Will Tesla ever offer Lease buyout?

[dino007]

Tesla will never change the verbiage in existing lease contracts to allow for buyouts, I would literally bet my life on it. Kind of comical even debating it. Now could they change the paradigm in the future? Maybe... but even then I don't see how that would be a needle mover for them given the volume that they are pushing.

They did with model s and x leases back in like 2017 they sent out to lease holders if they wanted the option to buy it out and you could buy out those leases right up to late last year when they changed it cause of the market

Companies can have done these changes on and off before nothing new, contracts and verbiage can change if both parties agree

Honda and toyota and almost any car company would let u buy out leases for decades and even those 2 put a hold to that last year cause of the used car market

When the market settles or goes back it will probably change again and send out emails and crap hey u wanna buy out ur lease blah blah

 

[WhiteWi]

Question is why not to buy it to begin with? Lease is Rip off anyway.

 

[Daekwan]

Plenty of reasons to lease. The strongest case is business linked, due to tax reasons. But for others, its treating a vehicle as a monthly utility bill and having a set expense for transportation due monthly. For others, it's literally nothing more than a long-term rental car.. as that person likes to drive a brand new car every 2-3 years.

The only thing that's different right now.. is due to temporary events like COVID shutdowns, component, and labor shortages.. there are simply not as many new vehicles produced as there were in previous years. Which has driven up the costs of all existing vehicles both new & used. And made ALL used cars much more valuable than they were even just a year or two ago. My old 2018 CRV is literally worth more right now according to Vroom than I paid for it brand new about 3.5 years ago.

I believe in the US there were about a 17million vehicles sold before COVID.. now there's only about 14million.. and it's not because of a lack of buyers. But because of a lack of supply. When demand finally catches up to supply and the market returns to normal. Expect all the typical lease agreements to also return to normal.

 

[Gutta420]

I entertained a lease for about 2 seconds. Once they sent me my final paperwork with the money factor I was out. They know they worth of their cars and are purposely overvaluing them which in turn raising the monthly payment and total over 3 years. Almost $30k for a model 3 over 3 years and I can lease a bmw that costs more with a higher residual for less?! Nah, something not jiving here. A lease payment should not be only $80 less than a loan payment. Then to add insult to injury they won’t even give you the option to buy it out while Elon tries to realize his pipe dream of an idea in robo taxis? Nope.

 

[WhiteWi]

I entertained a lease for about 2 seconds. Once they sent me my final paperwork with the money factor I was out. They know they worth of their cars and are purposely overvaluing them which in turn raising the monthly payment and total over 3 years. Almost $30k for a model 3 over 3 years and I can lease a bmw that costs more with a higher residual for less?! Nah, something not jiving here. A lease payment should not be only $80 less than a loan payment. Then to add insult to injury they won’t even give you the option to buy it out while Elon tries to realize his pipe dream of an idea in robo taxis? Nope.

Lol why not buy if it is only 80 bucks difference?

 

[Gutta420]

Lol why not buy if it is only 80 bucks difference?

My point exactly. I don’t understand why anyone would even entertain a lease on a Tesla. The whole purpose of a lease is to have much cheaper payments and get you into something you probably couldn’t otherwise afford. But at the prices they’re asking for a lease it makes zero sense.

 

[Kairide]

They did with model s and x leases back in like 2017 they sent out to lease holders if they wanted the option to buy it out and you could buy out those leases right up to late last year when they changed it cause of the market

Companies can have done these changes on and off before nothing new, contracts and verbiage can change if both parties agree

Honda and toyota and almost any car company would let u buy out leases for decades and even those 2 put a hold to that last year cause of the used car market

When the market settles or goes back it will probably change again and send out emails and crap hey u wanna buy out ur lease blah blah

Honda and Toyota didn’t stop allowing lease buyouts. They stopped allowing the sale of leased vehicles to dealers other than their own. This was to keep inventory to sell. Anyone leasing could still buy their own leases out.

