Hello again. Still getting my ducks in a row before I chase down my new toy. After doing the math, I'm thinking that the best situation for me right now is going to be a 2-year or 3-year lease. Do any of you lease your vehicle, and what leasing company did you go through? I've seen references elsewhere to Premier Financial Services and Putnam Leasing, but haven't approached either yet. Thanks again! Tom
So either everyone here bought outright, or I'm the only one who hangs out on here all day because I'm an IT Desk Jockey?
Don't be discouraged... I have leased supercars before and may very well do so again when my next F-car gets into my sights. I posted something around leasing a few months back, so it might be helpful to do a search on it. I (originally) leased my Porsche Carrera 4 through Don L Leasing in Florida. I later bought it and have owned it free and clear for years now. This was a while ago so my data may be a bit old. I would say Don L Leasing was a good choice for me as I had a modest credit history at the time. That said, their terms were pretty rough and I remember my effective interest rate being fairly high at the time. Not sure about your credit/financial picture, but it is one option if you have a few blemishes. Let me know how you fare with the other options you are looking at (Putnum, etc) . If you get a great deal, I might follow your lead. ketel
Putnam and Premier are not traditional leasing companies in the same sense that you lease a BMW or Mercedes for a fixed period. Their deals are essentially loans, structured like leases where they own the car and you pay a monthly fixed amount, but they require a substantial down payment. They hold you to the buy-out balloon so you effectively will purchase the car at the end of the lease, or at anytime before the end by paying the remaining balance and a penalty for their lost future income. This is not a situation where you can hand them the keys to the car at the end of the lease period. The advantage of this structure is that "lease" payments are completely tax deductible as a business expense, whereas payments on a loan are not. The depreciation on the car would be deductible, but is almost always less than the lease payment. It is almost impossible to find a traditional lease on exotic cars as the bank will not gamble on estimating the residual value of the exotic car at the end of a lease period. In the broader car market there are literally hundreds of thousands of cars which form the market and allow consistency in valuations to be discerned. Exotics can fluctuate wildly in value, especially after three years and lots of miles and no bank will take the risk that they will be left holding a devalued asset. BTW Porsches are not exotics and can be leased normally.
Thanks so much. I did do the search and found the great thread that talked about it. I'm going to be talking to Premier today to examine their terms. My credit is excellent, so I won't have a problem there, the issue is the downpayment - the whole point of a "lease" (be it open-ended or closed-) for me is to maximize cash flow without impacting investments. I understand that Putnam and Premiere are open leases, and what all that implies. It makes me a little bit jittery, but not terribly so. Ultimately if they require a large down, I'll have to weigh that against what the payments on a straight loan from the credit union would be. With little-to-no-down, just about any lease estimates win hands-down, but with a larger down, it evens things out for me somewhat. Another person wrote about this - I don't own a business anymore, so this won't be a write-off; I just have a somewhat unique personal circumstance that makes leasing, even open-ended, the right alternative right now. Thanks again.
Premier is great, the used to give you a full amortization table so you knew where you were at all times. The down payment will depend on what you are buying and for how much.
I just found an article from Robb Report in 2005 that had an interesting estimate on downs. http://www.robbreportcollection.com/Articles/Autos-Other-Vehicles/Sports-Cars/Feature-Please-Re-Lease-Me.asp On Page 4, they apparently got a quote from Premier on a 2005 F430, which assumed a 200k purchase price with 10k down over 60 months. That's a rather low down. Now, maybe it's because it was a new vehicle at the time, but if I could arrange something like that, I'd have no problem doing it. Again for me, it's nothing complicated, I just believe, based on history, that I'll be doing better on my investments than I'll be paying in MF as long as I don't have to do a huge down. Plus, from all I'm reading here, it appears to me that most of you believe that the 550s are starting to bottom out, which would imply to me that this would be a good time to lease. Anyway, thanks again. I'm going to talk to Premier in a couple hours and I'll relay the substance, in case anyone else is interested.
I don't know if I would buy an exotic if it took a lease to get it. If cash is a problem what do you do if you have a 15,000 repair bill? Not likely but can happen. I do realize that everyones situation is different.
No, it isn't a cash problem. After lurking here for a while, I can understand the possible repair costs, and I can handle those just fine. I can also handle a large down just fine, if I need to. I can also buy the car through a credit union loan. If I want to cash out a majority of my holdings, I could pay cash for it, but historically I've found that this is not an efficient way to do things - I'd much rather minimize initial outlay to maximize cash flow and liquidity. This is another reason I'd like to lease - the whole sales tax issue. The bottom line for me is that I'm not wealthy - I'm just a well-paid, hard-working grunt who appreciates nice things and who is ready to upgrade to the next level. I've done all the analysis and had deep heart-to-heart discussions with my accountant, and this purchase isn't a stretch for me; I'm just looking to find the best way to make use of my finances based on my current goals.
The big advantage of the Premier program is you can run it through your company, which for some is a huge advantage. I know several owners that got their start in a Premier Lease on 328s and have worked their way up.
