Urgent, made down payment. Now need to decide Buy or Lease.

[JackIT]

I just put a $2,500 down payment on a 2017 90D, it's listed as a demo, even though it has 23 miles on the odometer. It's spec'd out very close to how I'd want it, so took the bait.

Sticker is ~$111,850
Discounted $22K for being a demo and a 90D
$1k referral discount
plus $7,500 tax credit if I buy

I need help deciding wether I should buy or lease. The sales guy is trying to push me to lease, but I think I might be better off buying. (I've leased several cars, including my current one which ends at the end of the month). I'm not concerned with monthly payments, I'm more concerned with the overall cost to drive/own.

The lease comes out to: $822 a month for 36/12K with $5k down (plus TTL) and security deposit
Total cost of lease payments with down payment is $34,592 (not sure what the MF is)

or I can buy it for the effective price of $81,350 (inc tax credit) +TTL interest is 0.99%

my sales tax rate is 7%, so I'd end up paying about $3,800 in additional taxes on a purchase versus lease.

comparing apples to apples, and adding the additional tax difference into the cost to purchase, making it $85,150

Assuming I get rid of the car in 3yrs either way. The car would have to be worth less than $50,558 ($85,150-$34,592) after 3years for the lease to come out ahead of the buy scenario.

Do my assumptions make sense?

What would you estimate a 2017 Model S 90D to be worth in 3yrs, assuming 36K miles driven?
My rough guess would be at least in the $60-65K range, based on what I've seen in the market.

I'd appreciate any insight you might have.

Thanks in advance!

 

[buttershrimp]

I've done the math, over and over, and with the money factor and apr rates, it seems best to buy... even if you have a business you can have an accountant expense the lease equivalent amount on the vehicle for business expense... hope this helps.

 

[Destiny1701]

Leasing vs Buying also depends on how long you wish to keep the car. If your a long term person, definitely buy. If you prefer to have the latest and newest, lease.

I leased in 2016 for 4 yrs for the simple reason that I didn't yet know the true longevity of Teslas vs more established brands ie. Toyota, Lexus, BMW, merc etc. There are examples of owners now passing the 100k miles mark however the cars are still 2012/2013 models and only 4-5yrs old. No one truly knows how the parts, seams, battery performance etc will hold at the 9/10 yr mark for the model S.

If she's behaving well at lease end, I'll look at how those same 2012/13's are fairing out and then decide if I'll either buy it out or perhaps see what the 2020 model S has in store Leasing gave me that extra bit of time to look at long term reliability.

Everyone has their own reasons for one or the other. Welcome to Tesla either way

 

[computerchuck]

I've done the math, over and over, and with the money factor and apr rates, it seems best to buy... even if you have a business you can have an accountant expense the lease equivalent amount on the vehicle for business expense... hope this helps.

I fully agree with buttershrimp here, and not because I like reading his posts so much... (tmi).

Like he, I've run the math in my spreadsheet using several methods. And unless you can business expense 100% of the car (depending on your tax bracket), it will be better to buy, then lease. It also gives you additional options to sell early, just in case you need to buy a AP HW v2.5 P100D in a year and a half... just sayin...

 

[number12]

I did the same math...

Is it impossible to lease a Tesla in Georgia?

Two weeks after I bought AP2.0 came out.. 10 months after that AP2.5 came out... since then. Faster 0-60 by 1 second, better fit/finish, price cuts, more items standard, etc.

My initial calculations did not factor in TSLA. So numbers (depreciation wise) would be altered. If I wanted to lease now I would do a lease take over. Seems hard to get out of a lease and people usually have to take a sizable haircut.

 

[buttershrimp]

Leasing vs Buying also depends on how long you wish to keep the car. If your a long term person, definitely buy. If you prefer to have the latest and newest, lease.

I leased in 2016 for 4 yrs for the simple reason that I didn't yet know the true longevity of Teslas vs more established brands ie. Toyota, Lexus, BMW, merc etc. There are examples of owners now passing the 100k miles mark however the cars are still 2012/2013 models and only 4-5yrs old. No one truly knows how the parts, seams, battery performance etc will hold at the 9/10 yr mark for the model S.