Question is why not to buy it to begin with? Lease is Rip off anyway.

My point exactly. I don’t understand why anyone would even entertain a lease on a Tesla. The whole purpose of a lease is to have much cheaper payments and get you into something you probably couldn’t otherwise afford. But at the prices they’re asking for a lease it makes zero sense.

Leases are not always a rip off and the point of leases is not just to save money. People who lease do so for many reasons, business tax write off, because they don’t want to own a depreciating asset, don’t want to own a car past its warranty period, want a new car every few years.
Just because a lease doesn’t work for you doesn’t mean they are not for anyone or that they are stupid. I leased numerous Audis and never had an out of warranty repair or worried about diminished values after car accidents.

 

[Ogre]

My point exactly. I don’t understand why anyone would even entertain a lease on a Tesla. The whole purpose of a lease is to have much cheaper payments and get you into something you probably couldn’t otherwise afford. But at the prices they’re asking for a lease it makes zero sense.

It makes zero sense to lease a car because you can’t afford to buy it.

I know a lot of people do it, but it is about the worst car “buying” choice you can do. If you can’t afford to buy it out at the end of the lease, you’ve just made your financial situation worse. Even if you can afford to buy it out at the end of the lease, you are now paying higher used car financing rates and extending the loan for another 5 years.

While there are good reasons to lease a car, this is not one.

 

[Kairide]

It makes zero sense to lease a car because you can’t afford to buy it.

I know a lot of people do it, but it is about the worst car “buying” choice you can do. If you can’t afford to buy it out at the end of the lease, you’ve just made your financial situation worse. Even if you can afford to buy it out at the end of the lease, you are now paying higher used car financing rates and extending the loan for another 5 years.

While there are good reasons to lease a car, this is not one.

We’ll actually I leased my 2019 Model S because I didn’t know where Tesla would be in 3 years. This was before the 3 and Y were released. I didn’t want to be stuck with a $89k car of Tesla went under.
Fast forward 3 years and I bought out the lease because it’s $20k positive equity and I got a 1.9% used car rate.
So yes, typically buying a new version of the car is better than buying out your lease. But not always.
Another plus with leasing is you don’t pay all of the taxes up front. You just pay the taxes on the principle payment each month.
Some people just don’t want to own a car. Similar to how some people don’t want to own a home, they are just happy renting and letting someone else deal with the maintenance costs.

 

[240vPlug]

These are some great points. I would say that leasing does allow someone to get into a car with a payment they may not otherwise be able to afford. I think that would be a good reason to lease so long as the person normally switches vehicles every few years. If that is the case it would be a better financial decision then buying.

Really though buying a new car is not a good financial decision under normal market conditions. Buying a 5 year old used car and keeping it for 10 years is the cheapest way to own cars.

With that said i consider myself an enthusiast and i do like to switch cars every few years. I wanted the write off and it was my first Tesla so if the experience didn’t work out I only had to deal with it for three years.

The no buyout will eventually change and there are already signs of softening jn the used market though not enough to make a big difference right now. Even if the market softens I think EV demand will stay very strong unless oil crashes.

Tesla needs to allow buyout on their leaees like every other car maker. With the cost of everything going up a lot of folks may not be able to afford another Tesla and so Tesla’s policy will cause them to lose customers. It just seems short signed on Tesla’s part if you ask me.

 

[Gutta420]

Honda and Toyota didn’t stop allowing lease buyouts. They stopped allowing the sale of leased vehicles to dealers other than their own. This was to keep inventory to sell. Anyone leasing could still buy their own leases out.



Leases are not always a rip off and the point of leases is not just to save money. People who lease do so for many reasons, business tax write off, because they don’t want to own a depreciating asset, don’t want to own a car past its warranty period, want a new car every few years.
Just because a lease doesn’t work for you doesn’t mean they are not for anyone or that they are stupid. I leased numerous Audis and never had an out of warranty repair or worried about diminished values after car accidents.

