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Leasing/Buying? Lease Buy Out?

Discussion in 'Model S: Ordering, Production, Delivery' started by diver110, Sep 25, 2019.

  1. diver110

    diver110 Member

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    It is, on a monthly basis, cheaper to lease than to buy. But, of course, at some point the lease expires, and you either have to turn the car back in or buy out the lease. But the buy out numbers I have seen have been crazy high, on the order of $80,000 for a car that might sell in the used market for $50,000-$60,000. So, if you still liked that particular model, it would make more sense to turn it in and buy it again. If you lease, you might spend $40,000 to own the car for 3 years. Not exactly chump change, but you never have to worry about repairs or paying for supercharging. And you can upgrade in 3 years, and I assume there will still be substantial changes going forward. Agree/disagree? Am I missing something?
     
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  2. ewoodrick

    ewoodrick Well-Known Member

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    It is never cheaper to lease than to buy. You are probably thinking that the monthly payments are less, but then again at the end of the lease, you have $0 investment.

    It's actually a lot more expensive to lease than to buy. Using simple mathematics. When you own, you pay $X for the car.
    When you lease, the leasing company pays $S for the car and then adds a fee for it's profit. If you buy it out, the buyout and total of monthly lease payments is $X+ $$

    If you are going to buyout a car, it definitely makes more sense to purchase at the beginning.
     
  3. Petrocelli

    Petrocelli Member

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    Tesla's leases are absolutely terrible. I ran a lot of numbers. It makes much, much more sense to buy any Tesla.

    For other cars, I figure there is about a 15% premium to lease than buy. But you get a new car every three years, and you never have a car out of warranty.
     
  4. Green_Light

    Green_Light Member

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    If you plan to owe a car for just 3 years, would you buy or lease Raven P100D?

    Depreciation on this car is going to be HUGE, since Plaid drivetrain and other carmakers are coming out...
     
  5. diver110

    diver110 Member

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    Green Light's point is what worries me. Like P said, the leases are terrible, but a bit less risk, and with all the improvements likely to be forthcoming, depreciation could be a big number. Of course, if I was going to keep the car 10 years, buying is the way to go, and the only way I have gone in the past. But with electric cars, I wonder.
     
  6. TLej

    TLej Little-Known Member

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    I leased my S almost 4 years ago. My lease is up in December, and I'm trying to figure out what to do about it, but here are some real numbers.

    I 2015, my car was about $116,000 (CDN). My lease is $1600/month, plus I put down some cash, don't recall how much, assume $7500 including first payment. Over 4 years I will have paid about $76,800 for my lease. My residual is $51,000 (CDN). If I decide to buy it out, maybe I finance that $51k over another 4 years. In total I will have paid around $130-something-thousand over 8 years to own the car, compared to the original $116k purchase price. Not a great deal.

    However, if I decide to turn it in and get a new S and assume a similar lease, then after 8 years of "ownership" I will have paid around $150k, which is even more absurd considering I still won't own anything at the end of that lease.

    The current closest equivalent to my 90D is a Long Range S. Here's the progress Tesla has made in the past 4 years:
    - LR has about 150km more range than my S
    - it costs about $10k less than my S did 4 years ago
    - my S has coil suspension, new ones are air (not sure if this is a pro or a con but I read good things about the new suspension)
    - my S has a solid metal roof, new ones are glass (again, not sure if this is a good thing as I like my roof)
    - my S: no Autopilot. New S: standard Autopilot (equivalent to what my AP1 is/would be capable of)
    - my S: 2 cameras, HW1, never going to drive itself. New S: many cameras, HW3, maybe self-driving one day? I won't pay for FSD up front but if they ever get it working would add it on in a heartbeat
    - MCU1 vs MCU2 is a big difference in responsiveness, although my screen has not yellowed and the new ones seem to have an issue
    - new cars Supercharge much faster

    There are probably more things that I've overlooked (just remembered, I have cloth seats vs new leather-ish seats), but I think you get the idea that there have been some big changes in the last 4 years. Is the pace of change slowing, or accelerating? What would that mean to re-sale? I live in a part of the world where there is not a big market for used Teslas, so if I owned mine, how hard would it be for me to sell privately vs. just giving my car back to Tesla? Will any other manufacturer have a more reasonably-priced alternative that is as good or nearly so, in the next three to four years? These are things that have me leaning towards another lease, even though it is probably not the smartest financially.

