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Picking up my 85D in 3 hours! Can I get a few glances at these lease details?

Discussion in 'Model S: Ordering, Production, Delivery' started by TheAccuser, Sep 8, 2015.

  1. TheAccuser

    TheAccuser Member

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    I know the way I structured this lease is not for everyone, but I wanted to keep my lease payment at $1000/month. I also thought about purchasing, but at the end of the day I wanted to easily be able to turn this back in to Tesla in 3 years so I can get a shiny new and fully updated car without worrying about selling on my own.


    Before I sign on the dotted line, can I get a few opinions of the lease details below? Anything funky going on?

    Capture.JPG
     
  2. jtpassat

    jtpassat Member

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    i'm no expert but looks straight forward as long as you realize you are paying the equivalent of 8.2% in interest charges (rent charge).
     
  3. TheAccuser

    TheAccuser Member

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    Is that because I'm paying down the lease with cap reduction?
     
  4. jtpassat

    jtpassat Member

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    "Line F: Rent Charge"

    I took that value 8,573.40 and divided by the cost of the car 104,200 and got .082 which is 8.2 percent. Not sure where they got the 8,573.40 value from but that's what they are charging you.
     
  5. djn04

    djn04 Member

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    It doesn't work that way. Yes, he's paying 8.2% of the MSRP in rent charge, but that's not the same as an 8.2% APR loan.

    Ask Tesla what the money factor is and then plug that into one of the online tools to convert it to an interest percentage.

    For a variety of reason I would only put down the minimum and use the difference towards your monthly payments.
     
  6. MsElectric

    MsElectric Active Member

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    Not to sound doom and gloom but I see that you have put down $21,000 on a car you are leasing.

    God forbid the car is totaled (let's say after 6 months), have you looked at the fine print of your insurance and lease documents to see what amount of that $21K you will get back? Again this is not to sound doom and gloom but you should research this aspect to ensure you know how much of the money you put down you will get back.

    Perhaps a scenario like this is the reason that @djn04 suggested that you put down the minimum possible and use the difference towards your monthly payments. Also if you own a business and plan to deduct your lease, it helps to have a higher monthly lease payment as that increases your deduction.
     
  7. patrick40363

    patrick40363 Member

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    You don't get any of the down money back if the car is totaled. When I lease I always do zero down/drive off. I would have leased my Tesla but didn't like the lease terms so I bought instead.

     
  8. TheAccuser

    TheAccuser Member

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    If you total a leased car, they don't simply replace the car? That doesn't make any sense.
     
  9. MsElectric

    MsElectric Active Member

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    Let's consider the following scenario (same as OP):

    Bought a car totaling $104,000
    Paid a capitalized cost reduction of $16,000
    The amount the lease company is essentially "buying the car for" in this case is: $88K.

    And let's assume for some unfortunate reason the car is totaled after 2 months of use. So if the car is totaled after 2 months, isn't the fair and reasonable thing to do the following?

    Subtract two monthly payments of $1,000 from the $88K as that money has already been received by the lease company so the remaining "capital value" of the car is now $86K. So if the car is totaled after two months and the insurance company writes a check for $95K, should the OP then not receive $9K?

    How on earth can the lease company finance $88K and keep the entire $95K payout from the insurance company? Some insurance companies actually pay out the full value of the car in the first year and that could make this calculation even more egregious.

    Whatever the case, the OP should really figure this out and get what they will do in writing because you are putting down a huge sum of money for a lease. If they keep all the money the insurance company would pay out in the event the car is totaled, you should really reconsider putting down that much money on a lease.
     
  10. MsElectric

    MsElectric Active Member

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    So did you pick up your car?

    Any answers/news on the situation with your car in case of a total loss and how much of the money you put you can get back?
     
  11. TheAccuser

    TheAccuser Member

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    I did pick it up yesterday at noon! Prior to taking delivery I probably have only been behind the wheel for 10 minutes max at a time. Test driving this car does not do it justice. I'm blown away.

    I spoke with my insurance agent about this concern, and they would do a total replacement regardless of how much was put down on the lease. I can get details if anyone would like for their own piece of mind for leasing.
     
  12. MsElectric

    MsElectric Active Member

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    Congrats!

    Yes, please can you share the details? We are looking into leasing for tax purposes and had planned on putting down about $25K as a cap cost reduction and the lease would be structured with high monthly payments for maximum deductibility so we can buy the car off at the end of the lease period for very little $. Since we are essentially building equity with the lease (opposite of what usually happens) the situation with the car being totaled and the lease company keeping that $ has been a major concern.

    How will the replacement actually work with our insurance and lease companies though? The car is under the name of your lease company right? So would your insurance company be essentially buying a replacement car for your lease company?
     
  13. David_Cary

    David_Cary Member

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    MsElectric - I'm not sure they will let you cut down your residual value. Seems like they should, but they may not. They didn't allow greater than 25% CCR - which seemed strange to me - but is an example of them having rather strict rules.
     
  14. EVenthusiast

    EVenthusiast Member

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    #14 EVenthusiast, Sep 9, 2015
    Last edited: Sep 9, 2015
    This doesn't make sense, unless you found the unicorn. If your vehicle is totaled, the insurance company might pay it off at best, but they aren't going to give you back your $21k! So now you don't have a vehicle, and are out $21k!

