Leasing Help

[BMWY]

Hi everyone, as a longtime leaser of cars, I'm having a hard time wrapping my head around Tesla's paradigm here. I ordered an MYP and when I price out the 36 month lease versus the 72 month finance, the lease comes out to essentially the same payment, maybe a few dollars less at most. I'm kind of shellshocked by this, as I always thought that the main benefit of leases was the lower payment, but that doesn't seem to be the case here.

Is this normal for Tesla? I'm actually contemplating a finance now, but I just want to make sure that the calculator isn't broken or something.

TIA

 

[BreatheEasier]

I was in the same boat, which is why I didn't lease. I leased BMWs and I feel they have the best lease program available, and with great residuals, and I go zero down, 36 mo, 15K leases, my payment was less than what I would have had with a simliar zero-down finance payment. Zero down with Tesla puts my lease payment at the same as finance, so I went the finance route. I don't have any concerns about selling my MY in the future, so I wasn't that concerned as I would be with BMW, where the real-world resale of a 3-yr old X5 with 40K+ miles was astonishingly low compared to the residual from my lease.

 

[CapeOne]

Hi everyone, as a longtime leaser of cars, I'm having a hard time wrapping my head around Tesla's paradigm here. I ordered an MYP and when I price out the 36 month lease versus the 72 month finance, the lease comes out to essentially the same payment, maybe a few dollars less at most. I'm kind of shellshocked by this, as I always thought that the main benefit of leases was the lower payment, but that doesn't seem to be the case here.

Is this normal for Tesla? I'm actually contemplating a finance now, but I just want to make sure that the calculator isn't broken or something.

I am seeing a bigger difference between the lease and buy payments than you seem to be.

Lease on 2021 Tesla MY Performance
MSRP $62,190
Down payment = $4,330 ($3,635 + $695 acquisition fee)
10k miles/year
36 months lease = $719/month

Finance on same with same down payment
MSRP $62,190
Down payment = $4,330
72 months financing at 2.49% APR = $866/month


This difference is fairly comparable to a BMW X3 M40i

Lease on 2021 X3 M40i
MSRP $61,745
Down payment = $4,330 ($3,405 + $925 acquisition fee)
Includes $1,250 lease credit/rebate
10k miles/year
36 months lease = $669/month

Finance on same with same down payment
MSRP $61,745
Down payment = $4,330 plus $2,500 finance credit/rebate
72 months financing at 2.79% APR = $829/month


BMW lease payment is ~81% of finance payment
Tesla lease payment is ~83% of finance payment

 

[z335is]

one thing I’ve quickly learned is that Tesla leases are the worst in the industry. I can’t believe they can get away with some of these numbers.

 

[blinkme323]

I am seeing a bigger difference between the lease and buy payments than you seem to be.

Lease on 2021 Tesla MY Performance
MSRP $62,190
Down payment = $4,330 ($3,635 + $695 acquisition fee)
10k miles/year
36 months lease = $719/month

Finance on same with same down payment
MSRP $62,190
Down payment = $4,330
72 months financing at 2.49% APR = $866/month


This difference is fairly comparable to a BMW X3 M40i

Lease on 2021 X3 M40i
MSRP $61,745
Down payment = $4,330 ($3,405 + $925 acquisition fee)
Includes $1,250 lease credit/rebate
10k miles/year
36 months lease = $669/month

Finance on same with same down payment
MSRP $61,745
Down payment = $4,330 plus $2,500 finance credit/rebate
72 months financing at 2.79% APR = $829/month


BMW lease payment is ~81% of finance payment
Tesla lease payment is ~83% of finance payment

You’re forgetting one big difference - you can negotiate the price on BMWs (and any other car really).

I had a lease deal lined up for a loaded 81k X3M that was still cheaper than what it would cost to lease a 65k MYP.

I’m still going with the Tesla, but it will be a finance for sure.

 

[BreatheEasier]

You’re forgetting one big difference - you can negotiate the price on BMWs (and any other car really).

I had a lease deal lined up for a loaded 81k X3M that was still cheaper than what it would cost to lease a 65k MYP.

