Confused by lease return payoff quote

[laine_m3]

Hi All- I'm hoping someone here might be able to provide some context/explanation on the lease return numbers I'm getting. I've been going down a google rabbit hole and came across this forum, and you all seem pretty knowledgeable on Tesla, so I am really hoping someone can help here. Thank you in advance.

We have a 2020 Model 3, leased on March 22, 2020 for a 36 month term. We just paid our Jan payment, so I believe we have one left before we return it in March. We are looking at buying another car (non-Tesla), so thought we might pay off/return the car a little early (we are well under the mileage limit - we planned for 15,000 a year for commuting and then Covid hit). I went on the app for my lease payoff quote and it is really high. And I'm so confused.

How does this math work? The RV in the lease is $30,897.10 - and the payoff quote has it at $31,261.27 - so they can just increase the RV? Am I reading this correctly? Even with one payment left and the disposition fee (and the difference between either of those RV values), how do they get to over $4k for the payoff? Is there anyone who can help explain this math? What am I missing here?

I appreciate your help. Thanks again.

 

[Willy’sEV]

The paperwork you are showing us has the answer, at the bottom in the rectangular box it says early termination will have a substantial charge, maybe thousands of dollars. Just wait and pay your lease on time for the remainder of the lease and all you have to pay is the disposition fee of $395, unless there is some abnormal wear and tear as described by Tesla.

 

[laine_m3]

Thanks Willy- I did see that, but given we are so close, I was confused as I was trying to figure out what math they used to come up with that figure. It seems arbitrary. I'll guess we'll just wait it out. Thanks again.

 

[Willy’sEV]

Laine, please report back when you return your car. I am curious if they hit you up with repairs like tire depth, rim rash, or dents.
There is another thread I read some time ago and the poster said that on lease return Tesla hit him up with a $5400 bill, I don't know the ending of the story but I understand that is the norm not exception. I lease my car also, does not get returned until May 2024. As as you know there is no lease buyout at the end of the lease from Tesla.

 

[RichardL]

I returned my lease M3 in September and they sent someone to do a very detailed inspection and I got hit for every ding and scratch - even on the glass. Cost me around $3K, even without the disposition fee.

Previously I returned a leased MX in 2019 and they didn't do any kind of inspection or even ask me about it - just took it back as is - so things have changed a lot

 

[ATPMSD]

I returned my lease M3 in September and they sent someone to do a very detailed inspection and I got hit for every ding and scratch - even on the glass. Cost me around $3K, even without the disposition fee.

Protect yourself from this BS. First read the excess wear section of your lease! They cannot charge you for reasonable wear for ordinary everyday use - the car does not have to be perfect - scratches here and there are in my view ordinary wear. Inspect the car as a picky buyer and take photos. You can also pay for a lease turn in inspection from a 3rd party, this will document ordinary wear and tear. If the inspector finds anything beyond ordinary take it to a body shop and get a quote for repairs.

 

[jjrandorin]

scratches here and there are in my view ordinary wear.

You are correct that people should look at the excess wear guides put out by whatever manufacturer they lease from. What an individuals "view" is on this doesnt matter, though. It doesnt matter if you think a scratch is normal wear and tear, what is normal wear and tear is specifically called out by each manufacturer (including tesla). Manufacturers normally call out what type of damage is normal wear and what isnt. Tesla has this here:

Excess Wear and Use Guide | Tesla Support

Learn how to do a self-inspection using our guidelines to see if your vehicle wear and tear is normal or excessive.

www.tesla.com

Specifically about scratches, on the above page, it says:

Exterior

Wear and Use	Normal	Excessive
Scratches and Scuffs	Scratches that do not break the paint that can be buffed out during vehicle reconditioning or scratches that break the paint that are less than 4” in length (maximum of three per panel)	Scratches that break the paint that are 4” or more in length
Dents and Dings	Dents and dings that do not break the paint that are less than 2” in diameter (maximum of two per panel)	Dents and dings that do not break the paint of any size that occur more than three times on one panel or any number of dents and/or dings that do not break the paint that are more than 2” in diameter
Chips	10 or less chips measuring less than 1/8”	11 or more chips measuring less than 1/8”
Previous Repairs	Previous repairs to the vehicle must have been facilitated by Tesla through a Tesla Service Center or authorized service provider	Mismatched paint or parts; swirls, bubbles, debris or defects of any type in repainted areas; any substandard repair due to inferior or mismatched replacement parts
Rust and Corrosion	NA	Any visible rust and/or corrosion

There is a table at the link above, with each section of the car broken out with examples of whats "normal" and not chargable, and whats excessive. Anyone leasing a Tesla should familiarize themselves with this information, so one doesnt end up in a situation where they think the scratches hear and there are normal wear and tear, but they dont meet that definition as Tesla describes it.

 

[Willy’sEV]

I don't turn my car in until May 2024 but getting nervous and expecting a big hit.
The shame of the matter is there is no buyout of the lease even if I wanted it.
I guess I can hope they have a glut of cars and turn around an offer me a buyout.......not holding my breath.

 

[ATPMSD]

I do not know why Tesla makes everything so complicated. The lease payoff amount is simply all remaining payments, plus the disposition fee, plus excess mileage and excess wear.

 

[laine_m3]

I returned my lease M3 in September and they sent someone to do a very detailed inspection and I got hit for every ding and scratch - even on the glass. Cost me around $3K, even without the disposition fee.

