New Credit Tesla Leasing

[gaurav91pandey]

Hi everyone!

I just ordered my Tesla 70D and I have applied for Tesla leasing. It has been my dream to get Tesla since they launched the Tesla Roadster. I am now a Software Engineer in a tech company and earn $118k a year with no loans etc. I am also not a US citizen and hence have very less credit history (6-months) with a credit score of 708. I have paid $2500 deposit that Tesla asks while building and ordering the car.

Has anyone with similar financial situation tried ordering the car? If yes, please let me know your experience. I am not sure if my leasing application will be approved and I am not in a position to finance the car, but I think I can easily afford a lease.

 

[tnt1971]

Leases only make sense if you use the car up to the allowed mileage and are the type of person that puts more than the average wear and tear on a car. The last car I leased was in 2001 and when I turned it back in in pristine condition with 18k miles after 3 years, I realized how silly it was.

I actually considered leasing my tesla because it is a relately new company and the possibly of it going out of business, leaving the car as the banks problem. However, i realized that the banks usually hire really smart people to assess these risks and they would factor that into the price.

In short, don't lease if you are not in the unique place I described above. While I would hate to talk you out of your dream car, if you cannot afford to pay it off in 3 years, you should not be buying the car.

 

[bswn1]

Leases only make sense if you use the car up to the allowed mileage and are the type of person that puts more than the average wear and tear on a car. The last car I leased was in 2001 and when I turned it back in in pristine condition with 18k miles after 3 years, I realized how silly it was.

I actually considered leasing my tesla because it is a relately new company and the possibly of it going out of business, leaving the car as the banks problem. However, i realized that the banks usually hire really smart people to assess these risks and they would factor that into the price.

In short, don't lease if you are not in the unique place I described above. While I would hate to talk you out of your dream car, if you cannot afford to pay it off in 3 years, you should not be buying the car.

He has the option to purchase it in a few years at the end of the term. Granted it will be a bit more expensive, but if he isn't in a position to buy now then it's a moot point.

 

[hdgmedic]

If you make $118,000 with no debt, you will have absolutely no problem buying or leasing the car. As long as you're not spending that money in other ways. In fact, you could easily pay it off in 1-2 years. Don't forget that $7500 tax rebate you'll be getting.

 

[gaurav91pandey]

If you make $118,000 with no debt, you will have absolutely no problem buying or leasing the car. As long as you're not spending that money in other ways. In fact, you could easily pay it off in 1-2 years. Don't forget that $7500 tax rebate you'll be getting.

That is good to know. However I am scared about my thin credit file .

 

[hdgmedic]

I don't know what your interest rate would be, but with a score of 708, income of $118,000 and a debt to income ratio of 0, you will be financed.

 

[gaurav91pandey]

I don't know what your interest rate would be, but with a score of 708, income of $118,000 and a debt to income ratio of 0, you will be financed.

But what about lease? If I lease it the monthly payment will be a little less compared to Financing. I can use this money to do some investments etc. Also I forgot to mention that I am only 24 years old. Will that also affect my chances of approval?

 

[MsElectric]

He has the option to purchase it in a few years at the end of the term. Granted it will be a bit more expensive, but if he isn't in a position to buy now then it's a moot point.

Except the way Tesla leases are structures make that a really unappealing prospect. They apply the $7,500 credit to the residual rather than the capitalized cost so if you decide to buy the car at the end of the lease you are essentially paying $7,500 more for it than if you had just bought it and financed it.

IMHO you are better off to buy it and keep the car for 4 years. You then get the benefit of amortizing the depreciation over 4 years with years 3-4 costing you less and you also get the benefit of the tax rebates.

Leasing is preferable if you have a business and can deduct the payments and/or you like to drive a new car every 3 years.

 

[gaurav91pandey]

Except the way Tesla leases are structures make that a really unappealing prospect. They apply the $7,500 credit to the residual rather than the capitalized cost so if you decide to buy the car at the end of the lease you are essentially paying $7,500 more for it than if you had just bought it and financed it.

IMHO you are better off to buy it and keep the car for 4 years. You then get the benefit of amortizing the depreciation over 4 years with years 3-4 costing you less and you also get the benefit of the tax rebates.

Leasing is preferable if you have a business and can deduct the payments and/or you like to drive a new car every 3 years.

The reason I don't want to Finance it is that EV is a growing market and who knows, after 3 years, they might come up with even better stuff. Being a tech savvy person, I absolutely hate being stuck with older technology. I do see he advantages of Financing, but I don't want to make that big a commitment where I could easily be spending that money for other investments (e.g. Tesla stocks ).

 

[MsElectric]

The reason I don't want to Finance it is that EV is a growing market and who knows, after 3 years, they might come up with even better stuff. Being a tech savvy person, I absolutely hate being stuck with older technology. I do see he advantages of Financing, but I don't want to make that big a commitment where I could easily be spending that money for other investments (e.g. Tesla stocks ).

There will be always better vehicles available to buy.

At the end of the lease period you give the car back, pay for excess mileage plus and additional wear and tear and you end up with nothing.

If you pay a bit more and finance, at the end of the finance period you own the car. Even if the car is only worth 50% you own that as opposed to nothing. You also get the benefit of the $7,500 tax rebate if you qualify for that. Investments go up and then come down so that could go either way though I agree that Tesla stock is presently a great investment.

Your money, your car, your call At the end you will end up with a Tesla so there are no bad options.

 

[gaurav91pandey]

There will be always better vehicles available to buy.

At the end of the lease period you give the car back, pay for excess mileage plus and additional wear and tear and you end up with nothing.

