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Those who lease: thoughts on Model 3 Lease (details included)

 
Old 04-18-19, 06:28 AM
  #1  
jrmckinley
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Default Those who lease: thoughts on Model 3 Lease (details included)

For those who are well-versed and experienced in leasing and the structure of deals, what do you think of the Model 3 lease? Below is a snapshot of the details from the Tesla website - I don't know how to reverse engineer the math to see what the MF is, etc. Tesla does not seem to let you play with this and I'm not sure if you can negotiate if you go into the dealer..?

Here's some of my math:
  • $50k price of Model 3 long distance, 15k miles/year, paying extra for color choice (didn't know black was only "free" color), I don't see that Tesla is factoring in the $3,750 credit into this final price, so below math may drop a bit.
  • $4k due at signing, $727/month for 36 months = total of $30k over 3 years
  • Since I currently drive an older car (2010), I assume I will lose about $8k to $10k in value over the next 36 months.
    • I also fill my car up every week @ $60/week, so $240/month x 36 months = $8,640
    • At a minimum, I would spend $1k/year on maintenance that I wouldn't pay in an EV. This comes to at least $3k over the course of 3 years
    • Therefore, between depreciation, gas cost, and non-EV maintenance, I will "lose" and "spend" somewhere between $19k and $21k by keeping my car for 3 years
  • This means my true differential cost is $9k to $11k over the course of 3 years to have a Tesla Model 3 ($300 to $400 per month)
Interested for thoughts on my math, things I'm not considering, etc. Thanks,

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Old 04-18-19, 06:47 AM
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The down payment here seems to be 6.5k including the ďorder paymentĒ. A down payment in any lease simply pre-pays/buys down the lease payment, in this case to the tune of 180 per month. Tesla leases usually arenít great, and this one doesnít look like itís going to change that. As a general rule leases ought to be zero down for myriad reasons (covered in the lease thread in the sticky topics above)

In cases like this it really just boils down to how much you like and want the car.
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Old 04-18-19, 06:48 AM
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very interesting analysis, and i'm glad you factor in current 'older' car costs as many people seem to consider their older cars 'free' once paid for.

maybe you don't get the fed tax credit because you don't own it?

given how fast things are changing (including every other day with tesla, lol) i think you're smart to lease. i think 3 year old teslas in 3 years are going to be considered like an iphone 4. despite musks claims they'll be used in self-driving fleets - maybe by tesla who will retrofit newer hardware...

new versions of the onboard computers in their cars continue to come out with 'leaps' more computing power than older ones... which again, makes ownership tricky. i think most who buy a tesla though, like most 'exotic' purchases don't think about any of that, which is fine of course, they like the quiet/electric drive, the cool factor, etc.

i can see my next vehicle being electric, but thankfully i've got a couple of years to wait, during which no doubt there will be lots of new stuff happening!
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Old 04-18-19, 07:01 AM
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The $3750 federal tax credit goes to Tesla in this case, not the lessee.
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Old 04-18-19, 07:13 AM
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Originally Posted by swajames View Post
The down payment here seems to be 6.5k including the ďorder paymentĒ. A down payment in any lease simply pre-pays/buys down the lease payment, in this case to the tune of 180 per month. Tesla leases usually arenít great, and this one doesnít look like itís going to change that. As a general rule leases ought to be zero down for myriad reasons (covered in the lease thread in the sticky topics above)

In cases like this it really just boils down to how much you like and want the car.
Yeah, agree - I read through the leasing thread/sticky about a week ago and tried to enter "$0" as my down payment and it wouldn't let me. The minimum is $2,500.

