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Tesla Finance: Production X Leasing Details & Top-Tier US Bank Financing Rates

Discussion in 'Model X: Ordering, Production, Delivery' started by engle, Oct 24, 2015.

  1. Robbo

    Robbo Member

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    When I got my first S, I focused on this and was told that as long as the loan is not fully paid off by month 36, the RVG was still valid. So I suppose one could pay off most of the loan early as long as you leave some principal outstanding.
     
  2. Jack_L

    Jack_L Member

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    Would we not get the same protection against unexpectedly high depreciation if we financed through Tesla and had the 36 month guaranteed value option? Wouldn't this give much of the benefits of both leasing and purchasing? Thanks for any guidance.
     
  3. ptsagcy

    ptsagcy Member

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    Not really, because they only guaranty 50% on the base price and 42% on the options which is less attractive than the leasing residuals.

    - - - Updated - - -

    The recent announcement that the charger will only be 48 amps is another reason to lease. Based upon the early negative reactions to this announcement, I think TM will offer larger chargers in the not too distant future. That together with the larger battery packs, that we all anticipate, will have a negative impact on the resale value of the early cars.
     
  4. engle

    engle Member

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    Right now, I don't plan to ever resell my X, since my P serial will be < 50 I think. I believe these vehicles will last a long time. I expect to replace the original battery 10+ years from now whenever range degradation becomes unacceptable with one that is 400-500 miles of EPA range.

    I'm still going to lease it to hedge my bets, then payoff the lease residual in 36 months if I haven't changed my mind at that time. However, if the 2019 Model X is self-driving and there is no upgrade path for mine, that it will be hard to keep my original one and I'll probably return and replace it.

    I don't believe in delaying my purchase to wait for the next innovative feature set anymore. I was Model S 4,XXX reservation and didn't get it in 2012 because of the lack of AWD and Mercedes-style driver assistance safety features like blind spot detection, ACC and automatic braking. I also wasn't happy with the cramped back seat head room. I was stuck with a ML 350 SUV lease followed by a short E 350 lease when X was delayed yet again. Therefore, I missed the enjoyment of driving a Model S daily during the past 3 years.
     
    • Informative x 1
  5. ChadFeldheimer

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    Beware that if you buy the car at the end of the lease, you are giving up the $7500 federal tax credit. The $7500 tax credit is incorporated (added) into the residual to reduce the lease payments but is not removed to determine the purchase price at lease end.

    If the $7500 tax credit had been deducted from the original price of the car (as opposed to added onto the residual), this problem would not exist.

    If you want to confirm that you lose the tax credit, calculate your total expenditure under the terms of the lease (that is, add up your downpayment, lease payments, and the residual) and compare to the original price of the car.

    I do not recommend leasing (a Tesla) if you plan on purchasing the car at lease end.
     
  6. Nototrader

    Nototrader Member

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    I think it's a no brainer to finance for 72 months since rates are still really low and will only go up. This way, you don't have to fell bad or worried about putting a down payment on the purchase, unlike with a lease.
     
  7. ptsagcy

    ptsagcy Member

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    On 12/1/15, I got an email from Tesla NA Financial Services with basically the same info but in a little different format:

    Residuals:
    10,000 mile lease: 52% + $7,500 for the tax credit
    12,000 mile lease: 51% + $7,500 for the tax credit
    15,000 mile lease: 50% + $7,500 for the tax credit
    All the other numbers were identical to what you got.
     
  8. Aljohn

    Aljohn Member

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    financing or not --- supposes that one has an alternative --- that is pay cash. Given those alternatives the equation is simple since interest paid is no longer in the tax equation. If one can make more on capital than the interest rate paid then finance. If not then don't. Alternative investments may yield a greater return that the 2.15% indicated above. If it does invest in the alternative and finance. Getting 2.5% return on an investment in today's markets is not highly risky.

    All of that said, it becomes a personal decision.
     
  9. modelxowner

    modelxowner Member

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    Anyone consider taking a home equity loan to pay for the X? Interest rate maybe a little higher but its tax deductible. Whats the pros and cons with this option. I'm thinking of using this option.
     
  10. Blastphemy

    Blastphemy Member

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    I wonder if it would serve the greater good to combine these two threads?

    Tesla Finance: Production X Leasing Details Top-Tier US Bank Financing Rates

    ModelX Leasing question: Residual Value percentage

     
  11. adiggs

    adiggs Active Member

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    I've thought briefly about this option. At least for me it doesn't make sense.