And every point you made besides it being a depreciating asset and business tax write offs applies to financing as well. I have always financed up until my last two cars and always trade them in before the manufacturers warranty expired and have always had positive equity. I know which cars to pick that retains their value. Having said that a Tesla lease is stupid because of the way they have it structured…the money factor is way too high for those with good credit scores. Like I stated in a previous post, I can go right now and lease and bmw that costs more for less money and a money factor of less than half of what tesla is offering and have the opportunity to buy it out at the end while retaining any positive equity. Other than for business write off purposes it is not a very smart financial decision for anyone. You pay way more than you should over 2 or 3 years just because it’s a “tesla” and you gain ZERO positive equity regardless of what the car may be worth in 2 or 3 years and you have zero chance to buy it at the end. When you have a lease payment that is only $80 less than a finance payment it’s time to walk away. When you’re paying almost the same amount over 2 or 3 years between leasing and buying then why not buy and retain the equity yourself and then sell or trade. But hey…whatever floats your boat.

 

[Gutta420]

It makes zero sense to lease a car because you can’t afford to buy it.

I know a lot of people do it, but it is about the worst car “buying” choice you can do. If you can’t afford to buy it out at the end of the lease, you’ve just made your financial situation worse. Even if you can afford to buy it out at the end of the lease, you are now paying higher used car financing rates and extending the loan for another 5 years.

While there are good reasons to lease a car, this is not one.

I agree with you there. I was just stating that 80% of folks lease because it allows them to get into a car they otherwise couldn’t afford.

 

[240vPlug]

And every point you made besides it being a depreciating asset and business tax write offs applies to financing as well. I have always financed up until my last two cars and always trade them in before the manufacturers warranty expired and have always had positive equity. I know which cars to pick that retains their value. Having said that a Tesla lease is stupid because of the way they have it structured…the money factor is way too high for those with good credit scores. Like I stated in a previous post, I can go right now and lease and bmw that costs more for less money and a money factor of less than half of what tesla is offering and have the opportunity to buy it out at the end while retaining any positive equity. Other than for business write off purposes it is not a very smart financial decision for anyone. You pay way more than you should over 2 or 3 years just because it’s a “tesla” and you gain ZERO positive equity regardless of what the car may be worth in 2 or 3 years and you have zero chance to buy it at the end. When you have a lease payment that is only $80 less than a finance payment it’s time to walk away. When you’re paying almost the same amount over 2 or 3 years between leasing and buying then why not buy and retain the equity yourself and then sell or trade. But hey…whatever floats your boat.

It shouldn't be that way with a Tesla though. It should be like the scenario you mention with BMW. One big reason people will lease an EV is because they are uncertain about the technology and how it will work for them. I see leasing as a stepping stone for a lot of folks looking to make the switch into an EV. The primary point being they are only making a two or three year commitment.

I have read countless EV forums over the last 4 or 5 years. Time and time again I see folks leasing because they are unsure about if an EV will work out for them. Another reason I saw was due to uncertainty about battery longevity. While most of us here know that the BMS and battery technology are solid and will last a long time the average consumer does not and is not convinced at this point.

So I see bad leasing policies like this as something that hurts EV adoption. If Tesla waits 2 or 3 years or more to change this policy it will probably be too late. Once they have a reputation of having terrible leasing options nobody who wants to lease will get a Tesla.

 

[Dan203]

Question is why not to buy it to begin with? Lease is Rip off anyway.

Because it's not..

 

[Dan203]

It makes zero sense to lease a car because you can’t afford to buy it.

I know a lot of people do it, but it is about the worst car “buying” choice you can do. If you can’t afford to buy it out at the end of the lease, you’ve just made your financial situation worse. Even if you can afford to buy it out at the end of the lease, you are now paying higher used car financing rates and extending the loan for another 5 years.

While there are good reasons to lease a car, this is not one.

