Lease vs. Buying Used

[RAHRCR]

If you are buying a new car and would get rid of it in 3 years anyway, then lease. If you are like me and plan on driving it for longer, just write a check for it and enjoy.

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[SoccerMan94043]

Sometimes, there are more/better incentives for a lease.

As far as “getting something in the end” goes, you have an agreed price at the end where you can buy out the lease.

In my last car (Mach E), the residual value would have been much higher on a lease than the actual value I sold the car for.

My cost of ownership on a lease would have been much lower than the purchase that I did.

The MachE is a bit of an extreme case... and that's the risk I noted. The Finance Manager told me to expect 50% depreciation in 3 years and it seems to me that Porsche Finance quotes track along these lines as well (I was getting 1, 2 and 3 year lease quotes).

There are a few variables making it hard to know how big the risk will be:

1) Porsche is now making far less Taycans. What impact will that have on the used market in a few years? Mine, being a 2025, might turn out to be harder to find in the future, but it's impossible to know.

2) If Porsche really moves away completely from EVs, who would want to risk buying an expensive car on a dead platform? I'm betting they won't as they've invested so much already and have created the best EV on the market (for now). I'm hopeful smarter heads will eventually prevail.

3) What I'm not sure about is whether the depreciation is that linear... I paid 30% less on a 6 month old car. In 3 years will that be 50% of my price or will the depreciation improve over time such that it might be worth 65%? There is probably data out there for this, but I'm not sure how realiable it is due to point 1 and 2.

 

[Schroederhc]

Sometimes you can pick up good deals on swapalease.

 

[Gkwan]

As Jasper & several people said, it's a financial & personal situation decision.
In my case I don't know if & when I'll want to have a new job, in which I'd have a personal company car (that's what I had for 25Y), so buying was the only option because I can sell it whenever I need, or keep it if I love it, situation changes etc.
Leasing has to be compared to buying without any increased 1st month (otherwise it's not comparable), you finance the difference between price "new" vs "residual value", which is set by the company. The main advantage, even more with EV is indeed peace of mind : you're not the owner so you don't have to worry about anything (almost).
Keep in mind you are signing a contract, usually 3 years, and >90% of the time you won't be able to break free before those 3 years without a huge penalty (sometimes lighter if you're at 2Y+ but not always).
So in my case the only logical choice was to buy it : Taycan Turbo with almost everything except ACC & Innodrive, 37K km, 3Y PA warranty directly from Porsche, all new from visual point of view (they showed me a 5K€ internal bill for cosmetic repairs), tires are almost new; great look (21" with the inside painted in white / white & red leather).
Model from June 2020 but really looks new, and I fought with the dealer to make sure it's fully updated (they confirmed it's done, Androïd Auto magically appeared on the PCM, but I'll double-check anyway).
I'm paying 74K€ vs 180K€ when it was new.
Battery SoH is 91% etc...
Really checked in-depth, couldn't find anything better in France, ChatGPT either (really pushed in-depth). And importing from Belgium/Germany/Luxembourg etc wasn't a huge gap either, plus you get additional trouble.
I found only 1 ad which was better, 65K€ for a ~190K€ worth Turbo, but the guy was in the east of France, near 90000km, nearly out of PA (ie +5K€ for 3Y like mine) and I didn't like the design alas (dark blue with black leather) - very nice guy though.

I know I'll lose money when I resell it, probably ~7% per year, but I had too much cash sitting in the bank so I'd rather have a car than risking the French state to overtax it (illegal today, but tomorrow who knows...we're not in great shape financially ).

But be careful, 2 years is not the maximum depreciation wave, for the Taycan market I would say the biggest drop is behind you when you buy a 4Y or 5Y old car (in my case 5,5Y, it lost 60% value).

 

[Gkwan]

The MachE is a bit of an extreme case... and that's the risk I noted. The Finance Manager told me to expect 50% depreciation in 3 years and it seems to me that Porsche Finance quotes track along these lines as well (I was getting 1, 2 and 3 year lease quotes).

There are a few variables making it hard to know how big the risk will be:

1) Porsche is now making far less Taycans. What impact will that have on the used market in a few years? Mine, being a 2025, might turn out to be harder to find in the future, but it's impossible to know.

2) If Porsche really moves away completely from EVs, who would want to risk buying an expensive car on a dead platform? I'm betting they won't as they've invested so much already and have created the best EV on the market (for now). I'm hopeful smarter heads will eventually prevail.

