TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

Lease vs. Buy Calculator (with tax credits)

Discussion in 'Model X' started by HockeyPlayer, Aug 2, 2016.

  1. HockeyPlayer

    HockeyPlayer Member

    Joined:
    Jul 30, 2016
    Messages:
    29
    Location:
    Los Angeles, CA
    Hello. I'm on the fence for my Model X to buy vs. lease. The geek in me says to lease since I'll probably want a new car in 3 years. But the finance part of me wants the full value of the tax credit. There are a lot of calculators out there but few have a place to input the value of the tax credit. If you know a great site or place to download an Excel calculator to run the benefits of one over the other, it'd be so appreciated!
     
  2. trinites1a

    trinites1a Alfred | X60D

    Joined:
    Feb 11, 2016
    Messages:
    32
    Location:
    NJ
    My understanding is you still receive it just over the course of the lease rather than a lump some at taxes if you finance.
     
  3. HockeyPlayer

    HockeyPlayer Member

    Joined:
    Jul 30, 2016
    Messages:
    29
    Location:
    Los Angeles, CA
    #3 HockeyPlayer, Aug 2, 2016
    Last edited: Aug 2, 2016
    Some updates on what I've researched in making my lease vs. buy decision. Only some of the tax credits benefit the customer in Tesla's lease program for the Model X. I spoke with my financing manager and he showed me that the residual (amount you would pay to purchase the car at the end of the lease if you wanted to) inclusive of the tax credits is about 57% of the original purchase price. (36 month lease with 15,000 miles per year) If you take the industry average of a 55% residual for a well valued car, the tax credit drops the monthly payment by about 2% of the purchase price which is ~$65.00 per month or <$2,500 over the life of the 36 month lease.

    Here's a really useful tool to help you look at the lease vs. buy decision. Go to Find a credit union on CULookup.com - Your Credit Union Locator then "Calculators" and finally "Should I lease or purchase a car" under the auto calculators section. The only thing missing from it is plugging in the federal and state tax credits into the buy side. But you can factor that in manually when making your decision. Benefits to you will depend on how long you want to keep the car (in a rapidly advancing technology marketplace), your individual tax situation and write offs and the flexibility you'd like to have. With a lease, you are committing to the entire 3 year term but can walk away at the end. With a purchase, you can dispose of the car (or in our case upgrade) when you want. Hope this helps. Disclaimer, this is general info and I am not a financial advisor. Your mileage may vary!
     
  4. Rich Meister

    Rich Meister Member

    Joined:
    Jun 14, 2016
    Messages:
    96
    Location:
    SoCal
    From my understanding, you can also transfer the lease if you want to walk away. The only benefit I see from leasing is the sales tax implication. On a sale, it's a $10K tax bill due at signing while leasing you pay taxes on the rent charge. So the $7500 tax credit is a wash if you factor in the sales tax for CA residents.
     
  5. Scrith

    Scrith Member

    Joined:
    Jan 18, 2015
    Messages:
    105
    Location:
    Redwood City, CA
    I think an important thing to keep in mind in these lease vs. buy discussions is that they rely upon an expected value for the vehicle in 3 years. With the poor reputation of first-year Model X vehicles, and the soon-to-open Gigafactory drastically reducing the cost of batteries used in the X, their most expensive component, it is my opinion that the actual value of the Model X in 3 years is lower than most people think.
     
    • Like x 1
  6. Rich Meister

    Rich Meister Member

    Joined:
    Jun 14, 2016
    Messages:
    96
    Location:
    SoCal
    I would def have to agree with you on this. The tech is just changing so rapidly and with the Gigafactory up and fully running in 3 years, batteries will be coming way down in price.
     
  7. HockeyPlayer

    HockeyPlayer Member

    Joined:
    Jul 30, 2016
    Messages:
    29
    Location:
    Los Angeles, CA
    Thanks everyone for your input. I agree with the logic of a faster expected depreciation. If new technology comes around and there are additional entrants in the field, it's likely that the car will depreciate faster than expected which is why I will be leasing. By the way, one can't just "transfer" the lease unilaterally unless you intend to default on the obligation (and obliterate your credit rating). When you sign a lease, you are committing to the full payments committed to in the contract.
     
