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TESLA - LEASE OR BUY IT??? My simple math on the subject - For those who may be interested

TESLA - LEASE OR BUY IT??? My simple math on the subject - For those who may be interested

On the fence between leasing or purchasing? (Slightly revised figures)

Everyone has their own opinions and this won’t apply to everyone. I used to be 100% against leasing until I did the math and realized the error of my ways several years ago. Haven’t “purchased” a car since. Since there was an earlier debate, figured I’d share my reasoning and calculations for anyone interested.

For me, the most important factor is: What does it cost me from the time I walk in to pick up the car and the time I turn it back in or trade it back into Tesla? A few other end of lease/purchase options after three years also noted below. The following is just an example. Everyone’s situation may result in variances of the final figures. Hope this helps.

Tesla probably has one of the worst lease programs of all manufacturers in that there are no special deals ever offered. Similarly priced cars from other manufacturers often have much lower payments than Tesla. Even with all of that, based on the calculations below, I believe it still makes sense to lease a Tesla in most scenarios. Most certainly in my personal scenario it does. I'm not one that keeps cars longer than 2-3 years. If you only buy a car once every 5 or 10 years, read below as a lease still may be the best option.

If you're one that almost always trades in their car rather than selling it private party, then this heavily applies to you. If you regularly sell your cars private party when you're done with them, purchasing may be the better option, or not.

OK, here’s the simple math for Purchase vs. Lease –

Based on a custom order of a new P100D – Black, standard wheels, glass roof, “leather” (whatever the material is now?) interior, EAP, no FSD. Nice round price of $140,000.

All lease and purchase figures pulled from Tesla's website.

LEASE---
Lease Payment (based on 12,000 miles per year) = $2,028 before tax. $2,211 per month (Includes 9% L.A. CA tax rate).
$2,170 X 35 payments = $77,385 + $9,424 due at signing (includes 1st payment, so only 35 payments to be made after) = $86,809
$86,809 total spent from the time you walk in and sign the lease, until the time you turn in the keys after 3 years.

PURCHASE----
Purchase Payment (72 month loan) = $1,920 per month = $69,120 after three years + $20,774 required down payment (including tax, delivery, license)
Total out of pocket after three years $89,894.
Loan balance after three years $68,066.
Let’s assume the car is worth 50% of what you paid for it (generous as Tesla’s old price guarantee does not pay 50% for options. They paid 50% only on the 75 kWh version’s base price, I think it’s 40-45% for anything above). But we’ll give purchasing the benefit of the doubt. That means your car is worth $70,000, assuming you put the same 36,000 miles on it. Either scenario is a 25 cent per mile reduction in value per Tesla. So that means you have $1,934 in equity after three years.
$89,894 less $1,934 you’ll get back from your equity = $87,960 is the amount the same Tesla cost you out of pocket on the day you trade it in.

Of course you can try to sell it for more. But this analysis assumes having the same no hassle luxury of not having to deal with selling the car after 3 years and turning it in or trading it in to Tesla.

$87,960 to buy it and trade it in to Tesla after three years.
$86,809 to lease it and give it back to Tesla after three years.
$1,151 cheaper to lease the car from the time you walk in the door until the day you drop off the keys. (Savings are higher if you live in a state with a sales tax rate less than 9%) If you drive more miles, 25 cent mileage penalty is the same for both lease and Tesla's guaranteed buy back program.

Based on pricing noted in my prior posts, my $130,000 car maybe could bring me $80,000 today, after only 2 years of ownership, if I sold it privately (Tesla just offered me $66,000 on a trade in). Another year from now? Being generous, maybe $75,000? (probably only $60,000 on a trade in) Which equals 57.6%. So on a $140,000 car, 57.6% is $80,640 if you sell it private party.

Assuming you can get $80,640 for it private party, then you come out $11,423 ahead having purchased the car instead of leasing it. But, you have the hassle of selling it yourself. And that’s hoping you get that price for it? With all the CPO's available, obviously quite a few people don't want to sell private party and just trade their cars in. I barely got that percentage for my 2 year old car on the private market and it was a pain in the rear having to sell it. Based on my trade in offer, if I bought the car instead of leased it, costs you another $15,000 more than the figures reflect, so your options only get worse on a purchase. And your $11,423 profit now becomes a $3,577 loss if you don't have the price guarantee from Tesla (Not sure if they even offer that anymore?).