    I love my car - I have had no problems with it, it's the first car I have ever ordered customized to my preferences, and I truly don't see most of the progress as progress. I prefer my dumb cruise control that just holds the speed I tell it to (no phantom braking), I love driving my car and I'm not interested in anything less than full level 5 autonomy, I like a roof that doesn't make my head hot in the summer and cold in the winter, so I'm really having trouble thinking of turning it in but the idea of continuing to pay for a car that gets more outdated by the day is unappealing. Sure, compared to 80% of the cars out there my old S is still a wonder of technology, but that technology keeps showing up in cars at lower and lower price points, so in 4 more years is even the most basic Honda going to have features similar to or better than what my car has, and if so what's the value of my car going to be? Scorching acceleration, decent range, a comfortable ride, all things that aren't going to change, but I honestly don't know what the value of a Tesla totally out of warranty (after 8 years) will be, and I'm not sure I'm ready to find out yet.

    No idea if this helps you, but it kind of helps me getting it all written out. TL;DR, leasing an S is a terrible idea financially but lower-risk while the industry remains in flux, in my opinion.
     
  7. diver110

    diver110 Member

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    Thanks for the feedback. Tlej’s comments are what have also been going through my head.
     
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  8. _jal_

    _jal_ Member

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    fwiw, my lease is up in a couple months and I'm buying a MS LR to replace it. I told people "I don't want to own this thing!" when I got it because I didn't want to be burned on the downside. But the lease is REALLY expensive. The $7,500 down payment alone can easily get lost in the shuffle. I've got a real Frankenstein - AP2.0, RWD, MCU1, springs, 60 upgraded to 75 - but resale is still fine from what I can gather from looking at listings. It's not a huge difference from what I can calculate, but it still would have been cheaper to buy by maybe 10% - maybe more. Also, I know I limited my driving because of going over lease (which I have already done by 3,000 miles)

    The new cars are really solid from a spec perspective. I'm going to miss my sunroof, but it is starting to leak which I guess happens to a lot of them. But the new range is really extraordinary and I think the air suspension is really a big improvement. I have driven one and I really liked it a lot more than the springs. Nicer seats too and some other improvements and what @TLej enumerated above. A lot of those features have gone from being OK to being a lot more mature. (My current headrests aren't adjustable, vanity mirrors aren't lighted, eg)

    Though the top of the line model is going to be better in 3 years with plaid, etc. I don't think that is going to diminish the value of the current cars that much. They're good in and of themselves. I think the 3 is a safer bet because the S is a bit long in the tooth in some areas like battery cell technology, but it's hardly a disaster. I still get a lot of looks in mine. Lastly, it's a luxury car. They're all suckers' bets! That's why we *lease* a Subaru too :D (That's another great car!) But that's a "normal" lease of a "normal" car that is very competitive.
     
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  9. TLej

    TLej Little-Known Member

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    My last car before my S was an Outback. :) An EV Outback with 600km of range would be my perfect car.
     
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  10. diver110

    diver110 Member

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    I actually think the premium TLej paid for leasing versus owning to be worth it, given the relative risks at the time he bought it. In the US, if he has, say, 50,000 miles on it, it looks like he could turn the car in and buy about the same car privately for around $45,000, more from Tesla, but then it would come with an extended warranty. (Bit of guess on the private price. I looked at sold cars on Ebaymotors, but there was no clear match--one with about 28,000 miles went for about $50,000.) After sales taxes and fees, probably pretty much the same as the buy out price, BUT for not a lot more money he could get a car that was newer, with fewer miles. Also, more and more companies are coming out with electric cars. Both VW and Daimler has said they are moving away from ICEs. So I could see a Tesla dropping more in price in the future than in the past. All of that said, the new S's have impressive range, and I am not the first one to note that more range might not be that valuable to most people. So maybe the S has gotten to a point where future improvements may not be that dramatic....
     
