TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

Finance, Lease or Cash?

Discussion in 'Future Cars' started by Bob Loblaw, Oct 19, 2014.

?

Finance, Lease or Cash?

  1. Finance

    22 vote(s)
    48.9%
  2. Lease

    9 vote(s)
    20.0%
  3. Cash

    14 vote(s)
    31.1%
  1. Bob Loblaw

    Bob Loblaw Member

    Joined:
    Oct 2, 2014
    Messages:
    11
    Location:
    Orange County
    I'm just curious how most of the people planning to acquire a Model 3 are planning to pay for it? I've always financed in the past but I havent had a car payment in about 5 years which has obviously been nice. However the technology and engineering seems to be advancing in these cars much faster than their ICE counterparts which has me thinking maybe a lease is the way to go.
     
  2. tga

    tga Active Member

    Joined:
    Apr 8, 2014
    Messages:
    2,199
    Location:
    New Hampshire
    I think your lease/cash/finance decision should be based on the following:
    • How many miles a year do you drive?
    • How long do you plan to keep the car?
    • Do you want to drive a new car every (whatever) years?
    • Do you mind having ongoing car payments, or do you like to be payment free as long as possible (this ties in with "how long do you plan to keep it")
    IMHO, people get way to hung up on this concept of "advancing EV technology" (notice that wasn't in the list). I think "advancing technology" is a red herring. What, exactly, are you concerned about missing out on? More range? Because all other technological advances apply to any drivetrain; ICE or EV. If the car meets your needs, does it really matter if a better battery appears?

    You car is going to depreciate like a rock. They all do. If you keep it for 10 years, it won't matter if there's a 1000 mile battery that charges in 30 seconds; your car will be worth squat regardless. If you plan to keep it for 3 years, the car will retain enough value that there may be some risk that a better battery may reduce your value significantly. In that case, it may be worth it to lease (if you plan to get rid of the car in three years anyway), since you push off the risk around the residual value onto the leasing company.

    If you expect to keep the car for 10 years, leasing for 3 and then buying out is probably the worst option. Most lease deals I've seen wind up costing more in this case then buying and financing up front.

    Personally, I keep cars a long time, and generally pay cash. I may finance my next car if rates stay this low, since I should be better off leaving my cash invested.
     
  3. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    1,383
    Location:
    Seattle, WA
    One of the reasons I've been hesitant to get a Tesla is the lack of regular lease.

    With advancing battery tech - this is like the early days of HDTV. Remember those huge CRT HDTVs for 10k+ before y2k ? That is how the current EVs are - ofcourse the battery tech advances slower.

    There is one more reason leasing makes sense now. Every 2 years, I can get fed tax credit. Once that is gone, lease will become somewhat less attractive.
     
  4. Red Sage

    Red Sage The Cybernetic Samurai

    Joined:
    Jul 6, 2014
    Messages:
    2,393
    Location:
    Los Angeles CA
    At 200,000 zero emissions vehicles made available in the United States of America by a manufacturer, the Federal Tax Incentive begins to go away, reducing every quarter from that point forward, until it is gone. Tesla Motors should be rather close to the mark by the time Tesla Model ☰ is released. I would not count on receiving a $7,500 tax credit on them if you are not within the first 50,000 buyers... Maybe even the first 20,000 would be a stretch.

    I intend to pay cash. I hope there will be a coupe among the initial offerings. I expect I'd have to wait a couple of years beyond the Generation III launch. I have plenty of time to save the cash needed, even if the Model ☰ is released in late 2016 to the surprise of many and to my own glee.
     
  5. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    1,383
    Location:
    Seattle, WA
    Yes - I think both Tesla & Nissan would have finished off 200k cars by the time Model 3 comes (may be GM too).

    One possibility is the law gets modified so that early EV backers like Tesla, Nissan & GM are not punished. Otherwise, we won't have the tax credits.
     