But, as I’ve also previously noted, US Bank, who does most of Tesla’s leases, has always offered to let me buy my leased vehicles for well below the residual value. In the past, on other cars, it’s been around a 20% discount (sometimes even more). With an estimated residual value of around $75,000, that would mean a $15,000 reduction in price (could be more, could be less). But, if that’s the case, then you just purchased your Model S for $60,000 after 3 years. Add in $5,400 for sales tax plus the $86,809 it cost you for the first three years and the car cost costs $152,209 and you own it free and clear.

On a purchase, you’ve spent $89,894 out of pocket after three years. You owe $68,066. So to own it free and clear after three years and pay off your loan, your total is $157,960.

In this scenario, having started off with the lease, by the time you pay everything off and own the car free and clear, you’ve saved $5,751.

That means, for peace of mind, on a car where Technology changes monthly and based on recent events, prices can plummet instantly, leasing the car may be the best option. Even if you plan on keeping the car for years to come. Under a purchase, if you decide you want out after three years, the responsibility is all on you and you have to hope that another turn of events doesn’t reduce the value of your car and put you upside down on your loan balance. The lease gives you more options after three years, likely at less cost. Based on Tesla's trade in offer for my current car, I'd be upside down in my car by $8,000 and would have to pay that just to get out of the car, in addition to whatever the new car costs.

I didn’t mention the Federal & State rebates. State rebates are still given to those who lease, so there’s no difference. Not everyone will qualify for the federal credit or will qualify for a reduced amount. But everyone’s situation is different. For me personally, I get to deduct 100% of my lease payment. So even on a good year when I can get my tax rate down to 25% that’s a savings of around $530 per month or around $16,000 over 3 years, which far outweighs not getting the $7,500 tax credit (less for my scenario due to business use of the car, so my benefit is even greater). Check with your accountant to see where you stand based on your own tax structure. Also, on a lease, you only pay sales tax on the amount of the payments you make. On a purchase, you pay sales tax on the entire price of the car. In my state and city where sales tax is 9%, that calculates out to $6,230 paid in sales tax rather than $12,600. So I save $6,370 in sales tax. Making the loss of the $7,500 tax credit negligible. Plus, on a lease, the federal rebate is figured into the pricing, so that means you effectively get the credit either way, even those that wouldn't otherwise qualify for it on their tax returns. Again, everyone's situation in this will be different, which is why I left it out of the calculations. For me, I come out WAY ahead in the tax department on a lease versus a purchase. Those that live in states with no sales tax, will certainly have more incentive to purchase the car IF they qualify for the full $7,500 tax credit.

Other benefits of leasing:

1. Options, options, options: I believe you have more options available to you on a lease than on a purchase. On a purchase, again, if you sell your car private party and values have held up, then you may come out ahead. But, if US Bank holds true to form and offers to sell you the car at a discounted price, this likely balances out that difference. If you're one who trades in your cars, then you certainly have better options starting off with a lease. If Tesla doesn't offer a 50% price guarantee after three years for a purchased vehicle, based on the trade in numbers I noted, your losses grow even more having purchased the car to start, especially if you want out after three years.

2. How quickly the battery degrades is of no concern to you. If you want to charge at 100% every time, the adverse long term effects on the battery are of no concern to you. You don’t have to deal with it.

3. Do you really want to own the most technologically advanced car that has proven VERY costly to repair if something breaks outside of warranty, without a warranty? I know I don’t and wouldn’t. So add in another $5,000 for that peace of mind to buy the extended warranty.

4. Paying $2,000 a month for a new car is a lot of money. But at least it’s new. How will you feel when you’re still paying $2,000 a month on a 4 year old car that has no warranty? That’s one of the reasons why I lease. If I’m spending that much, might as well have something new. Leasing means, you still have the payment, but you’ll have a shiny new car every three years and feel like your money is going towards something fresh and new.

Yes, you could own it free and clear after 6 years, but then you own a devalued car that’s 6 years old and are responsible for all repair costs.

