News

Is leasing a good idea?

Discussion in 'Ferrari Discussion (not model specific)' started by Spectre, Apr 4, 2004.

  1. Spectre

    Spectre Karting

    Apr 1, 2004
    120
    Atlanta, GA
    First of all, thanks to everyone who's answered my questions about the right Ferrari for me. After the discussion, I've decided that eventhough 308's, 328's, Mondials and so forth are nice cars for under 40k, I'm still want a 348. I've found several that are in my price range, if I lease them vs. purchasing but I'm not sure if that is the best idea. I don't like the idea of having to give back the car, but then again I don't want a car with high mileage after the lease term that would require expensive maintenance.

    Any thoughts?
     
  2. To remove this ad click here.

  3. sherpa23

    sherpa23 F1 Veteran
    Silver Subscribed Owner

    May 28, 2003
    9,511
    Colorado
    Full Name:
    Bastuna
    For an older car like a 348, I would just buy it. I cannot think of an advantage to leasing.

    For a new daily driver type car, I prefer to lease depending on the lease conditions. You'll be dealing with a known monthly payment and final residual. And it saves you from having to deal with selling the car at the end.

    However, none of these are issues with a Ferrari and especially a 348 which already has depreciated significantly. If you buy the car right, you can drive and enjoy it and when it's time to sell it, you could conceivably get all of your money or very close it at the end.

    Why you would want to lease a car like that is beyond me.
     
  4. nberry

    nberry Formula Junior

    Nov 1, 2003
    714
    Perfect answer!
     
  5. Texas Forever

    Texas Forever Four Time F1 World Champ
    Rossa Subscribed

    Apr 28, 2003
    47,696
    Texas!
    Ryan, I agree with you, but what's the deal with the ads that I get seeing from Putnam and other in mags like SCM offering to lease vintage cars? A vintage Ferrari shouldn't depreciate. It may not appreciate very much. The only realy depreciation should be repairs. Perhaps their program is very different. I'm curious to know if anybody here has leased a vintage car and how it worked.

    Thx, Dale

     
  6. sherpa23

    sherpa23 F1 Veteran
    Silver Subscribed Owner

    May 28, 2003
    9,511
    Colorado
    Full Name:
    Bastuna
    Dale, since I generally would defer to your expertise on these matters, I guess that we should look into the deal with Putnam et al.

    However, I'm still puzzled. A big part of the price of ownership of a used F car that has depreciated significantly, (i.e. not a 360 spider that someone's paying $60k over sticker for) is equity. When it's time to sell the car you get almost all of that back, and all of it on rare occasions. With a lease, you pay money but have no equity. To me, the advantage of leasing is that you're paying on a monthly basis only for your depreciation . If you get a new Saab, BMW, Audi, etc. that has all the maintenance included and you lease for the length of time that the program is valid (I prefer three year leases), then depreciation is all that you are paying for. F-car ownership is a different experience to that so I don't understand where the advantage would lie.

    Maybe the vintage program is a program where you pay by the mile or something like that? I am curious as well.
     
  7. To remove this ad click here.

  8. Spectre

    Spectre Karting

    Apr 1, 2004
    120
    Atlanta, GA
    My reasoning for leasing is to have the ability to buy a slightly more expensive car at the same monthly payment as a cheaper one.
     
  9. Ed P.

    Ed P. Formula 3

    Dec 28, 2002
    2,177
    Long Island
    Full Name:
    No Longer
    Why don't you finance it for 5 years as opposed to leasing for 3? The payments would probably be pretty close if that's your concern. Doesn't make sense to rent an already depreciated vehicle.
     
  10. W00dEar

    W00dEar F1 Rookie
    BANNED

    Feb 24, 2004
    3,515
    LI, NY
    Full Name:
    Chris
    For a normal car, for example you want to get a Benz E class as daily driver, you can lease. There isn't much difference money wise, you pay alot more monthly on a 3y loan vs. 3 yr lease, and the money saved by leasing is equal to what a 3yr old E class worth on market anyway.

    Now, for cars like Ferrari, new or used, I will say buy it in most of cases. Why? Because those cars keep their value, if you buy a used F355 or 80k or used F348 for $50k, they will still worth like $60k and $40k 2-3 yrs from now, so you can really didn't put out that much money once you sell it. But if you lease it, your money is gone, you paid 3 yrs basicly for nothing.

    Thus, I will lease any car at a reasonable lease rate, but I will not lease a Ferrari.
    Heck, if you get lucky enough one day, and are able to buy new Ferrari at list price, you can basicly drive it for a year or two then sell back to get ALL your money back, how sick is that?
     
