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Buy Vs Lease - Model X

Buy Vs Lease - Model X

I am trying to decide betwee buying vs leasing. Leasing protects me from Tesla coming out with newer technology.

Model X Cost: $95,500
I could use the $7500 tax incentive and $1000 MA tax incentive
Loan / Lease monthly payment is not really a factor
Don't own a business

What I am unable to understand is at the end of the lease, if I wanted to buy, how much will I have to pay. Are there any calculators or anyone gone through a similar decision ?

abourgeois79 | 2 juin 2017

As the cash is relatively cheap these days (interest rates) it is quite interesting to lease rather than buy, I believe.
If you already have the cash (or most of it) you can probably make more out of it than what the lease is costing (financial interest).

Then indeed the terms and conditions of the lease can be different depending on the country and be more or less interesting for a buy-out or upgrade later. Can't comment on that part as I got mine in Japan :-)

jlegath | 2 juin 2017

As you said lease let's you out for the newest version of the the technology without the hassle of selling your car. I just priced out.about a 125,000 Model X. The 72 mo loan with 2500 down and the 3 yr lease with 7500 down both had about the same monthly payment.

You can ask Tesla what the residual value cost to buy the vehicle at the end of the lease costs.

Finally leasing only works if you stay below the 12k miles annually. Otherwise the penalties really make it more expensive.

poloX | 3 juin 2017

So, if both are about the same wrt payments, then the differences are with leasing, you are contracted to 12k mile/year and at the end of the leasing, you don't own the car and might even have to pya more for the mileages that you go over 12k m/yr? Why leasing then? Free from maintenance costs? Free in the first 4 year 50k mile anyway when buying. I don't get it.

anks | 3 juin 2017

@naikshubha, I decided to lease due to the following reasons.
1. When I am paying close to 1200-1300/month (12kmiles/yr), I wanted to have the option of switching to a new and technologically more advanced tesla at the end of 3 years. With the introduction of Model 3 and uncertainties about the growth of Superchargers and its availability on a daily basis .. I wanted to see before I am committed to this model forever.
2. Actually the lease versus buy payments were not that different. If you are thinking about a 100k car .. its not something that makes or breaks for you. Its the ease/difficulty of switching or resale of the old car.
3. I am getting free supercharging with my friends referral code for life...It stays with me not my Model X. So I am certain that I will always have the free supercharging even if I buy a new Tesla after 3 years.
4. Electric vehicles are always evolving... same holds true for Tesla. 3 years is a long time for technology to change drastically. I want to have the option of selecting the best and the latest when that happens.

To answer your question about how much would be the residual value...Let me give you my example.
For a car worth 96k, for 12kmiles/year, 3 year lease I will pay 1300/month with zero security down. Only paying the taxes and registration around 7k. Residual value is around 59k. So you essentially pay 8-10k more to buy it after you lease it.
The federal tax credit gets added to your residual value and thats how you get the benefit when you lease. For example if your car was worth 50k after 3 years of lease, it will be 57.5k after 3 years and so you pay 7.5k less during 3 years.

Hope this helps :)

naikshubha | 3 juin 2017

Thanks to all for your responses, especially @anks.

I got some more numbers from Tesla

Price of ModelX: $95,500

Loan(Buy):
- Interest rate: 1.49%
- Down Payment: $9,770
- Monthly payment: $1,277
- Total Cost over 72 months: $101k
* $7500 fed tax incentive and MA $1k incentive ignored

Lease(12k Mies):
- Money factor: 5.04% (I am not sure what this is)
- Monthly Payment:: $1248
- Down Payment: $6943
- Cost over 36 months: $51k
- Residual value: $57k
- Total Cost over 72 months: $108k

So if I understand this, with the lease option, I pay $51k over 36 months and then turn the car in. I can keep the car but then I need to pay $57k more. My commitment is $51k. I was hoping it would be around $40k.

hundredmountains | 3 juin 2017

@naikshubha,

If you want to lease, most likely you'll not want to buy at the end of term because of $7500 federal incentive.
When you lease, $7500 is added to the residual value of the car instead of subtracting from the initial value of the car,
which means you'll lose $7500 federal incentive if you buy it back at the end of the lease.

campusden | 3 juin 2017

Other things to consider: Auto insurance cost, additional hassle of power of attorney forms for license plates, and future changes in sales tax rates.
I personally drive too much for leasing to be cost effective but if you can write it off as a business expense it maybe worth it.

poloX | 4 juin 2017

You could buy and sell at the end.

Saxman | 5 juin 2017

Unless I'm not understanding correctly it seems that buying would be better if the payments are the same. With buying you are building equity which can be used when you want to replace that vehicle and sell. You can sell a purchased vehicle at any time, rather than at the end of a lease.

