Any leaseholders considering buying out their lease?

[submatrix]

Since the federal EV credit is effectively dead for the Taycan, I started to wonder if it made sense to buy out my lease. I'm currently 16 months into my 36 month lease, so I have 20 payments left to go.

I received a buyout quote of ~$77k. Combined with payments I've made already, this adds up to $107k. I then went and built my exact same spec in the configurator ( http://www.porsche-code.com/PP8MMQ53 ), and it also came out to $107k before taxes/fees. This means my equivalent car if I ordered today would easily push ~$117k out the door.

I also called Porsche Financial Services to find out more info about how the buyout amount is calculated, and whether it was advantageous (from purely a financial standpoint) for me to buy out now vs. later or at lease end. For example, if the buyout amount decreased each month by exactly the amount of my monthly lease payment, there would be no point to buying out early. However, I found that the monthly lease payment is made up of a base payment plus a "rent charge" and taxes. The "rent charge" is effectively a charge for servicing a loan. The buyout amount is calculated by taking the residual value (as noted on the lease contract) and adding it to the remaining number of payments multiplied by the base lease payment. I confirmed this with a calculator (although it was still off by ~$400 for some reason, not sure why). In other words, by buying out now, I avoid paying 20 months of "rent charges".

I already know that if I were forced to buy a new EV today, I would buy another Taycan. However, I am perfectly happy with my current vehicle. It's also Chalk, which will soon become a PTS color I believe. That could up the resale value, right?

It seems like it makes sense for me to buy out the lease. Is there anything I'm missing?

Sponsored

 

[TDinDC]

What is the total amount you would save? Consider that amount to be insurance against vehicle value at the end of the lease, then decide whether the insurance is worth the cost to you.

For example, will the Taycan be worth more or less than the residual value of the lease. If it is worth more, would that value likely exceed the amount that you would save?

I personally think I will want a new vehicle at the end of the lease, and that, once we get through this supply problem (if we get through this supply problem), the demand for new Porsches vis-a-vis used ones will once again be at traditional levels

 

[FlyingPoint]

Absolutely will acquire.

 

[RCorsa]

No point on buying out your lease early as you still have to make all the payment and pay all the interest regardless the only reason to buy it out now is if you wanted to finance the amount of the payments and the residual value and assumed that interest rates will be higher at the end of your lease rather than right now

 

[submatrix]

No point on buying out your lease early as you still have to make all the payment and pay all the interest regardless the only reason to buy it out now is if you wanted to finance the amount of the payments and the residual value and assumed that interest rates will be higher at the end of your lease rather than right now

Geez, I think you're right. I took a closer look at the lease agreement and one of the charges when buying out before the lease ends is to make all remaining base payments. That sucks.

I guess there goes the idea of buying out the lease early...

Edit: actually, is it possible the buyout quote includes these remaining base payments? In my original post, I said:

"The buyout amount is calculated by taking the residual value (as noted on the lease contract) and adding it to the remaining number of payments multiplied by the base lease payment. "

So I think the buyout quote of $77k I received does include all the remaining base payments, no? But the advantage of buying now is I avoid all the rent charges.

 

[RCorsa]

Nope - that’s the disadvantage of trying it get out of leases early. Regardless you are responsible for all the payments. It’s why places like lease trader exists so people can take over leases

 

[submatrix]

Nope - that’s the disadvantage of trying it get out of leases early. Regardless you are responsible for all the payments. It’s why places like lease trader exists so people can take over leases

But as I discovered, the lease payment is composed of a base payment + a rent charge (plus some taxes). Apparently the buyout quote I received makes it so I don't have to pay the remaining rent charges if I were to go the full term of the lease. I do still have to pay the remaining base payments, which makes sense.