  11. Zinhead

    Zinhead Karting

    Feb 29, 2004
    184
    Chicago, USA
    IMHO, the only reason to lease a vehicle is if you could otherwise write it off as a business expense. If you bought a car and could expense it, you would be limited to writing off $3,060 for the first tax year, $4,900 for the second tax year, $2,950 for the third tax year, and $1,775 for each succeeding tax year. The first year depreciation can be increased to $10,710 under certain conditions (new car purchased after a cut off date).

    On the other hand, if you leased it, you could write off the entire lease payment. Potentially, that is a much greater amount than the deductions allowed, you don't to worry about keeping track of your depreciated basis or paying taxes on any profits made when selling the car. You can always buy the car at the end of the lease if you like it. The point is, you should not be deciding if you should buy or lease a car, your accountant should be telling you.
     
  12. To remove this ad click here.

  13. DodgeViper01

    DodgeViper01 F1 Veteran

    Oct 1, 2003
    6,761
    It all depends. If you are interested in not owning a car and do not mind payments then go for it. Just remember you have nothing to show at the end of the lease and you will have to pay for ANY damage to the car. They will get you there especially in a Ferrari.
     
  14. Husker

    Husker F1 Veteran
    Silver Subscribed

    Dec 31, 2003
    8,950
    western hemisphere
    If you want lower payments, leasing is a great idea.

    If you want to lease a 348ts, I might lease you mine. Here are the terms:

    - Post a $40,000 surety bond (should cost $500 or so)
    - 4 year lease at $700 per month or 5 year lease at $600 per month
    - 5,000 mile annual limit
    - $1 per mile penalty beyond the limit
    - You are responsible for all car repairs during the lease, and these repairs must be documented and performed by a legitimate Ferrari mechanic.
    - You are responsible for all car repairs needed when the lease is up, other than normal maintenance and wear & tear.


    About my 1990 348ts:

    Red, 38,600 miles, like new condition, getting ready to perform 30K service.

    Email me if you are interested. Take care.
     
  15. Agent Smith

    Agent Smith Formula 3

    Apr 20, 2002
    1,500
    Leasing a used, decade old Ferrari just does not make sense to me. If you want a 348 more than a 3x8 or Mondial, then save up the extra money. I agree leasing make sense in certain situations for new cars. But a used Ferrari that is older like that won't depreciate as horribly as say a 360 or 575. I bet you would pay far more in lease payments than what the actual depreciation would be.
     
  16. mustgofaster

    mustgofaster Karting

    Mar 27, 2004
    102
    West Lakeland, MN
    Full Name:
    Mark
    Ok, now to throw a twist. I am having the same struggle on the purchase of a 2003 or 2004 360 F1 Spider. Lease or purchase? Is there a great lease benefit on a new car, other than the lower monthly payment? Who is the best in the market on a loan of $175,000? I would probably want a 72 month loan and I understand they can be difficult to find.

    Keep On Truckin!
     
  17. W00dEar

    W00dEar F1 Rookie
    BANNED

    Feb 24, 2004
    3,515
    LI, NY
    Full Name:
    Chris
    On car newer car like that, it could be different ball game. Because we don't know what depreciation will be like on that, heck 3 years later that car can be under 100k, then you might lose just as much financing it compared to leasing. Just like I for sure would never finance a new 550, I mean it lost 50 value in few yrs, that's crazy.

    The best way to buy it if no cash, take a line of credit of equity loan on your mortgage.
     
  18. W00dEar

    W00dEar F1 Rookie
    BANNED

    Feb 24, 2004
    3,515
    LI, NY
    Full Name:
    Chris
    Btw, one thing with leasing write-off.
    If it is a car leased by your company that you don't pay for, then by all you don't have to care at all how they do it. Not your money.
    But if you own a company, company money is still your money, then it does make a difference. Even though the payments are tax deductible, if you get a bad lease deal compared to financing, the end result can still be in favor of financing.
     
  19. norm

    norm Karting

    May 30, 2003
    204
    Rochester, NY
    Why lease a car that has already substantially depreciated. The therory behind leasing is you are only paying for the % of the car that you use. As such, if you take a new car, allow x number of miles, you arrive at a residual value. Your lease cost is based upon the current price of the car vs the residual value, amortized over the term(ie: 36 months)of the lease. If we take a car that has already been substantial depriciated, allow X number of miles(typ. minimal with a Ferrari), it would be an interesting number. The residual projection would be interesting in terms of the current part on a 348. Potentially, if the car was at a low point in it's depreciation curve, with an allowance for minimal miles, the lease payment in theory should be cheap. But, reality has to come into play, I have a hard time picturing anyone is going to give a descent lease arrangement on a used 348. May be I am a skeptic, but I have an easier time picturing someone giving a minimal mileage allowance, and a generous (to them) depreciation factor.

