Wattsisname
MY Red/White/Gems
Quite so! And however we acquire them, we will love those Tesla ponies.
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SpareHeadOne
Member
You really need to use PCP for 48 months and a larger deposit to gain the benefit with Tesla, for your 15k/year example the PCP and loan are both £743/month with a £10k deposit and the PCP monthly figure goes down slightly more if that's increased because the GFV doesn't change with larger deposits.
As usual with finance you have to look at your own numbers and requirements then decide what is the better option for you in each individual case. Tesla are a little odd in that they offer significantly different interest rates for PCP and Loan and their GFVs seem pretty conservative (almost £10k less than other manufacturers would set for a similarly priced vehicle).
I agree with you about lease though, for private customers it really feels like the monthly numbers are way too high.
Hi, just to add to this, hope the OP doesn't mind.
I'm able to get a lease through work salary sacrifice which will cost me about £520 a month net inc maintenance, insurance etc. For about 7500 miles a year.
The thing is I have nothing to compare against on approx value of the car in 4 years so difficult to work out if a private PCP / purchase would actually be better ?
Any advice ?
I'm able to get a lease through work salary sacrifice which will cost me about £520 a month net inc maintenance, insurance etc. For about 7500 miles a year.
The thing is I have nothing to compare against on approx value of the car in 4 years so difficult to work out if a private PCP / purchase would actually be better ?
Any advice ?
SpareHeadOne
Member
Tesla PCP would have your GFV as 37% of the original price at the end of four years.
It's pretty difficult to know if that would be about right or significantly above or below the actual second hand value of the vehicle at the moment, particularly as the prices are crazy at the moment.
I'm just about to change my M3 that I took delivery of in December 2020 and Tesla are offering me about £100 more than I paid for it - although it did qualify for the plug-in grant at the time, so that's technically around £3k less than the original list price.
So in my case I put down £7k deposit and having paid around £10k since I bought it, I will have roughly £13k in equity towards my new one meaning it's actually cost me about £350/month and my new one will end up being about £70/month less in finance payments - actually slightly less than your monthly lease payments but I have to pay for maintenance and insurance of course.
I think for me numbers show that loan is better :/
Not only your monthly payments are lower, representative APR is better, but at the end of your contract your total amount payable is lower anyway. not saying that in both ways you can trade in earlier and you have no additional fees if you drive more than 15k a year.
especially in my case, where I estimate ~20k a year, PCP just doesn't add up at all.
Wattsisname
MY Red/White/Gems
For some reason, on a three PCP deal, which I favour (I've also stopped buying green bananas) the max deposit Tesla allow on a £61, 590 cash price is £18,447. Also, 10,000 per month is the minimum mileage for their calculations. Also, the residual/final payment is quite low at 3 years namely £25,250 which means the monthly payment is £636.
Back in the day when HP for cars was still fairly novel, people were just so keen to get the motor that they did not give much thought to the (flat) interest rates. The important bit was the monthly payments which were never advertised with the cars - as one sees nowadays.
So, the dealer, after a a short battle ( "are you trying to bankrupt me sir") would give in to the customers' sale price negotiations if he knew they were financing through him. He would then quote the monthly payment and the customer would sign the agreement. In fact, the dealer would have calculated a repayment which would generate a settlement from the HP company equal or more than the original sticker price).
Having said that, I have been a cash buyer for many years and have found this current exercise quite interesting. Leasing, for retired private individuals, seems a bit of a mugs game. However, although flat and APR rates are quoted for the PCP deals, I can't make the numbers agree with the rates/periods. So, I guess it's never changed in its opacity, except maybe for C.A.s and the initiated, although regarding the latter, I am not sure the sales agents understand how "computer" arrives at the numbers.
Therefore, go compare, in the generic sense, and choose what seems closest to your needs because.... it is what it is!
Paying £800 a month is mortgage money for most people and finance is horrendous for Tesla cars and their is no guarantee that we will have any value in a car after 2 to 3 years as the supply will improve and after upfront costs leasing will pay hundreds less in many cases as a guaranteed resale value that stays in your bank account.
it loan is over 6 years.
Leasing is cheaper hence why it’s attracti
How much is the gross reduction as reduces your salary wich then impacts loans and state pension.
Wattsisname
MY Red/White/Gems
I am not expert in these matters. For me, a PCP with 10k miles was just right when I factored in the maximum ( Tesla Finance ) down payment.
