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Happiness guarantee

Discussion in 'Model S' started by sundoc, Oct 25, 2014.

  1. sundoc

    sundoc Member

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  2. CHG-ON

    CHG-ON Still in love after all these miles

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    Sorry, but their lease is a rip. I financed 100% (130K) only because money is sooooo cheap these days day that I wasn't willing to use cash and I only pay 1250/mth compared to their 1,620 for the same car that I will never own and only get 15K/yr (I drive more) and only for a few years. Simply not worth it.

    But I am stilted. I have always found that leases just don't work out financially for anybody but company cars and the the guy selling the lease. They look great at first, but we pay in the end through the residual value BS they play.
     
  3. Kandiru

    Kandiru Member

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    Amen bro, if you run real life lease numbers on apps like "Ca Loan" or "Lease Calculator" you will see a huge markup.

    Definitely makes a lot more sense to finance a car that will never rust and has a 8 year batt. warranty.

    Along the same lines I also don't like the greed they display on the tire/wheel packages. Packages I configured with sensors included on TireRack are roughly half the price using same or better tires.
     
  4. digitaltim

    digitaltim Sig737 VIN628

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    Ditto - I have never been able to financially justify a lease and always buy and have never leased. That said, if mileage limitations were not so constraining, the idea of flipping the car every few years for the latest and greatest is tempting...kills me though given my views on inefficient consumerism.
     
  5. breser

    breser AutoPilot Nostradamus

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    That's a good bet for them to make because I bet hardly anyone would ever use it. There would be a small handful of people who would buy it and be unhappy about the car enough to want to get rid of it and not buy another one. Then again as the car becomes more popular there's probably more and more people buying that aren't fully informed.
     
  6. jweinstein

    jweinstein Member

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    Regarding leasing in general: the tax advantages for a business owner are hard to ignore.
     
  7. svp6

    svp6 Member

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    Leasing or buying depends on your preferences - if you want to always have a car under full warranty, changing cars every 3 years is a good (but costly) option. The advantage of buying comes from keeping the car longer term.

    Don't know about the summer tires, but for couple weeks now you can have the 19" winter wheel and tire package from Tesla at $2500 (Tire rack including shipping is $2486 for Pirelli Sottozero II with 19" Rial Lugano + TPMS). This is also the price if you order separately (not with a new car).
     
  8. MY T

    MY T Member

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    Leasing makes more financial sense if you own your own business and are at a certain income bracket. I've been waiting for a lease to come out to get my car.

    Here's why: Tesla offers a buy back guarantee for financing the vehicle after 3 years which is the same amount the car is valued at after a 3 year lease. Therefore either way after 3 years the car is worth the same amount. This means that if you wanted to keep the car forever and lease the car car for 3 years and then decided to finance the remaining balance, your monthly payment for the last 3 years would be the same as if you financed if from the start for a 6 year term. Therefore the savings comes from the after tax cost for the vehicle if it is leased or purchased. In calculating my situation of either leasing the car though my business or financing it and depreciating it through my business, even after adding in the tax incentives for CA I still saved thousands of dollars leasing the car rather then depreciating it.

    When you lease a vehicle you can expense the entire lease payment where as if you finance a luxury vehicle you can only depreciate it based on the luxury tax laws which are not good for non commercial size vehicles.

    Here is an example for the car I bought that I verified with the tesla finance department.

    after 36 months buy or lease the car is worth $58,668.50

    Lease:
    Down payment; 11,207 (including 2,500 deposit and first month’s lease payment of 2098)
    Monthly payment; 2098 for 35 months
    Total paid after 36 months including down payment, taxes, fees; 82,137 (Minus 2,500 EV rebate)= 79,637
    Purchase option of 58,664.50; After 36 month I can turn the car in or finance 100% of the purchase option price. Monthly finance payment will be $1,685

    Finance:
    Down payment; 24,006 (including 2,500 deposit)
    Monthly payment; 1,685 (including interest) 2.15%
    Total paid after 36 months including interest; 60,660
    Total paid after 36 months including down payment, taxes, fees; 84,666 (Minus 10,000 Credit/EV rebate)= 74,666
    Guaranteed by back amount of $58,664.50 or option to continue financing for the remaining 3 years at same payment of $1,685

    You see the total out of pocket cost to lease is $79,637 vs $74,666 to finance.
    However the after tax cost (depending on your tax situation and I assume most of us purchasing a $120k vehicle will roughly be in the same situation) I'n my case I'm taxed at 50% earned income so my after tax cost for the lease is $39,818 for the first 3 years or $1,137/month

    If finance depreciation is subject to limits under section 280f. Essentially the depreciation amount is the lesser of the allowable MACRS depreciation or section 280f.