Previously I returned a leased MX in 2019 and they didn't do any kind of inspection or even ask me about it - just took it back as is - so things have changed a lot

@RichardL - I see you're in San Diego. We're going to return ours in Cathedral City - I wonder how much the inspection varies per dealer. Or if it's a timing thing.

@ATPMSD - 100% agree. That's why I was so confused. I mean, we're so close to lease-end. We literally have one more payment, so I figured it would be any outstanding payments, the disposition fee, and wear & tear. (We're well under mileage.) That's how it's been with cars we've leased in the past.

@jjrandorin - Thanks for sharing that link. We'll check for any dings/scratches. I do think we have to replace two tires. I was just going to order the least expensive ones in the correct size from TireRack. I notice it says this:

Wear and Use	Normal	Excessive
Tires	Tread depth 4/32” or greater and all tires must meet our size and rating (speed and seasonal)	Tread depths less than 4/32”; tires that do not meet our standards for size and/or rating (speed and seasonal); mismatched tires (other than brand); or dry rot, cupped, cut or sidewall plugs

So that is saying all four tires need to be the same brand? But not necessarily model? Am I reading that correctly?

 

[SlimJim]

I will never lease or buy Tesla again.

 

[HBM3]

Laine, please report back when you return your car. I am curious if they hit you up with repairs like tire depth, rim rash, or dents.
There is another thread I read some time ago and the poster said that on lease return Tesla hit him up with a $5400 bill, I don't know the ending of the story but I understand that is the norm not exception. I lease my car also, does not get returned until May 2024. As as you know there is no lease buyout at the end of the lease from Tesla.

I've leased several vehicles and haven't had any ridiculous fee's outside of the regular disposition fee. I'm hoping Tesla doesn't try anything funny when I turn in my car. I still remember the last vehicle I returned Acura RDX manager walked around it and said I'm taking this home tonight .

 

[mpgxsvcd]

Hi All- I'm hoping someone here might be able to provide some context/explanation on the lease return numbers I'm getting. I've been going down a google rabbit hole and came across this forum, and you all seem pretty knowledgeable on Tesla, so I am really hoping someone can help here. Thank you in advance.

We have a 2020 Model 3, leased on March 22, 2020 for a 36 month term. We just paid our Jan payment, so I believe we have one left before we return it in March. We are looking at buying another car (non-Tesla), so thought we might pay off/return the car a little early (we are well under the mileage limit - we planned for 15,000 a year for commuting and then Covid hit). I went on the app for my lease payoff quote and it is really high. And I'm so confused.

How does this math work? The RV in the lease is $30,897.10 - and the payoff quote has it at $31,261.27 - so they can just increase the RV? Am I reading this correctly? Even with one payment left and the disposition fee (and the difference between either of those RV values), how do they get to over $4k for the payoff? Is there anyone who can help explain this math? What am I missing here?

I appreciate your help. Thanks again.


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Tesla leases are just terrible. What they are doing is saying that if you end the lease early then the residual is adjustable. They can adjust it to the actual wholesale value of the car and that is exactly what they did.

Instead of giving you the original ~$31k residual they are giving you the ~$27k wholesale value as the residual.

Don’t lease a Tesla. Just don’t.

 

[ATPMSD]

What they are doing is saying that if you end the lease early then the residual is adjustable.

Since there is really no benefit in an early lease termination, with any company, except not having to pay car insurance, the answer is to just park the car and use if needed until the lease end date.

And I agree, don’t lease from Tesla!

 

[rpiotro]

This is why less and less people are leasing The are getting wise to the scam.

 

[ATPMSD]

This is why less and less people are leasing The are getting wise to the scam.

Hang on. I have leased for 20+years and have never had a problem. The problem is with Tesla, not leases. Of course people who lease need to ensure a lease is appropriate for them.

 

[arghx7]

Tesla leases are just terrible. What they are doing is saying that if you end the lease early then the residual is adjustable. They can adjust it to the actual wholesale value of the car and that is exactly what they did.

Instead of giving you the original ~$31k residual they are giving you the ~$27k wholesale value as the residual.

Don’t lease a Tesla. Just don’t.

This is absolutely normal. I remember trying to break a lease on my 2015 Mustang back in 2017. It was thousands of dollars due to a different calculated residual value (remaining payments were a separate thing). The residual value is only binding at the end of the lease term. When I (my wife actually) bought out a lease car (non Tesla) last year in 2022 at the end of the 3 year term, the market value was easily $10k more than what it was contractually. The dealership was desperately trying to squeeze more money out via a trade in etc etc. So this residual value thing cuts both ways.

Also, Tesla just dropped prices.

TL;DR there isn't some unique Tesla lease scam here, this is how leasing works. There is a big incentive to not break your lease.

 

[MaskedRacerX]

Yep, they're adjusting that residual on the fly to adjust for the market, including their own significant price decreases.

Back in the summer of '22, my early termination was $0, mid-Fall it bounced around $3K-4K, today? It's over $10K.

I have a Rivian on pre-order, 16 months left on this lease, zero rush, car is mint, low miles, used infrequently, fine, I'll just keep it till they take it back under the original agreement.

 

[rpiotro]

...Of course people who lease need to ensure a lease is appropriate for them.

Yes, there's the rub. There are circumstances where it makes sense. Too many people lease because they think it is cheaper. Then forever in a payment rut.

 

[brkaus]

Yes, there's the rub. There are circumstances where it makes sense. Too many people lease because they think it is cheaper. Then forever in a payment rut.

It’s great - “only pay for the part of the car you use.” /s

(Frequent ad on local radio station)