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Lease or buy Tis the question of 100k!

Discussion in 'Model S: Ordering, Production, Delivery' started by modelx007, Dec 18, 2015.

  1. WMAC

    WMAC Member

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  2. Screwbal

    Screwbal Member

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    I chose to buy over lease. I'll do easily over 15k miles and in my volt a couple years ago turned 18-20k in a year. That just by its self didnt make me want to lease but then again I've never leased before so I didn't want my first experiance with unknown numbers or cause and effect to be on something so expensive.
     
  3. McHoffa

    McHoffa EV.network

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    The mileage is the biggest factor making me unsure. I could come close to hitting 15k per year.

    That said, I did quick math on the particular config I want, a 70D with a few options

    price - $84000
    dest/doc fee - $1200
    down payment (difference of amount due at lease signing) - $5508
    total - $85200
    amount still due after 36 months (assuming 3%) - $41635
    minus tax rebate - $34,135

    lease payments total - $36468
    due at signing - $6708
    total minus those payments - $40824

    So buying comes out ahead by about $6500 at the end of the 3 years. If I kept the car the full 6 years, I'd have something left to sell and put toward the next one, though looking at numbers so far, not a whole lot. The buyback guarantee would give me $40k for the car + $1600 for the extras after 3 years? That would mean I would come out about $7k ahead of a lease, and I wouldn't be worrying about mileage.

    (If I've missed something in my math, please tell me)
     
  4. modelx007

    modelx007 Member

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    Here's my dilemma:
    Purchase: 105k price. down payment with fees taxes $17k. 2.64 rate. Monthly 1421. That's a big down payment. 72 months

    Lease: 36 months. 1354 for 15k miles. 5695 down.

    I got no clue how many miles but don't think I'll go over 15k especially since I'm planning to.also get the model x.

    So does leasing seem like a better money deal if my plan is to get rid of it in 3 years?

    Thanks
     
  5. McHoffa

    McHoffa EV.network

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    I forgot to figure in taxes. In NC we have a 3% HUT, so that's another $2500, but not sure if that also applies to a lease as I've never done it before.
     
  6. ChadFeldheimer

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    Comparing how much you owe after 3 years (6 year loan versus buy-out option on the lease) is one metric. Other metrics include how much you've actually paid in the first 3 years and how much you expect the car to be worth at that point (e.g. if it makes sense to return the leased car because it's worth less than the residual).

    The problem with the lease is that you lose the $7500 tax credit if you purchase the car at the end of the lease term. This happens because the $7500 is added to the residual - as opposed to reducing the capitalized cost. So the lease is at a $7500 disadvantage after 3 years, which is probably what's driving the $6500 advantage to buying. I'm assuming you chose a 6 year loan because the payments over the first 3 years are roughly the same?

    You might consider leasing if you're pretty confident (say, 90%+) you will want to return the car at the end of the lease OR if you believe the value of the car at the end of the lease will be lower than the residual (minus $7500).

    Otherwise, you are probably better served buying the car.
     
  7. eyespii

    eyespii Member

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    Which CU are you going with? Alliant still offers 1.99% for 60 months. I think for my tesla they were offering 72 months, and only required the tax as the down pay, so ~$6k down. If I want to upgrade in a few years (which I likely will), I'll just pay off the car and sell it. Prolly won't end up much worse off compared to if I had leased, and I don't have to worry about miles. Remember that the number of miles you drive after you get a tesla tends to go up. Every weekend I'm looking for a new place to take a road trip in my car now. Couldn't pay me to do the same in my old Prius.
     
  8. McHoffa

    McHoffa EV.network

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    Yeah, the tax credit is definitely what pushes the loan ahead of the lease. Is there a cost or terms for the buyback guarantee? Does the car actually have to be paid off to get that or could you turn the car back over and get the difference between what's owed and their guaranteed price?

    - - - Updated - - -

    I was looking at Alliant.

    I agree about the more driving. I hate it now, but I think in the Tesla I'll look for reasons to drive more/further.
     
  9. WMAC

    WMAC Member

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    Financing over 72 months is what's going to hurt - even at sub 3%. 40 over 48 @ 2% is only $2k in finance fees. I'm sure a local credit union or even Energy CU could do well for you.
     
