Model 3 leasing

[Trev Page]

If you can cough up the $14k up front you'll be better off than using it after to help pay for the monthly cost because it reduces the amount you're financing and thus saving on interest and less tax. In Ontario at least, the tax you pay is only on the monthly payment and not on the whole amount of the car value.

You can use the rebate either way to finance the car but I'm going to reduce the capital cost because it's a depreciating asset and why should you pay more than you should??

Rebates come in the mail anywhere from 2 weeks to 3 months. Depends on their backlog I guess.

 

[Trev Page]

Thanks for your input. So essentially it doesnt matter what options are put into the Model 3, it will still qualify for the full Ontario rebate ($14,000 potentially).

Here's the link to the PDF for the EVIP program.

http://www.forms.ssb.gov.on.ca/mbs/...tFileAttach/023-2096E~3/$File/2096E_Guide.pdf

I've read it very carefully and based on the requirements Model 3 should easily qualify for the full $14K rebate. The max claimable amount is $13K but cars with 5 or more seats get an extra $1000. The BMW i3 for example gets the full $13K but since it only has 4 seats it can't qualify for the $1000 extra.

The Chevy Bolt should also qualify for the full $14K by the way.

 

[pmich80]

If you can cough up the $14k up front you'll be better off than using it after to help pay for the monthly cost because it reduces the amount you're financing and thus saving on interest and less tax. In Ontario at least, the tax you pay is only on the monthly payment and not on the whole amount of the car value.

You can use the rebate either way to finance the car but I'm going to reduce the capital cost because it's a depreciating asset and why should you pay more than you should??

Rebates come in the mail anywhere from 2 weeks to 3 months. Depends on their backlog I guess.

I do have funds ready to go. I've been saving for years for my next car but have never pulled the trigger because I've been so uninspired. I;m still rocking my 2001 Sentra in the meantime. Ill definitely take your advice and put it into the down payment so the interest paid over the length of the term will be less. Then I;ll reinvest the funds when I get the rebate back.

The Model 3 definitely will seat 5 so we get the extra $1,000 rebate. I;ll take a look at the form.

MSRP
MSRP is the base value of the each model and trim level exclusive of options, taxes, PDI and freight.

Model 3 will definitely be under the 75K then. Awesome.

 

[machzy]

I can't believe how lucky ON folks have it. $14k tax rebate! that's incredible. That's like 40% off a brand new car!

I'm in NS and we have 0 EV tax incentive programs but I'm thinking that since the Model 3 is probably two years out anyways, I should talk to some government people to see if we can get anything here.

Any ideas on where anyone would start for something like that?

 

[engle]

Great writeup I understood all this already but you expressed it perfectly.

My only non understanding is (and I guess my accountant knows so I dont need to worry) but like to understand is how does the lease when owning a business benefit on the tax schedule?
Is it a personal lease that is used for business use? Or must it be leased in name of business?

Disclaimer: I'm not a CPA so verify this with your tax adviser.

In the USA CA Tesla Leasing paperwork, there are 2 forms for business leasing use:

1. Corporate Borrowing Resolution for the Purpose of Leasing
2. Limited Liability Company Resolution for the Purpose of Leasing

If the vehicle is leased in the name of the corp. or LLC, then the appropriate form is used, since the corporate tax return will take the deduction for % of business usage.

Otherwise, if the business is a sole proprietorship (Schedule C), the lease is done in the name of the proprietor as a personal lease. The lease payments for the business use percentage, which is calculated based upon a log of (annual business mileage / total mileage driven), are deducted on Schedule C under "Car and truck expenses".

My guess is for a general partnership filing Form 1065, the Tesla would be leased in the name of the general partner who will be primarily operating the vehicle?

Here's the LLC form - the Corp. form looks very similar:

 

[Bounou]

To get a rough idea, I live in Canada and i assume the Model 3 will start at $47,000 here and i'll probably option it up to $60,000. In Ontario we get a tax credit of $13,000 or ($14,000 if the M3 is considered a 5 seater). How much would this tax credit theoretically decrease my monthly payment on a lease?

Secondly at $60,000 what would you assume the residual value of the car to be after 3 or 4 years and i guess the tax credit added on to the residual correct? I'm trying to determine what my monthly costs would be on a lease would be. Aiming for anything around $500..max $600.

The price is actually 43750$ according to current exchange rates, the CAD has been steadily climbing up for a while now.

 

[Chopr147]

My plan is/was to buy the M3 with low finance option. But, seeing how quickly the 2013 Model S has become "old" due to new upgrades,better options etc.... I may look into a lease if only because I may want a new one every 3 years Now i have to re-evaluate

 

[TravelSD80]

My plan is/was to buy the M3 with low finance option. But, seeing how quickly the 2013 Model S has become "old" due to new upgrades,better options etc.... I may look into a lease if only because I may want a new one every 3 years Now i have to re-evaluate

I too planned on buying my first M3. But depending on how autonomous the initial M3s will be, and other features, I may lease my first M3 then after that is up buy a M3 and keep it longer. I generally keep my cars 8-10 years, but my Acura ICEs haven't advanced much whereas Tesla is constantly innovating. I'll have a better idea after the second announcement on how I will finance my M3.