If you’re someone who only buys a car once every 10 years and can’t afford to pay off the car after three years, then a standard purchase and loan is your best option. If you pay cash for your cars, then the above doesn’t apply. Although, at 0.99% financing, doesn’t make a lot of sense to tie up $150,000 when Tesla is willing to loan you that money practically for free. $150,000 can certainly earn you more than 0.99% if put to work elsewhere.

If you’re ready to lease/purchase, be sure you have a referral code. Saves you $1,000 and gets you free supercharging for as long as you own the car. If you have a friend / family member that owns a Tesla, ask them for their referral code. If not, plenty can be found on the forums. Still seems silly to me that Tesla mandates a referral for new buyers to receive free supercharging! If you're not able to find one, mine can always be used as a last resort. http://ts.la/nicholas7346 . Just use the link from a friend, family or this one to start your order and the $1,000 discount is automatically applied along with registration for free lifetime supercharging.

Hopefully the above adds some useful information to consider. My conclusion is that, a lease offers you a guaranteed easy exit out of the car after three years, likely at a lower cost. If Tesla offers you a 50% price guaranteed buy back after three years, then you still have the luxury of a guaranteed easy exit from the car after three years. If that offer doesn't exist, then its a gamble on if you'll be able to sell the car for an amount high enough. On a private party sale, you may come out ahead. If you trade it in, you'll likely come out well behind having purchased the car instead of leased it. No matter which way you go, you'll certainly enjoy the heck out of the car!

Side note: Be sure to ask your Tesla representative for availability of new inventory vehicles. The Tesla website often doesn't show all that are available. But typically they have a long list of cars available and at discounted prices. Have recently seen the same $140,000 Tesla offered at greatly reduced lease prices. Remember seeing lease offers at between $1,500 to $1,600 for the same car that a custom order reflected a payment of over $2,000. The sale prices were only slightly less (within $10,000), but a lease at $500 per month less certainly adds another variable not reflected in this post that could reduce your cost over 36 months by as much as $18,000. Do your homework.

2015P90DI | September 8, 2017

Realized I had a couple of minor factors I hadn't considered in my original post. Had calculated the lease based on 36 payments, however your drive off cost includes one of those payments, so calculations needed to be revised based on 35 additional payments. In addition, the expanded lease details on Tesla's website revealed a different payment amount. So the calculations have been revised. Since there were replies based on the original figures, to avoid confusion, I deleted the original and re-posted.

burdogg | September 8, 2017

What would be the difference if you put 0% down, or 5%? I got my X with 0% down and 1.99% finance back in Dec. Just assuming you have to put 20% down is not true, so would be interesting if you did those calculations as well. Not that i have ever been a lease person and would rather own a vehicle, especially since I buy and keep for 10 years :) But there are many that don't put a whole lot down.

burdogg | September 8, 2017

OH, and not that they can't afford to put anything down - just that can get a better return keeping my own money longer, then putting it down upfront :)

Tropopause | September 8, 2017

OP,

Did you delete and restart this thread?

Tropopause | September 8, 2017

Sorry, I read your second post here.

SUN 2 DRV | September 8, 2017

Generally speaking a lease helps with short term cash flow and a purchase helps accumulate equity and longer term value. It all depends on whether your time horizon is short or long term....

An interest-only house mortgage also helps reduce you monthly payment but may not be the best long term strategy towards owning a home.

2015P90DI | September 8, 2017

burdogg | September 8, 2017
What would be the difference if you put 0% down, or 5%? I got my X with 0% down and 1.99% finance back in Dec. Just assuming you have to put 20% down is not true, so would be interesting if you did those calculations as well. Not that i have ever been a lease person and would rather own a vehicle, especially since I buy and keep for 10 years :) But there are many that don't put a whole lot down.

-----------------

I just used the calculations on Tesla's website. Naturally, if you put less down, your payments will be higher in both scenarios and you'll pay interest on that money. But with low interest rates, the difference is minimal. Other than affecting the payment amounts and amount up front, putting more or less down won't have much of an impact on the total 3 year cost of lease or purchase.

