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Leasing inventory cars

Discussion in 'Model S: Ordering, Production, Delivery' started by rycelover, Mar 6, 2015.

  1. rycelover

    rycelover Member

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    From what I understand, since you are eligible for a $7500 fed tax credit when purchasing an inventory car, and there's an original factory warranty, and for all intents and purposes it's treated as a new car purchase, can we lease it through Tesla?
     
  2. 647chang

    647chang Member

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  3. arijaycomet

    arijaycomet Member

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    Yes you can lease inventory cars that are being sold as new. You cannot lease CPO (Certified pre-owned) cars, however. Just keep in mind that Inventory cars are only going to benefit you with the $7500 tax credit if you PURCHASE. When you lease, the first owner is the bank, and they get the tax credit. However, that $7500 then reduces your monthly payment.

    What this means is that a car that was going to cost let's just say $900/mo with down payments due, the payment gets reduced by the discount. So a car that is discounted $7200 is going to save you around $200/mo. As such there are cars that pop up that could be leased for as low as $600/mo if you wanted to find a rather "base" 60 kWh vehicle. So, if your goal is a low payment, and you have the cash to make the down payment on the lease ($6-7k typically), inventory cars are a GREAT option!
     
  4. Karma

    Karma Member

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    You don't get the credit when you Lease the car.
    It's factored into your overall leasing, but that money isn't coming to you under any real circumstances. You do not get the tax credit. The finance company does.

    I know...I leased an inventory car and spent some serious time looking into this very issue.
     
  5. krisg81

    krisg81 Member

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    It's a piece of depreciating technology, not just a car anymore.

    leasing protects you from the next big thing killing resale value

    leasing allows you to not pay all sales tax up front, which is great if not keeping the car long term.

    you can always buy out the lease early at any time, which is based on depreciation just like a purchase. If you are a business owner you get better tax incentives.

    always get an inventory car IMO. My P85D I'm getting next week has 65 miles on it, $131K sticker, and $9900 discount, $121K.

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    By the way I leased my P85 6 months ago, and they are terminating early and rolling $8k of equity into new P85D lease. Had I purchased, I wouldn't have had equity because of all the sales tax I'd have paid. Win for lease, again.
     
  6. MsElectric

    MsElectric Active Member

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    I agree with everything you said except buying the car off lease. They've structured the residual value in a horrible way making it not at all attractive to purchase the car at the end of the lease period. Rather than apply the $7,500 rebate to the capital cost of the car as they should, they basically add that to the residual value. So it is good in that it helps reduce your lease payment but bad if you have any thoughts about buying the car at the end of the lease period.

    IMHO what is fair is to apply the $7,500 credit to the actual cost of the car, as Tesla shows on their own order page. This is not what they are doing now as the leases are structured for Tesla to get the car back at the end of the lease and make it financially disadvantageous to consider buying the car at the end of the lease period.

    The only reason I am considering the lease option is because as a business owner I get a great tax incentive by being able to write off most of the lease payment. I'd never be considering leasing otherwise. I mentioned this on another recent thread but the one thing you have to watch out for when leasing an inventory vehicle is that you are not paying for options that have no value to you. Between 21" wheels, the Executive Rear Seat, and the Premium Interior, you are already in $10,000 worth of options you may not need so even with a $10K discount, you are back where you started so if you are leasing an inventory car be careful to not overpay by paying for options you don't want.

     
  7. krisg81

    krisg81 Member

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    Yep. I wouldn't lease unless it was for business so can take advantage of Section 179 small business deductions

    whats wrong with adding the rebate to the residual value? This way the savings was spread out through the course of the lease any way. No big deal.

    as for inventory cars, just be patient and find one that has the options you want. Or just use the discount in a way thinking you are getting free "nice to have, but would never pay for" options. Either way you have that discount as equity going into the deal, I'd never order a new car since my inventory deals have been almost $10K each time, and I don't wait for the production time. I also get to test drive before putting a deposit down like a regular dealership vehicle purchase.



     
  8. MsElectric

    MsElectric Active Member

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    #8 MsElectric, Mar 15, 2015
    Last edited: Mar 15, 2015
    What's wrong about adding the rebate to the residual value is that it makes it financially absurd to consider buying the car at the end of the lease period. They should have applied it to the capital cost of the vehicle so if you decide to buy the car you are leasing you get the benefit of the $7,500. As it is they take away that $7,500 from you if you decide to buy the car you've driven the last 3 years. Not good.