If she's behaving well at lease end, I'll look at how those same 2012/13's are fairing out and then decide if I'll either buy it out or perhaps see what the 2020 model S has in store Leasing gave me that extra bit of time to look at long term reliability.

Everyone has their own reasons for one or the other. Welcome to Tesla either way

It's a good point... but remember you can always get out of a lease by selling the car, and will likely be close to the same value when you mix in money factor and down payments, etc. With a Tesla though, I found that the rebate incentive seems to favor buying in my opinion, at least in Texas, where the sales tax has to be paid on the entire value of the car regardless of lease or sale... THAT is a big big deal... so depends on the state as well. With Lexus lease in Texas, I only had to pay sales tax on the amount of the lease contract... on the tesla, there was no way to avoid paying the entire sales tax amount on the car

 

[James*]

I just put a $2,500 down payment on a 2017 90D, it's listed as a demo, even though it has 23 miles on the odometer. It's spec'd out very close to how I'd want it, so took the bait.

Sticker is ~$111,850
Discounted $22K for being a demo and a 90D
$1k referral discount
plus $7,500 tax credit if I buy

I need help deciding wether I should buy or lease. The sales guy is trying to push me to lease, but I think I might be better off buying. (I've leased several cars, including my current one which ends at the end of the month). I'm not concerned with monthly payments, I'm more concerned with the overall cost to drive/own.

The lease comes out to: $822 a month for 36/12K with $5k down (plus TTL) and security deposit
Total cost of lease payments with down payment is $34,592 (not sure what the MF is)

or I can buy it for the effective price of $81,350 (inc tax credit) +TTL interest is 0.99%

my sales tax rate is 7%, so I'd end up paying about $3,800 in additional taxes on a purchase versus lease.

comparing apples to apples, and adding the additional tax difference into the cost to purchase, making it $85,150

Assuming I get rid of the car in 3yrs either way. The car would have to be worth less than $50,558 ($85,150-$34,592) after 3years for the lease to come out ahead of the buy scenario.

Do my assumptions make sense?

What would you estimate a 2017 Model S 90D to be worth in 3yrs, assuming 36K miles driven?
My rough guess would be at least in the $60-65K range, based on what I've seen in the market.

I'd appreciate any insight you might have.

Thanks in advance!

How are you getting that low of a leasing payment? My calculations say it should be different:
Loan
Cash Price $88,850.00
Down Payment $5,000.00
Trade-in $0.00
Taxes $6,219.50
Amount Financed $83,850.00
Term 72.00
Interest Rate 0.99
Monthly Payment $1,199.99
Total cash layout $11,219.50
Total cost at 36 mo $45,022.22
Left on loan at 36 mos $42,547.28

Lease
Residual Percentage 0.51
Residual Value $52,201.50
Gross Capitalized Cost $88,850.00
Adjusted Capitalized Cost $83,850.00
Depreciation Amount $31,648.50
Base Payment $879.13
Rent Charge 285.70815
Pretax Lease Payment $1,164.83
Total Monthly Payment $1,246.37
Fees 1090
Total cost at 36 mo $50,959.37

These are approximate, but should be very close to what you should expect to pay.

For example, if you plug $88,850 into Tesla Leasing for 12k miles/year, then you get a monthly payment of $1,123, which is similar to my pretax estimation about at $1164.

I already had a spreadsheet setup to do these calculations since I was trying to determine what was best for me. At my lower price for the Model S75, it turned out to only be a difference of around $2k for me for 36 month cost of ownership, and so it was very worth it for me to lease to hedge against the risk of lower resale values in the future.

For you, it seems to be about a $6k difference. Honestly, if it was my I'd just go for the lease if I knew I wanted a new car at 36 months, even at the 6k difference. I feel like the prices of new Model S' will come down and further depreciate the cars we buy now.

 

[computerchuck]

I did the same math...

Is it impossible to lease a Tesla in Georgia?

