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Tesla personal lease program now available

Discussion in 'Model S: Ordering, Production, Delivery' started by bigdomer, Oct 6, 2014.

  1. bigdomer

    bigdomer Member

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    For those of you with reservations, check the bottom of your My Tesla page under financing. click on apply for leasing and you will see the new option.
     
  2. Raffy.Roma

    Raffy.Roma Active Member

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    For those of us not having a reservation is it possible to know how this new personal lease program works?
     
  3. bigdomer

    bigdomer Member

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    #3 bigdomer, Oct 6, 2014
    Last edited: Oct 7, 2014
    Not sure how/if it works internationally. U.S. version is $5,000 down, $700 acquisition fee, $300 disposition fee, residual for 36 bmonths/15k miles is the same as the resale guarantee (50% of S60 cost plus 43% of all options including 85 upgrade), 12k mile lease is available for about $50/month less, money factor is .00104 (2.5%). I tested the math in the design studio and it is accurate. One just needs to add sales tax to the monthly payment from design studio to get the final number.
     
  4. No Tailpipe

    No Tailpipe Member

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    Check the "Order" option on the Tesla Motors | Premium Electric Vehicles site. When building your tesla it now shows three tabs on the right...Finance, Lease (NEW) and Cash.
    Up front fees are first month lease payment plus $5000 at signing for 12K per year. There is an option for 15K per year too. First monthly payment and up front fees does not include any state incentives in CA, CO and MA.

    However, it doesn't show how many months the lease is for...I'm guessing the above numbers represent three year lease.
     
  5. timf

    timf Member

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    Yes, it is 36 months. There is fine print at the bottom of the page that gives the details. It's not available in every state, and you don't get to claim or receive an incentive equal to the federal tax credit. For some people it may be desirable, but the monthly payments are still extremely high and don't really provide a savings over buying.
     
  6. Tedkidd

    Tedkidd Member

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    Kind of a bummer it doesn't factor in the credit AND uses a pretty terrible residual assumption. Other EV's seem to do both, driving monthly payment down really low.
     
  7. breser

    breser AutoPilot Nostradamus

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    Tesla isn't reporting a profit, so if the lease is actually from Tesla then there's no tax for them to get the credit on and as such they'd have to just eat the credit.
     
  8. shrink

    shrink Member

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    Fair point, but if Tesla isn't reporting a profit, how can they finance a lease? There is usually a leasing company behind a lease and the leasing company is presumably profitable and can therefore claim the $7500 tax credit. It would be better if that is passed to the lessee to lower the monthly payments - if a separate financial institution is, indeed, financing these leases.

    Can anyone with a current business lease clarify?
     
  9. bigdomer

    bigdomer Member

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    #9 bigdomer, Oct 7, 2014
    Last edited: Oct 7, 2014
    I am not sure about the existing business leases, but I was told yesterday that the personal leases are going through Tesla's new captive finance company and are not being backed by a third party financial institution. Breser is exactly right that Tesla, as the parent company to the captive finance arm, would not recognize any current benefit of the lessor tax credit due to the cumulative tax net operating loss incurred to date. Tesla finance has advised me several times that they know that they could pass the credit on to us in the form of cap cost reduction, but will not do that since they are getting no benefit on their side. What this means is that perhaps once they exhaust their tax net operating loss, then they will consider the tax credit in the pricing of future leases.

    - - - Updated - - -

    There definitely is not a savings over buying unless one drives a ton of miles for business and will get to deduct a good portion of the lease payments.

    One interesting thing that I proved out is that the net out of pocket cash between a 36 month lease or a 84 month resale guarantee loan with Tech CU is almost exactly the same to the dollar at the three year mark where one would turn the car back in to Tesla. This is even net of the federal tax credit on the purchase side. The answer is not materially different if one uses a 72 or 66 month loan. I will admit that I did not take the time to present value the analysis (for things like taking the tax credit in year one). However, I have concluded from this analysis that there is no reason to do a longer term resale guarantee loan with the new personal lease program now being available.

    For those that keep their cars a long time, I still like the idea of cheap money over at Energy FCU (or one of the other CUs frequently mentioned on this board). Unfortunately, I tend to trade cars every 30 - 36 months (or less) and likely need to consider the new personal lease even though the monthly payments are high, but the upfront cash is low.
     
  10. Tedkidd

    Tedkidd Member

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    Thanks for doing the math.

    My take is they are missing opportunity to lower lease cost by $180 a month and pick up more buyers by not having an entity that can benefit from the tax credit.

    $180 +/- a month is a fair amount of money to me, almost 15% of the lease payment. I have no use for the tax credit. Also, there is a lot of uncertainty in this new market. I like the "wait and see" of laying off depreciation risk to a leasing company for the first three years. (look what happened to the early Volts)
     
  11. JST

    JST Active Member

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    Interesting about the similarity in outlay at the three year mark. Another variable is the opportunity cost of whatever down payment you put down on the loan, which will likely be greater than the $5K cap cost reduction on the lease; OTOH, I've long been of the opinion that you should put nothing down on a lease, since a total loss of the car would generally mean you were just out that money. $5000 is a lot more than I would ever want to put down as cap cost reduction.

    Sales tax treatment may be different, too, depending on your state, though in VA they assess tax on the full value of the transaction, not just the lease cost.

    It would be worth exploring how easy it is to buy out the lease at the end of the transaction. I suspect that (again, depending on the state) it may be easier to sell the car privately or wholesale if you have a loan subject to the RVG than if you are leasing the car, which you may want to do if the residual ends up being higher than expected. But I don't know that for sure.
     
  12. bigdomer

    bigdomer Member

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    You are right about the different sales tax rules on leases. I worked under the assumption of a state that simply taxed each payment only. Agree the cap cost reduction would ideally be zero. However, I did consider that in the 36 month calc.
     
  13. bigdomer

    bigdomer Member

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    Signed up and received approval for the new personal lease in less than a day. Process is absolutely painless. Name, address, DL#, SSN, monthly income, mortgage payment. That's about it. You drop that info in through My Tesla. Got an email back from regional finance person with clarification of the terms and approval. Awfully easy.
     
  14. Omer

    Omer Member

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    Hopefully within a few years Tesla will have built up enough data (and held value well enough) to offer more competitive leases.

    Most BMW 5 series leases are 59% residual for 15k/36 months (same residual for options) and with non-Tesla manufacturers the true residual is actually much higher since the lease residual is calculated from MSRP and most people get significant discounts. For example any 5 series can be purchased for 5% - 10% below MSRP; if doing euro delivery 12% - 14%. So on a 5 series you are actually paying for 27% - 35% of the MSRP plus interest during the 3 year 15k lease. With a Tesla you pay well above 50% of the MSRP (58% of all options including 85 upgrade) plus interest. For two identically priced cars, a Model S and a fully loaded 550i, you would pay just about double for the Model S over 3 years.

    I purposely left out gas savings because I'm not comparing the technologies, just the expected depreciation. I'm sure Tesla needs to be very cautious in setting the residuals and outside finance companies need to see lots of data history before taking the risk. So here's to hoping that by Model 3, the residual's will have proved themselves and we will see 60%+ residuals. Actually I expect residuals on electric cars to go up when the tax credits expire because the effective cost of a new car will go up causing used values to follow.
     
  15. USCjon

    USCjon Member

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    I just picked up my brand new Tesla last week. I am disapointed to not know about this lease option and the D. Is it wise to sell my current car and lease a new one? What's the monthly payment on a lease? Any advice?
     

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