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’07 AW BUYERS GUIDE easing Your Heart’s Desire HETHER YOUR DECISION IS DRIVEN BY RATIONAL ANALYSIS OR RE PASSION, YOU HAVE A CHOICE OTHER THAN BUYING A CAR LARRY EDSALL Your daily newspaper, Consumer Reports a dozen websites can probably tell you re than you could ever wish to know ut whether to lease or buy a daily comter-mobile. We’ll even have a little ade on that score later in this story. Basically, the pluses for leasing are lower nthly payments and/or the ability to ve a larger/better/more luxurious car than could afford to buy. The decision has a to do with money management and the ails of finance, and requires that you anae the automobile as a rational purchase. t let’s face it—many of you really don’t e a tinker’s or any other sort of damn ut capitalized cost reduction or residual ue and could care even less about “The nstant Yield,” whatever that might be. But what you want is a particular car, one ’re passionate about driving. The car of r dreams may have rolled off the assemline just a few days ago or maybe it was ilt decades ago. That’s right, you can lease a collector car, ether it’s a Duesie or a Hemi, or you can se that exotic Italian sports car just as if were leasing a new sedan or crossover icle, or a minivan or a a full-size pickup ck. Why, you can even lease a race car! Regardless of your choice of make and del, you need to decide whether it makes se for you to buy that vehicle outright or lease it for the next 36 or however many nths. This applies whether your income 50,000 a year, $500,000 a year or even $5 llion (and that’s just your year-end bonus). d yes, even those who could write a ck to buy the entire dealership may find antages in leasing. Ed Yankowski, managing director of tnam Leasing, offers a few reasons why se making the big bucks consider leasing ir big-buck cars. First, he says, there are tax considerans. If you live in California and buy a 0,000 car, you’re looking at 8.25 percent te sales tax (the national average is 6.3), or ,625 in additional upfront costs. And st luxury leases are traded in before the of their lease periods. So what, I’m rich, you say? Well, consider this: “Leasing allows them to use their capital for what they do best, whether it’s investing or real estate or even for buying other cars,” Yankowski says. Why tie up all of that $250,000—or $270,625 with tax—on one car when, for that same quarter-mil, you can lease a fleet of interesting vehicles or put the bulk into your investment portfolio? And finally, if you are a basketball player, an actor or actress, or a business owner, your accountant could point out the additional tax advantages of not having a $250,000 vehicle show up on the books, says Yankowski. Putnam Leasing has been in business since the early 1980s, founded, as Yankowski puts it, “to fill a void in the marketplace for high-end cars. ” The luxury automakers either were not offering exotic car leases at the time or they were making it too difficult to get out of a lease when the lessee sought something newer to drive after a few months at the wheel. Yankowski notes that perhaps 75 percent of Putnam’s clients do not keep their vehicles for the full term of their leases, preferring instead to change vehicles more frequently. Unlike the typical dealer’s lease arrangement, Yankowski says, Putnam’s leases are set up with turnover in mind. Lease a Toyota Camry from your local dealer, he notes, and you may have a deal that spans 36 months and limits you to 10,000 miles a year. Then, when the lease is over, you return the car, drop off the keys and start over again. But lease a $225,000 Ferrari F430 Spider, put down $75,000 and take a five-year lease, and it’s in the agreement that you can swap that Ferrari for something else. Maybe by then you want a 599 or a Bentley—with Putnam’s deals, you can swap into that new dream car without pesky penalties. However, he adds, Putnam leases are not set up like the aircraft-style shared-ownership programs for luxury and exotic cars that are springing up in various places. Putnam’s are lease-to-own contracts, with a lot of flex- ibility built in. Putnam leases more than 1000 vehicles year, ranging in price from $50,000 to more than $1 million. Putnam offers “all makes, all models, all years,” Yankowski says. You can get a 1954 Ferrari 250 Europa or a 2004 Ferrari Enzo. For example, you want the 250 Europa. That’s a $650,000 car, Yankowski figures. Putnam helps you find it, even if it means going to a collector car auction. “You put down $150,000 and lease $500,000 over 60 months,” and by setting a residual of, say, $100,000, “you have a low payment of $7,000 a month.” If you put the same $150,000 down and borrowed the $500,000 at 7 percent, you’d have a monthly paymen of $9,900. Or maybe you could just buy the
LAMBORGHINI MURCIELAGO ropa for cash—but then you have to wonabout what you might have made over e years if you’d invested the $500,000, or n just the $2,900/month difference. Plus, re is no one helping you find the car at tion or for private purchase and, perhaps re significantly, no one standing by ready help ease the transition two years later en you decide that you really wish you’d sen the Enzo, after all. Provided you maintain acceptable onck insurance, you can even lease a vintage e car, perhaps a factory team spec’d 427 bra or a Porsche 906. And if you can drive ll enough, you might convince Steve le to let you enter the Monterey Historics th your leased car. Okay, maybe you’re not quite ready to lease a collectible car or vintage racer through Putnam or its biggest rival, Premier Financial Services, but there may be good reasons to lease rather than to buy your next vehicle. Maybe you need to make the rational decision more than the emotional one. To make up your mind, consider something like the “Buy or Lease Your Next Car?” questionnaire on a website such as bankrate.com. The Federal Reserve (www.federalreserve.gov/pubs/leasing) provides sample lease contracts, charts that get into the details and compare the financial aspects of buying (a 60-month loan) vs. leasing (a 36-month term), as well as other well-presented information you should have before deciding. Basically, unless you’re among the wealthy looking for a way to build a fleet and have a skilled accountant to deal with tax issues, it probably comes down to the fact that by leasing, you can get a more expensive vehicle for the same monthly payments. However, you will be restricted on how many miles you can drive—and th can be important for the auto enthusiast. You’ll also face restrictions on personalization or modification of that vehicle. Of course, when the lease is up, you always ca buy the vehicle for its residual value. Or, buy the vehicle outright in the first place and you can drive it as much as you want, install that cat-back exhaust and lower suspension, even aftermarket header And when your loan is paid off, the car is yours. No additional payments. ■
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