Leasing Model 3 in Ontario

[pmich80]

I've been trying to figure out how the leasing works for in Ontario with the Tax credit. From what I've read, the tax credit is applied to the residual value of the car by the leasing company and the tax credit is essentially applied to lowering your monthly payments across the length of the term. Is that correct?

An example is car is $60,000 with a residual value of $29,000 after a 3 year term (based on .48% residual value).
Normally the lessee would be on the hook for $31,000 + interest over the course of the lease but with this tax credit of $14,000 the residual value is bumped up to $43,000.00 Therefore the lessee would be on the hook for only $17,000?

Essentially the $14,000 lowers the monthly payments by $389 monthly for the a 3 year lease? (14,000 / 36 months)

MSRP = $60,000
Minus Residual =29,000
Minus Tax Credit = 14,000
Balance owed = 17,000 (over length of term).

This is all without a down payment (not that i'd put much done since i'm leasing. No point..better off getting Gap insurance).

 

[Jgdixon]

You are confusing things with the U.S. Lease
Here you would have to wait a month or 2 for the rebate.
The best way is to reduce the price of the vehicle with a down payment.
The residual will always be based on the price of the car and should have no bearing on whether there is a tax rebate

 

[pmich80]

You are confusing things with the U.S. Lease
Here you would have to wait a month or 2 for the rebate.
The best way is to reduce the price of the vehicle with a down payment.
The residual will always be based on the price of the car and should have no bearing on whether there is a tax rebate

So I get the rebate even though I do not own the car? (the leasing company does).

So essentially I could put down a payment of $14,000 out of my own pocket and have low monthly payments and then a cheque rebate would arrive to cover the down payment?

 

[Jgdixon]

So I get the rebate even though I do not own the car? (the leasing company does).

So essentially I could put down a payment of $14,000 out of my own pocket and have low monthly payments and then a cheque rebate would arrive to cover the down payment?

Yes that is correct. I have leased twice and got the rebate as the lessee.
You have to be careful though with a large down payment. It will reduce your payment dramatically and you will need a similar down payment next time if you decide to lease again.

 

[pmich80]

Yes that is correct. I have leased twice and got the rebate as the lessee.
You have to be careful though with a large down payment. It will reduce your payment dramatically and you will need a similar down payment next time if you decide to lease again.

That's fine. I could always set aside the 14K rebate and use those funds to help with the monthly payment if i decided not to put a large down payment and still with a 700-800 monthly payment.. It just seemed simplier the initial way. So it only took 2 months for the cheque to arrive. That's pretty ideal.

The one caveat of a large down payment on a lease is the risk of losing it in case of an accident from what I've read.

 

[Jgdixon]

That's fine. I could always set aside the 14K rebate and use those funds to help with the monthly payment if i decided not to put a large down payment and still with a 700-800 monthly payment.. It just seemed simplier the initial way. So it only took 2 months for the cheque to arrive. That's pretty ideal.

The one caveat of a large down payment on a lease is the risk of losing it in case of an accident from what I've read.

That is not true. The insurance company insures your car and the settlement is based on the depreciated value, down payment has no bearing. You can also insure for replacement value for very little added cost.

 

[pmich80]

I heard that you could possibly not get your down payment back on a lease in case of an accident since the insurance company will only pay the depreciated value.

Thanks for your help by the way.

 

[hingisfan]

I'm not sure on this either....I always thought on a lease in a write-off situation, insurance would just pay what you still owe so you can essentially walk away from the remainder of the lease.

 

[pmich80]

I'm not sure on this either....I always thought on a lease in a write-off situation, insurance would just pay what you still owe so you can essentially walk away from the remainder of the lease.

That's what i think too but then you lose your initial Down payment. So it's better to keep it low on a lease for that reason. You won't get it back.

 

[Jgdixon]

That's what i think too but then you lose your initial Down payment. So it's better to keep it low on a lease for that reason. You won't get it back.

A lease is treated no differently than a loan. You can buy waiver of depreciation coverage but if not the settlement value is compared to the amount owed.