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

[NewTMSMan]

Simplest lease comparison you can do is compare the following:

Lease Residual Value - Remaining Purchase Loan Balance @ Lease Term (i.e. 3 years) - (Loan Down payment - Lease Cap Cost Reduction) + $7500 Tax Credit >0

then Buying is better financially than leasing. What this formula simplifies a lot is basically, what is my equity position in the car if I buy it as your equity position in a lease is $0 at the end, so if you have positive equity in the car (i.e. what amount of money would you net if you sold it after the lease period) you come out ahead.

When I ran these numbers for my Model X and Model S comparing Teslas 3 year lease they offered me and the 0.99% financing for 72 months, I came out a huge amount ahead buying (average about $22k).

Now the risk on the residual value is all on me and if the car is not worth the end value I am using (I used the same value for the end value in the loan as the residual value in the lease calculation in the above simplification) then you will have less benefit. This is the key risk and you can adjust the above calculation by the amount you think it may be worth less than the lease residual after 3 years if you want.

 

[mikehicks]

I dont have it right in front of me, but the MSRP was ~$140k, and the "selling price" of the lease was ~$100k. Residual value (calc'd off the MSRP) was ~$94k. And it's only a 2 year lease. So 6k of depreciation + finance charge of 4.3xx% or whatever it was over 2 years.

Curious how did you were able to do a two year lease? I’ve leased many BMWs and I’ve necer seen anything offered other than three years.

 

[BigNick]

Leasing puts you into a mileage "box" so it's not for me. My round-trip work commute is 100 miles and I've never seen a lease that allows 25000+ miles/year.

Spending $4/day for charging vs $12/day in gasoline is one of the main reasons I gave my wife my old ICE car and went with the Tesla.

 

[ba2002]

Curious how did you were able to do a two year lease? I’ve leased many BMWs and I’ve necer seen anything offered other than three years.

It was end of 3rd quarter 2016 and Tesla was looking to bump their numbers for their "best quarter ever" for PR reasons.

They ran a limited time offer of a 2 year lease, which happened to coincide with deep discounts on the pre-refresh front fascia P90D loaners/demos/leftovers which made for enticing deals. Haven't seen anything to quite match it since.

Only downside is I have to figure out how to leave behind the P90D performance when my lease is up next October. No way I'm paying sticker for it, although with the new uncorking, the 75D/100D (or maybe M3 P80D?) will likely be close enough.

 

[yancantcook]

Simplest lease comparison you can do is compare the following:

Lease Residual Value - Remaining Purchase Loan Balance @ Lease Term (i.e. 3 years) - (Loan Down payment - Lease Cap Cost Reduction) + $7500 Tax Credit >0

then Buying is better financially than leasing. What this formula simplifies a lot is basically, what is my equity position in the car if I buy it as your equity position in a lease is $0 at the end, so if you have positive equity in the car (i.e. what amount of money would you net if you sold it after the lease period) you come out ahead.

When I ran these numbers for my Model X and Model S comparing Teslas 3 year lease they offered me and the 0.99% financing for 72 months, I came out a huge amount ahead buying (average about $22k).

Now the risk on the residual value is all on me and if the car is not worth the end value I am using (I used the same value for the end value in the loan as the residual value in the lease calculation in the above simplification) then you will have less benefit. This is the key risk and you can adjust the above calculation by the amount you think it may be worth less than the lease residual after 3 years if you want.

What is the lease cap cost reduction? I'm looking at my lease figures but don't see that cost in there.

Per Tesla leasing:
The residuals are:


15k miles- 47% of base price + $7,500

12k miles- 48% of base price + $7,500

10k miles- 49% of base price + $7,500


Don't the residual seem too low?

 

[davidc18]

if you think the residuals are low, wait until you get a trade in offer on your 3 yr old MS/MX (hint - it will be way lower than you like). Which ever way you go you will enjoy the car!

 

[whitex]

What is the lease cap cost reduction? I'm looking at my lease figures but don't see that cost in there.

Cap cost reduction is the "Other amounts $(14,500)" line - it's the discount you get off of MSRP which reduces your capital cost amount by reducing the price of the car but not the residual.

Don't the residual seem too low?

The residuals in the 47-49% are actually not bad at all for this class of a car. The actual residual is the percentage, the $7,500 is just a way for the leasing company to extract more value out of the federal tax credit - they add back the federal tax credit so if you buy it, the leasing company gets it twice (once from the federal government and second time from the buyer paying the residual cost) - they justify this with the fact that the $7,500 federal tax credit will be gone for Tesla cars by the time your lease ends. The added $7,500 combined with the higher interest rate it makes it much more expensive to "lease and buy at the end" vs. "loan". The only way leasing and buying at the end is cheaper than loan is if at the end the car value is significantly lower than the residual (in this case $15K or more) AND the leasing company lets you buy the car at that lower price (so $40K instead of $55K) which doesn't always happen as they know the car has special value to the person who leased it, since they know the car's history, etc, so they'd rather try for full price with the lessee and if that doesn't work they wholesale it.

 

[cwerdna]

Curious how did you were able to do a two year lease? I’ve leased many BMWs and I’ve necer seen anything offered other than three years.

I leased my 1st Leaf in July 2013 as a 2 year. They weren't uncommon back then.

The used '13 Leaf I own now was almost certainly a 2 year lease return.