the rare nuance to counter that caveman "always lease depreciating assets" cliche that people interpret as dictum.
probably the 2nd most annoying one in the car world, after "horsepower sells cars, torque wins races"
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Own vs Lease?
- Thread starter KAnder04
- Start date
the rare nuance to counter that caveman "always lease depreciating assets" cliche that people interpret as dictum.
probably the 2nd most annoying one in the car world, after "horsepower sells cars, torque wins races"
mrbulk
Member
I am unsure if folks are confusing the Model 3 lease (with no consumer buyback allowed) and my Model S lease (I can choose to buy back or not). So in this way at least, I am guaranteed a depreciation floor, yet am not tied to it and could actually make a profit (selling it for more on my own and paying off the lower residual) in case my particular vehicle is enjoying a better resale value used than the residual value initially established to formulate the lease.
Dickie_L_J_O
Member
Hi,
I have an agreed residual value and buy-out waver with Tesla for my Model 3, should I wish to purchase at the end of the lease.
Perhaps it’s different country to country, with no one-size-fits-all answer, a bit like this thread’s topic.
Cheers,
- Dickie
I have an agreed residual value and buy-out waver with Tesla for my Model 3, should I wish to purchase at the end of the lease.
Perhaps it’s different country to country, with no one-size-fits-all answer, a bit like this thread’s topic.
Cheers,
- Dickie
Maybe its different in switzerland?
https://www.tesla.com/support/tesla-leasing
The relevant quote from that tesla official page:
=========================
Can I purchase my Tesla at the end of my lease?
You can purchase your Model S or Model X at the end of the lease for its residual value, plus remaining amounts owed under the leases, taxes, official fees, etc. associated with the purchase. Model 3 will not be available for purchase at the end of the lease. Review full terms in your lease agreement.
========================
So maybe they have different terms where you are. Is there a tesla switzerland website with model 3 leasing information?
bannedgoose
Member
TT97
Active Member
Are you asking on how sales tax credit works on trade-ins or how it applies to leases?
As you are only paying sales tax on the lease payments, you only pay on the total payments and not on the total value of the car. [This is the case in California, don't know if other states calculate sales tax on leases differently.]
For example, in L.A., sales tax rate is 9.5%. Cash price on Model 3 Long Range is $46,990. 36 mo lease, 12,000 miles/yr and no downpayment is $631/mo (per Tesla order page).
On the cash purchase ($46,990*9.5%) - sales tax is $4,464.05. On the total for the lease ($631*36*9.5%) - sales tax is $2,158.02. This is a savings of $2,300 in sales tax for a three year hold (and likely the $4,464 sales tax is being rolled into a loan which increases the cost of the sales tax even more).
Why are RV on Model 3 so much higher than Model S? Is it solely based on demand or is it just the way Tesla has them? It is like they don’t want you to lease a Model S, as those RV are terrible.
every lease has strict mileage limits. leases above 10-15k annual miles become *very* expensive quickly. Every EV gets "cheaper" the more you drive it ... high initial fix costs, low variable operating costs (electricity and minimal maintenance). Tesla's also have a terrific residual value... leasing an EV - especially a Tesla - doesnt make sense
TT97
Active Member
Your arguments make more of a compelling case to not buy new as opposed to leasing vs buying. Naturally, if you drive 25k milers per year, it doesn't make sense to lease a vehicle with 15k annual miles (of course, you can still do a high mileage lease but not sure if Tesla offers those). The high initial fix cost is a reason to lease vs buy (which is also contradictory to your terrific residual value statement which also benefits leasing). Low variable operating costs are the same regardless if you buy vs lease.
Everyone's situation is different, blanket statements make no sense. You can pick up a used 500e for under $7k, it's a perfect car for my in-laws that live with us and never drive farther than 10 miles away; I would never recommend a Tesla to them but also would not recommend a used 500e to most other people I know.