3) What I'm not sure about is whether the depreciation is that linear... I paid 30% less on a 6 month old car. In 3 years will that be 50% of my price or will the depreciation improve over time such that it might be worth 65%? There is probably data out there for this, but I'm not sure how realiable it is due to point 1 and 2.

you can use ChatGPT and help him analyse your market specifics + your personnal situation, to estimate the value your car will loose in your market.
It gives at least some idea, I put mine in example (French sorry!)

 

[kern417]

The MachE is a bit of an extreme case... and that's the risk I noted. The Finance Manager told me to expect 50% depreciation in 3 years and it seems to me that Porsche Finance quotes track along these lines as well (I was getting 1, 2 and 3 year lease quotes).

There are a few variables making it hard to know how big the risk will be:

1) Porsche is now making far less Taycans. What impact will that have on the used market in a few years? Mine, being a 2025, might turn out to be harder to find in the future, but it's impossible to know.

2) If Porsche really moves away completely from EVs, who would want to risk buying an expensive car on a dead platform? I'm betting they won't as they've invested so much already and have created the best EV on the market (for now). I'm hopeful smarter heads will eventually prevail.

3) What I'm not sure about is whether the depreciation is that linear... I paid 30% less on a 6 month old car. In 3 years will that be 50% of my price or will the depreciation improve over time such that it might be worth 65%? There is probably data out there for this, but I'm not sure how realiable it is due to point 1 and 2.

like the audi etron hack that ed bolian blasted last year. all those cars will be coming back at the same time because they sold out nationally almost instantly. I guarantee Audi won't be making that mistake again, and the forums are full of people asking what to move to because they don't want to downgrade but can't find a comparable option.

Audi overestimated how well the cars would hold their value so they cut deals, but that's not the norm. and ultimately you're also gambling on that decision hoping the values will be in your favor.

i'm more of a buy a good deal and hold kind of guy anyway. i got some good incentives to buy out my last lease during covid, but never again.

 

[Gino]

I know there is a strongly held belief that leasing EVs is the better way to go. My understanding is that belief is based primarily on the huge depreciation new EVs take. However, if I were to buy a 2-year old Taycan, a lot of that depreciation has already happened. I'm curious what other considerations push people to believe that leasing is better. Is it the rapidly changing technology (a different kind of depreciation)? It seems that buying a 2-year old CPO Taycan is the sweet spot. I would still have two years of the original warranty and then get another two years of CPO coverage after that, and am getting a $100K+ car for about half of what it sold for. I'm obviously not the first person to think of this, but I am curious what people think about leasing a new Taycan vs. buying a used one.

For me buying a 2 year old CPO was a no brainer. It doesn’t bother me the Porsche Sales Manager drove it 30K miles in the 2 years and got the majority of the bugs/recalls taken care of by the time I bought it with 1 year of free charging, 2 years warranty & 6 years battery warranty remaining.
I purchased the extended warranty so the overall warranty expires the same time with the HV battery.
I have peace of mind until 2030 when I would be in the hook for everything.
This was all fine for my wife & I when we fell in love with the Taycan RWD in coffee beige metallic.
could we have saved another $10K by finding a straight up used Taycan but it would have been unlikely to find it in coffee beige metallic. I don’t care about depreciation since I have no intention of ever selling it.
I put 4K to 5K miles max per year so my Taycan will not hit 100K likely in less than 20 years. The miles I drive per year will drop as well once I buy either a Boxster or 911 CPO convertible in the next year or two. I just have to trust Porsche will continue to support my Taycan for at least the next 15-20 years when I’m too old to care.

 

[69Mach390]

If you are buying a new car and would get rid of it in 3 years anyway, then lease. If you are like me and plan on driving it for longer, just write a check for it and enjoy.

Again, it’s not so simple.

Just depends on the deals at the time.

In the US for the last couple years, EV leases took advantage of an additional $7500 credit and had very low interest rates baked into the deals.

And you can always keep the car at the end of the lease, no need to turn it in.

Sometimes people were just leasing for the extra $7500, then buying out the lease as it was much cheaper than a straight purchase.
I saw a deal a few months ago for a Chevy Blazer EV lease that was a single pay $7500 for a 2 year lease. Seems like a no brainer vs a purchase:
https://www.macheforum.com/site/thr...ntly-above-final-balloon-payment.47914/page-2

 

[Mr.Smith]

Sometimes, there are more/better incentives for a lease.

As far as “getting something in the end” goes, you have an agreed price at the end where you can buy out the lease.

In my last car (Mach E), the residual value would have been much higher on a lease than the actual value I sold the car for.