 

[engle]

I too planned on buying my first M3. But depending on how autonomous the initial M3s will be, and other features, I may lease my first M3 then after that is up buy a M3 and keep it longer. I generally keep my cars 8-10 years, but my Acura ICEs haven't advanced much whereas Tesla is constantly innovating. I'll have a better idea after the second announcement on how I will finance my M3.

While supercharging my X in San Mateo on Saturday, I spoke with a very friendly member of the autopilot team who works on computational modeling R&D. I noticed the S he was driving had metal, unpainted, ultrasonic sensors on it. I forgot to check his front camera - I was near the end of a long roundtrip road trip to Ukiah and I was a bit dehydrated. Hope I'll run into him or one of his colleagues again!

Anyway, one of his comments to me was: [1]

"There is lots of low-hanging fruit in the EV space" - meaning there are many innovations that are relatively easy to accomplish from an engineering viewpoint, since EV technology is still in it's infancy, compared to 100+ years of ICE. My personal take on it is a 2026 (2021?) will make a 2016 seem quite obsolete. I'm happy I leased my X.

It does cost more in interest, which is ~4% now based upon the money factor, compared to 1.49% lowest I've seen reported for loans.

While I was there, another Tesla employee with his girlfriend(?) stopped by to supercharge his company weekend loaner.

My theory is the autopilot/autonomous team has free use of test and production vehicles over the weekend so they can drive Alpha and R&D code in the real world.

[1] At the beginning of our chat, I specifically asked him not to mention anything to me that's Tesla Proprietary, and he did not. As we all know, sales is kept totally in the dark about the pipeline. I did learn that, unlike the big fruit company building a spaceship, there isn't a firewall between projects internally among engineering.

 

[Chopr147]

I too planned on buying my first M3. But depending on how autonomous the initial M3s will be, and other features, I may lease my first M3 then after that is up buy a M3 and keep it longer. I generally keep my cars 8-10 years, but my Acura ICEs haven't advanced much whereas Tesla is constantly innovating. I'll have a better idea after the second announcement on how I will finance my M3.

Good point. No need to make a decision since the delivery is so far off anyway. I'll just take the wait and see approach as well

 

[Tiberius]

Leasing is generally a bad idea unless you want a brand new car every three years. And if you're worried about the payment, you probably shouldn't be getting a new car that often.

Be smart. Buy the model 3, get the tax credit, enjoy it for 6+ years.

 

[engle]

Leasing is generally a bad idea unless you want a brand new car every three years. And if you're worried about the payment, you probably shouldn't be getting a new car that often.

Be smart. Buy the model 3, get the tax credit, enjoy it for 6+ years.

If you have a business, leasing a 3 is better because you can write-off most of the lease payments based upon percentage of documented business use. The 3 isn't heavy enough for accelerated depreciation on the purchase. With a lease, you still have the option to pay it off and keep it after 36 months.

 

[Tiberius]

If you have a business, leasing a 3 is better because you can write-off most of the lease payments based upon percentage of documented business use. The 3 isn't heavy enough for accelerated depreciation on the purchase. With a lease, you still have the option to pay it off and keep it after 36 months.

Like I said, generally. OP didn't mention using it for business use so I doubt that is a factor.

 

[tfna]

If you can cough up the $14k up front you'll be better off than using it after to help pay for the monthly cost because it reduces the amount you're financing and thus saving on interest and less tax. In Ontario at least, the tax you pay is only on the monthly payment and not on the whole amount of the car value.

You can use the rebate either way to finance the car but I'm going to reduce the capital cost because it's a depreciating asset and why should you pay more than you should??

Rebates come in the mail anywhere from 2 weeks to 3 months. Depends on their backlog I guess.

I spoke with the Ontario Ministry of Finance and if you lease, you receive the rebate in annual and equal increments.

 

[tfna]

Leasing is generally a bad idea unless you want a brand new car every three years. And if you're worried about the payment, you probably shouldn't be getting a new car that often.

Be smart. Buy the model 3, get the tax credit, enjoy it for 6+ years.

I'd disagree, at least for the Canadian side of things. Leasing is akin to a sound business decision for personal use insofar as tech goes, because of the rate of change of inmovation in the ev space - more specifically teslas. The premise of leasing is that ownership costs are fixed over a duration; most commonly 3 or 4 years. If this were $200k farm equipment machinery that was financed, the resale value could be a swing of $50k in 36 months, making it a very unstable exit price if and when you want to unload the item. The same holds true for cars. Accident repair? There goes half the value of the claim. Needs change? You lose taxes + $5k on trade value at the minimum on a loan that hasn't been paid nor the full utility of the car has been captured if one doesn't stick to the 6 year term. Lease buyouts are basically an options contract that negate the benefits of financing as those benefits are not mutually exclusive.