I can understand the benefits of leasing if it is on a company that will receive tax benefits.
However, as a private individual, the idea of what is basically long term car hire with no sensible options at the end made no sense to me. I believe the car's value will not drop below the value of the balloon payment and I will have a choice.
My repayments are a bit over £ 600 pm.
If,as you say, £800 is morgage money to most people, not sure I see the relevance there.... we should remember that we are fortunate..... most people won't be buying a £ 62k car ( or even the base config tesla).
The OP can only look at the options and choose the one that best meets their needs and with which they feel most comfortable.
The recent high prices achieved for second hand cars is a temporary aberration; anyone with experience knows that buying a car is not about profit but very much about loss; though I prefer to call it the cost of realising your motoring dream. You only really feel the pain if the motoring reality fails to meet expectations.
why is it horrendous?
yes, Loan is like mortgage, yes, but in the end you get the equity which is for you to decide what to do with it. But lease is like rent - you just spend money and in the end you get nothing.
In the same way, as PCP, with loan you can trade in earlier, let's say after same 4 years as pcp, but difference is that in case you decide that you like the car - you just continue paying same and not the baloon payment. financially, it's exactly same as PCP. Only difference is that with high mileage PCP payments are significantly higher
Compare the monthly on Tesla finance against lease monthly and the difference over 4 years minus up front cost or deposit is your cars guaranteed resale value. If your paying hundreds more than last car best not look at a Tesla and never justify the whopping cost compared to your last ICE vehicle by thinking the fuel savings will pay the difference as the worlds economy is a mess at the moment and anything can happen. Say to yourself can I loose this deposit in normal times.
You hope. In normal times luxury cars never pay off the settlement figure hence why a lower lease monthly gives the garanteed depositfee to have your next deposit.
No your monthly is less on a lease so keep the difference to fund next car. For similar money you can buy a Porsche and it’s a big junk from most peoples salary.
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For years now I’ve had this internal battle on used vs pcp vs hp vs leasing. Now treat every new car as an entirely different circumstance, decision etc. because it is.
I think wattsisname has summarised pretty neatly above, but feel there is one big thing missing from this thread that may help you OP.
That is this: can you *afford* to have thousands or potentially tens of thousands of either cash or commitments tied up in the car for the next >4 years?
By afford I don’t mean your ability to make payments, I mean can that money serve you better elsewhere? Buying outright or on pcp / hp with a huge down payment only makes sense in my opinion if you have stacks just lying around or want to keep the car 7+ years. Obviously if you have the cash to set up an hp and then just pay it all off maybe that would make sense but I’m not certain the numbers add up with tesla on that because they don’t do any of the legacy dealer ‘deals’.
All other things consistent, it’s purely a financial decision. If you do too many miles for leasing then it’s obvious pcp or hp will be better. If you don’t, then it’s a choice between possible (but not guaranteed) equity returns, which in my opinion are insanely volatile and shouldn’t be factored as any kind of given or access to useful cash or capital with a monthly saving.
Case in point: in the next three years we want to extend our house. It would/will cost thousands and we need capital for it to do it properly. Having 50k tied up in a car be that cash or debt makes absolutely no sense even if we did see a few thousand in equity at the end. Investing the difference between that and the lease commitment which is tiny in comparison in our property is a no brainer. Doing the same with a big mortgage repayment might be just as beneficial depending on your interest rate on that, and that is *guaranteed* value.
So really it comes down to your mileage, tax situation, financial circumstances and whether the possibility of equity at the end (but a much higher overall commitment) is worth more than having that difference in commitment as cash or available capital over that period of time minus the equity risk/reward.
Just as an aside, lease brokers do not always ‘cash in’ on cars where predicted equity is high. Some want volume and to capture as much of the market as possible. Case in point, in Jan - Feb this year many were competing to shift as many Tesla’s as possible so they were willing to take a bet (on equity being really good) and take a smaller margin overall on the cost of the rental to get sales. I looked for a couple of weeks and lease deals were consistently 200-300 per month cheaper than Tesla’s finance at the time (may be completely different now - such is the volatility on cars).
Just my two cents
I think wattsisname has summarised pretty neatly above, but feel there is one big thing missing from this thread that may help you OP.
That is this: can you *afford* to have thousands or potentially tens of thousands of either cash or commitments tied up in the car for the next >4 years?