I’m still going with the Tesla, but it will be a finance for sure.

Precisely. My $74K sticker 2017 X5 xdrive40e was $62K after negotiations, which also included a reduction in MF, plus a discount on excess miles. And I always put zero down on a lease. If you get in an accident with your lease that results in a total loss, you don't get your down-payment back. I also don't know if Tesla leases have GAP insurance built in. If not, you'll need to pay for that unless you want to owe money to Tesla if you have an accident that results a total loss. BMW leases have GAP insurance built-in. I'm also comparing zero-down leases with zero-down financing. With BMW, I could always wind up with a lower monthly lease payment after negotiations than I could with financing. Could simply be unique to BMW, as I have never leased with a vehicle with another manufacturer.

 

[CapeOne]

You’re forgetting one big difference - you can negotiate the price on BMWs (and any other car really).

I had a lease deal lined up for a loaded 81k X3M that was still cheaper than what it would cost to lease a 65k MYP.

I’m still going with the Tesla, but it will be a finance for sure.

I didn't "forget." My comparison between Tesla and BMW was about percentage/ratio differences between each one's lease and finance payments and not which model had lower payments. Yes, you can negotiate purchase and lease pricing on BMWs and most other vehicles.

It is also possible to get discounts on new existing inventory Teslas e.g., below is a 2021 MY Performance with a $4k discount which would result in lower lease and finance payments versus paying full retail.
2021 Model Y | Tesla

 

[blinkme323]

I didn't "forget." My comparison between Tesla and BMW was about percentage/ratio differences between each one's lease and finance payments and not which model had lower payments. Yes, you can negotiate purchase and lease pricing on BMWs and most other vehicles.

It is also possible to get discounts on new existing inventory Teslas e.g., below is a 2021 MY Performance with a $4k discount which would result in lower lease and finance payments versus paying full retail.
2021 Model Y | Tesla

Oh agreed. I’m simply stating that it is a flawed comparison since almost no one pays sticker on a BMW while almost everyone pays sticker on a Tesla. Therefore, the usual ratios and comparative factors are essentially moot.

 

[UT4EVER]

one thing I’ve quickly learned is that Tesla leases are the worst in the industry. I can’t believe they can get away with some of these numbers.

Do you care to elaborate? I purchased a MYP in August and I just leased a MY LR for my wife last Friday. The terms we got were better than the Land Rover that we just turned in and much better than the BMW X5 before that. I paid $0 down toward CCR (only paid taxes, registration, etc) and elected 15k miles for 36 months. My payment is $723 and I got Red exterior ($2k), white interior ($1k), and induction wheels ($2k). What comparable car can you get with better terms? I’m very satisfied with my Tesla lease.

 

[z335is]

Do you care to elaborate? I purchased a MYP in August and I just leased a MY LR for my wife last Friday. The terms we got were better than the Land Rover that we just turned in and much better than the BMW X5 before that. I paid $0 down toward CCR (only paid taxes, registration, etc) and elected 15k miles for 36 months. My payment is $723 and I got Red exterior ($2k), white interior ($1k), and induction wheels ($2k). What comparable car can you get with better terms? I’m very satisfied with my Tesla lease.

Sure I'd love to. First off, you mention Land Rover, which are also bottom of the barrel for leasing due to their horrible residual value, so I'm throwing that right out the window

As for why Tesla is bad? It's a litany of things really, but I'll start with the fact that they only offer closed-end leases, which is almost unheard of anywhere else and hamstrings your options throughout the term. Next, you have the effective interest rate. When you abstract the base MF that Tesla offers, it comes out to be tick over 5% interest over the life of the loan. Compare that against the interest rates that you'd get for a comparable finance and well, enough said there really. Lastly, the residual they offer is well below the 3yr residual value that the M3 has shown. However, I will couch that statement by also saying that the residual values on the M3 that we are seeing after 3 years is almost unheard of in the industry, so I will give them some leeway there.