 

[Tiberius]

I'd disagree, at least for the Canadian side of things. Leasing is akin to a sound business decision for personal use insofar as tech goes, because of the rate of change of inmovation in the ev space - more specifically teslas. The premise of leasing is that ownership costs are fixed over a duration; most commonly 3 or 4 years. If this were $200k farm equipment machinery that was financed, the resale value could be a swing of $50k in 36 months, making it a very unstable exit priceif and when you want to unload the item. The same holds true for cars. Accident repair? There goes half the value of the claim. Needs change? You lose taxes + $5k on trade value at the minimum on a loan that hasn't been paid nor the full utility of the car has been captured if one doesn't stick to the 6 year term. Lease buyouts are basically an options contract that negate the benefits of financing as those benefits are not mutually exclusive.

My original post said that its a bad idea unless you wanted to switch cars every few years. Your make it sound like that's your plan.

Like most people who've grown out of their immature 20s, the idea of paying off a car and driving it for several years is more appealing than the newest shiny model. You lose resale value when you finally decide to sell, but the money you've saved by not having payments for several years more than makes up for it.

Having a lease just leaves the back door opened to get screwed. I know that sounds jaded but typical cars dealers will rake you over the coals if given the chance (here in the US at least).

Afterall, it's not like we're talking about expensive farm equipment, lol.

 

[tfna]

My original post said that its a bad idea unless you wanted to switch cars every few years. Your make it sound like that's your plan.

Like most people who've grown out of their immature 20s, the idea of paying off a car and driving it for several years is more appealing than the newest shiny model. You lose resale value when you finally decide to sell, but the money you've saved by not having payments for several years more than makes up for it.

Having a lease just leaves the back door opened to get screwed. I know that sounds jaded but typical cars dealers will rake you over the coals if given the chance (here in the US at least).

Afterall, it's not like we're talking about expensive farm equipment, lol.

We're not in total disagreement, but the statement that 'leasing is generally a bad idea ' is not a bad idea at all in any case when compared to a new finance. I'd argue that financing pre-owned at half the value in 3 years and riding it out for 10 years makes way more sense, if one is optimizing for average yearly cost of ownership. Even moreso, one can buy a 90s honda or toyota for $500 now and have no payments for 10 years whatsover. The point is, if it's strictly about the economics, financing new sucks more than leasing. But people buy new for all sorts or reasons. Many of them not necessarily frugal, but sometimes exclusive. Namely, the model 3. In this case, I'm sure we all hope this car magically falls somewhere in between the two.

 

[Scannerman]

If the Model 3 lease is based on my Model S lease, Tesla will happily be keeping your $7500 Federal Tax Credit. You only get that if you purchase the vehicle.

Are you certain that Tesla does not adjust the lease cost downward, taking into consideration the Federal Incentive, which they receive?
That would seem to me to be a safe assumption.

Scannerman

 

[dgpcolorado]

Are you certain that Tesla does not adjust the lease cost downward, taking into consideration the Federal Incentive, which they receive?
That would seem to me to be a safe assumption.

Scannerman

Yes and no. Yes they do use the tax credit to lower the lease payments by adding it to the residual value. But no, if you were to buy the car off-lease you would pay the residual value plus the tax credit, losing it to the lease company. If one leases and turns in the car at lease-end, the tax credit will be a benefit. Leasing-to-own is not practical compared to buying the car outright and Tesla's finance people will tell one that right upfront when discussing financing options.

Whether this will change by the time that the Model 3 is released remains to be seen. I, for one, can't qualify for anymore than a small fraction of the tax credit because my income is much too low. I expect that a lot of Model 3 buyers are in for a rude surprise if they are counting on getting the tax credit.

 

[tga]

because of the rate of change of inmovation in the ev space - more specifically teslas

I call BS on this oft-repeated mantra. There's really nothing magic about EV's or Tesla's in particular that will advance faster than ICE cars (except batteries; see below). All cars, regardless of drivetrain, will have autopilot, etc. That tech will improve regardless of drivetrain.

An yes, batteries will get better. So what? If an 200 mile (or 85 mile) EV is good enough for you now, chances are it will be in the future. So what if batteries double in capacity in x years? If you don't need it now, you probably won't need it in the future.

Now if you plan to get a new car in 2-3 years (and you meet the specific parameters of the lease), leasing may be better, since the exit price is known. But if you are getting new cars every 2-3 years, you probably aren't worried about getting the best value for you money, anyway.

The point is, if it's strictly about the economics, financing new sucks more than leasing.

You can't make a blanket statement like that. Leasing is not always better. We could come up with tons of hypothetical situations where one is worse than the other.