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Lease numbers don't make sense?

ATPMSD

Member
Mar 12, 2021
277
272
Atlanta, GA
@Kairide With a lease it is all about lowering the monthly payment. In reality the total out of pocket with or without the down payment is often the same, depending on the residual and money factor. The best deal is to put a lease downpayment in the bank and let the funds accumulate. When I lease I pull out my TVM calculator and run several options.
 
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rohiggidy

Member
May 27, 2021
174
141
ny
But you aren’t purchasing the car with a lease. When you put money down on a purchase, you’re helping lower the loan amount and narrowing the difference between positive and negative equity. When you put money down on a lease, your monthly payments are less, but there’s no point since you’re not purchasing the car.
Tesla requires a down payment on leases which is based on your credit score.
 
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rohiggidy

Member
May 27, 2021
174
141
ny
@Kairide With a lease it is all about lowering the monthly payment. In reality the total out of pocket with or without the down payment is often the same, depending on the residual and money factor. The best deal is to put a lease downpayment in the bank and let the funds accumulate. When I lease I pull out my TVM calculator and run several options.

It seems like no one brings this up when it comes to leases, even though tesla has gap insurance built into their leases.​

What Happens If You Total A Leased Car?​

One problem arises when a vehicle gets totaled. Generally, an insurer will write off a car as a total loss if it needs to pay more than 65% of the car’s value to repair it. If the car needs $30,000 in repairs but is only worth $36,000, then the vehicle might be declared a total loss.

Remember, however, that you are contractually obligated to make payments to the leasing company, and this obligation does not disappear simply because your leased car is totaled. Instead, many people end up owing to the leasing company money after a bad accident. This means that many people end up further behind financially if a leased car was totaled than they would have ended up had their own car been totaled.
 

Kairide

Member
Jul 13, 2021
152
155
CA
@Kairide With a lease it is all about lowering the monthly payment. In reality the total out of pocket with or without the down payment is often the same, depending on the residual and money factor. The best deal is to put a lease downpayment in the bank and let the funds accumulate. When I lease I pull out my TVM calculator and run several options.
Lease or purchase, you should never focus on the monthly payments. Negotiating monthly payments is the biggest mistake when leasing or purchasing a vehicle. When purchasing or leasing a vehicle, you need to look at the overall picture. I understand Tesla is a little different as you can't negotiate price, MF or residual on a Tesla lease. But, putting down more money than necessary on a lease, Tesla or any other manufacturer is a bad idea. You don't own the vehicle, so trying to bring the equity down is pointless. If you do the math and calculate an amount down on a lease compared to amount saved per month, you're better off paying the extra per month.
Example:
You put $5k down on a lease, you'll save ~$100 per month on your payment. Take that $100 and multiply it by the 36 payments over a lease period and you'll have saved $3,600. Why pay $5k to save $3,600? At the end of the lease when you turn the car in you just lost your $5k.

If you have a lot of money to put down, you're better off purchasing and using the money as a down payment.

Tesla requires a down payment on leases which is based on your credit score.
Interesting, good to know.


It seems like no one brings this up when it comes to leases, even though tesla has gap insurance built into their leases.​

What Happens If You Total A Leased Car?​

One problem arises when a vehicle gets totaled. Generally, an insurer will write off a car as a total loss if it needs to pay more than 65% of the car’s value to repair it. If the car needs $30,000 in repairs but is only worth $36,000, then the vehicle might be declared a total loss.

