Lease a Bad Idea?

[ggmkp]

I ran the numbers through several different calculators and leasing seems to be a better option.
SR+ with Purchase price of $42,000, $4,500 down, 36 months, 10k miles is around $430

I don't buy Model 3 would hold a residual value of 65%+ after 5 years. With model Y and Truck coming out within next 3 years along with all other brands coming out with their own EVs. And I don't think people would want to purchase SR+ after 3 or 5 years (degraded battery, less miles...)

So I'm thinking leasing it for about 3 years and see what comes then.
And advice?

 

[OCR1]

You would be paying $20K to rent the car for three years. You don’t think the car will be worth at least $22K at the end of the three year period?

 

[ofcorona]

Yes a lease is a bad idea. For the model the 3 you can't purchase it after the lease ends. Also paying 100$ more ( in my situation) I was able to finance it.

 

[BikerPeaBody]

Yes a lease is a bad idea. For the model the 3 you can't purchase it after the lease ends. Also paying 100$ more ( in my situation) I was able to finance it.

Lease is good depending on the need of the buyer. If you are looking at option to buy the car after lease, then you probably should just buy the car in the first place.

Otherwise, some people like new cars, often,keeping up with technology(although tesla is one of the few manufacturers where you can get new features over the internet). So leasing is great..

Obviously if you plan on keeping a car for 7+ years long time, you should buy, and not choose the lease then buy after lease option. But if you like new switching and having new cars every 3 years, like from a 3, to a S, or the Mach E, then lease is the best way to go

 

[OCR1]

Obviously if you plan on keeping a car for 7+ years long time, you should buy, and not choose the lease then buy after lease option. But if you like new switching and having new cars every 3 years, like from a 3, to a S, or the Mach E, then lease is the best way to go

For this to be true you would have to believe that you would not be able to sell the car at the end of the year year ownership period for at least $22K. No used Model 3 has gone anywhere near that low of a price on the used market. A lease still has to be competitively priced to make sense. Otherwise you could achieve better results by just buying the car and selling it after three years. Selling a used Tesla has not been known to be a problem.

 

[baronlf]

I don't think there is a right or wrong answer. It depends on individual situations. I have leased cars for the past 20 years and it has worked well for me. By the way, the residual value that Tesla calculates for my configuration (SR+, blue/black, aero wheels) is $28,454 after 3 years.

Car companies are really good at calculating depreciation and therefore residual value. I have looked into buying cars at the end of the lease and there is no money to be had. I always find that trade-in value (sometimes even retail value) and residual value are pretty much the same. I am leasing the SR+

 

[BikerPeaBody]

For this to be true you would have to believe that you would not be able to sell the car at the end of the year year ownership period for at least $22K. No used Model 3 has gone anywhere near that low of a price on the used market. A lease still has to be competitively priced to make sense. Otherwise you could achieve better results by just buying the car and selling it after three years. Selling a used Tesla has not been known to be a problem.

Leases in general are cheaper per month than financing
But again, if you are going to buy a car and sell in 3 years, then leasing is a good alternative
The selling would need to be done privately, not at a dealership. You could sell the car in 3 days or 13months. No worries with a lease. A lease is not awful, but you defintely want to keep in mind to lease only if you want to keep the car for mininum number of years. Tesla doesn't even have a buy option after you lease now that I remember.

 

[OCR1]

I’m not sure why the residual value matters on a Model 3 since you can’t buy the car at the end of the lease.

I think you just have to look at how much you are paying to rent the car for three years and decide if it makes sense to you. If the total cost to rent plus the cost you could likely sell it for is greater than the cost to purchase, then financially a purchase is a better deal.

If you don’t want the hassle of having to sell the car at the end of three years, then consider the higher cost to lease a convenience fee.

But then you also have to deal with a 10,000 mile cap, and a requirement to hand back the car at exactly 36 months, which may or may not be the most convenient time for you to make a car change. I’m guessing there is also a lease disposition fee built into the contract that you are stuck paying at the end of the lease.

