Leasing Thoughts

[silentrider21]

Just want to get a general sense of what people think about leasing the car. If you are currently leasing a model 3, I would love to hear how you like it so far. I just graduated college and not sure if I am ready to commit to a car for 72 months (especially with the way battery tech is advancing and how different the EV market could look in just 3 years).

Currently, I have an order in for lease (15,000 miles/year) with a monthly payment of $403 after I trade-in my car. SR+, Black Paint, Black Interior

 

[MrFusion]

If you like getting a new car every few years and can afford it then leasing is the way to go. If you are okay keeping the same car 5-10+ years and are smarter financially, then you should buy.

Personally I like getting a different car pretty often and don’t mind spending more money on a lease because it’s one of my “luxury” items. I also have found that when I own a car I’m always paranoid about the trade in value if it gets scratched or rear ended, etc. because I know I will want to sell it or trade it in within a year or two. With a lease I don’t care because I know I will just turn it back in and nobody will care if there have been insurance repairs, etc.

 

[Evergreeen]

Tesla is charging a high interest something like 5% but who knows what elon will cook up in the next three years so I'm gonna lease

 

[dandrewk]

This will be the first EV I haven't leased. I looked at the possibility, and then I looked at current resale value of Model 3s. I didn't give it a second thought.

Then I realized it's still too new to gauge resale, especially now when demand far outstrips supply. Then I looked at Model S resale value. I'm still not leasing.

 

[nicrdh]

Just want to get a general sense of what people think about leasing the car. If you are currently leasing a model 3, I would love to hear how you like it so far. I just graduated college and not sure if I am ready to commit to a car for 72 months (especially with the way battery tech is advancing and how different the EV market could look in just 3 years).

Currently, I have an order in for lease (15,000 miles/year) with a monthly payment of $403 after I trade-in my car. SR+, Black Paint, Black Interior

I am at the same decision point right now while i wait. i have always leased in the past and enjoy not having to commit to a car for 5 years or more. However this time i am torn because the model 3 lease to me isn't really that great. Leasing can be a great deal if the manufacturer has some incentives buried in the deal and you can score a good MSRP discount, that is one of the huge benefits of leasing. This Tesla lease really doesn't have any support besides a decent residual. As others have said the interest rate is above 5% and obviously there are no discounts. if this were a BMW lease i wouldn't even consider it however there really isn't anything close to the 3 out there so i am leaning towards just sucking it up and going with the lease. If there is competition around in 3 years then they will almost certainly improve the lease terms.
Its a tough call because there are some really good reasons why buying this car makes sense too....low maintenance costs, OTA updates promising resale values....

 

[pagreene864]

Do you know that if you lease that you do not qualify for the tax credit? I had read that from other sources and confirmed with Tesla via chat session. The first time I ask via chat the tesla rep said as long as I take delivery by December 31st then it would qualify for the federal credit. I then ask the question again for leasing and eventually she confirmed that you do not qualify for the credit if leasing.

 

[jjrandorin]

Do you know that if you lease that you do not qualify for the tax credit? I had read that from other sources and confirmed with Tesla via chat session. The first time I ask via chat the tesla rep said as long as I take delivery by December 31st then it would qualify for the federal credit. I then ask the question again for leasing and eventually she confirmed that you do not qualify for the credit if leasing.

Correct, tax credit goes to the owner, which in this case is tesla if you are leasing. This is not a tesla thing, this is a "leasing" thing. The manufacturer can choose to pass on some or all of the tax credit as an incentive. From what I see of the tesla tesla lease numbers, it appears to me that tesla is burying some / most / all of the tax credit into the residual value.

The lease has an abnormally high residual value percentage (I dont think the car will be worth the percentage they have set on lease end).

 

[sqrt]

I'm leasing. I'm in California and to keep the HOV lane stickers I need a new car every three years. It makes no sense to buy if you plan to sell in less than 5 years.
Also, I'm pretty sure I will be salivating for a new EV, maybe a model Y, in three years.

 

[pa1ntbru5h]

I just started thinking about getting a Model 3. I went straight into looking at leasing like I usually do with my other cars but after crunching numbers and really thinking about it, I'm deciding to buy.

