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Tesla Lease offer 70D: reasonable or not?

Discussion in 'Model S: Ordering, Production, Delivery' started by rog, May 31, 2015.

  1. rog

    rog Member

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    I'm looking into leasing the 70D, and I'm wondering if anyone here can comment on what tesla leasing is offering:

    Cash price: $81k
    term: 36 months, 10k miles / year
    Capital cost reduction: $5k
    monthly payment: $894
    Residual: 63% ($51,332)

    Thoughts?

    Cheers,
    Rog
     
  2. Stoneymonster

    Stoneymonster Active Member

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    The other important number (besides the residual) is the money factor. You should ask what that is (or compute is from these numbers). It's the interest rate of the loan.
     
  3. travwill

    travwill Member

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    I dunno, if you had a loan and own, you say would have a minimum $800 of a $894 payment going towards principle, leaving you with right around $52K left on the loan as well. You would also get a tax credit at minimum of the 7500 federal credit. Assuming you applied that it would be like $45K left.

    This doesn't take into account sales taxes, which you would pay on the full purchased amount, and only use for lease, but that is just about 3K difference at most. So even with that lets say you end up with around 48K remaining when purchasing after 3 years due.

    The other factors then that would make we want to purchase instead would be:
    - No 10K mile limit
    - The market for resale is probably over 48K after 3 years still or at least that much or around 50K. The CPOs for 60s right now that are a couple years old is around 60K in average builds & 70D is a higher value with AWD/larger battery.

    -T

     
  4. bonaire

    bonaire Active Member

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    #4 bonaire, May 31, 2015
    Last edited: May 31, 2015
    I like travwill's notes on considering ownership. Right now, $1.07+ per mile to lease it for only 10,000 miles a year. I think the extra mileage charges are under $1.00 per mile so it makes sense to drive extra miles on the lower lease mileage choice.

    rog, what is the "cash down" portion? It would factor in to the total overall COO (cost of ownership). I don't think Tesla or other financing have zero-down options.

    There are some low-mileage CPO cars on the list now that if you were to buy one and use it for three years, may be able to sell it for 20,000 less than bought or a COO of under $.75/mile. But I think people are really leaning toward D models and the RWDs are becoming "objects in the rear view mirror".
     
  5. rog

    rog Member

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    Thanks all for your replies so far!

    Cash down is min. 5k - and the D is exactly the reason why we don't go for the CPO, there simply are none in our area (NYC)...
    We are not going to make more than 10k miles / year - yearly mileage on current BEV and ICE combined is something like 7k.
     
  6. patrick40363

    patrick40363 Member

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    It is never a good idea to put any money down on a lease. If Tesla had zero down lease options I might have leased instead of buying.
     
  7. smilepak

    smilepak Member

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    What is the penalty for early lease termination?
     
  8. zer0cool

    zer0cool Member

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    No, current Tesla lease offers are poor. Basically based on my experiences and research, various brands approach leasing differently. BMW for example has a lease strategy and sets residual and money factors to induce people to lease instead of buy (it basically makes no financial sense to buy most BMWs), while VW companies like Audi or Porsche are the exact inverse, setting horrible lease numbers to induce people to buy instead. Tesla appears to be in the 2nd camp.

    I assume your number above does not include the 1200 doc fee and any taxes or government fees. The car you have quoted is basically a low-mid 70k car and the total monthly payment is 1032/m for 10k miles /yr. Last summer, I received a BMW550i quote (MSRP 74.5k) for 15k miles per year for 36 months at 745/m, 1100 due at singing, all taxes and fees included. This is more than 300 dollars cheaper (after you add in taxes and fees to the Tesla, and more if you want 15k miles per year) per month even though the two cars are in the same price range.

    Basically leasing the Tesla vs a similarly priced car results in monthly payments that are 40% higher (300/745)... Sure you can probably account for some of that difference with gas cost, but also note that BMW doesn't have any maintenance cost in the first 4 years or 50k miles (which covers the full term of the lease).

    So is the 70D worth 40% more per month? I think no.

    But if you buy and finance instead, the payment difference is much less. Given poor leases for Tesla, like the case of Audi or Porsche, it's better to buy.
     
  9. patrick40363

    patrick40363 Member

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    You pay off the contract. That is what would have happened with my last lease with US Bank.

     
  10. zer0cool

    zer0cool Member

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    #10 zer0cool, Jun 9, 2015
    Last edited: Jun 9, 2015
    Ya there isn't really a "penalty" per say with leases, but you just have to pay off the full amount of the lease + residual value. Due to how finance and rent charges are calculated, on a car like Tesla you ll end up paying thousands if not 10k more than the original MSRP if you decide to pay off the lease early...