You noted that you paid 1.99% interest, not sure if that's higher than today's 0.99% rate because you put less down or because the rates were simply higher when you purchased. At 1.99%, you paying a little more to borrow the money, but 1% is again, pretty minimal. I'm with you, I prefer to put less down. As I noted in the original post, when car manufacturers are willing to give you free money (meaning loans at very low interest rates), may as well take advantage of it and put that money to work elsewhere. 0.99% or even 1.99% or 2.99% is better than most can get on a home loan, let alone a business loan or any other type of loan, so financing a car, especially at Tesla prices, is a good opportunity to put a decent amount of cash to work for you. Of course to put less down generally requires higher credit ratings, so not everyone will have the same luxury.

ST70 | September 8, 2017

Simple Math? Why did you write an essay?

2015P90DI | September 9, 2017

@ST70 | September 8, 2017
Simple Math? Why did you write an essay?

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Oh, and here's another forum gem!! LOL. Why? Because I f*%#ing felt like it. That's why!

carlk | September 9, 2017

The best way is still pay cash and not having to worry about it as long as you own the car.

NewTMan | September 9, 2017

Couple of quick points as many may not be able to follow the whole analysis; the tax credit makes a big difference in the analysis for most people, and in my particular case (NJ) there is no sales tax. I would expect most people, but maybe not all, can take advantage of the full $7,500 (especially those of us with W2s ;) ).

Deductions for leases are easier to take, but you should be able to take an equivalent deduction for the purchase and use the same depreciation model you used for valuation of the car. Downside is if you sell it for more than you depreciated to you need to gross that back up technically.

Overall you should caveate the analysis that it applies to people who can deduct the lease payment easily and don't have W2s. Those of us with W2s, the analysis works out quite differently and with 0.99% financing (free money) compared to Tesla's 5% rate on leases buying works out better overall depending on the end value of the car. I have found it best to assume the same value for the lease and buy (i.e. use the car residual in the analysis for buying as well) and that way you are not playing games with what the car could be worth and affecting your analysis that way.

In my case for my Model S I just bought I come out $18k ahead buying compared to leasing using a similar analysis and making minor adjustments I noted (ok, I also adjusted for the time value of money in all cases, but that is not really necessary).

Ross9733 | September 9, 2017

That's awesome. No state sales tax is a game changer

BruceR61 | September 9, 2017

The analysis also only really works for someone who drives about 12K miles per year. In the 5 1/2 months I've had my MS I have already driven 14,200 miles. I project 28K per year and will have the car about five years. I agree leasing is usually smarter if you can write off the lease, but not if you drive a lot.

MAPC | September 9, 2017

The other variable, related to sales tax, is how the sales tax is paid. In CA, you only pay the sales tax on the Cap Cost Reduction and the amount of the monthly payment- in other words you pay the sales tax only on the part of the car that you 'use'. In TX, as I understand it, sales tax is levied on the entire purchase price and then amortized into the lease.

Here in CA, leasing saves you (on a $100K net price Tesla) approximately $5000 right off the bat.

For my new P100D-L, I am leasing. I have decided that I like to have a car that is always under warranty and that I can swap out every few years as technology improves.

But that's just me...for someone who keeps their cars for long periods of time, purchasing likely makes sense.

tstolz | September 9, 2017

Weird how someone else (the leasing company) would be willing to come out behind in the deal. Hint ... they won't won't or they would be out of business.

Tldickerson | September 9, 2017

To much to read. I paid cash and will just keep the car.

lilbean | September 9, 2017

Me too, Tl!

Ross9733 | September 9, 2017

Here in CA, leasing saves you (on a $100K net price Tesla) approximately $5000 right off the bat.

Not true. Cause with a sale you get the 7500 federal tax credit and in a lease that's "included" in price.

Tesla has horrible lease rates and residuals so although still a great option you cannot compare to leasing a Lexus

ST70 | September 9, 2017

2015P90DI- You need to spend more time driving your P90DI (not ludicrous) car....rather than trying to convince everyone to lease

MAPC | September 9, 2017

Ross 9733-

The $7500 credit is applied 100% to the Cap Cost reduction so you DO get the benefit of this on a lease.

TeslaKU | September 10, 2017

@tstolz - The 3rd party lease company makes the money on the interest/loan. The loan is the same regardless if it is a Tesla or an ICE vehicle. You simply make clear which party takes the tax deduction. If they do, then the loan terms should reflect it. I think everyone assumes lease means Tesla lease. There are 3rd parties that do lease-style loans.

