Certified Pre-Owned vs. Leasing: Which Is Better?
Have you always dreamed of owning a Porsche? Good news! There’s never been a better time to drive the car of your dreams. Why now? Simply stated, now is the time to own a Porsche because there are more choices than ever before. Porsche’s current lineup of makes and models includes coupes, sedans, and SUVs—something for everyone. Every car Porsche makes is true to its sports car heritage, so you can get the pure driving pleasure that comes with a Porsche in a 911, a Panamera, or a Cayenne, whatever your current situation requires.
In addition to the unprecedented variety of new cars, used and vintage Porsches abound. Did you know that approximately 70 percent of all Porsches ever made are still on the road today? This statistic is astounding and speaks to the true value of a Porsche. In fact, Kelly Blue Book has awarded Porsche a number of awards for value, including the Performance Car Best Buy of the Year for the 2018 718 Boxster and the Best Resale Value Award for a luxury brand. Individual makes and models have also been recognized for maintaining their value over time. For buyers, this translates to a wealth of Porsches to choose from today in all sizes and in all price ranges. There’s room for everyone in the Porsche market.
The questions now are which model do you want and do you want to lease or buy? Make and model come down to your personal preference and current situation, but any Porsche you choose will be the most amazing vehicle you have ever driven. Determining whether to lease or buy is a bit more complicated. Ultimately, your decision will come down to your personal financial circumstances, but here are a few things you should know about leasing and buying to help get you started.
When you lease a car, you are affectively only paying for the depreciation on the vehicle that occurs over the term of the lease. Your negotiated lease price will be the difference between the current value of the car and the estimated value of the car at the end of the lease term. That lease amount, together with interest, taxes, and other fees, is divided by the number of months in the term of the lease to determine your monthly payment. You will almost always get a lower monthly payment from a lease than you would for a purchase. One way to think about a lease is that you only pay for the part of the car you drive.
Pros—In addition to lower monthly payments, leasing offers a number of other benefits. During the lease, the vehicle is fully covered by all manufacturer’s warranties, and many lease contracts also include basic maintenance, so your additional ownership costs are limited to insurance and fuel. Leasing also makes it possible to have the latest vehicles and the latest technology without the large financial burden of a down payment. Since lease agreements typically last three years, you can get a completely new car every three years.
Cons—Leasing is not without its downsides. First, since the owner remains the leasing company, lessees are subject to various restrictions determined by the owner. These typically include limitations about annual mileage, wear and tear, and even some usage limits. Second, when you return the car at the end of the lease, you will have no equity in the vehicle to use toward purchasing a vehicle and, if you’ve violated mileage and maintenance restrictions, you may actually be on the hook for expensive penalties. It’s also important to know that you must have excellent credit to lease a car.
When you purchase a car, you buy it outright for cash or with the assistance of financing. Monthly payments build equity in the car and end when the car is fully paid for. You are the owner and are not subjected to any restrictions—you can do what you want with your vehicle. You can also have bruised credit, since it’s easier to qualify for a loan than a lease. While buying a car is great, it is also more expensive. Monthly payments are higher, interest is likely higher, especially on long-term loans, and you will likely need cash for a down payment at purchase time. Additionally, depreciation is a bit of a gamble and you have no assurances about what your car will be worth down the road. If depreciation moves faster than you build equity, you may find yourself upside down on the loan, needing to pay back more than the car is worth.
All that said, Porsche’s certified pre-owned (CPO) program is an excellent option for purchasing a Porsche and broadens your choices beyond new vehicles. To earn the Porsche Approved CPO stamp, vehicles must first be from the current model year or the eight previous model years and have less than 100,000 miles. Eligible cars are then run through a 111-point inspection to ensure that all Porsche’s stringent quality standards are met. The Porsche Approved stamp means the CPO vehicle looks and functions as well as it did when it first came out of the factory. To sweeten the deal, Porsche adds additional warranty and roadside protection to their CPO vehicles, demonstrating how confident they are of the quality of these cars.
If you’ve been waiting for the right time to buy a Porsche, the time is here. The decision to buy or lease is really up to you. Carefully consider the costs and benefits of each choice and how they align with your needs and budget. Factor in how many miles you drive each year, what limits your credit history provides, and how often you want to have a new car. Don’t hesitate to ask your dealer to write up a lease and a purchase plan for you so you can really see the numbers. Today’s the day; experience the pure driving pleasure of Porsche.
Date Posted: March 3, 2018