    Simple calculation given the above example: 81k, total lease payments = 37.2k, residual 51.3k. Basically if at any time during the lease you decide to pay it off, you will end up basically paying 37.2+51.3=88.5k for the car, which is 7.5k above MSRP.

    If on the other hand you buy the car, get 7.5k federal refund, effective price is 73.5k. Therefore, if you decide to end the lease at any time before lease-end, or even buy the car at lease send, you will end up paying 88.5-73.5=15k more for the car.

    Basically Tesla lease makes no sense at the moment... Or in an unlikely scenario, it would only make financial sense if you believe a 3 year old 70D with 30k miles (based on above lease) will sell for less than 36.3k (73.5-37.2) in 36 months. I strongly believe it will sell significantly higher, so even better case for Tesla lease making no sense.
     
  11. rog

    rog Member

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    The 7.5k above msrp is basically the tax credit that is added onto the residual in order to lower monthly payments, or an I getting something wrong?
    Or does that just coincidence with the amount of interest on the lease?
     
  12. zer0cool

    zer0cool Member

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    Just coincidence and the difference turns out to be 7.5k. It has nothing to do with federal refund.
     
  13. tsfl

    tsfl New Member

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    I've seen a few discussions on the lease vs buy and we were doing the calculation ourselves, so I thought I'd create a simple spreadsheet so you can do the calculation yourself. Plugin your car cost, monthly leasing amount (from tesla's website) financing costs, sales tax etc. and this will give you an idea of your gain/loss after three years. It doesn't take into account the time value of money, but it should be relatively accurate. For us given that we are planning on getting rid of the car after three years, didn't mind the lease restrictions and weren't sure of the resale value - it made financial sense to lease.

    Please let me know if you see any issues - I know I could have made mistakes in here!

    Tesla Lease vs Finance - Google Sheets
     
  14. Oba

    Oba Member

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    I did a similar comparison on a spreadsheet, and came out far ahead at three years with a lease, even if I drive 75,000 miles in three years (I'll pay an additional $7500 at lease turn-in at 25 cents per mile over 15,000 miles per year).
     
  15. tsfl

    tsfl New Member

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    Let me know if I made any mistakes in my spreadsheet, but for us it came out at pretty close. Things that could make a big difference - your financing (lots of variables), state incentives (not included) and whether you can claim the lease costs as a business expense (not included).

    - - - Updated - - -

    Sorry, pretty close if you assumed you sold the car at 60% of the original cash value, otherwise it was a big difference - leasing was way better if you sold the car at 50%.
     
  16. rjcbox

    rjcbox Member

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    Isn't that the big attraction of leases used for business ? When used for business you can write off lease payments, but need to use mileage deduction method if financed (bought).
     
  17. Fiebrudo

    Fiebrudo Member

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    Based on my own calculations, Leasing vs buying from Tesla (in order to insure the "buyback guarantee") come out very close. My conclusion, based on no business deduction advantage:

    Leasing: Peace of mind that you return the car and walk away. Monthly payments are less. Less upfront money to pay (downpayment and taxes)

    Buying from Tesla: You keep the buyback guarantee (hopefully nothing fishy happens), you can sell above the buyback price to a third party and come out ahead by $3000 (Spend more during the 3 years of payments, recover at the end), or keep the car for as long as you want.

    Anybody would like to challenge the above reasoning? Please? Need to decide within the next week.

    Thanks
     
  18. smilepak

    smilepak Member

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    My offer was similar...

    Car Price - $84200
    § 15,000 miles per year lease $984 Payment + Tax ($51284 Residual Value)
    o Capital cost reduction: $5,000 minimum + tax ($2,500 on file from your order payment)
    o Acquisition fee: $700 + tax
    o Title/registration fees: $695
    o Disposition fee: $395 (applicable only if you turn your car back in at the end of your lease)


    Not sure what is the whole "Disposition" fee all about. I have to pay to return my lease? Crazy.
     
  19. jeffro01

    jeffro01 Active Member

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    FWIW, every "company" charges this when you return your lease, it's waived of course if your getting a new one from the same place to replace the one your turning in. So if you get a new Tesla when your lease is up you won't pay the disposition fee...

    Jeff
     
  20. Oba

    Oba Member

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    You're making assumptions based on other car company's operating practices... it may not apply to Tesla.
     

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