There is a lease company in Texas that does a low residual which makes the payment higher. With the low interest rates it is not that bad. At the end of the "lease", the residual amount is so low that selling it to Car Max you would make money unless the value just plummets. They will also take the car back or offer a standard simple interest loan on the remaining balance.

MAPC is correct that Tesla applies the tax credit to the lease. The terms are bad. One would hope their model changes as more-and-more lease returns start to come in.

2015P90DI | September 10, 2017

ST70 | September 9, 2017
2015P90DI- You need to spend more time driving your P90DI (not ludicrous) car....rather than trying to convince everyone to lease

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@ST70, you need to stop asking stupid questions, making stupid statement, basically showing your idiotic colors in a public form, stop telling people what they should or shouldn't do and mind your own business. Don't like what I have to say, don't read it. Go buy a Tesla and focus on things in life that actually matter. In the meantime, I feel sad for you. God bless, you need it.

Bob12345 | September 10, 2017

For the build I want Tesla says: (personal use, not business)

$955 month lease (15K a year and tax credit factored into lease) X 1.06 SC sales tax = $1,012 per month.
$1,052 purchase for 72 months. $7500 tax credit /36 = $208 per month. $1,052-$208 = $804

$6675 down for lease. $5000 down for loan. Lease is $1675 more upfront. $46 more per month added to the lease.

Lease: $1012 + $46 = $1058.
Loan: $804

Looks to me that leasing cost me $254 per month. Or $9144 over 36 month.

Feel free to correct me if I calculated something incorrectly or used an invalid assumption.

TeslaKU | September 10, 2017

Bob12345 - sales tax is missing (assuming your state collects as opposed to a use tax). Your tax credit in the purchase seems wrong even though you are trying to apply it to the first 36 months. You still have a higher monthly payment, you just don't have to pay the feds on the other end.

You are only comparing the first 36 months. After 36 months, you still have a buttload of car to pay for on the purchase which will be upside down for most of it.

Bob12345 | September 10, 2017

True. $500 sales tax capped here in SC. That's plus $14 a month for the loan. So, that makes it to $1058 for lease and $818 for the loan. So now it's down to $8644 total difference over 36 months.

As for the tax credit, it is used to lower the lease payment, so I felt it was necessary to deduct it out of the loan payment over 36 months, just to compare apples to apples.

As for what you have left to pay and being upside down, the amount remaining on the loan after 36 months will be around $37,300. Unless something crazy happens in the market, I don't see the car being worth less than that after 3 years and 45K miles. You might actually be able to make a few bucks. The leasing agents certainly are making money, either on the front end or the back end. Maybe both. Otherwise, the leases wouldn't be happening.

Ross9733 | September 10, 2017

Honestly, no matter how you crunch numbers or do the math in the end the payments over 36 months for lease or or buy come out roughly the same. There are many pros
and cons to being a lease or buy at end of 36 months that fit different people's situation differently. Don't think a wrong decision since everyone made the right one in getting a tesla!! I was just surprised as traditional ICE leases usually have much lower monthly payments when compared to a finance.

But most disappointing thing I find in these forums is people resorting to name calling and mean spirited responses. Just makes no sense.

Good luck to everyone

TeslaKU | September 10, 2017

Bob12345 - If you are spreading the $7500 over three years and not six, then you should put all the interest on the first three years to be apples to apples. Forget the monthly payments because you should care about the total cost of the car at then end of the terms. That is apples to apples.

Lease is $6675 + ($1012 x 36) = total cost with nothing to show for it ($43,107 spent over 3 years)
Loan is $5000 + ($1052 x 72) - $7500 = total cost with a car worth ? at the end of it ($73,244 spent over 6 years).

I'm using your numbers.

Bob12345 | September 10, 2017

Correct.

But at the end of 3 years (apples to apples)

Lease is $6675 + ($1012 x 36) = total cost with nothing to show for it ($43,107 spent over 3 years)
Loan is $5000 + $500 + ($1052 X 36) - $7500 = $35,872 + loan for $37,300 for a 3 year old Tesla with 45K miles

So, if you can get out of the car at the end of the 3 years for $37,300 you end up almost $7200 ahead. Anything above this is gravy. I certainly can't find a 3 year old 45K mile MS for that price now. I may be looking at something wrong but it looks like the leasing companies are making a killing.