By afford I don’t mean your ability to make payments, I mean can that money serve you better elsewhere? Buying outright or on pcp / hp with a huge down payment only makes sense in my opinion if you have stacks just lying around or want to keep the car 7+ years. Obviously if you have the cash to set up an hp and then just pay it all off maybe that would make sense but I’m not certain the numbers add up with tesla on that because they don’t do any of the legacy dealer ‘deals’.
All other things consistent, it’s purely a financial decision. If you do too many miles for leasing then it’s obvious pcp or hp will be better. If you don’t, then it’s a choice between possible (but not guaranteed) equity returns, which in my opinion are insanely volatile and shouldn’t be factored as any kind of given or access to useful cash or capital with a monthly saving.
Case in point: in the next three years we want to extend our house. It would/will cost thousands and we need capital for it to do it properly. Having 50k tied up in a car be that cash or debt makes absolutely no sense even if we did see a few thousand in equity at the end. Investing the difference between that and the lease commitment which is tiny in comparison in our property is a no brainer. Doing the same with a big mortgage repayment might be just as beneficial depending on your interest rate on that, and that is *guaranteed* value.
So really it comes down to your mileage, tax situation, financial circumstances and whether the possibility of equity at the end (but a much higher overall commitment) is worth more than having that difference in commitment as cash or available capital over that period of time minus the equity risk/reward.
Just as an aside, lease brokers do not always ‘cash in’ on cars where predicted equity is high. Some want volume and to capture as much of the market as possible. Case in point, in Jan - Feb this year many were competing to shift as many Tesla’s as possible so they were willing to take a bet (on equity being really good) and take a smaller margin overall on the cost of the rental to get sales. I looked for a couple of weeks and lease deals were consistently 200-300 per month cheaper than Tesla’s finance at the time (may be completely different now - such is the volatility on cars).
Just my two cents
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Wattsisname
MY Red/White/Gems
Maybe we could at least agree that the OP knows which car he wants or else he would be on the Porsche discussion site.... just sayin'.
OK. Lease is 650 a month for max 15k miles. then 16.5 ppm (plus VAT).
So over 1 year if 20k miles you have: 7800 for payments + 825 for mileage. - 8625 a year
Other lease options end up at quite similar values pm.
Loan is 9300 pa - and calm of mind, and no additional payments after 6 years anyway.
PCP for 20k miles is even more: 9780 + balloon payment in very end of 4 year period.
Main difference is that with Loan or PCP you have the car, and with Lease you pay more or less the same over year and then after 4 years you get nothing.
of course, circumstances might be different for others, but I think that equity is better than no equity in the long run. maybe it's just me
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I think this makes sense for your mileage and if you want to keep the car for 6+ years, but you’re treating this comparison as if the 25k difference in commitment doesn’t cost anything.
Sure after 4 years you hand the lease back, but with 72 months financing, you still don’t own the car at 4 years. Tesla do, and even with a really strong equity prediction you owe them in the region of ~30k still (at the 3 year mark), whereas with a lease you owe nothing at that same point in time.
So it’s swings and roundabouts. If you don’t have any plans with which you could make use of that difference in commitment though, and it makes you feel easier not *having* to give the car back or sell it at any point and roll the dice on equity, sure finance for 72 months!
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oh, it cost for sure. however... with pcp/loan after 4 years the value you own is lower than expected/anticipated car value anyway. actually, you will own in the region of 15k after 4 years. and the value is quite similar for both pcp and loan.
I wonder where did you get 30k from?
the flipside of that is if you do want out early, a loan gives you more flexibility vs being tied in with a lease to a minimum period (and a PCP will often be very close to term before you hit the 50% threshold for VT due to the balloon). when I went for the tesla I looked back at perhaps the last 5 cars which were on PCP - justified at the time as 'well I can change but I also have the option to keep'. Almost in all cases I VTd before term as I wanted to change. So I went with a loan to simplify things for me.
My bad, 25k not 35k total difference between the cost of leasing over that period vs the total commitment you’re taking on to ‘buy’ the car on HP. So at the 4 year point the difference is still quite big (total outlay for lease vs value tied up in car + remaining payments).
Yep totally. If you don’t see the difference in commitment as being tied up and stopping you from doing other things then that makes sense.
I’ve always done the same with pcp. Traded in early. Overall (excluding only my last car which was a bit of a fluke due to covid), I realised this was costing me more than I was content with though, and over the next 3 years want to use the difference between lease and buy to do other things.
It will force me to not switch too soon too.