At the end of the day though, and I say this with great sincerity, it all comes down to whatever makes you happy. If you or anyone is happy in their lease, then that's all that matters. I'm just some guy barking down an alleyway

 

[CapeOne]

Oh agreed. I’m simply stating that it is a flawed comparison since almost no one pays sticker on a BMW while almost everyone pays sticker on a Tesla. Therefore, the usual ratios and comparative factors are essentially moot.

Again, the purpose of my comparison to BMW was not to show what the specific BMW payments were compared to the Tesla payments but rather to show that the percentage of the Tesla lease versus Tesla finance payment ($719 / $866 or 83%) was similar to the percentage of the BMW lease versus BMW finance payment ($669 / $829 or 81%).

The fact that you can negotiate the BMW price lower and therefore lower both the lease and finance payment doesn't necessarily change the lease to finance payment percentage e.g., an additional $4k off the BMW may lower its monthly lease payment to $621 and monthly finance payment to $769 but the lease payments is still 81% of the finance payment (as in my original example) and still similar to the Tesla’s 83%.

The OP had stated that by their calculations, the Tesla lease and finance payments were essentially the same. I was pointing out that by my calculations they weren’t “essentially the same” and on top of that, the difference between Tesla’s lease and finance payments were fairly similar to the difference between a BMW X3 M40i’s lease and finance payments. The ability to negotiate on the BMW does not make the purpose of my comparison “flawed" or "moot.”

 

[UT4EVER]

Sure I'd love to. First off, you mention Land Rover, which are also bottom of the barrel for leasing due to their horrible residual value, so I'm throwing that right out the window

As for why Tesla is bad? It's a litany of things really, but I'll start with the fact that they only offer closed-end leases, which is almost unheard of anywhere else and hamstrings your options throughout the term. Next, you have the effective interest rate. When you abstract the base MF that Tesla offers, it comes out to be tick over 5% interest over the life of the loan. Compare that against the interest rates that you'd get for a comparable finance and well, enough said there really. Lastly, the residual they offer is well below the 3yr residual value that the M3 has shown. However, I will couch that statement by also saying that the residual values on the M3 that we are seeing after 3 years is almost unheard of in the industry, so I will give them some leeway there.

At the end of the day though, and I say this with great sincerity, it all comes down to whatever makes you happy. If you or anyone is happy in their lease, then that's all that matters. I'm just some guy barking down an alleyway

I guess we are evaluating from different perspectives. I am considering the Tesla MY terms vs other vehicles I could get for similar terms (payment, down payment, annual miles). SO, I believe we could both be correct. In my humble opinion, I could not get a comparable vehicle at these terms for $723 per month. $723 per month ($0 down and 15k miles) is a steal for this car in my eyes...... You cannot lease a Chevy Tahoe for $723 per month

 

[CapeOne]

You cannot lease a Chevy Tahoe for $723 per month

Sure you can. A new 2021 Chevrolet Tahoe could be had for even less than $723/month on a 36 months / 15k miles per year lease with $0 down. It would also be a much larger vehicle but that's a separate discussion. If you're comparing against Chevrolet, a Traverse (if one needs up to 7 passenger seating) or one of the other Chevrolet SUVs is more comparable as far as size and would be available for much less.

 

[UT4EVER]

Sure you can. A new 2021 Chevrolet Tahoe could be had for even less than $723/month on a 36 months / 15k miles per year lease with $0 down. It would also be a much larger vehicle but that's a separate discussion. If you're comparing against Chevrolet, a Traverse (if one needs up to 7 passenger seating) or one of the other Chevrolet SUVs is more comparable as far as size and would be available for much less.

Yeah I was kinda being sarcastic about the Tahoe. And a Traverse may be similar in size but that‘s about the only thing comparable to the MY. I believe that cars like the BMW X3, Audi Q7, Volvo XC90, etc are more realistic comparisons based on size, quality, and MSRP. But I still believe that the MY LR is still a better vehicle than any of these..... Just my opinion of course.

 

[blinkme323]

The lease terms may also be different for the lower trim models. A zero down, 10k mile lease on my MYP was going to cost me the same as a zero down 72 month finance at 1.99%

Also, IIRC the standard lease interest rate (MF) for Tesla is 5.15%