Here are my thoughts..
1) The technology is advancing so quickly that I was afraid to purchase a Tesla.
2) There is no option to buy once your lease ends. You must return the car. This was my main deciding factor because what if after 3 years I decided I wanted to keep it? Not possible. I'd have to return the lease and buy another Tesla.
3) If I buy it instead of leasing, after 3 years if I decide I don't want to keep the car, I can sell it. At least the car has value.
4) I don't have to worry about going over my mileage with a purchase vs leasing.

 

[stevegu]

We chose to lease, which worked for us with this reasoning:

-- 10K miles/year is plenty for our needs
-- while with a lease there is stated as no opportunity to purchase at the end of term, since they are calculating a residual of almost 69%, I don't think we are giving up a very valuable option
-- I would not be surprised if Tesla in fact gives us the option to purchase our car at a retail-market price in 3 years, and even if they don't we can purchase an equivalent should we so desire
-- who knows what will be on the market and at what price in 3 years?
-- while I love the car and believe it the finest-driving and funnest one we can afford, I am not yet sold on Tesla as a permanent company to rely on for service/parts, etc. By leasing we will have a much smaller investment and full warranty
-- our lease does indeed carry a 5% interest rate, but it also has that 69% residual. The payment is the same as a 3% interest rate with 63% residual, so the actual cash cost is I think very competitive (also works out the same for a purchase at the same interest rate/monthly payment, FWIW). Again, even at 63% residual I don't think the lack of purchase option is a very big loss

 

[dandrewk]

What if the resale value exceeds the residual in three years? (rhetorical if not an option, but buyout option is more common). It’s an unusual situation, but Tesla cars have a history of keeping their values. This could be the reason Tesla won’t sell at lease end. Why sell for residual amount when you can sell it for more used? Especially when low mileage is a given.

Then there’s the tax credit. If Tesla buries it in the residual, you lose out. Only applies until end of last year.

Don’t want to buy because EV technology is rapidly improving? Very important consideration, and the reason we leased our 2012 Leaf and 2017 Bolt. This issue is mitigated somewhat because of Tesla’s over the air updates.

For these reasons, we’re buying. Plus, the mileage restraints were a constant consideration. In California’s it’s very easy to exceed 10k miles in a year, even without commute miles. Especially in a Tesla that BEGS to be driven!

 

[jonquiljo]

Leasing is not a good way to spend money on a car. You just buy the depreciation, in an ideal world. If you are just out of college, I’d wait a bit until you see how far your income stretches. That’s my cautious side talking.

You’ll have plenty of time to buy cars. You may want a house or condo. I’d give numbers, but it varies so much depending on your job track and area you live in.

For instance I live in the Bay Area, and unless you want to eat noodles, you’ll need lots of $ for other thongs - like a roof over your head. Taxes can eat up a big chunk of earnings - depending on how much you earn.

If you’ve got plenty of $, then buy. In the first few years, you will always have a decent resale - just not as high as you’d expect. I’ve just seen too many people borrow too much money and regret it later. Credit is way too easy to find, and can be annoying if you don’t pay people.

In short - get a lay of the land before you commit large sums. Make sure of how much you will have after taxes. The IRS is not very nice when you don’t pay them. Good luck and enjoy!

 

[dandrewk]

Agreed, but there is a major issue with EVs constantly evolving. The car you buy might lose a ton of value, and worse - not having the latest safety/auto pilot options. Much less chance of this happening with Tesla though.

e.g. I leased our 2012 Leaf. As many of you know, Nissan had serious issues with premature battery degradation, due mostly to their stubborn refusal to provide active cooling for the battery. Lease came due, but I wanted to continue lease for another year, waiting for the Bolt to be available. They gladly agreed. When lease came due again, they offered it to sell me the Leaf for $5k out the door. That was a steal.

 

[Darren Donovan]

Just want to get a general sense of what people think about leasing the car. If you are currently leasing a model 3, I would love to hear how you like it so far. I just graduated college and not sure if I am ready to commit to a car for 72 months (especially with the way battery tech is advancing and how different the EV market could look in just 3 years).