  11. JPoldo

    JPoldo Member

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    I have a 3 year lease on a ms with only 10 months remaining. Leasing has no impact service as you are still responsible for out of warranty repairs as well as normal wear and tear. My only expense through two years has been tire rotation & balancing. Reliability has been excellent.

    If the vehicle is used at your business, the lease payments are tax deductible. I'm an engineer who loves new technology so getting a new vehicle every 3 years is a big perk. Also, leasing allows me to keep funds in the business and eliminates the big cash outlay required for a purchase. Of course, financing does the same. However, leasing is bad if you drive much greater than average. Buying at end of lease usually is a bad deal.

    Hopefully Daimler, BMW, or Porsche has a competing luxury sedan to consider in 2020. But Tesla's supercharger network is a big advantage over the competition.
     
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  12. brkaus

    brkaus Well-Known Member

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    Different states have different tax implications on leases. Some pay tax on the entire value at purchase, some pay tax on the payments. It makes a big difference.
     
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  13. rory breaker

    rory breaker Member

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    I want a different car every 2/3 years, so I lease. It’s hassle free, carries zero risk, just hand the keys in, buh bye, and hello new car.
    Especially with a Tesla...I’m on my 2nd, and can’t see anyone legitimately competing with the car until after my 3rd.

    If you are talking 2/3yrs of ownership, generally speaking, leasing makes sense. Slightly more expensive usually but time = money and it’s way less time. Only you can do the math for your own situation, for me, it’s a no brainer with Tesla. Hand keys in, get in new car, drive away.

    However my current plan is to trade this in for a plaid car when they are released in 20/21 so what do I know :)
     
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  14. TLej

    TLej Little-Known Member

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    @rory breaker What has your experience been like with regards to wear and tear items when you go to turn your car in? Not having been through it myself, I'm not sure what to expect but if they're going to ding me like $10k for a couple of small rock chips on the hood and a scuffed rim then I will probably buy mine out. I talked to someone at Tesla and they said they'll send me a self-inspection form to do and send back to them, that makes it seem like I won't know what (if anything) they're charging me for until after I've already turned the car back in to them.
     
  15. _jal_

    _jal_ Member

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    I just did my inspection via AutoVIN (that's how they handled my lease inspection). I got dinged $125 for a little (1.25" by their measure) curb rash on a rim. The car was perfect otherwise. I've never paid anything on prior leases. In fact, Subaru gave us a $1,500 credit toward damage! And then they paid the first month's lease for us on our new one! So I don't find them competitive vis a vis other companies I've leased with, but I didn't find it really punitive.
     
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  16. AMPd

    AMPd Active Member

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    Interesting, I returned my vehicle and there was no inspection. I scheduled the appointment, arrived at the service center, gave them the key fobs and they gave me a receipt and an employee came out to look at the car and I was on my way.
    I had curb rash on all the wheels and didn’t get charged for any. And the curb rash on some was pretty bad, like all around the wheel.
     
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  17. _jal_

    _jal_ Member

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    Northern California. They let you put ketchup on your hotdogs too. Basically anarchists
     
  18. AMPd

    AMPd Active Member

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    Ketchup on a hot dog?
    Hey man I’m about as masochistic as they come, but even I won’t do that!

    Or would I? :rolleyes:
     
  19. rory breaker

    rory breaker Member

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    Hahaha NorCal indeed, gotta love it. I turned mine in 2 months ago, almost....haven’t gotten a bill yet haven’t gotten any notice of any charges. Hope it stays that way!
     
  20. _jal_

    _jal_ Member

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    FWIW, I got my new MS Friday and it’s terrific. HUGE improvement over the 2016 75. They’ve definitely gotten better at making cars, the base trim w suspension etc is way better, and the power is out of control. No swag though :( I leased almost the cheapest S I could and got a tote bag, pen, coffee cup, umbrella, and a sign that said “Congratulations on your Tesla!” or whatever. :cool: This time I turn the keys in and ask the guy if it matters that only one key has the rubber band key ring thing for the fob (cuz I’d taken it off to make it easier to fit in my pocket) and he’s like “Oh. Keep that. Oh. Keep that. They don’t make those anymore.”
     
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