  6. patrick40363

    patrick40363 Member

    Joined:
    Mar 25, 2014
    Messages:
    208
    Location:
    Cali
    you can't take the federal tax credit if you lease. You are not the owner.


     
  7. tga

    tga Active Member

    Joined:
    Apr 8, 2014
    Messages:
    2,199
    Location:
    New Hampshire
    In many cases, (some portion of) the tax credit is rolled into the lease, so you'd receive it indirectly.

    In many Volt leases, the residual is increased by the amount of the credit, thereby lowering payments. It does mean that many Volt leasees don't buy their cars at the end of the lease, as the residual is way over the car's value, and the leasing companies generally won't negotiate. They sell it (at market rate) to a dealer who resells it. I believe I read that Ally won't let the dealer sell it to the originally leasee (so you can't get a dealer involved to work around the inflated residual).
     
  8. wallet.dat

    wallet.dat Member

    Joined:
    Sep 4, 2013
    Messages:
    443
    Location:
    SW
    Depends on what rate I could get from a lender. If I can get something like 1.9% or under, I'd definitely finance. Why buy it with my own money when I could just use somebody else's money? I'm no financial whiz, but I'm pretty sure I can earn more than 1.9% with my own money. Even some high-yield checking accounts return more than that for just having your money sit there.
     
  9. patrick40363

    patrick40363 Member

    Joined:
    Mar 25, 2014
    Messages:
    208
    Location:
    Cali
    I know how a lease works.I currently lease a Volt but will purchase a tesla in February when my lease is up. Tesla is not in a position to use the tax credit for their lease so their current rates are high. They also don't offer zero down/drive off lease which make more sense to someone like me. I am self employed and write off a percentage of my cost.

     
  10. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    1,383
    Location:
    Seattle, WA
    But the leasing company does and passes on the credit to us.
     
  11. patrick40363

    patrick40363 Member

    Joined:
    Mar 25, 2014
    Messages:
    208
    Location:
    Cali
    It depends on the leasing company. They don't have to pass on a credit.

     
  12. EVNow

    EVNow Active Member

    Joined:
    Sep 5, 2009
    Messages:
    1,383
    Location:
    Seattle, WA
    Yes, but most do. BMW is the only exception I know of - may be rav 4 as well.
     
  13. Trev Page

    Trev Page Member

    Joined:
    Sep 21, 2012
    Messages:
    576
    Location:
    Aurora, Ontario, Canada
    I finance my car as I drive 50% more KMs per year than a lease typically allows. I made that mistake once, never again.
     
  14. Tedkidd

    Tedkidd Member

    Joined:
    Dec 8, 2013
    Messages:
    612
    Location:
    Rochester, New York, United States
    I believe for Tesla that is a very recent change. Lease is only recently dropped $100-200 a month - which seems to express this value.

    So it becomes a question of your situation, plans, and math. Leasing, then buying allows spreading the cost out longer if you lplan to keep the car "forever".

    I like the lower cost of the lease, and capital risk avoidance. The clincher ends up being residual value. I don't want the residual value to be so low I have to buy it out. I also want to see the financing prwmium charged by the leasing company vs buying outright.

    This analysis becomes much simpler once the tax credit goes away.
     
  15. Rebel44

    Rebel44 Member

    Joined:
    May 3, 2014
    Messages:
    93
    Location:
    Prague, Czech Republic - EU
    Depending on financing terms, I plan to either pay cash or 50/50 cash/financing.
     
  16. Richard Benson

    Joined:
    Nov 7, 2014
    Messages:
    18
    Location:
    Florida
    but the thing is it will our own after leasing time finished right? actually those who can afford to buy in cash can get better opportunity..
     
  17. Rebel44

    Rebel44 Member

    Joined:
    May 3, 2014
    Messages:
    93
    Location:
    Prague, Czech Republic - EU
    It depends on contract. Lease contracts I have seen contained cost of buying the car at the end of lease.
     

Share This Page