For me, purchasing gives me much greater flexibility. I can sell the car at any point I decide I want something different. I have no concerns about how many miles I drive. And I can keep the car for more than three years, but only if I want to. Used Teslas have always held a strong residual value so selling them has proven to be quite easy.

If you can’t afford the finance payments, leasing may be the only option for you. But it will cost more any way you look at it, at least until Tesla makes their money factor rates more competitive.

 

[en_passant]

If you know that you do not want to keep the 3 past three years and that you will stay under 10,000 miles per year, a lease can be a good idea. It sounds like you don't really want a 3 a want something larger?
I thought about leasing the BMW228i I have now in 2016, because I knew I wanted a Tesla 3 back then but availability wasn't there yet. The only reason I purchased instead of the lease was the miles. My job sends me to different locations so I can easily go over 10,000 in a year.
Now the EV I really want is on the market so I'm buying. If I wanted something larger I would just wait because the Y is coming soon. If I really wanted a cybertruck or a Rivian, then I would lease the 3. Leasing the 3 to buy a Y in three years doesn't make a lot of sense with the Y so close.

 

[IceIceBaby]

I ran the numbers through several different calculators and leasing seems to be a better option.
SR+ with Purchase price of $42,000, $4,500 down, 36 months, 10k miles is around $430

I don't buy Model 3 would hold a residual value of 65%+ after 5 years. With model Y and Truck coming out within next 3 years along with all other brands coming out with their own EVs. And I don't think people would want to purchase SR+ after 3 or 5 years (degraded battery, less miles...)

So I'm thinking leasing it for about 3 years and see what comes then.
And advice?

Leasing all depends on your lifestyle... If you don't plan on driving it that much or your daily commute isn't that far then it seems like it's a pretty good deal.

 

[baronlf]

Residual value matters because on a lease you are paying the depreciation amount (cost - residual). plus interest on the total value.

These are my numbers based on a car cost of $42,290.

- Lease for 36 months at $590/month (includes FL sales tax), + $1,667 due at signing (includes first month payment) + $395 lease return fee for a total paid = $22,700.

- Finance cost plus sales tax, for 60 months @ 3.99%, with $2,500 down payment + 250 registration fee. Monthly payments of $780. Total paid over 36 months = $30,800. Assuming you sell after 3 years at $26,000 and repay the balance of your loan of $18,000 the resulting net total paid over 3 years is $22,800.

No substantial difference in total cost over 3 years between leasing and buying, but you have paid out $8,000 more over this period if you buy, which you will recover once you sell. However, with the lease you know what your costs will be. Buying assumes a sell value after 3 years which could be greater or not. Somewhat of a gamble.

 

[ggmkp]

I ran the numbers through several different calculators and leasing seems to be a better option.
SR+ with Purchase price of $42,000, $4,500 down, 36 months, 10k miles is around $430

I don't buy Model 3 would hold a residual value of 65%+ after 5 years. With model Y and Truck coming out within next 3 years along with all other brands coming out with their own EVs. And I don't think people would want to purchase SR+ after 3 or 5 years (degraded battery, less miles...)

So I'm thinking leasing it for about 3 years and see what comes then.
And advice?

You nailed exactly my concern. People here too optimistic that Model 3 would be like what it is now even after 3 years+ from now.
I'm guessing that the resale value would be one of the worst due to battery degradation, better tech and more choice of EVs.

I based my calculation on a resale value of Model 3 to be around 55% at 36m and 45% at 60m. Purchase would only make sense if I keep the car for 6+ years

 

[Knightshade]

You nailed exactly my concern. People here too optimistic that Model 3 would be like what it is now even after 3 years+ from now.
I'm guessing that the resale value would be one of the worst due to battery degradation, better tech and more choice of EVs.

The Model S typically has, by far, the best resale value in its class.

The 3 has so far as well (though it hasn't quite hit 3 years yet).