    I completely agree with you about "nice to have" options but there are some options that may have absolutely no value to anyone. We live in New York and you could not pay me to drive on delicate 21" wheels as they'll never survive our badly maintained roads so that $4,500 option is worthless to me. So is the $2,000 Executive Seat option. I personally also don't care for the spoiler that is not painted the same body color of the car or see $3,500 of value for the premium interior package.

    Assuming the goal in purchasing an inventory vehicle is to save money, this is why I pointed out you have to be careful of buying an inventory car. If that car has over $10,000 worth of options that have absolutely no value for you, a $10,00 inventory discount is meaningless as you are essentially paying more than buying a new car.

    As I've suggested earlier if you are buying an inventory car, first spec the car you want to buy with the options that are of value to you. Then find an inventory car that matches what you want as close as possible that costs at least $5-10K less than what you would have paid had you bought a new car.

    It is amusing that a bunch of inventory car options I've been presented with would have cost more to buy than just buying the car I want new with the options I wanted. Just be careful and don't get caught up with the "discount figure" without taking into consideration which options are actually of value to you. So far I have been presented with 4 P85Ds and they've all had about $10,000 worth of options that I find absolutely no value in or use for. I'm holding out for one with just Tech, Pano, Air, sound, and Next Gen seats but with as few other options I don't need as possible.

     
  9. Cyclone

    Cyclone Active Member

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    This is why I have turned down some nicely priced inventory cars, b/c they weren't nicely priced to my specs. I am looking for 19" wheels, standard stereo, standard interior. $4,500 for 21" wheels, $2,500 for the ultra stereo, and $3,500 for the upgraded interior makes the starting price $8,500 higher than I would start with when ordering new. Now, inventory cars can also be found without these, so I'm being patient.
     
  10. krisg81

    krisg81 Member

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    If you do buy the car at the end of the lease, you then qualify for the $7500 rebate on the purchase I've been told. You may want to clarify with Tesla about that.




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    Trust me be patient and wait for the right car to come along, it's worth it.

    Also just because it has more options than u wanted still makes it a great deal as the car is worth more right upon delivery.
     
  11. rycelover

    rycelover Member

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    If what you say is correct, and I qualify for the $7500 rebate if I decide to purchase at the end of the lease, then that's a pretty good deal, although I would have rather taken it at the front end, because by that time something else will have tempted me to switch cars.
     
  12. cgiGuy

    cgiGuy Member

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    Yes, please do check with Tesla and your tax advisor, because this is inaccurate. You would be the second owner in this situation (the "bank" or Tesla Motors being the first) and would not qualify. This is why Nissan Leaf leases are so attractive--you can practically get a free car after you factor in gas savings. That's because they reduce the the initial lease price by $7500.

    Tesla is taking the $7500 credit and "may" be passing some of that along to the lessee. How much, however, has yet to be determined. And some think it's "zero." See: http://www.teslamotorsclub.com/showthread.php/38304-New-Leasing-Details
     
  13. bonaire

    bonaire Active Member

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    Legally, the tax credit is subject to the year the car was put in service. Leasing is longer than 1 year in length, so no.

    The bank has full rights to take the tax credit and one Vin # per Tax Credit is all that can be posted for that Vin #. Now, if you get really sneaky - some orders today started out with one Vin # and switched to another Vin # - wonder if someone will take "both" on the sly? Bank or person, there is potential for that trouble.

    Also, the IRS must have record of proper Vin # style. The 'P' that was recently removed from Tesla Vin #s needs to be accounted for at the IRS.
     
  14. MsElectric

    MsElectric Active Member

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    If you decide to keep the car you are leasing after 3 years you do not get the benefit of the $7,500 rebate. This is absolute fact, as I've gone through all the fine print very carefully. The only reason I am still considering this option is because I can use the lease payments as a tax deduction.

    Tesla inflates the lease residual by $7,500 just so that it makes no financial sense for you to purchase the car at the end of the lease (e.e. you will be able to buy a used Model S with similar features for less). They are basically looking to keep the $7,500 and the car at the end of the lease period so they can turn the car around and sell it as a CPO at a nice profit :)
     
  15. krisg81

    krisg81 Member

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    I am not really sure, but either way- using Section 179 credits because the car is leased under my business makes much more sense than a purchase using personal credit. My CPA told me all about this and many of her clients doing this. If this is a personal purchase or lease, I can see why leasing doesn't make sense- but coming from a guy who needs all the tax deductions as possible makes leasing this car a no brainer. Plus I am protected in the event of a massive drop in depreciation from Elon revealing some kind of big upgrade on the Model S. Just a safety net for expensive emerging technology with a degrading battery for me.
     

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