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Lease vs. Cash

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I think Auto Pilot is going to be the big unknown. When APv2 is released will it be hardware ready for Level 4 autonomous? Or will APv2 just be a step up from the current AP but not quite L4? I realize it may not be software ready but the hardware is more important.
 
I think we will be in a better place to guess about that once we get details on the Model 3 and the specs of the options.

For example if the Model 3 doesn't come with APv2 when it ships in 2017 I suspect it will by 2020. That alone may be enough to make some people want to lease vs. buy.
True about the autopilot. That seems like the most obvious place where large improvements could take place. I'm not interested in autopilot right now though, and I enjoy driving (that's why i was never interested in the boring EVs that came before Tesla). Maybe when I have kids, autopilot will be able to drive them to school and events for me ;) But until then I think I'm probably better off buying and holding until the batteries give out instead of leasing and upgrading in 3-4 years.
 
I wish I had leased my Model S instead of purchasing. The trade-in (or even sale value if I were to list it myself) is at best on par if not below what a lease would've cost (about $1500/mo).

I think, especially with electric cars, depreciation is a big problem. Not necessarily because the cars break down or degrade fast -- quite the opposite -- but because of how rapidly the technology is seemingly advancing. Leasing with a gas car can often be hit-or-miss because gas cars don't, for the most part, change much over time. So when you try to sell a Corolla in 2-3 years, there isn't a new Corolla that's so much better that few people would look at yours.

Not so with electric cars in the Tesla age.

Interest rates right now are pretty low for cars. To be honest, even if the car didn't depreciate in value, you would probably be better off financing or leasing rather than paying cash. Take the cash and invest it in an index/municipal/CD/etc. ~7% returns aren't hard to come by. 5% returns are safe as cash. Hell, if you're hyper-worried, buy the T-bill for 2%. Some financing rates are below 2% so you'll still be ahead over time.

The biggest downfall of leasing is that they limit the number of miles you can drive per year. 10k is pretty prohibitive if this car is your daily commuter.
 
I don't think we're in store for any huge technological advances on the battery front in the next several years (at least not in terms of becoming production-ready large-scale deployment). Increases in lithium battery technology are going to be incremental improvements in efficiency, not quantum leaps. The realities of capacity and charging are going to be with us for a while.
Yep.

I think, especially with electric cars, depreciation is a big problem. Not necessarily because the cars break down or degrade fast -- quite the opposite -- but because of how rapidly the technology is seemingly advancing. Leasing with a gas car can often be hit-or-miss because gas cars don't, for the most part, change much over time. So when you try to sell a Corolla in 2-3 years, there isn't a new Corolla that's so much better that few people would look at yours.

Not so with electric cars in the Tesla age.
I don't buy this "lease because the technology is advancing" mantra - As ucmndd pointed out, you shouldn't expect radical changes in battery capacity or charge rate in the near future. Therefore, there's no real technological differences between EV's and ICE's. Both can have autopilot, etc.
 
Lease then dump the car when the lease is up. Service stations and maintenance is going to be a nightmare $$$$

Admittedly I have this worry as well. Being able to get service for the car at a reasonable cost is going to be what makes or breaks Tesla in the long run. It will be a disaster if Tesla continues its trend to prioritize selling and production of the cars over service, logistics infrastructure, and quality coming out of the factory.

I assume they are well aware of the issue, but it remains to be seen if they can solve it in time.
 
I just leased a car (my first ever lease) while waiting on the M3. I expected a slightly higher interest rate 3.5% instead of 1.9%. I expected to "finance" the difference between sale price and residual value. I did not anticipate the $600 fee to originate the loan, or the $350 fee to turn the car in at the end. I was pissed when I found the negotiated price was not used to calculate the sum being borrowed, but the dealer pulled a fast one and charged the sticker price with all the dealer add-ons. Could not back calculate the interest rate - their money factor has a blend of fees that obscure the real interest rate.

So - I think I got screwed doing a lease.
As to the Tesla, the leasing company gets the advantage and you miss out.

If you buy, you always can choose to sell at market rate - whether it be 10 months or 40 month or 120 months. You can sorta sell under a lease, but they get to decide how big a ding is - you might think its $10 and they choose $500.

Earlier - a fellow wrote a good analysis of sales tax. Perhaps that dominates the calculation and my nickel-dime insults are just things that piss me off. I will avoid being pissed off again and simply buy - a known process with fewer surprises and more control.
 
I just leased a car (my first ever lease) while waiting on the M3. I expected a slightly higher interest rate 3.5% instead of 1.9%. I expected to "finance" the difference between sale price and residual value. I did not anticipate the $600 fee to originate the loan, or the $350 fee to turn the car in at the end. I was pissed when I found the negotiated price was not used to calculate the sum being borrowed, but the dealer pulled a fast one and charged the sticker price with all the dealer add-ons. Could not back calculate the interest rate - their money factor has a blend of fees that obscure the real interest rate.

So - I think I got screwed doing a lease.
As to the Tesla, the leasing company gets the advantage and you miss out.

If you buy, you always can choose to sell at market rate - whether it be 10 months or 40 month or 120 months. You can sorta sell under a lease, but they get to decide how big a ding is - you might think its $10 and they choose $500.

Earlier - a fellow wrote a good analysis of sales tax. Perhaps that dominates the calculation and my nickel-dime insults are just things that piss me off. I will avoid being pissed off again and simply buy - a known process with fewer surprises and more control.

Sorry to hear that the dealer pulled a fast one on you but ... all the critical amounts used to calculate the lease payments are stated in the leasing agreement including the capitalized cost.

Perhaps your strategy shouldn't be to say you'll never lease again but maybe next time, now knowing the pitfalls, be extra careful of the numbers before you sign the agreement ?
 