  10. ChadFeldheimer

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    The resale value guarantee requires a clear title - i.e. the loan has been paid off.

    There is also a mileage penalty for the resale value guarantee ($0.25/mile after 15k/miles per year). IMHO $0.25/mile after 45k miles is quite reasonable considering the first 45k were ~$1/mile =)
     
  11. McHoffa

    McHoffa EV.network

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    Maybe a lease is what I want then... lease the MS, buy the M3 and when the lease is up, buy another M3 or MY
     
  12. davesm

    davesm Member

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    I created a detailed spreadsheet for this decision that computes the total cost of ownership (taking into account options, taxes, cost of money over time, accessories, gas savings, interest rates, etc.) for loan (with or without guaranteed buyback) vs. lease (with or without buying it off the lease).

    If there's enough interest I can make it a bit more "user friendly" and share it on google docs...
     
  13. modelx007

    modelx007 Member

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    What was the outcome?
     
  14. davesm

    davesm Member

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    Of course, the answer is "it depends!" If you know with high certainty that you're going to replace the car after three years, than leasing is better (but not by a huge amount). But if there's a reasonable chance you'll keep the car, than the loan with the buyback option is better. But the relative amounts change as your discount rate changes and also varies as you change the term of the loan...
     
  15. rog

    rog Member

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    Would be interested in that sheet!
     
  16. calisnow

    calisnow Active Member

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    The answer is that the cheapest option is to buy the car - not lease it - then keep it til the wheels fall off. That's what I usually do - 200K+ miles and 10 years of ownership. But I've ordered a leased Tesla because these cars are changing so fast that I know I won't want my Model S 10 years - or even 5. I believe a Model S 36 months from now will be significantly safer than one made today because they'll have redundant sensors for autopilot, more cameras and more advanced AI. So - I'm leasing a car for the first time ever.

    In 3 years if they have gone to full autonomy I will go back to my usual practice of buying new and keeping 10 or more years.
     
  17. WestCoastP85D

    WestCoastP85D Member

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    Tesla lease rates suck. If you value convenience of not worrying about it (like $10-15K of value), then leasing is the way to to. Assuming you don't pile the miles on, and don't wreck it (always a chance), owning it is far, far better than the lease rates they offered me.
     
  18. ChadFeldheimer

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    My total finance charges over the 36 month term are $8000, at an APR that I back calculated to 3-4% (this figure is not explicitly provided). $9000, including the cow poop $695 acquisition fee and $395 disposition fee. This $9000 was worth it to me because:

    (1) it is significantly offset by not having to pay sales tax on the residual (in Illinois)
    (2) it guarantees a resale value that I speculate is on the optimistic side (for the lender)

    For (2), I believe (like calisnow) that the autopilot sensor and processor package will be obsolete in under 3 years, with the new package providing a large improvement in capability and value. I will want that new package, and I speculate that cars without it will become a "dime a dozen" in short order.

    What's the concern with respect to wrecking the car? As I understand it, regardless of whether you pay cash for the car, finance it, or lease it, you always end up eating the difference between the insurance payout and the actual value of the car. Is there another reason why a lease is disadvantageous when your car has been wrecked? If not, my insurer provides lease/loan payoff coverage for about $15 per 6 months - so $90 over 3 years, which is in the noise.

    Thanks!
     
  19. chriSharek

    chriSharek Member

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    I think Gaskilla has it right above. You won't gain the advantage of the Federal Tax Credit if you lease. Plus, even if you buy and you want "out" Tesla has the buy-back guarantee. This is my plan and thoughts as well. 94 days . . .
     
  20. ChadFeldheimer

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    In the case of a lease, the tax credit is nominally passed through to the leasee in the form of a higher residual.

    The residual on my lease is about $57k. If you back out the federal tax credit, the "real residual" is $49,500. The resale value guarantee on my car would have been about $43k, substantially lower than the lease residual.

    With the benefit of 2+ years of hindsight, it appears the RVG is conservative enough that its primary value will be to prevent Tesla from lowballing your trade-in at the ~3 year mark.

    If you're confident you want out of the car in 3 years and/or you believe the residual is on the high side (i.e. you think you might suffer less depreciation by locking in a 3 year put option on your car), I think a lease can make sense.
     

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