 

[RCorsa]

What country are you in. Leases don’t work like that in the uS. At least none I’ve ever heard of or done. I’ve done a ton of leases for my businessIt’s why I never do more that 24 months ever. You pay a higher money factor (interest) but it allows you to get out of A lease much earlier. The main advantage of leasing versus a standard purchase is that you only pay sales tax on the portion of the car you use i.e. the 24 to 36 months of payments rather than on the entire amount. Additionally it allows you to write off some expense if you do it through a business. However while leases typically offer lower payments than finance you are essentially locked into the entire term including the base payment and all of the interest and taxes for that 24-36 month period. Since cash flow is not an issue for me and really into the business expense aspect I generally just do a single pay lease at the beginning. The only way I’ve ever heard of being able to get out of a lease early is the transfer that leads to another. Not all leasing companies allow for this although most deal there is a small fee typically around $500 and of course you have to find somebody willing to except the remainder of your payments but it offers them a very short term lease typically without any of the upfront costs or cap cost reductions

 

[submatrix]

What country are you in. Leases don’t work like that in the uS. At least none I’ve ever heard of or done. I’ve done a ton of leases for my businessIt’s why I never do more that 24 months ever. You pay a higher money factor (interest) but it allows you to get out of A lease much earlier. The main advantage of leasing versus a standard purchase is that you only pay sales tax on the portion of the car you use i.e. the 24 to 36 months of payments rather than on the entire amount. Additionally it allows you to write off some expense if you do it through a business. However while leases typically offer lower payments than finance you are essentially locked into the entire term including the base payment and all of the interest and taxes for that 24-36 month period. Since cash flow is not an issue for me and really into the business expense aspect I generally just do a single pay lease at the beginning. The only way I’ve ever heard of being able to get out of a lease early is the transfer that leads to another. Not all leasing companies allow for this although most deal there is a small fee typically around $500 and of course you have to find somebody willing to except the remainder of your payments but it offers them a very short term lease typically without any of the upfront costs or cap cost reductions

I'm in Los Angeles. I definitely need to get more info from Porsche on this, yesterday I called PFS but the agent didn't really know much. What I described in my first post was the extent of what I could learn from the agent, but who knows if they were even correct in what they said.

What I do know is that I generated a buyout quote by clicking some buttons on my Porsche account, so it wasn't like someone just told me the number over the phone. It generated PDF with the buyout amount and instructions for how to make the payment if desired.

I'll probably call my dealer next to get the final word on how this all works. Thanks for your insight so far.

 

[Tooney]

The main advantage of leasing versus a standard purchase is that you only pay sales tax on the portion of the car you use i.e. the 24 to 36 months of payments rather than on the entire amount.

My understanding is that sales tax treatment of leases is state specific and varies. In Ohio, the sales tax on a leased vehicle is based on the full sales price of the car plus other items and it is all collected up front.

 

[submatrix]

Some extra info directly from my lease agreement:

Not sure what 1 and 2 would amount to in this case, but it definitely seems like you subtract the "unearned rent charges" from the final buyout amount.

 

[submatrix]

I just wanted to follow up on this, since I successfully bought out my lease. What I said here:

But as I discovered, the lease payment is composed of a base payment + a rent charge (plus some taxes). Apparently the buyout quote I received makes it so I don't have to pay the remaining rent charges if I were to go the full term of the lease. I do still have to pay the remaining base payments, which makes sense.

ended up being correct. Since I'm in California, I did have to pay sales tax on the buyout amount.

In other words, the buyout amount consisted of:

depreciation = cost of new vehicle - residual

base payment = depreciation / (# of lease payments)

buyout quote = residual value + (# of remaining lease payments * base payment)

final buyout amount = buyout quote + sales tax

By buying out early, I was able to avoid all remaining rent charges on my lease, which saved me around $7k compared to if I had bought out at the end of the lease.

I did the buyout through my dealer, as a result they handled all the DMV paperwork for me (and charged me doc fees of ~$100). I went in to sign some docs, took about an hour total. The new title and registration will be mailed to me.

Alternatively, I could have done the buyout through PFS directly, but then I would have had to do all the DMV paperwork myself.

 

[kempez]

If you are in Europe, you can pay off the remaining PCP (not lease), and save all the interest you would have incurred otherwise. By law.

 

[Mr.Smith]

You pay taxes on the residual value, but will pay it when you buy out the car.
You don't pay the interest of your monthly payments if you buy out early.
Your interest rate (MF) you're paying now is probably pretty low. It's best to hold off till a month left on your lease then buy it out.

 

[submatrix]

You pay taxes on the residual value, but will pay it when you buy out the car.
You don't pay the interest of your monthly payments if you buy out early.
Your interest rate (MF) you're paying now is probably pretty low. It's best to hold off till a month left on your lease then buy it out.

I believe my MF was something like .0024, which would be 5.76%. My financed buyout was 3.24%, so seems like a win to buy it out now rather than pay another 20 months at 5.76%.

Sponsored