  8. ⚡️ELECTROMAN⚡️

    ⚡️ELECTROMAN⚡️ Liked, but not well liked.

    Joined:
    Jul 15, 2016
    Messages:
    347
    Location:
    Oregon
    Batteries will come down in price, but wouldn't it make sense for Tesla to profit from the price reduction and not necessarily the consumer? They are taking on the risk and hardship of making it all happen. As long as they are priced competitively against the competition they should pocket the battery savings. At some point Tesla deserves to make a profit.
     
  9. HockeyPlayer

    HockeyPlayer Member

    Joined:
    Jul 30, 2016
    Messages:
    29
    Location:
    Los Angeles, CA
    Tesla NEEDS to make a profit or they will be out of business or bought up by another auto maker. All of the major luxury manufacturers are working on EVs so it'll be a delicate balance of pricing Telsa's great cars to be "in the ballpark" and improving profitability by reducing costs. The Gigafactory and increasing quality to avoid warranty claims are two ways that Elon has highlighted in analyst calls to do this.
     
  10. Rich Meister

    Rich Meister Member

    Joined:
    Jun 14, 2016
    Messages:
    96
    Location:
    SoCal
    You can transfer a lease for Tesla. There are a few car makers that do not allow it but from what I've seen, Tesla allows lease transfers to a new leasee. Which would make your lease obligation fulfilled. I have transferred 3 BMW leases and they are shown closed on my credit report.
     
  11. ABCCBA

    ABCCBA Member

    Joined:
    Dec 20, 2015
    Messages:
    390
    Location:
    Somewhere
    When you lease a Tesla, they use US Bank. US Bank allows one transfer, but there has to be 12 months or more remaining in the lease. The lease transfer costs $600. $150 for an application fee and $450 for a transfer fee. Once the transfer is approved by US Bank, the original leasee is released from the lease and has no further obligation. You can do this directly with US Bank, or you can do it through either LeaseTrader.com or SwapALease.com. It is a painless process and is an exceptional way to own a vehicle with no money down and a short lease.
     
  12. grayguy

    grayguy Member

    Joined:
    Nov 8, 2016
    Messages:
    11
    Location:
    Orange County, CA
    Is this number factored in with their estimated tax payments on the build your car tool on the Tesla website?

    I've found a bunch of buy vs lease calculators like this online, but none that help with factoring in tax credits for leases, or ones that help factor for a person who can write off lease payments or depreciation for business use purposes. Typically, the advice I've been given for taxes is that leasing is better than buying for cars that are more expensive that the average vehicle, due to the lease payment being a write off and the fact that depreciation is usually a smaller number.

    The think with the X is that you can take a $25k SUV depreciation the first year, so it's more complex. If anyone has a spreadsheet they've put together that factors for these things, I'd love to have a copy. Thanks.
     
  13. number12

    number12 Member

    Joined:
    Aug 16, 2016
    Messages:
    791
    Location:
    Tesla
    Take over a lease or buy. You'll want a new car sooner than 3 years
     
  14. wesley888

    wesley888 Member

    Joined:
    Oct 22, 2016
    Messages:
    181
    Location:
    Huntington Station, NY
    I created an Excel spreadsheet to match the numbers that Tesla gave me down to the decimal points. So that I can understand every single fee that they put in. If you use the other leasing calculator, for leasing, just subtract out the $7500 from the cost of your car will do. The sales tax they charge is on the total lease amount plus all the fees.

    For loan, it's much more simple since you get the Tax Credit yourself. You paid the tax yourself. The loan is just the normal loan calculation.
     
  15. SageBrush

    SageBrush Active Member

    Joined:
    May 7, 2015
    Messages:
    1,704
    Location:
    Colorado
    The full tax credit is received in a lease; the proper comparison that should have been applied above is the Tesla buy-back program. Comparing to "industry average" is apples to celery.
     

Share This Page