I leased because I bought my previous BMW for $68k, drove it for 3 years and just 16k miles and then sold it for $28k. I figured if I was going to get a new car every 3-4 years anyway, might as well lose less money doing so. No one could have predicted we'd have a global pandemic that would cause a supply crunch that would cause the price of used cars to actually appreciate.

If I had the option I'd buy mine out. But as it stands right now that’s not an option, so I'll just have to get a new one. Trickiest part now is timing it so I get the new one within 6mo of the lease ending. (you can do a 6mo, month to month, extension at the end of the lease)

 

[Ogre]

If you are worried about losing money, don’t buy or lease a new car every 3 years.

There is no economical way to buy a car every 3 years.

Teslas have always held their value well, even prior to the pandemic. They are likely to continue holding their value well for at least another 3-4 years as EVs are a hot market. Leasing a Tesla right now is a sucker’s bet.

 

[WhiteWi]

Because it's not..

View attachment 792658
View attachment 792659

Lol you spent 10k on lease and only 4.5k on the loan. At least make the numbers match before trying to prove your point. So in reality difference is 55 dollars.

 

[240vPlug]

The lease payments look slightly lower than the loan numbers. That’s the game Tesla plays.

The Tesla lease is not a good deal for many reasons:

1) higher money factor (interest rate) than what is charged by other mfr leases

2) artificially low residual value (62%) meaning that Tesla actuaries feel the vehicle will lose 38% of its value in the first three years.

3) because you can’t buyout a model 3 or Y at lease end or sell to a 3rd party dealer you can’t capture any value from the vehicle.

4) the cost of a lease is determined by the difference between sales price as lease end residual + money factor. So we have a high money factor and a residual that is at best nearly 4 times what the depreciation has been. All this means that the Tesla lease is a horrible deal for the buyer.

Other leases haven’t traditionally been this way. Leasing is typically more flexible and less expensive if you switch vehicles every few years or use for business.

I agree with others that right now EV are going to hold their value much better than ICE. With how restrictive Tesla leases are it’s just not a good deal at all right now.

 

[Dan203]

Lol you spent 10k on lease and only 4.5k on the loan. At least make the numbers match before trying to prove your point. So in reality difference is 55 dollars.
View attachment 792698

The two had the exact same $4,500 down payment. The 10,000 is miles, not dollars.

 

[Dan203]

The lease payments look slightly lower than the loan numbers. That’s the game Tesla plays.

The Tesla lease is not a good deal for many reasons:

1) higher money factor (interest rate) than what is charged by other mfr leases

2) artificially low residual value (62%) meaning that Tesla actuaries feel the vehicle will lose 38% of its value in the first three years.

3) because you can’t buyout a model 3 or Y at lease end or sell to a 3rd party dealer you can’t capture any value from the vehicle.

4) the cost of a lease is determined by the difference between sales price as lease end residual + money factor. So we have a high money factor and a residual that is at best nearly 4 times what the depreciation has been. All this means that the Tesla lease is a horrible deal for the buyer.

Other leases haven’t traditionally been this way. Leasing is typically more flexible and less expensive if you switch vehicles every few years or use for business.

I agree with others that right now EV are going to hold their value much better than ICE. With how restrictive Tesla leases are it’s just not a good deal at all right now.

When I did mine in Summer 2019 the option to sell to another dealer was still available, so I assumed that if it did hold it's value I could just sell it to CarMax or similar and pocket the difference. They removed that option last December.

There was also no guarantee that a Tesla would continue to hold it's value like it had in the past. In fact in August 2019 when I ordered that was trending down. Tesla was actually lowering prices and there was still some uncertainty about their long term viability. Right now I wouldn’t do it again. And when my lease is up I'll buy instead of leasing. But at the time it wasn’t such a clear cut decision. Especially after having just lost a huge amount of money on a car I never really liked. If I had leased that BMW instead of buying it I could have saved myself about $30k. I though, at the time, the Tesla could turn out the same. Obviously in hindsight that's not the case, but at the time there was no way to know that things would end up where they are today.