That makes no sense. I always lease, as always want a new car every two or three years and in warranty and drive about 18,000 miles a year. My question was why are Model S RV values so low and Model 3’s are much higher? If the RV are true, then buying a Model S makes no sense either as it must depreciate quite fast compared to a Model 3. If Model S did hold its value well, then RV values would be much better or similar to Model 3.
Don’t care about the own vs lease thing, as I alway will lease and my wife will always pay cash and buy, so two different mentalities in the same house... LOL.
Subvented leases aside, RVs are based upon future resale value, which is going to be a function of demand, original price, etc. Expensive vehicles typically depreciate faster. The S is a more expensive vehicle than the 3. The S is also a bit longer in the tooth, and could use a major refresh, which will also depress RVs.
That makes no sense. I always lease, as always want a new car every two or three years and in warranty and drive about 18,000 miles a year. My question was why are Model S RV values so low and Model 3’s are much higher? If the RV are true, then buying a Model S makes no sense either as it must depreciate quite fast compared to a Model 3. If Model S did hold its value well, then RV values would be much better or similar to Model 3.
Don’t care about the own vs lease thing, as I alway will lease and my wife will always pay cash and buy, so two different mentalities in the same house... LOL.
Because they expect the depreciation to effect model S harder than model 3? Kind of like asking why the RV on a 3 series is higher than a 5 series, or 4 series. its just how they set them, and since you lease all the time, I am sure you know that different models of a brand can have vastly different RVs.
I suppose the other factor is having an attractive lease figure drives sales, and it's likely that Tesla wants to drive sales of the Model 3 more than the Model S. Of course, it wants to sell all of its vehicles, but volume seems important to Elon and it's easier to push out lots of 3s than esses.
Sort of... but as I think I mentioned before in this thread, Tesla doesnt have a captive finance arm, so they cant play with the numbers like Toyota motor credit, BMW Financial Services, Ford Motor Credit, etc etc can.
Those companies can basically "invent" the lease residuals to drive sales, and they dont have to be rooted in any sort of reality. Fairly easy for them to inflate the residuals and also bump up the MSRP (for example) so when the cars are upside down when people turn them in, its more of a "paper" loss than a real one.
If one was getting a lease from a regular bank, the residual would be closer to what the bank would think is actual value in 3 years, and since tesla goes through banks instead of their own financial company (at least now), the residuals are "closer" to what is expected in reality.
Yes - you are probably right. Looks like I will be leasing another 5 Series LCI again. BMW is just so aggressive and if I went to Tesla would want a Model S. Really like the Tesla’s and would love to get one, but BMW is so aggressive, that it makes it hard to change. Changing from a BMW 5 Series to a Model 3 is not as easy as going to a Model S. At least that is my opinion. And not like BMW 5 Series is a bad car. LOL.
Yes - you are probably right. Looks like I will be leasing another 5 Series LCI again. BMW is just so aggressive and if I went to Tesla would want a Model S. Really like the Tesla’s and would love to get one, but BMW is so aggressive, that it makes it hard to change. Changing from a BMW 5 Series to a Model 3 is not as easy as going to a Model S. At least that is my opinion. And not like BMW 5 Series is a bad car. LOL.
Yeah, my personal feeling is the 5 series compares favorably in that segment, especially since the model S would be like a M550, and you could still lease an M550 for less than a model S fairly easily, I would bet. This is, provided you are comparing car for car, and not counting "fuel" savings.
BMW 5 series are really nice cars,.
TT97
Active Member
Tesla doesn't need a captive finance arm to play with the residuals. The bank is not getting the car back at the end of the lease, Tesla is; the bank doesn't care what the residual value is. For the bank, it is in essence a loan with a balloon payment at the end of the term. They don't care if that balloon payment is $10 or $100,000 as long as they get their balloon payment.
Having said that, are you sure Tesla doesn't have a captive finance arm? I don't know who does their leases, but they do have a subsidiary Tesla Finance LLC that "originates and services leases". They also show lease income in their financials that they wouldn't have if they didn't control the leases.
They might have one now, they didnt when I was looking into leasing a tesla in 2018. They were all done by Bank of America, or other financial companies. Someone with a current lease would need to say who its through.