TeslaKU | September 10, 2017

With the last "lease" I did on an ICE vehicle, the dealership was calling me and sending me all sorts of deals under their "brand loyalty" program to get me to move into a new car. I knew I was going Tesla, but some of those offers were VERY tempting. I am disappointed Tesla doesn't offer the same type of incentives to their lessees. I am hoping it will change. In the meantime, I will enjoy a very nice write off and drive an awesome car.

TeslaKU | September 10, 2017

That is TESLA LEASING. Yes. They are not very competitive.

Try a private company. They will do 60% or 65% residual with a low interest rate/low payment. I think it was around $800. They will also do a 40% residual with a low interest rate/high payment. I think it was around $1400. I was shopping months ago and am quoting from memory. They didn't care about the $7500. That was mine to take.

To me, the lease car is a rental with a nice tax write off. Something in my specific situation that I could not do on a purchase. If the car turns out to be a problem child, I don't have to worry about getting rid of it. I just hand the keys back with the car and move on. I think Tesla will be in a better place with battery and hardware in 3 years. I think the 2020 and 2021 car will be more in line with one that I want to keep for 10 years.

I have only leased two cars in my life. Before 2011, I would own a car for 7 years or 100,000 miles. I plan to go back to my pre-2011 model on the next car if I like the specs.

There is no one-size fits all. I think I am coming out WAY ahead with the lease right now.

reed_lewis | September 10, 2017

A lease does not work for me because I simply drive much too far. I bought my Model S in Dec 2016, and in Sep 2017 I have 19,300 miles already. I would be way over the allowed miles in the lease and it would cost me too much.

But I also plan on keeping my Tesla for a long time. With the 8 year battery/motor warranty, why would I get rid of it?

The only car I (F)leased, was a Smart ED for 15K miles a year. The downpayment was under $2K, and the monthly payment was about $200 a month. That was a good lease, but I traded it in early when I got the Tesla, so I had to pay the last few months.

Bob12345 | September 10, 2017

@kevinu69 They didn't care about the $7500. That was mine to take.

That is not correct. The federal tax credit has to be taken by the leasing company and refunded to the leasee. They can't just say "we don't want it so you can have it by claiming it on your taxes" Some state credit do allow the leasee to take it, but the $7500 must be taken by the owner, not the leasee.

TeslaKU | September 10, 2017

This was a 3rd party lending company I was talking to. Do you remember the GM "Smart Buy". It is a similar deal. It is not a lease, but they call it a lease. It is as stated several times a balloon note, with the right to return the car when the balloon comes due. So just like your bank, they CAN let the buyer take the take the tax credit.

I am sure on a true lease that you are probably correct.

Bob12345 | September 10, 2017

Yeah, I'm talking about a true lease.

SmartBuy actually titled the car in the owners name, so you could then apply for the credit if there is a similar product from a 3rd party vendor.

If you find a product that is better than the 72 month at .99%, please share. Amazing how much shopping around can save people sometimes. I've seen people sign some terrible deals. Just like throwing money away.

TeslaKU | September 10, 2017

Bob12345 - You assume everyone can qualify for a $100Kish loan for 72 months. Again, please read what I previously said. Some people need the lower loan amount to be able to get into the car. If you are among the elite that can do that, run with your 72 month at .99%. Not everyone is an elite but still like driving a nice car. This is where the Smart Buy, Red Carpet lease, and similar programs came from. The balloon loan is designed like a lease because you can turn the car in or buy it at the fixed residual value, so they call it a lease. As you stated, the car is titled in the buyer's name.

I don't want to start giving out private information, but I guarantee you that by the time I take the tax write offs that I will kill your .99% loan in 3 years. My super conservative accountant and I ran multiple scenarios and the one I picked was the most financially advantageous to me.

I know a few super-elites and they would say you are fool for financing longer than 36 months even at .99%.

REPEATING - One size does not fit all. Every situation is dependent on the specific financial and tax situation of the buyer.