    Most states (including OH iirc) charge sales tax on your down payment as well.

    I'm not a tax attorney, or a CPA, but this is one bad lease IMO.

    Fantastic car tho, and it sounds like everything is done, so at this point, just enjoy the vehicle, and learn from this experience.
     
  15. MsElectric

    MsElectric Active Member

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    Except I will not be using Tesla for the lease deal, because as you found out their lease policies aren't the best... It is especially horrible how they add the $7,500 credit to the residual to almost force you to not consider buying the car back at the end of the lease period...

    What we'll be doing is structure the lease so that we are able to write off most of the value of the car as a lease business deduction and then buy the car outright at the end of the lease period for practically nothing. Since we will in effect be building "equity" in the car during the lease period the scenario of the car being totaled is a big concern of ours, especially because the car is not technically in our name.

    This is why I am so curious to know what happens if the car is totaled 4 months into the lease and you've put in tens and thousands of dollars towards the car in the form of a large Capitalized Cost Reduction as well as high monthly lease payments.

    My fear is that the insurance company will write the check out to the lease company, as they are the "owner" of the car and then I'll be locked out of the "equity" that i have built up in the car.

    - - - Updated - - -

    It is not about the insurance company giving back that $21K, it is more a matter of that $21K being applied to the positive equity of the car. My question is does the insurance company write the check out to you or the lease company? If the check is written out to you then you essentially get part/most of that $21K back because the Capitalized Cost Reduction has already been applied to the car.

    It starts getting tricky if the check is written out to the insurance company as they technically then owe you a check for the difference between the value of the car and what the insurance company provided. For example, if the insurance company gave a check for $85K and the car's value pre-accident was $70K, then you are owed the $15K difference. This situation would only arise if you had put a bunch of money up at the beginning in the form of a Capitalized Cost Reduction or you structures your lease payments to be much higher than monthly depreciation.
     
  16. UMD86

    UMD86 Member

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    Without the down payment if you were to take the raw numbers it looks like APR is 2.99%

     
  17. AuKirk

    AuKirk Member

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    I have an 85D on order and I asked about this issue on "what happens if the vehicle is totaled and the insurance payoff is less than the cost of getting out of the lease"... here is the answer I received:

    Therefore, you do not need to buy Gap protection through your insurance company, which is only a few hundred anyway. However, I do think you will lose any cost reduction you put down at the time of the lease.
     
  18. ArtInCT

    ArtInCT Always Learning

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    #18 ArtInCT, Sep 10, 2015
    Last edited: Sep 10, 2015
    Here are a few tips for Auto Leasing which I have used:

    1) Independent Auto Leasing Firms / credit unions, often are more competitive with their APR or Money Factor Rates.

    2) Up Front Money - not a good idea if used to lower your monthly lease payment - Up Front Money is typically NOT refunded in insurance claims (Accident Total or Theft or Fire)

    3) GAP Insurance is a must - this covers you for the difference in the negotiated end of lease residual value and the actual end of lease value of the auto

    4) know your end of lease excess mileage rate, typically 15 to 25 cents per mile over the agreed upon mileage of the lease, you need to build your lease to cover your expected annual mileage X the number of lease years. You do not want to go under or over by many miles.

    5) obtain and read the end of lease condition guidelines for a clear understanding of normal wear and tear... this is pretty important as some leasing firms nit pick everything

    6) never lease for a time period that is greater than the auto's warranty period. Typical leasing periods are 12, 24, 36 and 48 months. Understand the mileage limits with the time period you are choosing for the lease.

    7) negotiate purchase price first.... in the case of Tesla that is not really a factor other than perhaps CPO?

    8) negotiate end of lease purchase price or have it divulged (at the end of this lease If I want to but the car what will I pay?) this is a residual value after the lease is up.

    9) leases are not free, the key items are total amount being leased, years, residual value and APR or Money Factor. In addition there often are one time fees up front fees such as
    registration, sales taxes, lease acquisition fees, GAP insurance fee.

    10) Know the current new car auto loan APR annual percentage rate... you can go to http://www.bankrate.com to find this out. Let us say this is 4.2% APR. So you can convert this to a Money Factor by dividing the rate by 2400, in this example 4.2 / 2400 = .00175 Now compare this .00175 to the money factor your potential leaser has given you to see if you are getting a good rate. Lower is better, higher is not as good.

    APR / 2400 = Money Factor
    or
    Money Factor X 2400 = APR

    11) If believe that if you lease a Tesla, you cannot claim the $7,500 Federal Tax Credit for EV's in the year you lease the car, instead, that credit is owned by the leasing company so double check this fact.

    12) If you live in a state or district/city that charges an annual property tax (sometimes called a registration fee in some states/cities) on automobiles, then that annual cost will be yours to pay, the leasing company does not typically pay this annual property tax.

    13) Your FICO credit score may have a large effect on the APR / Money Factor you are given. Know your FICO score and if it is high 800 or better then use this to your advantage when dealing with the APR / Money Factor aspect that the lessor provides.
     

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