You’ve decided that a Porsche is in your future, and you want to learn more about leasing one of Stuttgart’s finest. In this edition of Car Talk, we’ll explore the ins and outs of leasing a Porsche and suggest some money-saving tips.
Pros and Cons
Let’s begin with some fundamental pros and cons of leasing a Porsche.
Advantages
- Lower monthly payment than a traditional loan
- Always under factory warranty (for leases within four years/50,000 miles).
- No worries about depreciation
Disadvantages
- No ownership interest
- Responsible for damage and extra mileage
- Excessive fees
If you enjoy having the latest car and don’t mind paying for the privilege, Porsche leasing can be an ideal vehicle solution. If you tend to keep your vehicle for an extended period or customize your ride, then a traditional car loan may be the best option.
Leasing Basics
A car lease usually has a lower monthly payment than a traditional loan payment for the same car. This option works because, unlike a car loan that involves paying for the car’s entire cost plus interest, a car lease payment only covers a partial amount of the car’s value. Let’s look at the two components of a lease payment.
Depreciation: The difference between the negotiated purchase price of the Porsche and the residual value (what the car will be worth at the end of your lease term). Your lease payment will include this depreciation amount plus interest.
Residual Value: You’ll also pay interest on the value of the car.
Together, these two amounts (along with fees and taxes) add up to your monthly lease payment. Keep in mind that better residual value (Porsche’s tend to have better depreciation than other premium vehicles) and lower interest rates (which are NOT a feature of many Porsche factory leases) make for lower monthly payments.
Here are some things you may pay when you lease a Porsche.
Sales Tax: Some states charge sales tax based on the car’s negotiated price, and other states add sales tax to your monthly payment.
Acquisition or Bank Fee: A non-negotiable fee, usually at $1,095, collected by Porsche Financial Services (PFS) to initiate the lease.
Security Deposit: A variable amount (typically close to the monthly payment amount) collected at the start of the lease and returned at the lease’s end. In some cases, a security deposit may be waived. Any charges for excessive wear or mileage may be deducted from the security deposit.
Disposition Fee: Usually $595, PFS collects this amount at the end of the lease. In some cases, this fee may be waived if you lease another Porsche.
Down Payment: Any money you are putting down to reduce your monthly payment. This amount can include any equity from a trade-in vehicle.
GAP Insurance: In the event of your Porsche being stolen or totaled in an accident, a GAP (Guaranteed Auto Protection) plan will cover any shortfalls between the car’s value and the amount still owed on the lease. For someone not wanting to potentially be responsible for thousands of dollars following a vehicle loss, this can be cheap peace-of-mind.
Fees and Extras: This includes any dealer fees and extra coverage like wheel and tire protection plans.
If you’ve never leased a car before, it’s like learning a new language--don’t be overwhelmed and keep discovering. Here are three more essential terms to know:
Capitalized Cost: This is the negotiated price you will pay for the car. Depending on the dealer and the Porsche, it may be at, above, or below the car’s MSRP “sticker” price.
Term: The length of time you will lease the car. Usually, this is 24 to 48 months. The term will also specify your mileage allowance included in the lease, such as 10,000 miles per year.
Money Factor: Another name for the interest rate in a lease. It’s calculated by dividing the actual interest rate by 2400. For example, a 6% interest rate has a money factor of .0025. To calculate the actual interest rate of a money factory, just multiple the money factor by 24. So, a .003 money factor multiplied by 24 works out to a 7.2% interest rate.
The Truth About Porsche Leases
Porsches are unique cars. Sure there are Bimmers, Mercedes, and a bunch of other super-premium car brands, but if you want a German-flavored vehicle that’s embedded with sports car DNA and still suitable for daily driving, then a Porsche it is. This uniqueness comes at a cost due to the overall exclusivity of the brand. For the most part, you won’t see fantastic lease deals through a Porsche dealer. Sure, some Porsche drivers have gotten great leases, but these deals are more the exception than the rule.
It makes sense. Porsche wants to maintain the air of elusiveness. This is often reinforced by lease offerings that charge a higher interest rate (money factor) than other top-tier brands. Let’s explore a few different leasing strategies to help you get that new Porsche.
#1: The Local Experience
No rocket science here. This strategy involves shopping at local Porsche dealers. It’s a pretty straightforward process. Ideally, the car you want will be readily available, and the dealer will propose a deal that’s acceptable to you. It’s going to depend on the vehicle you want and how much the dealer wants your business. The dealer is going to be more eager to cut you a deal on something from a lot full of Cayennes than on his only special edition 911 Targa 4S Heritage.
#2 Expand The Search
If you don’t mind paying for shipping your Porsche or traveling a distance to take delivery of the car, then consider contacting dealers outside your immediate area. This could be the next state over or even cross-country. This approach is not about building a relationship with your local dealer; it’s about getting the best deal possible on the car you want. Some Porsche sellers are willing to deal and just want to do business. It’s your job to find the eager dealer. Pick up the phone, send out some emails, and get going.
#3 Use A Broker
Consider using an independent leasing broker to lease your Porsche. These companies have existing relationships with Porsche dealers and a knack for locating hard-to-find cars at better-than-dealer prices. Most brokers work off of a flat-rate fee (usually $100-$1,000), so negotiation is already done for you. Brokers typically handle all the paperwork, arrange shipping or local pick up, and interact with an authorized Porsche dealer. This can be a simple, direct business transaction as brokers only get paid when you lease a car.
Lastly, keep these leasing hacks in mind during your Porsche shopping adventure.
- Multiple Security Deposits: Paying multiple security deposits (MSDs), which are refundable at the end of the lease, can reduce how much PFS charges for the lease money factor.
- Low Down Payment: Put as little down payment as possible on a lease. If the car is totaled or stolen, you lose whatever funds you handed over.
- Alternative Leasing: A broker or dealer may be able to recommend a lower-cost third-party finance source for your Porsche lease.
- Used Porsche Leasing: Porsche has a factory program for leasing previously owned cars that are no more than five years old. Depreciation has already set in, and some cars still have a Porsche warranty--this technique may be the perfect sweet-spot for lease-loving Porschephiles.
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