I was looking on the TM site on the lease costs on a S or X and they seem pretty bad. Last year the rates didn't seem to be this bad, but something has changed to increase the payments. Unless you can write off the payments, the current lease rates don't look good.
 
Sorry to hear that the dealer pulled a fast one on you but ... all the critical amounts used to calculate the lease payments are stated in the leasing agreement including the capitalized cost.

Perhaps your strategy shouldn't be to say you'll never lease again but maybe next time, now knowing the pitfalls, be extra careful of the numbers before you sign the agreement ?

True - there is a document that shows most of the critical costs. That was flashed in a flurry of action (want to by red-light coverage? want to buy etch...) and during the brief time I got to hold that document - could not reconcile Agreed-Sticker price. Asked and was given a mumbo about "taxes and fees added here, but not there, so one could not match...just look at the months payment". I took that sheet home and took it apart line by line and found they indeed charged Sticker instead of Agreed - getting a $700 refund. Wife wants to love the new car and not spoil the new car buzz by getting pissed about the slick moves from the finance guy. [some other poster calls them the 'stealership' I like that description even more now].

So - will I lease a Tesla? I think I loose out on the $7500 tax credit due to fancy foot work. I think the cost of money is not advantageous. And the thought of talking to another slick willy...boy is that appealing!!
I can afford to pay cash. Why go through all the complexities of financing?

Thanks for your "sorry to hear" opening. I'm at "fool me once, fool me twice" status.

Model 3 RN 1078 should appear Q2 2018...hope hope.
 
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The Model 3 will be my first lease, potentially my last (?). I'm generally a buy CPO and drive into the ground kind of person, and CPO is generally a very good bang for your buck. The difference in this case is that the market for cars is shifting and changing extremely quickly at this point and likely will continue to for the next 5 years if not longer. The general mantra of buy and drive into the ground is fine when the technology and product aren't improving much. Look at a 2002-2005 car, pretty much nothing new and "gotta have it" between then and now. EVs are changing that.

I don't think we'll start to plateau in EV car tech until we have 4x motors, 1 for each wheel. Once that's achieved all of the fancy diffs, open diff, limited slip, torsen AWD, haldex AWD, torque vectoring, etc, won't really matter as you will be able to do it in software. And at that point when I have 4x motors I will go back to buy and drive into the ground, but not before.

This situation reminds me of smartphone adoption. It used to be (late 2000's early 2010's) that every year smartphones got "so much better" than the last year. But now they've essentially plateaued and you can get most anything and it will be pretty darn good. I think we're in that aggressive evolution curve and if I buy and hold there will be a significant improvement that I'd be kicking myself for missing out on.

Even if you look at the brief history of the Model S, they've made significant improvements in 3-4 years.
Tesla Model S Price and Equipment Changes 2013-2014 • /r/teslamotors
 
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This is important, so it's capped and bolded:

DO NOT LEASE IF YOU PLAN TO BUY AT LEASE END!!! YOU WILL LOSE THE TAX CREDIT!


This assumes Tesla has any credits left when you get the car, of course. Tesla leases (and many other EV leases; Volt leases are definitely done this way) handle the tax credit by artificially increasing the residual value by the tax credit, reducing the amount financed, and thus, your monthly payment. The leasing company gets less money from you, but makes it up on the credit. However, if you buy at the end of the lease, you are stuck paying the inflated residual, thereby buying a used car for $7500 more than it's worth. You'd be better off to walk away and find an identical car out on the used market.
Found that out after I signed the lease. US Bank should have been more upfront when asked directly. They misinformed me on this and have had poor customer service on the follow up to get full disclosure.
 
Found that out after I signed the lease. US Bank should have been more upfront when asked directly. They misinformed me on this and have had poor customer service on the follow up to get full disclosure.
I know each state has differing incentives for EV's but when I leased my Leaf in 2013 (in NJ) I received the federal tax credit of $7500 and paid no tax for the lease. The tax credit reduced my lease payments considerably. And if I wanted to purchase the vehicle at lease end (I didn't) the tax credit was already factored in to the residual value.
 
The lease vs buy topic also has another twist, depending upon market conditions in your area. I have talked to owners in Alabama who buy a new S every year or two and sell their old one within the state for more than they have in it. Making a profit on selling a used car is almost unheard-of (i.e., for someone who is not actually a used car dealer). I don't think you could pull this off with a lease. This might work for the Model 3 during the first few years of its production, when demand will outstrip supply.
 
I know each state has differing incentives for EV's but when I leased my Leaf in 2013 (in NJ) I received the federal tax credit of $7500 and paid no tax for the lease. The tax credit reduced my lease payments considerably. And if I wanted to purchase the vehicle at lease end (I didn't) the tax credit was already factored in to the residual value.
I had same experience with leasing a Leaf in AL. They took the federal incentive off the price & lease cost was based on the remainder (about $21 k, if remember).
 
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Got my VIN today. Exciting. Now on to the part where I have to confirm how I'd like to pay for this thing.

Is there anything binding about immediately completing Tesla's credit application for vehicle leasing/lending? I'd like to explore 3rd party loan providers (credit unions, etc.) but don't want to dead-end myself if there's something binding (or that otherwise forces my hand) in the Tesla application.

Thanks in advance all.
 
Got my VIN today. Exciting. Now on to the part where I have to confirm how I'd like to pay for this thing.

Is there anything binding about immediately completing Tesla's credit application for vehicle leasing/lending? I'd like to explore 3rd party loan providers (credit unions, etc.) but don't want to dead-end myself if there's something binding (or that otherwise forces my hand) in the Tesla application.

Thanks in advance all.

What? You talking about a Model 3? This doesn't seem right.
 
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