Remember, however, that you are contractually obligated to make payments to the leasing company, and this obligation does not disappear simply because your leased car is totaled. Instead, many people end up owing to the leasing company money after a bad accident. This means that many people end up further behind financially if a leased car was totaled than they would have ended up had their own car been totaled.
This is also a reason you don't put money down on a lease. But the only amount owed to the leaser would be the difference between the insurance payout and the leaser's buyout price at the time of the accident. So if you just leased a vehicle and total it, the difference will be greater since the amount owed to the leaser will be the greatest.
 

doomsday997

Member
Jun 1, 2021
209
370
NY

It seems like no one brings this up when it comes to leases, even though tesla has gap insurance built into their leases.​

What Happens If You Total A Leased Car?​

One problem arises when a vehicle gets totaled. Generally, an insurer will write off a car as a total loss if it needs to pay more than 65% of the car’s value to repair it. If the car needs $30,000 in repairs but is only worth $36,000, then the vehicle might be declared a total loss.

Remember, however, that you are contractually obligated to make payments to the leasing company, and this obligation does not disappear simply because your leased car is totaled. Instead, many people end up owing to the leasing company money after a bad accident. This means that many people end up further behind financially if a leased car was totaled than they would have ended up had their own car been totaled.
One of my leases was totaled and i didn't pay a dime. It's a rare occurance that you actually would have to pay anything. The accident ended my lease, the insurance paid the leasing company and that was that. The big risk is of course if you put down a lot of money initially, you lose it all if you total the car especially if its early on.
 
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rohiggidy

Member
May 27, 2021
174
141
ny
One of my leases was totaled and i didn't pay a dime. It's a rare occurance that you actually would have to pay anything. The accident ended my lease, the insurance paid the leasing company and that was that. The big risk is of course if you put down a lot of money initially, you lose it all if you total the car especially if its early on.
Well tesla requires a down payment base on credit score and was true for leases on the model s and x
 

scherer326

Member
Aug 24, 2018
307
149
Florida
do you guys think tesla will change soon the ability to buy the model y after the lease as ended. I was just asking and someone please talk me out of it, if you put a down payment of $6k to lease the model y yes it lowers your monthly payment but you dont get anything out of it after the lease ends.
 

ATPMSD

Member
Mar 12, 2021
277
272
Atlanta, GA
You should not put more down on a lease than the minimum. Run the numbers both with a minimun down and with that $6K down. Add up all lease payments and the down payment in each scenario and you will often find putting a lot down is not a good idea, but you should run the numbers.

Also, if you plan to buy the car at the end of the lease you should probably not be leasing. Here is a link to Tesla’s current lease end options:

 

kc1953

Member
Aug 13, 2017
36
18
Walnut Creek, CA 94597
All -- I was talking to a rep in the Chicago area about a lease and I'm having trouble reconciling the numbers... perhaps someone here can help.

I configured a Model Y LR in grey/ black with a Tow Hitch for 36 months/ 12k miles per year. Tesla is telling me I'd pay $649/month for the vehicle with a $5k down payment as well as ~$1500 in drive off fees. I cannot figure out for the life of my where this $5k is going when you run the real numbers...

Sale Price + Destination fee: 54490
Residual: 35692 (around 65% which is great)
———
Cap Cost (vehicle price minus residual): 18848
Cap Cost + Interest (4.4496% or MF .001854) = 19686

Here is where I begin getting confused, when we begin to distribute across 36 months and add taxes…

$19686/ 36 months = $546/month (please note this is WITHOUT a $5k down payment lowering the cap cost of the vehicle)

Now let’s add taxes.

Sales tax should be somewhere around 9.5%
546/month * 9.5% = $598/month

And the extra city of Chicago lease tax which is 9% (yes I realize this is robbery)
$598/month * 9% = $653/ month

Then add $33/ month distributing the Transport/ Doc fee of $1200 across the 36 months = $686/ month

I realize I’d have about $1500 in out of pocket for acquisition fee, and first month’s payment but I’m landing on $686/month (give or take) without any down payment whatsoever.

So… I still don’t really know where the $5k is going if I were to pay it. Are there other fees that I’m not taking into account? My calculations show that if I were to pay the $5k down payment, the overall payment should be less than $550/ month after taxes.