My cost of ownership on a lease would have been much lower than the purchase that I did.

Leasing makes the most financial sense when the residual value and money factor are subsidized by the OEM.
GM has masters this with the Hummer EV with an 80% RV. Essentially moving a car now and kicking the can down the road for the residual.
Tesla has been doing it too

 

[prj]

you can use ChatGPT and help him analyse

I'll stop you right here.
ChatGPT doesn't analyze anything, it's a LLM and LLM's essentially just see which words go together well.
You can not rely on anything that comes out of it at all without double checking it. Fools the majority of people though - they think when the grammar is correct, that the data must be too, which is not the case.

The only things LLM's are really useful for are language based tasks, e.g. translation (whether natural language or programming language), low tier tech support when trained on a relevant dataset, creative writing, some creative coding (but you must always double check the output), other creative generation.

Anything else - it will happily spit out outright lies and fabrications or just wrong data, while using very eloquent language constructs and an overconfident manner of speech.

Basing financial decisions on the output regardless whether it's calculating residuals or recommendations in the stock market is a shortcut to financial ruin.

 

[Gkwan]

I'll stop you right here.
ChatGPT doesn't analyze anything, it's a LLM and LLM's essentially just see which words go together well.
You can not rely on anything that comes out of it at all without double checking it. Fools the majority of people though - they think when the grammar is correct, that the data must be too, which is not the case.

The only things LLM's are really useful for are language based tasks, e.g. translation (whether natural language or programming language), low tier tech support when trained on a relevant dataset, creative writing, some creative coding (but you must always double check the output), some creative generation.

Anything else - it will happily spit out outright lies and fabrications or just wrong data, while using very eloquent language constructs and an overconfident manner of speech.

Correct, it's actually what I did, I had to "calibrate" it for a pretty long time to make sure it "understood" my various parameters, then understand what are the key takeaways etc... I use it as a data mining tool, doing the grunt work (collecting all ads/data which I defined as relevant), then tell him how to analyse it.
Still saves me time though.

 

[prj]

Correct, it's actually what I did, I had to "calibrate" it for a pretty long time to make sure it "understood" my various parameters, then understand what are the key takeaways etc... I use it as a data mining tool, doing the grunt work (collecting all ads/data which I defined as relevant), then tell him how to analyse it.
Still saves me time though.

But that's just the thing LLM's are incapable of "analyzing" anything, and the data you get, if it's randomly fetched from online can be also completely wrong, or just hallucinated.

You can't use it as a "data mining tool" - there is no guarantee to the quality of the data, it's mostly incapable of providing accurate data.

 

[SoccerMan94043]

But that's just the thing LLM's are incapable of "analyzing" anything, and the data you get, if it's randomly fetched from online can be also completely wrong, or just hallucinated.

You can't use it as a "data mining tool" - there is no guarantee to the quality of the data, it's mostly incapable of providing accurate data.

Technically not true... LLMs can provide very accurate data. A person needs the wisdom to know the difference though.

 

[prj]

Technically not true... LLMs can provide very accurate data. A person needs the wisdom to know the difference though.

This statement is reaching so hard...
"Technically", "Can provide", "Wisdom".

There is no quality whatsoever to the data - since there is no quality, then you can't make any correct decisions based on the data provided, making the entire thing completely useless for that purpose. It was also never the intention of the LLM.
You can not verify whether it is correct without having a secondary verified data source, and if you have one, then you did not need the LLM in the first place.
Another LLM is also NOT a verified data source. We are talking about financial data here, where before making any decisions you always take at least two high quality data sources and check whether they agree.

It's okay though, let the people get burned a few times by vibe investing, vibe coding and so on.

Anyway, this is derailing the topic too much.

 

[69Mach390]

Technically not true... LLMs can provide very accurate data. A person needs the wisdom to know the difference though.

And a broken clock is right twice a day.

The problem with what you said is that you need to know when the result is wrong. And what good is it if you already know the answer you are searching for?

I wish they would give a confidence % or something to let us know that even though it’s well worded and “sounds like it could be true,” you would know if the result came from a single source web page or a blog or if it’s an actual broadly sourced and verified info from a trusted set of sources.

My favorite recent example was on another car forum where someone asked a question no one knew the answer to. Then 3 posts in someone used AI to confidently confirm an answer.

When you clicked on the source data for AI?
It was the EXACT forum thread we were discussing. https://www.macheforum.com/site/threads/whisper-drive-mode-uses-less-energy.47647/

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