Two weeks after I bought AP2.0 came out.. 10 months after that AP2.5 came out... since then. Faster 0-60 by 1 second, better fit/finish, price cuts, more items standard, etc.

My initial calculations did not factor in TSLA. So numbers (depreciation wise) would be altered. If I wanted to lease now I would do a lease take over. Seems hard to get out of a lease and people usually have to take a sizable haircut.

I agree with most of what you are saying here, but my math which included buy back options is where going with a lease option really go south, like very south! IMO, you defiantly will come out with a better value 'buying' vs a lease within that scenario.

 

[buttershrimp]

I fully agree with buttershrimp here, and not because I like reading his posts so much... (tmi).

I am honored to be agreed with... especially by the chuck-ster

 

[buttershrimp]

How are you getting that low of a leasing payment? My calculations say it should be different:
Loan
Cash Price $88,850.00
Down Payment $5,000.00
Trade-in $0.00
Taxes $6,219.50
Amount Financed $83,850.00
Term 72.00
Interest Rate 0.99
Monthly Payment $1,199.99
Total cash layout $11,219.50
Total cost at 36 mo $45,022.22
Left on loan at 36 mos $42,547.28

Lease
Residual Percentage 0.51
Residual Value $52,201.50
Gross Capitalized Cost $88,850.00
Adjusted Capitalized Cost $83,850.00
Depreciation Amount $31,648.50
Base Payment $879.13
Rent Charge 285.70815
Pretax Lease Payment $1,164.83
Total Monthly Payment $1,246.37
Fees 1090
Total cost at 36 mo $50,959.37

These are approximate, but should be very close to what you should expect to pay.

For example, if you plug $88,850 into Tesla Leasing for 12k miles/year, then you get a monthly payment of $1,123, which is similar to my pretax estimation about at $1164.

I already had a spreadsheet setup to do these calculations since I was trying to determine what was best for me. At my lower price for the Model S75, it turned out to only be a difference of around $2k for me for 36 month cost of ownership, and so it was very worth it for me to lease to hedge against the risk of lower resale values in the future.

For you, it seems to be about a $6k difference. Honestly, if it was my I'd just go for the lease if I knew I wanted a new car at 36 months, even at the 6k difference. I feel like the prices of new Model S' will come down and further depreciate the cars we buy now.

This post is why I love the tesla forum... there is always some wickedly smart dude that can churn out financial calculations like Matt Damon in Good Will Hunting....

 

[Destiny1701]

It's a good point... but remember you can always get out of a lease by selling the car, and will likely be close to the same value when you mix in money factor and down payments, etc. With a Tesla though, I found that the rebate incentive seems to favor buying in my opinion, at least in Texas, where the sales tax has to be paid on the entire value of the car regardless of lease or sale... THAT is a big big deal... so depends on the state as well. With Lexus lease in Texas, I only had to pay sales tax on the amount of the lease contract... on the tesla, there was no way to avoid paying the entire sales tax amount on the car

Ah ok. Up here in Toronto Canada our provincial rebate is 14k regardless if it's leased or bought. And we pay tax on the lease payments so only on the depreciated portion. I find it amazing that one can be taxed full on effectively a long term 'rental'. If we had it like Texas I'd also seriously consider buying.

For getting out of the lease, apparently there are penalties involved ie. 3 months payments or some interest rate differential calculation based on the remaining months in the term. It makes the buyout a bit less palatable mid-lease vs end of term.

I agree though with your assessment of the cost of buying usually being cheaper in the end.

 

[mcbarnet007]

Buying it maybe cheaper but we all expect a refresh for Model S to come out soon especially within the next 3 years. Looking at the LR Model 3, I can only imagine what the current Model S will be worth at the end of 3 years. If you plan to keep the car for at least 6 years then by all means buy it. But if you think there is a chance you'll want to switch up to the latest and greatest, then you should lease it because the pace of improvement that Tesla is making is fast and you maybe itching upgrade sooner than you think.

