Is this Lease a good deal?

[Notaguru]

We are retirees with excellent credit and cash flow. We drive 700-8,000 miles a year. We just received an offer to lease a new BASE Model 3 at $329/month for three years, with $4500 at inception. 30,000 miles. More $$ for add-ons, but we don't need any.
We have NEVER leased a car before, but...

IS THAT A GOOD DEAL?

 

[dakhlkt22]

Don't know but it's a price cut

Tesla slashes lease pricing on Model 3/Y, expects to lose half tax credit on 3

Hot on the heels of a price drop that makes the Model 3 the cheapest Tesla yet, Tesla has also...

electrek.co

 

[ucmndd]

Well, if you go to the order page and input a Pensacola zip code to calculate taxes and fees, the monthly payment jumps to $362 and the cash at signing goes to $6,858. So that’s a $19,890 outlay over 3 years.

So the real question is, could you purchase a new Model 3, drive it for 3 years, and then resell it for a total net cost to you of less than ~$20k?

Without actually running the numbers, my guess is probably not. So a decent deal compared to purchasing, presuming you only want to keep the car for 3 years.

 

[father_of_6]

I'm under the impression that leasing is almost never a good deal compared to purchasing. You'll always pay more to lease a car, and then you'll be driving it under restrictions (mileage, condition, maintenance, etc).

There might be cases where it might still make sense to lease. E.g. tax credits for business leases, money is no object and you just want a new car every 3 years, etc.

I know people who lease because after a few years, their car doesn't have as much acceleration and isn't as quiet, so they want a new car - but those are symptoms of internal combustion vehicles.

EVs remain fast and quiet even after years. My suggestion is... if you like the Model 3 (and I do, it's fantastic) then just buy one and drive it for as long as you can. That'll make it cheaper in the long run than what a lease would be.

 

[Kairide]

Never put money down on a lease. Calculate the lease with $0 down and see how it fits in to your budget. Tesla has some of the worst terms in the industry.

 

[E90alex]

Well, if you go to the order page and input a Pensacola zip code to calculate taxes and fees, the monthly payment jumps to $362 and the cash at signing goes to $6,858. So that’s a $19,890 outlay over 3 years.

So the real question is, could you purchase a new Model 3, drive it for 3 years, and then resell it for a total net cost to you of less than ~$20k?

Without actually running the numbers, my guess is probably not. So a decent deal compared to purchasing, presuming you only want to keep the car for 3 years.

If they qualify for the federal tax credit, Model 3 RWD is about net $36k after destination and taxes. Is it likely that the car will be worth more than $16k in 3 years? I would think so.

Even 5 year old Model 3 SR+ are still going for mid $20s. Of course the EV market will probably be very different in 3 years from now so no one can say for sure.

 

[dakhlkt22]

Apparently you can't buy the leased Tesla at the end of the lease, so it's a pure lease.

Eligibility​

• All Tesla vehicles delivered on or after April 15, 2022 are not eligible for purchase.
• Third-party dealerships and third-party individuals are not eligible to purchase leased vehicles.
• Model 3 and Model Y leases are not eligible for purchase regardless of delivery date.

Lease-End Options | Tesla Support

If you’re looking to return your vehicle and upgrade before the end of your lease, we offer several options to end your lease early.

www.tesla.com

 

[BigNick]

Leasing is never a good deal, you pay for years and own two things at the end of the lease: Jack and Squat.

I say this having paid apartment rent for about 18 years, $150K to $200K down the toilet.

 

[ucmndd]

If they qualify for the federal tax credit, Model 3 RWD is about net $36k after destination and taxes. Is it likely that the car will be worth more than $16k in 3 years? I would think so.

Even 5 year old Model 3 SR+ are still going for mid $20s. Of course the EV market will probably be very different in 3 years from now so no one can say for sure.

Maybe. You’d need to include the cost of financing over those three years (or the lost time value of money if you paid cash) for a true apples to apples comparison.

 

[ucmndd]

Leasing is never a good deal, you pay for years and own two things at the end of the lease: Jack and Squat.

I say this having paid apartment rent for about 18 years, $150K to $200K down the toilet.

A vehicle lease with an accurate residual value should leave you in more or less exactly the same financial situation you'd be in at the end of the term had you financed the vehicle.

The apartment rental analogy isn't a great one because unlike cars, real estate typically (but not always) rises in value over time.

Owning something that is rapidly decreasing in value is not exactly the path to financial freedom. The real financial bone-headed move is replacing a car every three years, but we all know plenty of people who do that. But the means by which they finance that bad decision doesn't really matter much in the end.

 

[M3BlueGeorgia]

I'm under the impression that leasing is almost never a good deal compared to purchasing. You'll always pay more to lease a car, and then you'll be driving it under restrictions (mileage, condition, maintenance, etc).

There might be cases where it might still make sense to lease. E.g. tax credits for business leases, money is no object and you just want a new car every 3 years, etc.

I know people who lease because after a few years, their car doesn't have as much acceleration and isn't as quiet, so they want a new car - but those are symptoms of internal combustion vehicles.

EVs remain fast and quiet even after years. My suggestion is... if you like the Model 3 (and I do, it's fantastic) then just buy one and drive it for as long as you can. That'll make it cheaper in the long run than what a lease would be.

