in at 48 months as planned, under the mileage. The car had one tiny scratch on the passenger side mirror, which I touched up with paint and wasn't noticeable.

The guy who came to my office to inspect and take the car took FOREVER to check it out in the parking lot. He made two phone calls in my office to talk to his boss quietly, then came to me and said, "I will get fired if I turn in your car without anything wrong with it. So, I'm going to list that the logo sticker on the front is bug-laden. These cost about $80 from the dealership to buy and have them replace."

Fuming, I said, "You mean to tell me you are going to nail me for this when I kept this car in concourse condition for four $#@! years?"

He smiled and said, "No, we can waive up to $100 in damages and you're covered. Have a nice day and thanks for leasing your car through our company."

NickCats · 01-03-2007, 09:56 AM

Randall,

It definitely was intentional, but entirely my fault for not reading the contract.

Oh, and I also had to pay to replace all four tires on the Jeep when I turned it in

I guess my point was to let other know it costs major $$$ to get out of a lease early, be sure you can abide by the mileage restrictions, and make sure you know all the terms of the lease before you sign.

Good story, though !

Dbth, you are correct, and unfortunately, I have no one to blame but myself.

Expensive lesson learned…

Nick