Yet another buy vs. lease thread...

[tanker5]

Hi everyone. I have an important decision to make regarding my purchase. I confirmed my order for a 70D on 10/15 and was issued a VIN and now my order has been moved to the production queue. Tesla does not offer financing in the state I live in, so I would be unable to take advantage of Tesla's Guaranteed Resale Value. However, they DO offer leasing in my state.

2016 and the Model 3 introduction are right around the corner. I know the Model X was delayed so the Model 3 will most likely also be delayed. But, as it gets closer and closer to the release of Model 3, would it be safe to say that the resale values of Model S's could drop considerably?? Why would someone pay between $40-60K for a 3 year old Model S when they can get a brand new Model 3 (which is sure to be a beautiful car) for the same price?? Not to mention, Tesla also will most likely be upgrading the autopilot hardware and adding features in updates that the current hardware isn't capable of, like reading and reacting to stop signs and street lights, operating around construction zones and 90 degree turns.

That being said -- Leasing might be a better option for me. Without Tesla's Guaranteed Resale Value, I am unsure of how much I will get for the Model S after 3 years (or 5 or 6 years). For a total of under $45k over the next 3 years (including all taxes and fees -- and yes, I accounted for everything) I can have a beautiful car without having to worry about how much of the money I put into it I will get back. In 3 years time, I can either lease a newer Model S, or X or buy a Model III or Y (if they are available by then), with only a small payment increase.

I think I have a week or so to decide since my order will enter production soon. Any advice anyone has will greatly be appreciated. Thanks.

 

[Screwbal]

My pure guess as someone who just started following tesla recently which led me to order mine... when it comes to the 3 series it's going to be a much cheaper car. No telling what it will do to model S resale but I imagine the cheaper 3 isn't going to have the 17 inch display and will be less in many other areas. Which I won't speculate but I picture a much cheaper car that feels cheaper with fewer features and when it comes to resale of a S that will make the S hold fair value.

I'll defer to others though that have been following this closer and see their thoughts.

 

[dactylx]

That's basically the math I did as well to decide to lease mine for now. The technology in this space is changing rapidly enough that I'm pretty sure that either price, range, or cool new tech features are going to happen over the next three years that's going to make me want to buy another Tesla 3 years from now. Since I drive almost exactly 12,000 miles per year today, it was easy to say that leasing made the most sense right now. Three years down the road, I hope to decide to buy one outright (either an S, X, or 3), but I'm taking a wait-and-see approach right now while still driving around the coolest car available today.

Of course, you're going to be out nearly $50k for the privilege of doing so, but I think it's worth it (since you'd be out about the same if you used Tesla's guaranteed buy-back anyway). Just try not to think that every mile you will drive in the lease is worth $1.38 of vehicle cost.

 

[tstafford]

That's basically the math I did as well to decide to lease mine for now. The technology in this space is changing rapidly enough that I'm pretty sure that either price, range, or cool new tech features are going to happen over the next three years that's going to make me want to buy another Tesla 3 years from now. Since I drive almost exactly 12,000 miles per year today, it was easy to say that leasing made the most sense right now. Three years down the road, I hope to decide to buy one outright (either an S, X, or 3), but I'm taking a wait-and-see approach right now while still driving around the coolest car available today.

Of course, you're going to be out nearly $50k for the privilege of doing so, but I think it's worth it (since you'd be out about the same if you used Tesla's guaranteed buy-back anyway). Just try not to think that every mile you will drive in the lease is worth $1.38 of vehicle cost.

In a nutshell, this is exactly the same logic I used to lease. The cost is the cost - if you want to drive around in a $100K plus/minus car you need to pay. I chose lease because I want certainty that I can easily move to the next cool thing in a few years. Tesla is advancing the product at a breakneck pace so I am sure in 2018 I'll have something to get very excited about once again.

 

[dspan]

I also chose to lease. While I am a big believer in the value of the MS, I can't imagine that the 70D technology is what I will want in 3 years. I know I will pay more over the next 3 years, but to me it is about risk. I am pretty sure I will want to get the latest and greatest in 3 years, without having to worry about reselling.

 

[rypalmer]

Any idea what sort of lease buyout terms Tesla offers at the end of leases? This should factor into your calculations as much as other factors. If the buyout terms are favourable, leaving that option open could be desirable.

 

[Thundalicious]

I also will be leasing when I take deliver in December. I drive about 11k miles/year. Sure, purchasing a cheap, reliable small car and driving it into the ground over 15 years would be the economical thing to do. The problem is I love new technology and nice cars. I absolutely know if I purchased my MS I would be looking to make a change in 3-4 years regardless. That is my car buying history. In 3 years, 12/18 or 01/19, maybe I'll swap out for a newly designed MS, a fine tuned MX, or an unproven M3!!