    I found the maximum depreciation to be the following if the vehicle is used at 100%: actual usage of the vehicle would require a calculation of percentage of the total. So take 50% of 80% per year.
    Tax year Amount
    1[SUP]st[/SUP] $11,160
    2[SUP]nd[/SUP] $5,100
    3[SUP]rd[/SUP] $3,050
    Each succeeding year $1,875

    Conclusion: if you own your business and are making over $250K per year you will save over $15k in after tax payments if you lease AND you can still finance the remaining balance for the last 3 years at the ridiculously low interest rate.

    Hope this helps.

    btw: I am not an accountant.
     
  9. yobigd20

    yobigd20 Well-Known Member

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    "Leasing now also comes with the Tesla happiness guarantee. If you don't like our car for any reason in the first three months, you can just return it and your remaining lease obligation is waived. The only catch is that you can't then immediately lease another Model S. Upgrading early is no problem if you want to do that, but there is a pass-through fee to cover the new vs used value difference."

    Ok. so if I wanted to work the system I could just lease one in my name then say P85D-UBER model is released the following week, I can return it and then just lease another one and put it in my wife's name instead....
     
  10. RobStark

    RobStark Active Member

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    Then you have to put another ~9% down.
     
  11. yobigd20

    yobigd20 Well-Known Member

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    eh I didn't read the fine print. $5k down...blah. I guess that's the price you pay then. well they do say the second you drive off the lot you lose $5k. well in Tesla's case though (w\ regarding to purchase) thats $12.5k bc they take the $7500 government rebate back for themselves if you try to trade it right back in.
     
  12. jstepy

    jstepy Member

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    Amen MY T!

    For a small business owner leasing is way more advantageous for tax purposes. I am used to buying trucks for my company which due to weight are able to be depreciated rapidly with Section 179. My CPA was actually quite mad at me for financing my Tesla. Like you said up above the depreciation schedule is ridiculous. So when I mentioned the newer model that came out and the potential to lease this model my CPA was all for it. Yes I lost some cash on the trade but overall tax benefits of the lease will far out weigh that loss.

    Now with the news of the better lease options my payment has actually been reduced and like Elon mentioned leasing with Tesla is ridiculously easy.
     
  13. vgrinshpun

    vgrinshpun Active Member

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    I do not think that comparing 36 month lease on a $130K vehicle with a 10 (!) year loan is a proper way to determine the value of the lease. Although I myself always bought my vehicles, I recognize that for some advantage of the lease, aside of tax considerations, is that it has lower monthly payments. In this respect the new lease offered by Tesla and US Bank does not appear to be different from other conventional leases.

    For example, lease payment for a well equipped P85D with cash price of $132,720 is $1,923 with $7,623 down payment, which is $324.89 dollars per month less than 60 month financing with the same down payment and selling price. At 3% APR the monthly payment for a 60 month financing will be $2,247.93.
     
  14. Discoducky

    Discoducky Active Member

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  15. swaltner

    swaltner Member

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    The 90-day Happiness Guarantee is a nice perk. It's been 20 years, but my 1994 Saturn SC2 new vehicle purchase came with a 30-day/1500-mile exchange period. Didn't like the car? Return it and exchange for any other Saturn vehicle. This worked great in conjunction with their no-haggle pricing on every vehicle.
     
  16. invisik

    invisik Member

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    New lease offer, can return in 3 months

    Original blog:

    http://www.teslamotors.com/blog/significantly-improved-leasing-tesla-us-bank

    From the NYT article:


    Tesla Motors has unveiled a new package of lease offers for its Model S all-electric sedan, including a three-month return policy.
    Elon Musk, Tesla’s chief executive, said in a statement posted on the company’s website over the weekend that drivers who take out Model S leases have a three-month trial period during which they can return the car


    Log In - The New York Times
     
  17. trils0n

    trils0n 2013 P85

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    This happiness guarantee is probably a direct response to all of the commotion when the D was unveiled. 3 month return is probably good to fix that kind of "issue".
     
  18. AmpedUP

    AmpedUP EV Nut

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    As someone who drives less than 10,000 miles a year, this lease seems like a good fit. A great way to be "future proof" as well. If I'm in a lease, I'll see new enhancements as merely a reward less than 3 years away.
     
  19. breser

    breser AutoPilot Nostradamus

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    I don't think so. You can't lease another S if you do a return and the blog says you can do an early swap out in a different way.

    I think this is intended to give people who aren't sure that they'll be happy driving electric a way out of a lease that they'd otherwise be stuck in.
     
  20. dsm363

    dsm363 Roadster + Sig Model S

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    The three months is the same time cars are loaners before they are sold too. Another source of used cars for them.
     

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