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Lease Approved, questions about cap cost reduction

Discussion in 'Model S: Ordering, Production, Delivery' started by marcysx9, Jul 13, 2016.

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  1. marcysx9

    marcysx9 Member

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    Hi everyone,

    I got my leasing application approved by Tesla today (Model S 60) after weeks of back and forth and I was wondering if you guys could give me your input on the estimates they gave me (see attached picture). I find the cap cost reduction quite high. I am fairly new to car leases since this would be my first vehicle, so any input you could provide would be very helpful. I would be going for the 15,000 miles deal (California).

    Thanks in advance!

    ____________________________________________________________________________


    A bit of background, 26, female, single, no dependants, salary 110K /yr, no student loans, debts, or mortgages. In case is relevant, I am not planning on changing my martial status or purchasing/investing on properties any time soon. Corny or not, my main motivation behind getting a Tesla (aside from all the plus the car comes with) is for the environment. There are enough gas vehicles out there and I really want to make a difference. The carpool stickers are also a big plus as I have a long commute.

    So I applied for the Tesla leasing program about 3 weeks ago and Tesla got back to me about a week and a half after to let me know that they could not approve my leasing application due to my lack of credit history, which made sense since I recently moved to the US from Canada. They however strongly encouraged me to apply for financing instead.

    I replied back and said I wasn’t interested in financing the vehicle at all and that I was only interested in leasing. I told them that if we could workout a prepaid lease or monthly security deposits arrangement that I would be happy to discuss and also asked if they could run the credit report on my Canadian accounts instead.

    I heard back from them the day before the order was finalized (step before you get the VIN assigned). They told me that they ran my Canadian credit report and that unfortunately they could not approve the leasing (I am positive I have an excellent credit score in Canada though but oh well…). Once again they strongly encouraged me to apply for financing or to contact AutoFlex, a third party leasing company. Since I only had a couple of hours to make a decision and AutoFlex did not contact me back, I asked the Tesla owner advisor if adding a co-signer would help in reconsider my leasing application. Later that night, Tesla confirmed that I could add a co-signer, asked me to submit proof of income and bank statements and asked me to re-apply for the leasing once again.

    So I added my uncle as a co-signer, re-submitted the application and today I was notified that my leasing application had been accepted. The first sentence in the email was : "Please note the $11,130 cap cost reduction required + fees = $13996 for delivery.” followed by a long explanation on why the financing option is better than the leasing one etc.

    As of today, my Tesla has already been assigned a VIN number. In the first estimate I received, the down payment was $5,000 and the amount due at signing was $7,678. I guess it makes sense that they doubled the down payment because of my lack of credit history? What do you guys think? Am I getting ripped off or is this a fair deal? I also feel like they are pushing the financing option a bit too much despite the fact that I have made it clear that I am not interested.

    Due to all the back and forth that went on during the application process, can I still negotiate the cap cost reduction amount or is this now a take it or leave it? I wouldn't mind paying more per month.
     

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  2. superm1

    superm1 Member

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    I would definitely try to get the cap cost lowered, but yes that is what they do if you don't have a long credit history. I would think with the cosigner they could have dropped it, but it could be credit score dependent as well (I wasn't asked for any docs at all).

    How far out is your delivery?
     
  3. ABCCBA

    ABCCBA Member

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    @marcysx9 I was in your shoes many years ago, when you couldn't lease a vehicle unless you were 25 or older. My experience is strong in auto finance and leasing, as I have done both with my personal vehicles as well as my fleet of company vehicles.

    There are several moving parts to a lease that you have not disclosed, that are important: Sale Price, Residual, Money Factor, Length of Lease. You have provided the Cap Cost Reduction and the fees.

    Without knowing the needed variable, it's hard to say if it is a good deal over the term of the lease or not.

    The advantage of a lease is to pay for only the portion of the car that you use, and pay only interest on the portion that you don't (the residual). In this case, they are making you buy $11,300 worth of the car up front.

    I would ask them what the terms of financing are (length and interest rate) and what the monthly payment would be if you put the same $11,300 down. Plus, with a purchase, if you have a trade in, the value of the trade-in will reduce your sales tax burden.

    Anyway, if you can get the lease information, I would be glad to offer my opinion.
     
  4. javawolfpack

    javawolfpack Member

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    I'm planning to put about that much into my lease upfront, not to qualify for the lease (but it probably helped, sadly CS faculty don't get paid nearly what we could get in industry) but because it makes it easier for me to pay monthly and still put money into savings towards the car that comes at the end of the lease + savings/retirement. I'm also expecting to get what I'm putting into the lease back after the VW TDI settlement, which for me is a net zero as currently I'd be lucky if I could pay off the loan with the current street value of my TDI.

    But arguably financing at the current rate is a really good deal if you can afford it, but I know one reason I'm not pushing out my delivery and sticking with the lease is so much is looking to change in the near future... that I don't expect to keep the vehicle beyond 3 years, I also don't know when the VW settlement is happening so can't really lock in the current rates. But I feel that with car buying, do what you feels right for you... at the end of the day rather not have regrets.
     
  5. marcysx9

    marcysx9 Member

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    Makes sense, thanks for the info! I will ask if they can lower the cap cost. Delivery is supposed to be late August/early September.
     
  6. marcysx9

    marcysx9 Member

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    Thanks Mike! I added the leasing/loan comparison info as an attachment in this thread and including the leasing info below as well.

    Cash Price (incl doc & dest fee) $72,200
    Discount -$1,000
    Total Price $71,200

    Estimated Tax Rate 8.48%
    Down Payment $11,130

    Terms of lease 36 months - 15,000 miles per year
    Lease Money Factor (0.0018) 4.32%
    Monthly payments (incl. tax) $617

    Amount due at Signing Estimate (includes deposit payment) $13,996
    Cost over 36 months $36,032
    Cost to own $86,462
     
  7. marcysx9

    marcysx9 Member

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    Thanks! I am sticking with the leasing because I find that going for financing would be too much commitment and paperwork, and I would definitely like to see what Tesla comes up with in 3 years :).
     
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  8. Seattle Tom

    Seattle Tom Member

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  9. SageBrush

    SageBrush Active Member

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    Yep. Your age may not be helping either since younger people have less job security.

    A large cap reduction can cause cash flow problems for an individual but it is not a 'bad deal.' The interest rate stays the same ;-)
     
  10. SageBrush

    SageBrush Active Member

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    So far as I know, Tesla offers the same residual value to everyone
     

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