Thanks for any help you could provide in terms of clarifying the quote.
Model 3 value after 3 years has been closer to 85-90%. That’s a better estimate of Y residual than 65%…or split difference and say 75-80%. And you can‘t buy the Tesla at end of lease period. So guess who pockets the difference between 65% and likely higher end of lease value? That’s right..Elon. Pretty much every youtube on this tells you not to lease a Tesla now. Finance it if you aren’t a cash buyer and then sell it after 3 years if you are one of the gotta have the latest and greatest types.
 

rohiggidy

Member
May 27, 2021
174
141
ny
Model 3 value after 3 years has been closer to 85-90%. That’s a better estimate of Y residual than 65%…or split difference and say 75-80%. And you can‘t buy the Tesla at end of lease period. So guess who pockets the difference between 65% and likely higher end of lease value? That’s right..Elon. Pretty much every youtube on this tells you not to lease a Tesla now. Finance it if you aren’t a cash buyer and then sell it after 3 years if you are one of the gotta have the latest and greatest types.
sell it when the market might be bad for used cars? no one wants a 900$ car payment.
 

MG535

3SR+ ordered 7/22 (blue/black/19s). EDD 9/10-16
Jul 22, 2021
135
100
NJ USA
Cap Cost + Interest (4.4496% or MF .001854) = 19686
A little late but didn’t see anyone else clear this up: the MF is not applied to the cap cost. The rent charge for a lease is calculated as follows:

Monthly rent charge = MF * (net cap cost + RV)

PS there are many pros and cons to leasing. In your case, two things jump out: (1) how much you can expect the car to hold its value in the real world vs the OEM’s RV; and (2) whether taxation is biased on way or the other, in your case it’s biased against leasing.
 

MG535

3SR+ ordered 7/22 (blue/black/19s). EDD 9/10-16
Jul 22, 2021
135
100
NJ USA
The rule of thumb is every $1000 you put down will lessen the monthly payment by ~$20
Forget you ever heard this “rule”… the amount that can be saved on rent charges on a lease by putting any cap cost reduction down is dependent on the MF. The MF could be .00001 or it could be .00300+ … the amount of any potential savings will vary wildly
 
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WhatIsThis

Member
Mar 19, 2019
17
5
Phoenix, AZ
I’m in the process of leasing a Model Y Performance. Have a CT reservation and will be able to see the first versions of the CT get released then when my 3 years is up I’ll get the best option out there. Currently have a Model 3 LR RWD with 15k in equity. Going to pocket that extra 15k and just keep it for lease payments. Over the 3 years my lease will be a wash with my current Model 3 loan. Crazy prices on used cars right now.
 

MG535

3SR+ ordered 7/22 (blue/black/19s). EDD 9/10-16
Jul 22, 2021
135
100
NJ USA
Going to pocket that extra 15k and just keep it for lease payments
It’s important to compartmentalize/separate the two different things going on here.

Any decision to buy or lease the Y should be made independent of the proceeds from the 3 sale.
 

brandon8387

Member
Sep 12, 2021
17
10
AZ
I agree I'd never put money down on a lease. The main issue is their numbers just don't make sense either way; trying to figure out either what I'm doing wrong or where they are pulling the wool over my eyes.

Lease tax blows and I typically avoid that by registering at my home in WI, however the state of WI doesn't cooperate w/ Tesla's business model so that's not an option for this one.
W/O a down payment the monthly shoots up to 900-1.5k range. Who wants that? A 4.5k down payment makes it 650/mo after taxes
 

jeremymc7

Active Member
Feb 3, 2013
1,543
697
U.S.
When I looked at the 3 I bought in 2019 and the one in 2020 I looked at all the numbers for lease vs buy. The only thing that make sense was to lease the base stripped 3 both times. In both cases any other configure made more financial sense to buy. Tesla only wants to deal with the base models coming back and so anything else has the deck stacked in Tesla’s favor and you pay a premium for it.
 

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