Currently, I have an order in for lease (15,000 miles/year) with a monthly payment of $403 after I trade-in my car. SR+, Black Paint, Black Interior

I guess it has something with the value of your trade in, but how do you get 15,000 miles for only $403/month?

 

[Evergreeen]

its a couple thousand one way or another, doesn't worry me that much!

 

[silentrider21]

I guess it has something with the value of your trade in, but how do you get 15,000 miles for only $403/month?

I decided to put a bit more money down on top of my trade-in (and because of the California rebate).

 

[silentrider21]

Leasing is not a good way to spend money on a car. You just buy the depreciation, in an ideal world. If you are just out of college, I’d wait a bit until you see how far your income stretches. That’s my cautious side talking.

You’ll have plenty of time to buy cars. You may want a house or condo. I’d give numbers, but it varies so much depending on your job track and area you live in.

For instance I live in the Bay Area, and unless you want to eat noodles, you’ll need lots of $ for other thongs - like a roof over your head. Taxes can eat up a big chunk of earnings - depending on how much you earn.

If you’ve got plenty of $, then buy. In the first few years, you will always have a decent resale - just not as high as you’d expect. I’ve just seen too many people borrow too much money and regret it later. Credit is way too easy to find, and can be annoying if you don’t pay people.

In short - get a lay of the land before you commit large sums. Make sure of how much you will have after taxes. The IRS is not very nice when you don’t pay them. Good luck and enjoy!

I live in the Bay Area too and have my own place with a couple roommates. I've been working since May so I somewhat have an idea of my budget/take home pay after taxes. Mainly looking for a new car because I drive pretty frequently for work (did the math and I should be right around 14,000-15,000 miles/yr), and I am tired of paying for the upkeep of my current car along with the extreme gas prices here (I fill up around four times a month).

Paying to finance the car would be stretching my budget, that's why I thought leasing would be a good option (along with my other reasons I initially stated).

 

[adaminfl]

Lease for me
Car gets written off through my LLC. While I think Tesla will hold its value, I believe the battery tech will be significantly better in 3 years, thus it will be time for a new Tesla.

 

[jonquiljo]

I live in the Bay Area too and have my own place with a couple roommates. I've been working since May so I somewhat have an idea of my budget/take home pay after taxes. Mainly looking for a new car because I drive pretty frequently for work (did the math and I should be right around 14,000-15,000 miles/yr), and I am tired of paying for the upkeep of my current car along with the extreme gas prices here (I fill up around four times a month).

Paying to finance the car would be stretching my budget, that's why I thought leasing would be a good option (along with my other reasons I initially stated).

Well, if you have good credit - some banks will give you 1.99%. Then get a no prepayment penalty loan and stretch it 5-6 years. That will lower your payment for sure and allow you to pay off and move on whenever you want. Remember, Tesla leases do not have a “buy at end of lease clause.”

Either way, good luck and enjoy. I paid $4.99 a gallon a day which is silly. You can charge the thing at night with a PG&E off peak plan. It will save lots of $.

 

[acarney]

Just want to get a general sense of what people think about leasing the car. If you are currently leasing a model 3, I would love to hear how you like it so far. I just graduated college and not sure if I am ready to commit to a car for 72 months (especially with the way battery tech is advancing and how different the EV market could look in just 3 years).

Currently, I have an order in for lease (15,000 miles/year) with a monthly payment of $403 after I trade-in my car. SR+, Black Paint, Black Interior

I don’t know how much your trade in is worth, but I’ll assume at least $5,000 since you didn’t mention having to put any money down at signing. That means you’re essentially paying ~$19.5k for three years of SR+. That’s almost 50% of the cost of the car. I think a three year old Tesla with a year of warranty remaining and only 40-45k miles on it probably would sell for $20k. If this was a Chevy Bolt or something else with poor DC quick charging and large range losses in the winter months I would probably say lease if a good deal came by, BUT, it being a Tesla I would say buy. I think you’ll be surprised and impressed how much you like the car. You’re basically buying the best electric car on the market right now and Tesla’s have a lot of staying power.