 

[computerchuck]

Buying it maybe cheaper but we all expect a refresh for Model S to come out soon especially within the next 3 years. Looking at the LR Model 3, I can only imagine what the current Model S will be worth at the end of 3 years. If you plan to keep the car for at least 6 years then by all means buy it. But if you think there is a chance you'll want to switch up to the latest and greatest, then you should lease it because the pace of improvement that Tesla is making is fast and you maybe itching upgrade sooner than you think.

The above is the way I used to look at the 'buy out' option when leasing, that was all changed after a visit at the Tesla dealership. Armed with my spreadsheet, and with their account people in the room (and several phone calls to Fremont), they told me what the buy out cost of the vehicle and added that after 3 years, and WOW. When you add in all of the initial and long term costs over a 3 yr least, then add the buy out.... OMG! You are looking at ~25% additional cost (of full retail, not depreciated value), than if you had bought it outright. Hope my language isn't too confusing here...

 

[JackIT]

How are you getting that low of a leasing payment? My calculations say it should be different:
Loan
Cash Price $88,850.00
Down Payment $5,000.00
Trade-in $0.00
Taxes $6,219.50
Amount Financed $83,850.00
Term 72.00
Interest Rate 0.99
Monthly Payment $1,199.99
Total cash layout $11,219.50
Total cost at 36 mo $45,022.22
Left on loan at 36 mos $42,547.28

Lease
Residual Percentage 0.51
Residual Value $52,201.50
Gross Capitalized Cost $88,850.00
Adjusted Capitalized Cost $83,850.00
Depreciation Amount $31,648.50
Base Payment $879.13
Rent Charge 285.70815
Pretax Lease Payment $1,164.83
Total Monthly Payment $1,246.37
Fees 1090
Total cost at 36 mo $50,959.37

These are approximate, but should be very close to what you should expect to pay.

For example, if you plug $88,850 into Tesla Leasing for 12k miles/year, then you get a monthly payment of $1,123, which is similar to my pretax estimation about at $1164.

I already had a spreadsheet setup to do these calculations since I was trying to determine what was best for me. At my lower price for the Model S75, it turned out to only be a difference of around $2k for me for 36 month cost of ownership, and so it was very worth it for me to lease to hedge against the risk of lower resale values in the future.

For you, it seems to be about a $6k difference. Honestly, if it was my I'd just go for the lease if I knew I wanted a new car at 36 months, even at the 6k difference. I feel like the prices of new Model S' will come down and further depreciate the cars we buy now.

The residual value I believe was $67k (may have been $63k, definitely in the 60's, I'd have to check my notes when I get back to the office tomorrow)

I contacted tesla because of this post: Tesla Lease 760/month on 88k msrp (5k down)

Where the guy got a slightly better lease deal on a 90D with more miles.

 

[JackIT]

How are you getting that low of a leasing payment? My calculations say it should be different:
Loan
Cash Price $88,850.00
Down Payment $5,000.00
Trade-in $0.00
Taxes $6,219.50
Amount Financed $83,850.00
Term 72.00
Interest Rate 0.99
Monthly Payment $1,199.99
Total cash layout $11,219.50
Total cost at 36 mo $45,022.22
Left on loan at 36 mos $42,547.28

Lease
Residual Percentage 0.51
Residual Value $52,201.50
Gross Capitalized Cost $88,850.00
Adjusted Capitalized Cost $83,850.00
Depreciation Amount $31,648.50
Base Payment $879.13
Rent Charge 285.70815
Pretax Lease Payment $1,164.83
Total Monthly Payment $1,246.37
Fees 1090
Total cost at 36 mo $50,959.37

These are approximate, but should be very close to what you should expect to pay.

For example, if you plug $88,850 into Tesla Leasing for 12k miles/year, then you get a monthly payment of $1,123, which is similar to my pretax estimation about at $1164.

I already had a spreadsheet setup to do these calculations since I was trying to determine what was best for me. At my lower price for the Model S75, it turned out to only be a difference of around $2k for me for 36 month cost of ownership, and so it was very worth it for me to lease to hedge against the risk of lower resale values in the future.