ST70 | September 10, 2017

2015P90DI (NOT ludicrous)- you need to work on sentence structure and douche more often

avesraggiana | September 10, 2017

Dang...

Bob12345 | September 11, 2017

kevinu69:

I know a few super-elites and they would say you are fool for financing longer than 36 months even at .99%.

REPEATING - One size does not fit all. Every situation is dependent on the specific financial and tax situation of the buyer.

One sentence you claim your "super-elite" friends would declare me a fool, and in the very next sentence, you claim that nobody knows anything until they understand the buyers personal financial and tax situation. Seems like a direct contradiction.

And I didn't need anything repeated. I never said one size fits all. I also never assumed everyone could qualify for the loan. I listed a specific situation for personal use (my build/my state) and proved that the loan was better than the lease. And not just a little better. A lot better. Then you went to "That's Tesla's lease and they suck" and there are other products that could "kill" the loan option. Which is fine and entirely possible.

So let's see them. Please share the details that allow you to come out way ahead on a lease for a Tesla for personal use. I'm not trying to put you on the train to butthurtsville. I'm honestly asking for the terms and situations that apply that allows you to come out way ahead on a lease. Other people here may be in the same situation and find it useful. Nobody wants to pay more for the same thing.

Thanks in advance.

TeslaKU | September 11, 2017

Bob - I called around my local banks and credit unions and asked for the "smart buy" type loan. They did not offer it, but I received referrals to local companies that did.

I brought a 100% purchase offer from Tesla's preferred credit union (1.9% at the time) in California (Tech Credit, I think), Tesla's lease numbers, and the proposals from the local "lease" companies to my accountant. Tesla leasing was the only one that took the federal tax credit.

A few days later my accountant got back to me with the different costs over the next three years assuming my business model did not change that much. I was lucky enough to get a fully loaded July build 2017 90D at a MAJOR discount. Tesla recently dumped the 90 series cars. The car only had 14 miles on it when I took delivery. Since this is my first Tesla and the car is already behind the top line 100D, I decided to move forward with the assumption I would get a more current model in 3 years. We eliminated the purchase and I went with the deal most beneficial to me. I am a small business owner. I drive about 7000 miles a year. I got a deep discounted car with low payments and am able to receive tax benefits at the same time. After taxes, my per month cost will be lower than your .99% loan. My accountant is super conservative, so I trust the numbers she came up with. In 10+ years, she has never steered me wrong or not backed up her advice.

My parents and their friends are all retired and living on golden parachutes or fat pensions. They only pay cash for cars. They drive them for about 6 years. They give them to their kids or trade them in and buy a brand new car.

You math just isn't adding up to me. Something is missing. At .99% on a 72 month loan, an $80000 car would run almost $1200 a month. To get down to $800, the price would need to be between $55K and $60K of principle. Leasing a $60K car would not be anywhere near your number even from the bandits at Tesla. That is why I stated I was using your numbers for the calculations.

Ross9733 | September 11, 2017

I can tell you right now for an 84500 75d tonlease with 12k miles it's 1019 a month plus 5k down plus 700 acquisition fee plus the state taxes based on the 1019

For a 0.99 % loan for the entire 84500 with nothing down it's 1209 a month. Upfront would be the taxes. And you get 7500 credit which makes those taxes a wash.

Both get the state rebate.

Bob12345 | September 11, 2017

kevinu69

You math just isn't adding up to me. Something is missing. At .99% on a 72 month loan, an $80000 car would run almost $1200 a month. To get down to $800, the price would need to be between $55K and $60K of principle. Leasing a $60K car would not be anywhere near your number even from the bandits at Tesla. That is why I stated I was using your numbers for the calculations.

My cash price for the build comes to $78,500. $5000 down plus $500 sales tax (capped in SC) Leaves you at $74,000 to finance. 72 months at .99% = $1059. But since the $7500 fed credit is factored into the lease, I divided it by 36 and subtracted it from the payment just to compare payment apples to apples. $7500/36 is $208 dollars a month. New effective payment is $851 a month. Not sure how I came up with $804 to start with, but it is what it is.

A 10K miles lease for 3 years is $969 a month. 12K is $991. 15K is $1012. Lease requires $1100 more down.