In your examples, at the end of 36 mo. Lease, your $51k is down the drain. However in a purchase, it seems after the same amount of time, you've accumulated about $50k of equity.

Am I missing something?

poloX | 5 juin 2017

Saxman, +1. leasing, all monthly payments are gone. no equity. But sure, you are not responsible for the car when it breaks down since you don't really own it. But then, its 50K mile and 4 years bumper to bumper warrantee anyway. I don't understand leasing either.

macd1995 | 5 juin 2017

Can someone confirm this statement from anks:
"3. I am getting free supercharging with my friends referral code for life...It stays with me not my Model X. So I am certain that I will always have the free supercharging even if I buy a new Tesla after 3 years."

Here is what i read:
"Free unlimited Supercharging will only apply to the original vehicle owner and only for the duration of original vehicle ownership."

I was on the fence (kind of) because I want to keep the option for Free Super charging - Once they announced, I put my order in before they changed their mind. So - if supercharging only stays with the vehicle, then Buying is a safer bet if you care about Superchargers, because noone knows when/if Tesla will take that benefit away again.

levin92 | 8 juillet 2017

The main advantage to lease is the changing tecnology. The upfront money on lease is lost where as when buying it is not. I want a new car every three years and therefor favor leasing. It takes the trade in or resale value risk out of the end process.

ken | 8 juillet 2017

the tie breaker is on how many miles he drive/yr.

Errol_martinez | 8 juillet 2017

The money factor is like the interest rate so it is really high buy and trade in couple of years resale value is the best for the segment

soenke | 8 juillet 2017

Lease forces you to return or buy the car exactly in 3 years from now.

If you buy, you can sell it after 1 year, after 3 years or after 5 years, etc. .. up to you.

For the strong limitation to the 3-years cycle you pay an extra $7k. Didn't make sense to me - so I bought.

RealToast | 13 juillet 2017

Could have gone either way. The differences seem more related to convenience than money. I leased my last car and literally just left it and its keys at some random dealer as my wife followed me in my new X90D. It could not have been easier. I leased my X for the same reason. Squabbling over trade-in values or -- worse! -- actually having strangers calling me about my used-car-for-sale or dealing with an intermediary is just unpleasant. Time/Effort-expense has to be added to the totals here. Plus, free supercharging and I do expect to effortlessly dovetail right into my new, updated and improved Tesla 27 months from now. Easy-peasy.

Leli001 | 13 juillet 2017

@RT, one can argue that 'Squabbling over trade-in values...' leads to a better deal. You can easily lower your selling price and any dealer will take it, with no squabbling. Again, you are paying more on the lease for the convenience of not having to do even that.

Rocky_H | 14 juillet 2017

Or, to not get repeatedly punched in the face with depreciation, you can start with a 2 year old car to keep for 3 years at a time. You're still upgrading cars every few years, but not getting raked over the coals on value as hard. Yeah, I know some of you would consider it like being tortured to have to drive a "used" car, but if you're going to be on this ridiculous 3 year upgrade cycle with cars, you are cutting the losses way way down.

RealToast | 14 juillet 2017

@Rocky, I do that, too. My X isn't my only car. Most of the cars I buy are good quality, but used: Pay cash, drive away, and never think about it again.

mustangtornado | 21 juillet 2017

I'm not sure why people are saying lease payments are money down the drain and loan payments are not. If cars didn't depreciate, then sure, you've built some equity. However, especially discussing 72 month loan payments, the car could be depreciating as fast or faster than your payments. Here's how I justify leasing, the lease payments are covering the depreciation that inevitably happens whether you lease or buy the vehicle. The higher interest rate when leasing is the price to pay for avoiding the risk of ever owning the car out of warranty or being upside down on a loan. Not to mention, peace of mind that if an accident happens...the extra loss of value in the car isn't your problem.

dkpatel1976 | 27 juillet 2019

Lease is better if you are keeping the car for 3 years only. however, if you are keeping the car for long term you will come out ahead with purchase. for example: your payment will be $ 0 after loan paid off.

cl | 2 août 2019

Leasing seems better when the residual value on the lease is higher than the market price for an equal model. I don't want to purchase my Model X for more than I could get one out on the open market. Right now the difference is around $15,000.00. A number of car companies have overestimated their residual values in the past. This way you get to drive the car for 3 years and let the finance company carry the risk of depreciation. If the car is worth more then you can purchase it for better than market price. Am I missing something?

ir | 5 août 2019

OT: “Leasing protects me from Tesla coming out with newer technology.“

Since Tesla definitely keeps coming out with “new technology” faster than 3 years, it sounds like OT wants to keep up with the latest Tesla tech. In that case, get on the leasing treadmill and never get off. Tesla sales will call you like clockwork to remind you there is a fancier Tesla waiting for you at the factory as your lease comes up.