Who knows what is in store in the next 3 years as far as tech upgrades? I'm sure not many would say it, but I bet a lot of pre-autopilot Tesla owners wish, just a little, that they had autopilot ... just a little!
The MS seems to have good 3 year value, but nobody knows what a 6-8 year old MS is worth.

 

[tstafford]

Any idea what sort of lease buyout terms Tesla offers at the end of leases? This should factor into your calculations as much as other factors. If the buyout terms are favourable, leaving that option open could be desirable.

There is a buyout number provided at lease origination. Example - mine is $69K on a $116K MSRP.

 

[jeffs47]

Hi everyone. I have an important decision to make regarding my purchase. I confirmed my order for a 70D on 10/15 and was issued a VIN and now my order has been moved to the production queue. Tesla does not offer financing in the state I live in, so I would be unable to take advantage of Tesla's Guaranteed Resale Value. However, they DO offer leasing in my state.

2016 and the Model 3 introduction are right around the corner. I know the Model X was delayed so the Model 3 will most likely also be delayed. But, as it gets closer and closer to the release of Model 3, would it be safe to say that the resale values of Model S's could drop considerably?? Why would someone pay between $40-60K for a 3 year old Model S when they can get a brand new Model 3 (which is sure to be a beautiful car) for the same price?? Not to mention, Tesla also will most likely be upgrading the autopilot hardware and adding features in updates that the current hardware isn't capable of, like reading and reacting to stop signs and street lights, operating around construction zones and 90 degree turns.

That being said -- Leasing might be a better option for me. Without Tesla's Guaranteed Resale Value, I am unsure of how much I will get for the Model S after 3 years (or 5 or 6 years). For a total of under $45k over the next 3 years (including all taxes and fees -- and yes, I accounted for everything) I can have a beautiful car without having to worry about how much of the money I put into it I will get back. In 3 years time, I can either lease a newer Model S, or X or buy a Model III or Y (if they are available by then), with only a small payment increase.

I think I have a week or so to decide since my order will enter production soon. Any advice anyone has will greatly be appreciated. Thanks.

I was going to lease.. Until I ran the numbers... Here's what I worked out:

Base Model S70 (I'm in an area with no now) - with options $76,500.
Leasing with 15k/year:
Deposit: $2,500
Due at Signing: $5,272
Total: $9,069
CA Tax Credit: -$2,500
Total out of Pocket: $5,272
Payment: $961/month with sales tax

Buying at 72 Months:
Deposit: $2,500
Paid at Signing: $13,216
Total: $15,716
CA Tax Credit: -$2,500
Federal Tax Credit: -$7,500
Total out of pocket: $5,716
Payment: $1,049/mo

So, the payment is only ~$80 more per month and I *own* the car.
How do things look in 3 years? With the lease: I've got.. Nothing...
If I buy, I've got: Amount Financed = $69,580 - 36 x $1000 = $40,500 balance due on the car. I'm not sure what the used Model S market will be like in three years, but $40k feels like a reasonable amount. Even if I have to sell it back to Tesla, they'll give me around $36-$37k for the car. In the end, I decided to buy. In my view, the main benefit of leasing is for businesses who can write off the lease payment.

 

[Thundalicious]

Ahh, the endless lease versus buy debate. A different scenario for everyone.

Jeffs47, I will point out that by your logic, at the end of 36 months of loan payments you will still owe $40,500. If the car is worth 36-37k, you'll actually have … less than nothing.

I'm definitely not suggesting that leasing is a better option for you or anyone, but if you're underwater on a loan in three years you don't own anything.

 

[tccartier]

How about buying used "CPO" ?? I actually drove a M/S for the first time about three days ago. Now I MUST HAVE ONE !! however like many the entry level for a new example is just a tad bit more than I'd be comfortable with. That said, CPO examples are beginning to fall into my comfort zone "sort of". Would those of you who have or are purchasing or leasing "new" be hesitant of picking up a pre owned example? (I'm guessing not) but nonetheless for someone like me to tap that deeply into the bank combined with it being "used" is a little concerning. Any thoughts?

 

[jeffs47]

Ahh, the endless lease versus buy debate. A different scenario for everyone.

Jeffs47, I will point out that by your logic, at the end of 36 months of loan payments you will still owe $40,500. If the car is worth 36-37k, you'll actually have … less than nothing.

I'm definitely not suggesting that leasing is a better option for you or anyone, but if you're underwater on a loan in three years you don't own anything.

I do see your point, but the $37k is a worst case scenario from Tesla. Based on current Model S prices, I think it's pretty likely that the price for a 3 year old Model S will be > $40k.