Are these lease terms good bad or just OK?

That's about right. My lease for a 124k build is ~1700 (some downpayment)

 

I am actually about to start to talk to the same leasing company and looking for a similar monthly payment. If you do not mind me asking how long is your lease term, miles, etc. What is the rate of interest?

 

Sounds reasonable. I'm paying around $1700/mo for 15k miles lease with a $10k downpayment. This is for a fully decked out P85D.

 

Hello Daniel, please consider removing your PDF and use this cleaned up image. The PDF can be edited and the X removed easily.

 

Congrats on a great car!

I just noticed that what you have is what is called an "Open Ended Lease" as noted on the upper right hand corner. If I understand correctly that $78,930 residual stated on the lease is what they expect to be able to get for the car at the end of the lease but you might be liable for making up the difference if the "value" they are able to get for the car is less than that. Can you check with your lease company on how that works?

This is the biggest differentiator from what I gather between a lease directly from Tesla Motors where you can walk away at the end of the lease period with no liabilities contingent on the actual value of the car at the end of the lease period. What Tesla offers is a traditional close ended lease.

With Earth Motors Leasing, what you have is an "Open Ended Lease" where though a residual is estimated, you are liable for any amount the car might be worth less than the stated residual.

I could be wrong about all this and if so I'd love to know that I am wrong because I am strongly considering Earth Leasing for when we buy our Model S and would really like to understand for sure what an Open Ended Lease entails.

Based on the explanation on the Web page below, with an Open Ended Lease, the lessee actually assumes all liability to do with the actual value of the vehicle at the end of the lease period to a point where if the lease company can't obtain the stated residual, the lessee will actually be charged for the difference.

http://www.merchantsfleetmanagement.com/fleet-resources/openend-vs-closedend-leases.cfm

Excerpt:

Open-end LeaseWith an open-end lease, not all, but a significant degree of risks from ownership is transferred to the lessee. The total lease costs are unknown until the end of the lease term and the vehicle(s) under the lease are sold. And, if there are any gains or losses on the vehicle(s) sale, this is applied to the lessee’s account.

If a loss is incurred at the end of the lease term, it is treated as an additional payment, and the lease may be in jeopardy of meeting the criteria for an operating lease. In this case, the lessor needs to absorb a portion of the loss in order to keep the payments below 90% of the vehicle(s) fair market value. Due to the possibility of a significant loss, there are often provisions in the open-end contracts that bind the lessor to take steps and ensure the lease meets operating lease requirements.

Under this open-end lease agreement, there are significant risks that the lessee is exposed to from the swings in the used vehicle market, to the mileage and condition of the vehicle(s).

 

I don't know much of anything about leases, but if what MsElectric has pointed out here is true, you really need to look into it. In particular because, in my opinion, Model S resale value is going to be very unpredictable between now and 2018. The Model X launch is imminent, the Bolt might be available, and the Model III will be getting close. A cheap 200+ mile EV could tank Model S retail value. You might not want to take that risk, or you should at least be aware that it is a risk.

 

Unfortunately DE doesn’t offer Tesla Financing or Leasing so I was referred to those same companies. Earth explained that it would be an open lease and there would be more down, fees at the end, and potential damage fees (including wear on tires) at the end with limited miles. For me that’s counter intuitive for why I got an EV to begin with. That’s what scared me away from leasing, especially with Earth. Alliant and Del One FCU offered 2.99% for 84 financing. If you do the math at the end of that same leasing (3-4 years) period you would be far ahead equity wise by financing. I didn’t want to have to deal with open ended lease, mile limitations, fees for bogus damage and fees to turn in the vehicle. If at the end of 3-4 years I have more equity in the vehicle and thus more buying power for a new one, I’ll take that any day. JMHO

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Maybe this table would help:

Auto loan calculator - Bankrate.com

 

IMHO anyone considering an Open Ended Lease has to be very careful about what it is. If we go that route it is not necessarily for the leasing aspect but so we can use an Open Ended Lease as a financial instrument to write off basically most of the car as a business expense that we can deduct with our business. We will then be building positive equity in the car with very large lease payments so that at the end of the lease period we can buy out the car for a song. This is how commercial TRAC leases work.

The only aspect of this that has given me pause is what happens if the car is declared a total loss. GAP insurance in this case would be irrelevant because in this case we would have built up more equity in the car than what the car is worth so we can buy the car at the end of the lease period for a very low residual.