The exception to that (generally valid) statement is when a manufacturer hides their price cuts in the lease payment. BMW, Jaguar and Mercedes are/were famous for this.

 

[Gauss Guzzler]

There's nothing wrong with wanting/affording a new car every 3 years, it's no more financially irresponsible than wanting/affording a luxury car. But certainly a lease is the most difficult and expensive way to do it.

Leases are a huge commitment, much more so than a spouse, a home, or even a child in some cases. This translates to high risk - any changes in your car needs during the lease will be very expensive and difficult to deal with. There are many cases in which a lease is a worthwhile option, business-use tax writeoffs, cars that can't be sold for various reasons, or the current $7500 EV tax rebate loophole for non-Teslas. California even has an anti-consumer law that forces people to pay twice as much sales tax if they don't lease. But generally, the intent of a lease is just to trick buyers into paying more.

But the real answer to your question is yes, the base Model 3 is an exceptionally good deal and an absolutely amazing car, especially right now because of the refreshed "Highland" model coming out within months. They currently have a slightly hidden discount system on their "inventory" page which lists new and demo cars in your area that are around $1K-$4K off retail, changing daily. And don't forget to ask someone like me for a referral code for another $250 off.

New & Used Electric Cars | Tesla

Find new and used Tesla cars. Every new Tesla has a variety of configuration options and all pre-owned Tesla vehicles have passed the highest inspection standards.

www.tesla.com

 

[Mayer]

They currently have a slightly hidden discount system on their "inventory" page which lists new and demo cars in your area that are around $1K-$4K off retail, changing daily.

The inventory discounts appear to be on hold but will likely return mid quarter (November) or sooner. Lowest price for base M3 RWD in grey at end of third quarter was $36,220 plus transport fee $1,640

 

[trife.]

If the lease fits your budget and you’re comfortable with it, don’t overthink it and go for it. As I’ve watched Tesla prices fluctuate rapidly here recently, there’s zero chance I’d fully finance a purchase. Then again, I’m a new car every 2-3 years type of person, so I’m trying to avoid the risk of being underwater on a loan (which seems like a greater risk w/ a Tesla). That’s the beauty of a lease—drive it, have your fun, maintain it like you would a purchased car, then turn it in with no worries about being upside down. Same goes for accidents. Diminished value? Not my problem.

 

[Eric500]

based on my experience with leasing, I wouldn't do it.
1. tesla doesn't allow buyout, what if you decide to keep it, you've paid into it already, so paying for the rest is less
2. 2-3 year lease is great, but you are stuck on this timeline, you generally have to return the car october 2025 or 2026. what if a new model is released 3 months later, it is a pain to bridge any gap
3. in relation to #2, having ownership/financing creates equity and additional tax credit on trade in. I briefly looked at 3 year old M3s and they are maintaining the upper $20s to low $30s for used. If you lease, you pay in $20k over 3 years and have nothing to show for it. Even with higher rates, take a longer term if you want a lower payment, you will own the car and be able to take advantage of the likely maintained resale.

 

[EatsShoots]

Leasing is never a good deal, you pay for years and own two things at the end of the lease: Jack and Squat.

I say this having paid apartment rent for about 18 years, $150K to $200K down the toilet.

Sometimes leasing is a fantastic deal. I've seen a person pay negative money for a chevy bolt. Yes: literally paid to drive it. Free car. Highly unusual, but it's been done. leasehackr.com can show you the way. I've leased several cars at far less than had I ever bought them (in particular my first nissan leaf, which depreciated like a rock the moment I got it, which I was insulated from courtesy of leasing).

As for this tesla lease it seems okay, nothing fantastic.

 

[JBT66]

Now that the tax credit is rolled in it’s much more attractive.

 

[nicksp]

I priced a M3LR lease in CA with the only extra option being premium paint. By the time I added up all the fees and taxes, my down payment went up to $7500 and my monthly went up to $549/12k miles.
I ended up buying a pre owned instead for the same price.

 

[mpgxsvcd]

Leasing is never a good deal, you pay for years and own two things at the end of the lease: Jack and Squat.

I say this having paid apartment rent for about 18 years, $150K to $200K down the toilet.

The apartment is not a severely depreciating asset like the car is. If the car depreciates severely and you took out a loan for it then you own one thing after a few years of paying the loan. You will own the upside debt that you have incurred. With the lease you can just walk away from the underwater car and let the bank take the depreciation hit instead of taking that burden on yourself. Leases are not always a bad option. They often have additional discounts that you could not access with a loan but are available with the lease.

 

[ucmndd]

There's nothing wrong with wanting/affording a new car every 3 years, it's no more financially irresponsible than wanting/affording a luxury car. But certainly a lease is the most difficult and expensive way to do it.

It’s often FAR less expensive to lease a German luxury car for 3 years than it is to purchase it, because they’ve built an entire business model around leases with artificially inflated residual values.

Step 1: Write a lease with an unrealistically high residual value, which lowers the monthly payment.

Step 2: Wait for customer to return the car at the end of the lease because there’s no way they’re gonna buy it out given the high residual. Oh hey, that customer needs another car, guess we should get them into another lease, moving another new unit and keeping our allocations up!

Step 3: “Recondition” lease return and sell it as a certified pre-owned used car at a significant market premium.

Later, rinse, repeat.