For you, it seems to be about a $6k difference. Honestly, if it was my I'd just go for the lease if I knew I wanted a new car at 36 months, even at the 6k difference. I feel like the prices of new Model S' will come down and further depreciate the cars we buy now.

Also your $6k difference doesn't account for the "value" of the vehicle after 3yrs of loan payments. After 3yrs of leasing the value is getting my security deposit back.

For Instance, using your numbers, I'd have $42.5k left to pay on the car at 36mnths. Let's assume I get your residual amount of $52.5k when I sell it at 36 months. (Should hopefully get more) That's effectively $10k I get back when I sell it.

Making the gap $16k and not $6k

 

[P100DHG.]

Don't bother with math. I bought both my Model S and my Model X. Why?

Reason 1:
The entire duration of your lease you'll be pissed off that time is ticking away and you're paying full pop for that car you were promised all these features on and by the time you turn it in they'll have it working flawlessly. So that whole time you will have funded Elons kick starter project called AP2 and you'll get the full benefit of it for like a day and the next day you'll get to give it back.

Reason 2:
When the day comes that some person rear ends you and your car is in the shop for 9 months while Tesla gets the parts to the body shop you get the privilege of paying $1000+ per month for nothing.

Conclusion:
These cars are going through an evolution. They are in development (EAP & FSD software development) even after they roll of the factory line. That development will take time and it's best to hold on to this vehicle a while. I see people on this forum with leases talkinf about time ticking away and not getting the full benefit. Legitimately I want to add. But for those who purchased time is on their side (or so I feel).

 

[JackIT]

Also your $6k difference doesn't account for the "value" of the vehicle after 3yrs of loan payments. After 3yrs of leasing the value is getting my security deposit back.

For Instance, using your numbers, I'd have $42.5k left to pay on the car at 36mnths. Let's assume I get your residual amount of $52.5k when I sell it at 36 months. (Should hopefully get more) That's effectively $10k I get back when I sell it.

Making the gap $16k and not $6k

And you also missed the $7,500 tax credit?

 

[James*]

The residual value I believe was $67k (may have been $63k, definitely in the 60's, I'd have to check my notes when I get back to the office tomorrow)

I contacted tesla because of this post: Tesla Lease 760/month on 88k msrp (5k down)

Where the guy got a slightly better lease deal on a 90D with more miles.

I mean if that's the actual lease payment you're getting from Tesla, that seems like a no-brainer to lease (with the assumption you won't buy at the end of the lease).

 

[_jal_]

I ordered in November. I feel like just since then the market value of my car has been significantly discounted. I'm pretty sure the interior and exterior are going to get a significant revision, the autopilot thing ... OMG ... the autopilot thing. Who knows with that. Battery tech. Drive train tech. Tax break and so on. It's such a high risk adventure I can't imagine having this albatross around my neck. I love my car. It's totally awesome. But it's with a $1,000 a month and that's it. As soon as I assume all the crazy downside, that number goes up and it gets uncomfortable. It's a fun thing to do but I'm not ready to make it a lifestyle

 

[James*]

Also your $6k difference doesn't account for the "value" of the vehicle after 3yrs of loan payments. After 3yrs of leasing the value is getting my security deposit back.

For Instance, using your numbers, I'd have $42.5k left to pay on the car at 36mnths. Let's assume I get your residual amount of $52.5k when I sell it at 36 months. (Should hopefully get more) That's effectively $10k I get back when I sell it.

Making the gap $16k and not $6k

True -- I forgot to include some of my assumptions in the post. I'm assuming the car will depreciate faster than estimated, and that I would trade-in with Tesla to avoid the hassle of selling (I'm really lazy). So, I was simply making the assumption I would break-even on the amount left on the loan.

And you also missed the $7,500 tax credit?

Don't believe I did. The 7500 is accounted for in the total cost at 36 months ((Starting balance - ending balance at 36 months) + Down payment + Trade-in + Taxes) - 7500. I incorporated the 7500 credit into the reducing the total cost over 36 months.