At the end of the lease, you just give it back. At the end of the loan, you have a $37,549.18 loan on a 3 year old MS75. I haven't seen a 3 year old for anywhere close to the price. At that point, I consider it an asset, not a liability. Put in on the market for $40K and it would be gone quickly.

In SC, the loan is cheaper upfront, every payment is cheaper, and you can make money on the backend. And like a said, a small business lease is an entirely different animal. But I would check to be sure you can claim the tax credit if you work some deal where your name is not on the title. It may be possible, but I've never heard of it. Everything I've seen requires the leasing company to file for it and refund to you. Doesn't mean it can't happen, but that would be a nasty surprise.

But congrats on the 90D, There were some crazy deals on them.

Bob12345 | September 11, 2017

Ross9733

What is the state sales tax amount on the purchase and the percentage sales tax you will need to add to each monthly payment?

TeslaKU | September 11, 2017

Bob - We are both right and both wrong. This is pointless.

You spread the $7500 tax credit across 3 years but not all the interest. You need to spread it over 6 years to be a more equitable comparison or front load all the interest into the first 3 years. You are still paying $1059 a month for 6 years. If you are not able to write any of it off, then you have made the best choice in your situation. The ask for a 2014 Model S 60 is $59K. You are probably safe.

If by some chance the rest of the automakers start dropping some awesome electric cars or Tesla releases the 500 mile battery, then your car value may not be so hot. I just walk away from mine and and get a new one.

Bob12345 | September 11, 2017

The interest and tax deduction have nothing to do with each other. You don't lose any of the tax credit if you sell after 3 years. To be fair, it has to be factored into the 3 year price because they certainly are doing it for the lease. As soon as you receive the money, you can apply it to remaining payments equally or even "skip" 7 of your regular payments.

You do get some protection against drastic market changes, but I can't imagine being upside down. The 2014 S60 still sells very well despite a refresh, more range, and more standard options.

But you may be right. Tesla may have some big plans that they know are going to tank the current cars and are padding their leases to cover themselves.

prust | September 11, 2017

A simpler way to look at this is if you only want to keep the car 2-3 years, you should lease it and put the risk of the residual on the lessor. With the recent price reductions, constant innovation and improvements to the car, the true residual value is likely to be lower than the one used to calculate your lease payment. Eventually, the leasing companies will figure this out and up the cost of the lease. Buying and selling the car, you will have to absorb the loss. If you plan to keep the car for long term, then buying the car is the way to go especially with the 1%/year interest rate Tesla offers, unless you are sure you can purchase the vehicle at the end of the lease for significantly less than the residual value.

ST70 | September 11, 2017

If you trust prust you might go bust...

TeslaKU | September 11, 2017

Bob, just to be clear, Steve Mnuchin isn't going to send you a check for $7500. You have to owe $7500 in federal taxes that you will use your credit to pay the first $7500.

My federal tax write offs come off the back end (amount based on my tax bracket) as long as I own it.

Our EV federal tax credit is on the front end only the first year.

Your state sales tax is capped at $500, Do you have to pay county property tax annually on the car?

Your state's website: "For example, if you move to SC from Georgia with a vehicle that was previously registered in Georgia, when you register that vehicle with the SCDMV, you will owe the IMF [the $500], applicable title and registration fees, and property taxes. You pay your property taxes to your county treasurer. You must bring your original paid property tax receipt when you visit the SCDMV."

tstolz | September 11, 2017

Guys ... there is no free lunch. These threads remind me of the perpetual motion ones over in the General forum!

Sure is weird how adding a middle man makes things cheaper on a car you can't negotiate price on and when its so easy to get low interest rates! LOL

Bob12345 | September 12, 2017

I'm aware of how the tax credit work. Still $7500 in your pocket. You just have to wait until you file to get access to it.

Yes, we do pay a yearly property tax on vehicles. But you pay it regardless of loan or lease. Leasing companies can add it in and they will pay it on your behalf or you can pay it outright. Either way, it's a wash. Ideally, it would be better to pay it outright instead of being charged interest for it.

And tstolz, you are absolutely correct, there is no free lunch. But .99% for 72 months is like eating Ruth's Chris for Quincy's Family Steakhouse prices.

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