    It looks like car loans are somewhere on the order of 2 to 2.5%. The HELOC I have on my house is at 3.75%. The car loans don't adjust - the HELOC does adjust, and I judge that if there are any changes in the HELOC rate, those changes will be up (though in the larger context, I expect interest rates to remain quite low for an unknown time in the years range).

    I live in a state with 9% income tax, so my marginal tax rate is 37%. Being able to deduct the interest on a home loan means I pay 37% less. If there were 33%, then 3.75% would translate to 2.25% after tax savings. Of course your own marginal tax rate will change things and I'm pretty sure there are other issues that can influence the basic math. If your marginal rate is lower, then that increases the effective interest rate you're paying and makes it harder for the home equity loan to beat the car loan.


    For me, it looks like I can get a lower or at least equivalent rate. It will be fixed for the life of the loan, so I don't add on any risk of the rate increasing. And it's a minor thing, but the loans are then all tied to the property they're used for. If something happens financially and my back is against the wall, with a car loan against Model X, I can give back the keys (I'm sure it's not THAT simple). If I'm using a home loan to pay for Model X and I'm unable to make the payments (it's an admittedly disastrous corner case with little likelihood of actually happening), then it's the house that is at risk (I'd rather not end up with the Model X and no home). So the consequences of any risk occurrence are linked appropriately.


    Bottom line for me - I'll use a car loan to finance some of the purchase if it looks like I can get the ridiculously low car loan rates I've been seeing.


    I suppose another option is leasing - I can't help you there though, as I'm buying and hoping I'm still driving this car in 30 years.
     
  12. DJ Frustration

    DJ Frustration Model X Sig, Former Model S, Model 3 Res

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    What would serve the greater good is someone creating a Auto Finance Rate wiki so that we could easily show TMC members where the best rates are. Combing threads between leasing and financing, which are two different methods of car buying/renting, is counterproductive, IMO.
     
  13. DDG!

    DDG! Member

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    Be careful calculating marginal tax rates --- if you itemize (and aren't in the alternative minimum tax (AMT)) you can't add the federal marginal rate to the state marginal rate (because the state tax is deductible in calculating the federal tax).

    Example: 28% federal rate plus state rate of 9% = 28% + (9% x (1 - 28%)) or 34.48% effective combined marginal rates. Not 37%.

    If you're in the AMT, then adding the two tax rates together is fine.
     
  14. adiggs

    adiggs Active Member

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    Thanks for pointing this out. For me, the difference between 34.5% and 37% doesn't change the decision. For others, being more precise may make an important difference and is good to know.
     
  15. djbakasan

    djbakasan Member

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    Long time lurker on the forums but with the mass of invitations to configure that went out today, I find myself surprisingly in the position to move forward with my order now.

    One thing that I'm a little confused about though is how folks are approaching financing. I'll likely consider financing via Tesla if only for the 50% buy back option--but I want to still shop rates. Given that pre-approvals at your average back are only valid for say, 30 days, maybe 60 if you're lucky... how are folks timing getting their financials in order given a *very* open ended and loose delivery time line. I know from a very tangible point of view that I can afford this, but at the same time, this is far and above anything I've ever been willing to pay for a car before--so the whole process does have me feeling far more on guard and cautious than perhaps warranted.

    Thanks for any advice / tips!
     
  16. Vizir

    Vizir Member

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    i am in a similar situation. from what i read on these forums, tesla financing is the only way to get the guaranteed buyback. the good news is that tesla financing gives you the best rates of 4 banks and you can decide which one to go with. as far as "when", i will be waiting until the DS assigned to you calls you and tells you that you should start the financing part as the vehicle is entering delivery stage.
     
  17. djbakasan

    djbakasan Member

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    Yeah, to clarify, I intend to possibly do some rate shopping on my own from local credit unions. The buyback is a nice enticement to finance via Tesla, but at the same time, given the size of this purchase, I'm loathe to think I'd want to get rid of it 3 years in. If that were the case, I might as well just lease.
     
  18. Vizir

    Vizir Member

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    I'd wait till the DS gives the go ahead to do the shopping around, too. That way you will not be taking multiple hard queries to your credit score.
     
  19. timf

    timf Active Member

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    At this point, the market value of a 3 year old Model S is higher than the buyback guarantee would be. Unless something tragic happens to Tesla in the next 3 years, I would expect the same to hold true for Model X.
     
  20. akordz

    akordz Member

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    Anyone have the fine print on the guaranteed buyback? I think it would be very interesting to see what they consider when they make their offer.

    Also, for what it's worth, I was just told it is 43% of options/upgrades and not 42% anymore.
     

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