If you pay a bit more and finance, at the end of the finance period you own the car. Even if the car is only worth 50% you own that as opposed to nothing. You also get the benefit of the $7,500 tax rebate if you qualify for that. Investments go up and then come down so that could go either way though I agree that Tesla stock is presently a great investment.

Your money, your car, your call At the end you will end up with a Tesla so there are no bad options.

Agree with all of it. Thank you very much. I am willing to pay only $10k as down payment. But with my thin credit file I am absolutely sure that no bank or credit union will be able to provide me a loan of $80k for buying the Tesla. I will have to make do with a lease now. If I really like the car (and I absolutely will) an the newer alternative is not that much better I may end up using the car after 3 years. So now my other question is will I still get the $7500 rebate(or whatever the rate is at that time) should I decide to purchase the car?

 

[hdgmedic]

The rebate is factored in at the beginning of the lease. As far as I know , you cannot claim it at the end of the lease. You have a lot of thinking to do. One last thought: Don't let your speculation of your credit history prevent you from seeing if you qualify. You won't know unless you apply.

 

[AndreSF]

OP, sounds like you made unfounded assumptions that you are not going to receive a loan... Why not let the bank tell you whether or not you are qualified and take the guess work out of equation? "Thin credit file"? How do you think "think files" come about? By taking more loans and paying them off

IMO Tesla's leasing program is not very mature and not the best, but ultimately there is nothing fundamentally wrong with it. Leasing is not necessarily something you do because you can't afford to buy a car outright or afford payments, etc., it's just another payment method that many ppl that can afford to pay cash for vehicles have been using to be able to drive new car every few years based on the fact that most cars are liability anyway and not an investment.

There is a ton of info online on pros and cons of cars leasing, and I'm sure you can make your own mind armed with right info!

Good luck!

 

[gaurav91pandey]

OP, sounds like you made unfounded assumptions that you are not going to receive a loan... Why not let the bank tell you whether or not you are qualified and take the guess work out of equation? "Thin credit file"? How do you think "think files" come about? By taking more loans and paying them off

IMO Tesla's leasing program is not very mature and not the best, but ultimately there is nothing fundamentally wrong with it. Leasing is not necessarily something you do because you can't afford to buy a car outright or afford payments, etc., it's just another payment method that many ppl that can afford to pay cash for vehicles have been using to be able to drive new car every few years based on the fact that most cars are liability anyway and not an investment.

There is a ton of info online on pros and cons of cars leasing, and I'm sure you can make your own mind armed with right info!

Good luck!

You are right. I should not have made assumptions. I have already applied for lease and I will get my decision by Monday. Will definitely ask the finance guy about financing once I get the decision. Will keep you posted.

The reason of me making assumptions was because I have read lot of forums where many people had applied for financing and were rejected due to thin credit file. Let us hope for the best. Can't wait to be a proud Tesla owner.

 

[gaurav91pandey]

Good news guys! I got my lease approved! Here is the spread:

Does anyone know what the TBD will amount to?

 

[AMPd]

Good news guys! I got my lease approved! Here is the spread:

View attachment 113293
Does anyone know what the TBD will amount to?

Congrats!

 

[AndreSF]

Good news guys! I got my lease approved! Here is the spread:

View attachment 113293
Does anyone know what the TBD will amount to?

You can just ask financial advisor to give you exact numbers, but sales tax basically is whatever your local sales tax would be on $18k listed in the quote, licensing/registration/CA tire fee ~ $1000 or so might be slightly more.

P.S. Saw your other thread... looks like you got your numbers already. Congrats and enjoy!

 

[xG35]

This is not true.. Lease is paying for what you use.. if Tesla thinks the residual is 45% after 4 years.. then you pay for 55%..

The ONLY difference is you are paying for the interest on the 45% during that 4 years and never the capital.

With finance, you are paying more and a longer period.. but if your car is under water your situation is the same regardless of lease/finance.

With lease you are protected if your car sinks under the residual and if it is higher you can trade it in... With finance, you are financing the risk. This is car, always lease depreciating asset; so it comes out of a cash flow and its depreciation does not affect your net asset.

There will be always better vehicles available to buy.

At the end of the lease period you give the car back, pay for excess mileage plus and additional wear and tear and you end up with nothing.

If you pay a bit more and finance, at the end of the finance period you own the car. Even if the car is only worth 50% you own that as opposed to nothing. You also get the benefit of the $7,500 tax rebate if you qualify for that. Investments go up and then come down so that could go either way though I agree that Tesla stock is presently a great investment.

Your money, your car, your call At the end you will end up with a Tesla so there are no bad options.

 

[MsElectric]

This is not true.. Lease is paying for what you use.. if Tesla thinks the residual is 45% after 4 years.. then you pay for 55%..

The ONLY difference is you are paying for the interest on the 45% during that 4 years and never the capital.

With finance, you are paying more and a longer period.. but if your car is under water your situation is the same regardless of lease/finance.

With lease you are protected if your car sinks under the residual and if it is higher you can trade it in... With finance, you are financing the risk. This is car, always lease depreciating asset; so it comes out of a cash flow and its depreciation does not affect your net asset.

If you lease and decide to buy the car you loose the benefit of that $7,500 credit the way Tesla structures the leases because the $7,500 is not applied as a Cap Cost Reduction as it should be. Apart from that I agree with you in that you are paying to rent the car as well as the interest for financing the value of the car.

 

[xG35]

If you lease and decide to buy the car you loose the benefit of that $7,500 credit the way Tesla structures the leases because the $7,500 is not applied as a Cap Cost Reduction as it should be. Apart from that I agree with you in that you are paying to rent the car as well as the interest for financing the value of the car.

Right, that might be where it different for Canada Ontario, here we get the rebate regardless of lease/finance...