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Leasing / Lending Order of Operations

Discussion in 'Model S: Ordering, Production, Delivery' started by Jumper, Apr 19, 2016.

  1. Jumper

    Jumper Member

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    Got my VIN today. Exciting!!!

    Now on to the less exciting bit 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 completing the Tesla applications.

    Ideally, I'd like to get some offers as baselines in considering offers from other providers.

    Thanks in advance all!
     
  2. Eugene Ash

    Eugene Ash Member

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    In the same boat as you are. Got VIN, went through both leasing and financing application. there is nothing binding with these. The financing offers are valid for 30 days. Unfortunately, i'd have to wait more, it looks like. Did not have to sign anything yet, and was told by financing profressional, that will do that at the time of delivery.
    Do the homework. My homework led to elimination of Bank of America, as their lowest rates were higher than ones by Tesla's partners. Also, don't know about your trade-in situation, but it is worth listing your car now for a private party sale, as the trade in offer is likely to be low.
     
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  3. Jumper

    Jumper Member

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    Thanks for your perspective! Are you considering leasing at all? That has been my going-in plan given the rate at which the technology is evolving.

    Regarding trade-in: You're absolutely right. I was offered 16.5 for my loaded 2011 Audi A6 that I know Carmax would sell for around 25 or 26.

    Think. Think. Think.
     
  4. Eugene Ash

    Eugene Ash Member

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    I got the thinking jitters myself, but then an economist in me took over and i calculated pros and cons of leasing, namely it was ~13k more expensive than to finance. A lot of that has to do with 7.5 fed rebate, not being passed on to you when leasing.

    I'm coming from a 16kw i-miev, so battery technology was not a concern. Also 70D is plenty to go between superchargers, and with eventual Model 3 rollout there is going to be more of superchargers to support long travel. I'm fine with AP stuff, since it will make it less likely that i rear-end someone. So i'm fine with the current state of tech. For a large enough discount i may even bail on the deposit and still get a nose-coned one : ).

    Planning to keep it for the long haul. Nothing to rust, 2 drive units, battery is barely degrading, so thus financing makes sense for me, in the grand scheme of things of having to eventually put 2 boys through the college : )))
     
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  5. Jumper

    Jumper Member

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    Appreciate the thinking Eugene. Makes sense given your situation.

    I'm leaning lease because I honestly expect I'll want to dial in a Model 3 (or even a fully autonomous Model S) come Summer 2019. Our family of 5 owns a trusty 4 year old Honda Odyssey which we intend to run into the ground, so this will be the "other car" that is free to travel fewer miles.

    My wife has a business that she'll use the car for as well, so... that's a legitimate tax deduction from what I can tell.

    Fun stuff.
     
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  6. Eugene Ash

    Eugene Ash Member

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    Well, that is an important bit and changes everything! On my purchase price + tax, it made only a 3898$ difference, lease being more expensive over finance, IF getting 1/3 of lease payment amount deducted. Ask your CPA. 4k is a tiny price for optionality to switch in 3 years.

    Not sure if Odissey riders going want to continue riding that : ). Have you considered rear-facing seats to fit everyone in?
     
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  7. Jumper

    Jumper Member

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    Absolutely! Jump seats all the way!

    The Odyssey has actually been wonderful. Can't complain. Honda has a pretty solid ownership/maintenance experience, and the kids enjoy their comfy seats and occasional movies in back. Not TESLA nice... but happy with it! :D
     
  8. rcsting

    rcsting Member

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    Great information. I ordered my 70D yesterday and have decided to lease. The technology is improving so fast that its risky for me to buy it outright. Ive been watching Model S owners trying to sell their non Autopilot cars and taking a pretty large hit. It seems like most people want the latest tech.

    I have a feeling that at the end of my lease there will have been many more improvements. Just my opinion.
     
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  9. Chaz

    Chaz Big Kahuna

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    I'm not an expert, but I've been told that the $7.5k Federal tax credit is added to the residual value of the vehicle, so when determining your lease payment, it is theoretically lower than without the tax credit. An over-simplified equation would be (total purchase price - residual value - tax credit = amount of your lease divided by 36 months). However, residual value and the current money factor (lease version of an APR) are variable.

    Congrats to both of you on your upcoming deliveries!
     
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  10. Crazy Cabbie

    Crazy Cabbie New Member

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    If you finance, you still have the option to sell your car after 3 years...
     
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  11. eclipxe

    eclipxe Member

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    I'm leasing. In 3 years the AP tech will be next generation and who knows where prices will be. Same with Model 3. I bet it will eat into CPO prices.
     
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  12. Ojas Ray

    Ojas Ray Member

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    did you order your 70d with the upgraded sound package?
     
  13. rcsting

    rcsting Member

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    Yes I chose every option except for the Subzero and the rear facing seats.
     
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  14. SCDrJ

    SCDrJ Member

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    So the $7500 is added to the residual value?

    In my mind that means you only get the benefit of the credit if you turn the car in. If you buy it out, you end up paying that $7,500 to Tesla. Does that seem right?
     
  15. eclipxe

    eclipxe Member

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    You're getting the benefit of the credit each month of the lease. Without the credit you'd be paying for more depreciation up front (=higher lease payment)
     
  16. TaoJones

    TaoJones Beyond Driven

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    So the guaranteed resale value option is worth throwing into the mix if you don't plan to drive much in excess of 45,000 miles in 36-39 months. Caveats include having to use a Tesla banking partner.
     
  17. Chaz

    Chaz Big Kahuna

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    eclipxe is right, your monthly lease payment is lower (the higher the residual, the less you are "renting"). But you are also right about the buy out. You will (theoretically) have to pay $7500 more since the residual is higher than if there wasn't a tax credit. So if you lease, and the Federal Tax Credit is a factor, it doesn't make sense for most people to buy it out at 36 months.
     
  18. Chaz

    Chaz Big Kahuna

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    the guaranteed resale option at 36 months seems a bit like a lease. The difference being, you probably (not always the case) would spend more per month on a loan payment than a lease (+tax) per month. There are many variables, so you should do the math for each option, to include how much money you put down, interest rates/money factors, etc. to see what's best for you.

    Of note, if you like to put on a lot of aftermarket mods, than leasing may not be for you, especially if you cannot remove them at lease turn in and therefore just added to the total amount the car cost you.

    However, if you like to upgrade your cars often, want a lower monthly payment (usually) and do not want to deal with selling (or trading in) your old car, leasing may be for you.

    These are just my personal opinions based on my experiences, so please take care and do what makes sense for your situation. Cheers! :)
     
  19. SCDrJ

    SCDrJ Member

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    Ok, makes sense. I was hopeful that the tax credit was removed as a cap cost reduction, but rather it is added to residual. Either method reduces the monthly payment by a roughly similar amount, as you both have said. But... if you were to consider keeping the car, then you lose that benefit as it's still hidden in the residual value. I was hoping to have the keep/turn in choice at the end of 3 years, but that's a lot of cash to leave on the table if you wanted to hold the car more than 36mo.
     
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  20. ChadFeldheimer

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    At the end of leases, I suspect the bank and/or Tesla will offer to sell the car to you for less than the (inflated) residual. They will make more money that way.

    It may or may not be enough of a discount to recover the full $7500 tax credit.

    As for me, I'll be tossing the keys back to US Bank/Tesla and looking forward to the latest and greatest autopilot.

    Another reason is if you suspect the (pre-inflated) residual is on the optimistic side. Part of a (closed end) lease is the right to sell the car at the end of the lease term for a predetermined price. 3 year old Model S's are in relatively short supply now - and that supply is set to grow as the existing population ages.
     
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