410SA - I was never suggesting that Porsches are exotics--it just so happens that my only experience leasing was with Don L Leasing and it was for a Porsche. I am actually looking at leasing an F-car through them right now. Don L Leasing typically leases Ferraris, Lamborghinis, Bentleys, etc...so, yes, one would consider that they lease exotics. They operate like a dealer in that they carry their own inventory, but they will also lease on a vehicle that you find on your own. [That's what I did.] ketel
I understand, but I was pointing out that traditional leasing finance companies view Porsches like they view other high buck cars like MB and BMW and are quite happy doing closed end, finite leases with agreed on residual values. Low volume exotics like Lambos, Spykers and Astons to name a few, can't qualify for a closed end lease as the residual value of these cars three years away is almost impossible to pinpoint with any certainty
give woodside a call. I met with one of there representative to set up classic car financing for my business and they are MOST helpful. The gentleman that handles the Arizona and I belive southern CA as well is named Justin. He is a SUPER nice guy and Im sure he could help you out. By the way, most banks use woodside... they are really just acting as brokers... woodside is the actuall financial backer/insurer/lean holder on many exotic car finances/leases... and yes... its funny... most of these high end finance companies wont touch porsches BMWs Mercedes with a ten foot pole. THey dont care if you put a 90 percent down payment... they want nothing to do with them. The only porsche that woodside will do is a carrera gt... and they might just might do an rs... Justin said he would get back to me on that....
Okay, I spoke with Premier yesterday. They were very straightforward and helpful, and emailed me over the complete payment/depreciation chart for the vehicle. Apparently they tend to do 60-month leases with their famous option to terminate early (with a 1-month penalty). They estimate the residual over 5 years to be 50k on the sample vehicle I gave them (Jim L's 2000 with 16k miles, black/black with all the toys asking $119k). The money factor was very reasonable, and ultimately, at least on this type of vehicle, the decision on whether or not you're required to give a down, and of what size, depends on your paperwork. So, it's back to my accountant again to get the ducks in a row, and then back to them for the official application, and so on and so forth. My goal is to get preapproved for a ballpark range, and then go visit Jim to examine that unit. If that doesn't work out, I'll just sit on the preapproval and keep my eyes open for the right deal. Thanks again for everyone's help.
getting a loan from the credit union is probably better than the lease. the lease requires the early repayment fee, another fee to initiate the lease and the first and last payment upfront. credit unions give free loans (no fees, no prepayment penalties) and you can finance 100% up to 7 years. if you are going to sell the car in a couple of years, my suggestion is to use the credit union..it will be cheaper than getting a lease from a company like putnam.
I would never go to Putnam leasing again as I had a bad experience with them before because of early termination. However I have 2 leases from Premiere Financial services and they are great and straight forward by giving you a chart of immortization which shows your payments and balance if you decide to terminate early.
Call Ed Yankowski at Putnam or Rick Steinberg at Manhattan Leasing, I do all my business with them and they will tell you what the exact deal is upfront... make sure you listen to the details.
Call Ricky Steinberg at Manhantan Leasing and tell him Gustan and Piero Navarro from Motorcars of Distinction sent you and he will give you a 10% discount. They are great people and fund quickly.
What is your occupation? I cannot see how any exotic car is deductible as a business expense, if you follow the IRS guidelines, unless you are a dealer of exotic cars. The IRS is pretty strict on this one, as it has been abused pretty openly. If you pay a lot of taxes, the last thing you want is to get audited over a car.
An exotic car is no different to a Maybach or a corporate jet for that matter. If your business entity leases it, it is tax deductible. The IRS does not differentiate between a Ferrari or a Ford - they look at the ratio of the expense versus the revenue. A company that has significant revenue and can easily cover a $15,000 per month payment on a $500,000 lease is not going to raise a red flag regarding the deduction of that expense. Putnam type leases are not designed for salary earners who want to defray most of their taxable income in a lease, rather they are designed for high net worth individuals (who operate some sort of personal corporate structure) or for corporations with significant revenues.
You question is generic. Let's get specific. We have a corporate jet (fractional) and we have to keep VERY RIGID logs on who flies, when they fly and for what purpose. In addition, we have some executives with company cars, and we have to keep logs and we have to identify cars to the IRS. One of our executives had a BMW-X5 and a Porsche, both on leases. The IRS denied the Porsche because it was not directly related to business, and we were forced to give this guy a 1099 Misc, for income for the amounts we paid for his lease. We have tried other cars and been flagged. Our company is 450 employees and it would be easy to lose an expense here and there. Our payroll alone last year was over $24 million. All our expenses were over $100 million. But we have been unable to do it. I have a personal Sub S corporation and my accountant told me not to go near a lease of an exotic car. So, I know the theory--I learned it in law school--but has anyone on this board actually done it successfully for, say, 3 years running. If you did, how did you do it?
what ? who told you that ? a business can expense any item considered reasonable in it's pursuit of the profit motive. one that has a legitimate business purpose. it must be considered "ordinary and necessary". period. unless you operate in some type of automotive enterprise or can tie it into your business, you cannot LEGALLY deduct your ferrari. at least ask for the courtesy reach around during the audit.
I would say your problem there was not so much the type of car but the fact that you were trying to deduct 2 vehicles for one employee.
An expense is an expense. Business owners are sometimes stupid and make bad decisions about what may increase their revenue. The IRS cannot tell you how to run your business.
thanx for my morning laugh. classic business advice from an obvious W2 earner. i prefer paper please.
