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Tesla Lease offer 70D: reasonable or not?
- Thread starter rog
- Start date
vdiv
Chief Grump
Here is a statement that once accepted will make you sleep a lot better: nothing about driving a Model S is reasonable. 
That said the main point of the lease is to lower your monthly payment. As such reducing the capital upfront (up to 25%) helps you do that even further. Where it can hurt you (other than not having that money in an interest-bearing investment) is if you need to terminate the lease early. If you do that you lose your upfront payment and USBank charges you a fee based on the remainder of the lease from an extra 2.5 lease payments down to nothing.
That said the main point of the lease is to lower your monthly payment. As such reducing the capital upfront (up to 25%) helps you do that even further. Where it can hurt you (other than not having that money in an interest-bearing investment) is if you need to terminate the lease early. If you do that you lose your upfront payment and USBank charges you a fee based on the remainder of the lease from an extra 2.5 lease payments down to nothing.
Everyone says you don't get the $7,500 refund, but wouldn't that money be put back into then car as a cap reduction? Or does the bank keep that as pure profit?
What many people are forgetting is, as the end of the lease, there's going to be a huge delta between the residual price and the typical used car price. So if you sell it yourself, you can make up a lot of the "loss" compared to buying without having a huge down payment (though $5,000 is HUGE for a lease) and having a lower monthly payment. I'm sure there are many who own their own business and love the low residual because we'll buy it with our personal money at the end of the lease after we wrote off the lease payments through the business.
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What many people are forgetting is, as the end of the lease, there's going to be a huge delta between the residual price and the typical used car price. So if you sell it yourself, you can make up a lot of the "loss" compared to buying without having a huge down payment (though $5,000 is HUGE for a lease) and having a lower monthly payment. I'm sure there are many who own their own business and love the low residual because we'll buy it with our personal money at the end of the lease after we wrote off the lease payments through the business.
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There is no penalty for early termination. At least not official - Tesla will appraise the value of the car at the point of termination, and you pay the difference between that appraisal and the remaining balance due (assuming that the appraised value is lower than what is due on the car - which is almost 100% the case, especially if termination is more than a few month before the lease end).
The $7.5k is added to the residual in order to reduce monthly payments.
Omar Shahine
Member
Thanks for putting this together.
Big error in your spreadsheet
There is an error here. You have to divide the interest by 12. Right now if you add the principal and the outlay you'll see the loan payment greatly exceeds the loan (50K + 40K = 90K and Loan is for ~72K). If you correct the calculation the Lease vs Finance is much closer
C11 formula should be:
=Financing!B4+CUMPRINC(Financing!B1/12, Financing!B3, Financing!B4, 1, C7*12, 1)
The interest needs to be divided by 12 which is missing.
If you change that Principal goes about 20K.
tsfl
New Member
Thanks Omar! Corrected the spreadsheet with that info - it makes a $12,600 difference in the principal balance. Comes out to pretty much even leasing vs purchasing with that change (depending on what you assume you sell the car for). I also put in telsa's buyback price in there just for comparison (also pretty much even).
Nissan is trying to incentiveze you to get a Leaf out the door with lowered monthly payments and then keep it at the end of the lease. both Chevy and Telsa add the $7500 tax credit to the residual meaning that they keep the tax credit.
There was a time when the $7500 tax credit was not added back to the residual for Volts leased through US Bank but I don't think that is happening anymore. I leased with Ally and did not receive this benefit. But I knew I would be getting a Model S at the end of my lease.
regarding a Model S lease: I specifically asked this what happens to the$7,500 tax credit and was told specifically that Tesla adds it back to the residual, which means if you choose to buy your Model S at the end of the lease, you lose the tax credit.
When I leased my LEAF, Nissan subtracted the $7500 federal tax credit from the (already discounted) price of the car and calculated the monthly lease payment based on that. Numbers were approximately:
MSRP $31,000
Discounted price $28,000
Less federal tax credit $7,500 = $20,500
Monthly lease fee calculation was based on that.... at least, that's what they told me!
This is not accurate.
The tax credit goes to the 1st title-holder of the car. That's why inventory Model Ss are eligible for the tax credit but CPO cars are not. (CPO cars were previously titled, but inventory cars have yet to be titled so the credit can still be claimed by the 1st purchaser.)
who appears on the registration is less relevant.
when you lease, the leasing company is the title holder and the 1st to be titled on a new vehicle so the leasing company gets the credit.
Now weather your leasing company is nice enough to pass this credit onto you is a different story. The point here being that Nissan does it but Tesla does not.
With regards to financing, it is not preferable to do that for 6 years as the amount you pay in interest goes up significantly and if you want the sell the car 3 years later, the amortization schedule completely screws you as you will be paying off very little of the principal over the first 3 years. On a 6 year loan at the beginning you are pretty much paying inters and very little goes towards the principal. It is a horrible idea to finance a car for 6 years and sell after 3 years as you are going to en dup with a car with a huge amount of negative equity. Either lease for 3 years or finance for 3 years.
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This thread is interesting to me, and this comment more so....can you elaborate? I'm by no means an expert on US taxation, but since I have a small business, I do have something to write-off against. At one point I tried to make the argument to my CPA that my Model S (purchased/loan) was a tool of the business, since I cannot design new products without it (which is perfectly true, but she didn't accept it). My business miles perhaps account for 10% of annual mileage, so there's little tax benefit based on mileage deduction.
I've been considering selling my S85 to upgrade to some of the newer toys, but because we're in the middle of building a house, that's a tough business case, but a lease would help, especially if the payments can be written off to the business. Would leasing via the business (which is just a sole prop) overcome the need to provide evidence the car is a 'tool' of the business?
Don't worry, I won't hold anyone to this, but there's people on this thread that know what they're talking about, so would welcome any advice.
Get a new accountant. I put my wife on the payroll to write off a car for her too. We do have a 3rd car as the "house hold car."
You lease as you normally would with your name, but pay with the corp account. If the auditor want's to be strict, you're suppose to have a log for mileage and where you're driving to and from. I don't know anyone who does that.
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If you BUY a vehicle with I think 6,000 gross vehicle weight, you can write it off as a working truck. You can spread it out over a few years, or all in one year. Something like a BMW X5 just made the cut off.
A lease is totally different situation.
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