    I would seriously consider financing the car, and buying it. Hell, if you are going to lease, I would look at newer models as well. I had a business associate who was able to lease a Benz for the cost of a Buick due to the high residual value of the Benz. Crunch some numbers, you may be surprised.
     
  20. PSk

    PSk F1 World Champ

    Nov 20, 2002
    17,673
    Tauranga, NZ
    Full Name:
    Pete
    No!.

    I would also never buy an ex-lease car as they are fncked!

    Pete
     
  21. judge4re

    judge4re F1 World Champ

    Apr 26, 2003
    13,234
    Never home
    Full Name:
    Dr. Dumb Ass
    If you're asking the question about leasing something you can't afford anyway, then its a bad idea. When I read the original note, it sounds like you aren't willing to pay for the maintenance on a Ferrari. If that's the case, don't get one, you'll only be in for a rude surprise the first time something breaks.

    Remember, the purchase price is only the down payment for the cost of ownership.
     
  22. Doug

    Doug Formula 3

    Nov 13, 2003
    1,467
    Louisville KY
    Full Name:
    Doug
    I once did an open ended lease on a '87 911 that cost $18k. I set the 3 yr residual at @$11k. I had monthly payments of $320/mo. If the car was worth less at the end, I would be upside down and would have to pay the difference. I ended up selling it for $21k so the car was free even with interest.
    1. I paid sales tax only on each payment
    2. Low monthly payment(I couldn't get a long tem loan on an older car for the low payments.)
    *With the low interest rates today, the only thing it would gain is the tax break. Peoplefirst.com will do longet term used car loans for cheap and they don't care about the model year.
     
  23. CarStore

    CarStore Karting

    Sep 19, 2003
    54
    Most used Ferrari lease deals are open ended. I cant imagine what advantage you would get by leasing. They very rarely make sense.
    Tom Mellett
    www.carstoreofglenside.com
     
  24. parkerfe

    parkerfe F1 World Champ

    Sep 4, 2001
    12,887
    Cumming, Georgia
    Full Name:
    Franklin E. Parker
    No. a lease is a bad way to pay to drive a car whether it is a new Enzo or a 25 year okd Chevy. Pay cash if you can, finance if you must, BUT NEVER LEASE! Just my opinion as an attorney and a car nut.
     
  25. sherpa23

    sherpa23 F1 Veteran
    Silver Subscribed Owner

    May 28, 2003
    9,511
    Colorado
    Full Name:
    Bastuna

    Frank, why wouldn't you lease a brand new daily driver? There is an opportunity cost with paying cash and you're buying the entire car. If I am going to keep a daily driver for 3 years and they give me a good lease term, i.e. good residual, starting price, and interest rate, I'll do the lease every time. It has nothing to do with having a more expenisive car than I can afford. It has everything to do with putting the least amount of cash into a significantly depreciating asset. That's smart use of money in my mind. If you buy a daily driver, not only do you have to pony up all the money up front - regardless of whether you pay cash or finance - but you still have to bear the burden of getting back out whatever residual cash it still has: money that you could have been using to make more money.

    Spectre, I think that the idea of leasing in order to "drive a slightly better F- car at the same payment with owning" is, as with any Ferrari, absolutely ridiculous financially. As was pointed out, the purchase price is merely the down payment. You mentioned not wanting to maintain an older car. Well, maintenance is a part of owning any Ferrari and if that scares you, maybe you should look at something else.

    The only downside to leasing is that you're sort of trapped into leasing continually because you don't have any equity in a trade in. However, with daily cars depreciate so rapidly, equity is a car is a somewhat moot point.

    Or wait until you can really afford it, and budget some serious money for maintence, and then buy a Ferrari.
     
  26. W00dEar

    W00dEar F1 Rookie
    BANNED

    Feb 24, 2004
    3,515
    LI, NY
    Full Name:
    Chris
    That's your emotion talking, you have no mathmatical evidence to backup your claim.

    Lease can easily be a better financial choice EVEN IF NO BUSINESS WRITE-OFF IS CONCERNED. Pure math there, buddy.
     
  27. LAfun2

    LAfun2 F1 Veteran

    Oct 31, 2003
    6,106
    California
    Full Name:
    Ryan
    Example:

    You buy a Honda Accord cash for 21K. In 3 years its probably worth about 14K. Well you lost 7K in the car, but you have a car that is worth 14K.

    If you leased the same car say for 36 months at 225 a month you are out about 8100.

    So is leasing or buying better?

    I don't know, just throwing out some numbers to play with. I have never leased in fear that I hear all these horror stories how the dealer screws you when you return the car on regular wear and tear items.
     
  28. W00dEar

    W00dEar F1 Rookie
    BANNED

    Feb 24, 2004
    3,515
    LI, NY
    Full Name:
    Chris
     

Share This Page