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

[JackIT]

@JackIT You can sell the car prior to the termination of the lease to Carmax as I did with our Audi Allroad and got a check for $1100 rather then just turning it in. If you think the car is worth more then the residual this is a good option to explore. My brother did it with his A3 also and walked away with $4000. But if you buy it you can sell it at anytime to anyone. With a lease you can buy it but often times they won't let you sell it to a private party. You'd have to buy it, pay sales tax and then sell it so you'd have to have quite a bit of positive equity to pull that off. In the Carmax example, dealers have a resale license and sales tax is irrelevant, it makes it easier to get equity out if it but they offer less then a private party would. though undoubtedly leasing is better off over 3 years the issue that you are aquiring a car that is still in development and continues to improve over time is one you might find yourself realizing that you saved.

US Bank inflates the residual by $7,500 to account for the tax credit, making leases more attractive then they would be otherwise. And from what I hear, they also have some punitive early lease termination clauses.

So while this may work on Audi and other brands, it's not worth pursuing on a Tesla leased through US Bank. In fact keeping the Tesla at the end of the lease if also typically a bad decision. Because of the inflated residual and it being considered a "used" car, not only do you not get the $7,500 tax credit, you're actually paying US Bank the $7,500 via inflated residual

 

[JackIT]

OP,

In general it is not advised to lease a tesla. In your case however, considering the massive 20 percent discount, leasing is likely advised

It's a no brainer in my opinion and I suspect that the people here who advise you to buy don't understand how a lease works.

In your case you are paying 80 percent of MSRP. The residual value is 60 percent if I remember. So you are only paying 20 percent of the entire car over 3 years of ownership (+finance charges). That is a good deal.

not quite the way it works out, because of astronomical Money Factor. which works out to a 5% APR
over the term of the 36month lease I would pay $37,743 or roughly 34% of sticker. still not bad.

You do not have to take my words for granted. You should go to a dedicated lease forums and show them the numbers and have them weigh in. I recommend leasehackr.

Note that I am making some assumptions here:
- you are not in a lease unfriendly state like Georgia that forces you to pay the entire sales tax of the vehicle
- you will take well care of the vehicle
- I did not run the run the entire numbers (money factor etc)

I am 95 percent confident that buying is a very foolish thing to do here. I suspect knowledgeable people who lease will side with me. Again use a dedicated forum.

I'm on leasehacker, I posted here: same username: UPDATED: Tesla Lease 913/month on 108k msrp (zero CCR) and I've leased 4 cars in the past. Including my current Maserati which I have to turn in at the end of the month.

In this situation, it think it really boils down to will my 90D be worth more than $52K in 3 years? if yes, then buying makes sense..

 

[Destiny1701]

It was at the end of q3 2016 from USBank. There were a few people that got big discounts on performance cars (and to a lesser extent non-p cars) as part of Teslas 2 year lease program / EOQ push.

And this is only my second lease, but I thought the residual was always based off the MSRP?[/QUOTE

Residual is based on the actual purchase price.
Example if I lease a new car and the msrp was 50k and I negotiated the price with the dealer to 45k...my lease is structured based on a residual value for that car at a percentage of the purchase price. Say its 52% remaining in value after 4 yrs, it's 52% of what shows on the agreement of purchase. At least that's what Tesla did on my lease!

 

[XP90D]

Lease residual value is typically calculated as a fixed percentage of the MSRP as was done with my tesla lease.

 

[JackIT]

Residual is based on the actual purchase price.
Example if I lease a new car and the msrp was 50k and I negotiated the price with the dealer to 45k...my lease is structured based on a residual value for that car at a percentage of the purchase price. Say its 52% remaining in value after 4 yrs, it's 52% of what shows on the agreement of purchase. At least that's what Tesla did on my lease!

That is categorically false.

Residuals are a % of the MSRP. not the purchase price

Sauce:
https://cars.usnews.com/cars-trucks/what-does-residual-value-mean-for-a-car-lease
How Residual Values are Calculated

 

[Shock-On-T]

I like buying just for the freedom.
It does mean you'll be keeping your car a bit longer, and at the rate Tesla improves it can be a bit annoying not having the latest and greatest.

 

[Destiny1701]

That is categorically false.

Residuals are a % of the MSRP. not the purchase price

Sauce:
https://cars.usnews.com/cars-trucks/what-does-residual-value-mean-for-a-car-lease
How Residual Values are Calculated

Hmmm...
Well then I guess Tesla got it wrong? When I purchased my 90D it was originally a set residual based on the price I paid not the original msrp.
Infact I remember receiving 2 lease term sheets showing me the original residual on regular msrp and the new residual based on what I actually paid. It was calculated entirely on % of what I paid. The residual was revised based on what I ended up paying. Odd.

Maybe it's different up here in Ontario Canada?

 

[JackIT]

Hmmm...
Well then I guess Tesla got it wrong? When I purchased my 90D it was originally a set residual based on the price I paid not the original msrp.
Infact I remember receiving 2 lease term sheets showing me the original residual on regular msrp and the new residual based on what I actually paid. It was calculated entirely on % of what I paid. The residual was revised based on what I ended up paying. Odd.

Maybe it's different up here in Ontario Canada?

I'm not sure how it's done in Canada. But in the US the Lessor sets the residual rate. Which for Tesla, the lessor is US Bank.

You can of course get your own outside Lessor. Basically the Lessor buys the car from the manufacturer, and then "rents" it to you.

 

[buttershrimp]

Buy always with cash. If you can't afford to do it, then buy what you can afford.

I say, always put it on your wife's credit card... then divorce her and claim that the fact that she cheated on you with a guy that looks like Scott Baio is what entitled you to a performance model over the regular all wheel drive... then.... call her sister, and explain... you've always been misunderstood... you're a nice guy.... you've always liked her better ... is she dating anyone? Then, IMHO, it's always better to lease... Right guys... who's with me? Everyone on this thread has been there right?

 

[Destiny1701]

I'm not sure how it's done in Canada. But in the US the Lessor sets the residual rate. Which for Tesla, the lessor is US Bank.

You can of course get your own outside Lessor. Basically the Lessor buys the car from the manufacturer, and then "rents" it to you.

For us we went through Tesla Canada internal leasing.

 

[xav-]

not quite the way it works out, because of astronomical Money Factor. which works out to a 5% APR
over the term of the 36month lease I would pay $37,743 or roughly 34% of sticker. still not bad.



I'm on leasehacker, I posted here: same username: UPDATED: Tesla Lease 913/month on 108k msrp (zero CCR) and I've leased 4 cars in the past. Including my current Maserati which I have to turn in at the end of the month.

In this situation, it think it really boils down to will my 90D be worth more than $52K in 3 years? if yes, then buying makes sense..

My take it will be worth less than $52k. You can buy a brand new nearly fully loaded model 3 with 310 miles of range for roughly $60k (AWD). Model 3 will be a lot more reliable and much less costly to repair.

Good luck with your decision. I know it's hard. Last year I almost got tempted into leasing a loaded P90D. Car had a $30k discount. I was considering paying $22k for a 2 year lease.. but cheapest they would go was $25k. Looking back I am so glad I did not do it and got my volt. I really wanted that model s so bad.

I recommend you get the 3 or wait a year for the flow of returns from leases (buy a used 2015 or 2016 model s). But life is short

 

[whitex]

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.

I think you forgot the federal tax credit for Loan ($7,500). For lease, it's already added to the residual value.

Generally by the way, you only win with a lease if at the end of the lease the car worth is severely less money than your residual. If that is not the case, lease is always more expensive - you pay for the convenience of not having to worry about selling or trading-in a used car. There is one exception, when there is some ultra special on leases, for example ultra low interest rate, but in Tesla's case where the $7,500 rebate is just added to the residual, not sure you could offset that even with 0% APR.

 

[jerry33]

The rules I generally use are: If you can write it off on your taxes, lease, then there is never any question about how much you can deduct. If you can't write it off then buy. Your conditions may change and you can end up with a big payment at the end of the lease.

 

[whitex]

The rules I generally use are: If you can write it off on your taxes, lease, then there is never any question about how much you can deduct. If you can't write it off then buy. Your conditions may change and you can end up with a big payment at the end of the lease.

You can write off depreciation when you buy as well, though may require a skilled accountant.

 

[jerry33]

You can write off depreciation when you buy as well, though may require a skilled accountant.

Correct you can, but it's another item in an IRS audit where they may disallow some of what you wrote down and ask for a big cheque (usually at the worst possible time). With a lease, the amount is never an issue.

 

[therippa]

I'm kind of in the same boat as OP - I put down a deposit yesterday and am trying to figure out what works best for my situation - lease or loan. The car is priced at $88,250 total, and I have $30k to put down.

I used that calculator excel sheet, but I'm not sure why the lease numbers weren't lining up - I had to manually enter in the lease Total Monthly Payment and Total Cost to be what Tesla told me it would be. I'm still confused about how the numbers work though. At this point I'm looking to lease since I imagine something neater will be available in three years and I'll want it.

My head hurts after running these numbers. From what I can tell from the spreadsheet, since at the end of 3 years, I would have paid $59k for a loan ($3k over the $56k residual that Tesla is reporting with the leasing numbers, so in theory if I traded it in for something I would be upside-down by $3k), and $46k for the lease, it makes sense for me to lease...right?

TL;DR: I am pretty confident in 3 years I will want to trade-in and get a new Model Whatever. I'm putting down $30k. It makes sense for me to lease, right?

 

[therippa]

New math with my own spreadsheet. I made one that uses the numbers Tesla gave me for lease/loan, took into account my down payment and tax credit, with the assumption that at the 3 year mark I'll want something new. It seems FINANCING is the way to go... (Tesla Public)

 

[NewTMSMan]

That is one convoluted way to compare leasing to purchase. The easiest way is simply to compare your total equity position at the end of the period from one financing method to another. You also do not seem to have included the benefit of investing the down payment compared to using it for the lease (I would have the lease and purchase model with different down payments / cap cost reduction and include some nominal interest on the difference between the two in the equity calculation).

If you want to calculate the lease yourself, it is just a payment calculation with a FV (Future Value) equal to the residual of the car (in this case including the $7,500 tax credit) and an interest rate of 5% for Tesla.

 

[yancantcook]

I am in a similar situation. Got this inventory car with $15K discount for $84250.

Total cost after taxes: $93600 - $7500 EV rebate = $ 86,100

Lease for 15K/36 months is $1100/month, with a total cost to lease at 36 months at $46,710 (down payment, fees, etc). Residual is at $54,900.

Is a simple way for me to think of it is, if the value of the car is greater than $86,100-$46,710 = $ 39390 then I come out ahead with buying instead of leasing?


I am very new to this so please forgive my questions. I'm hoping to get opinions of some Tesla experts! Thanks

 

[TaoJones]

Do you plan to drive more than 45,000 miles in 3 years? If close, then buy.

It's easy to drive 20K+ miles/year in one of these cars. Leasing was never a serious consideration for me.

Your mileage may vary.