The $6.5k you reference isn't correct from what I can piece together. Tesla makes it a bit hard to understand, but the "due at signing" of $3,922 is order payment + $695 acquisition fee + 1st month payment, so the $2,500 "order payment" is already factored in. Does that make sense?
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Old 04-18-19, 07:19 AM
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Note you also have to include sales tax, and the way that is applied varies by state. Here in Washington, it is added to each lease payment. So, at 10.8% sales tax, your $727 becomes $806.
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Old 04-18-19, 07:19 AM
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Yes that does make sense. You may well be able to get the residual and/or MF from websites like leasehackr. If you have one you can calculate the other. Iíd guess the residual here is set fairly low and the MF set fairly high - both up the payment of course, never mind the Federal credit also going to the lessor. Does the lease quote not have a residual/buyout number? Maybe they just show it on the actual paperwork.
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Old 04-18-19, 07:22 AM
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Originally Posted by bitkahuna View Post
very interesting analysis, and i'm glad you factor in current 'older' car costs as many people seem to consider their older cars 'free' once paid for.

maybe you don't get the fed tax credit because you don't own it?

given how fast things are changing (including every other day with tesla, lol) i think you're smart to lease. i think 3 year old teslas in 3 years are going to be considered like an iphone 4. despite musks claims they'll be used in self-driving fleets - maybe by tesla who will retrofit newer hardware...

new versions of the onboard computers in their cars continue to come out with 'leaps' more computing power than older ones... which again, makes ownership tricky. i think most who buy a tesla though, like most 'exotic' purchases don't think about any of that, which is fine of course, they like the quiet/electric drive, the cool factor, etc.

i can see my next vehicle being electric, but thankfully i've got a couple of years to wait, during which no doubt there will be lots of new stuff happening!
Thanks - I tried to be pretty comprehensive in the way I'm thinking through it. "Older" car costs are very real and certainly need to be factored in... it costs money to keep a car, maintain it, and you have to know that when you sell a 12-13 year old car (me selling a 2010 in 2022), the next buyer is a value buyer and someone who is scooping up something that may have some expenses due to normal wear and tear. So that all gets factored in to what you will actually get for your car. I got $3k trade on my 2004 LS430 when I traded it in 2 years ago - granted it had 250k miles, but I paid $22k for it in 2008 with 70k miles. One way of looking at that means it only cost me about $19k to own a car for 9 years (less than $200/month) while the other way to look at it is I bought at the peak of depreciation and still had it go down in value quite a bit.

No matter which way you slice it, you almost always lose money on cars. In this case, it's interesting that I'm seeing I may only lose about $10k over the course of 3 years over the cost of keeping my current LS. If I have to replace control arms and have a brake actuator issue like 2007-2009 models are prone to, it could very easily become almost a wash to lease a Model 3.
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Old 04-18-19, 07:23 AM
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Originally Posted by JDR76 View Post
Note you also have to include sales tax, and the way that is applied varies by state. Here in Washington, it is added to each lease payment. So, at 10.8% sales tax, your $727 becomes $806.
Good point, didn't factor that in. In FL I think it's 6%. I could argue I should use that as a constant variable that would apply to any decision I make on getting rid of my LS and buying something different.
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Old 04-18-19, 07:26 AM
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Originally Posted by swajames View Post
Yes that does make sense. You may well be able to get the residual and/or MF from websites like leasehackr. If you have one you can calculate the other. Iíd guess the residual here is set fairly low and the MF set fairly high - both up the payment of course, never mind the Federal credit also going to the lessor. Does the lease quote not have a residual/buyout number? Maybe they just show it on the actual paperwork.
If I am buying a $50k car and spending a total of $30k over 3 years, Tesla is getting the Model 3 back at $20k (you can't buy out a Model 3 lease, you have to turn it in). I don't know how they would set the residual, but maybe it doesn't matter in this case since you can't buy it outright? Maybe it's just important for Tesla's books that the anticipated residual is $27k (example) and yet they get it back for $20k..?
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Old 04-18-19, 07:51 AM
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Funny I just plugged in some average numbers in a lease calculator and came up with the exact payment you have (not including sales tax) using a 50% residual and a 3% interest rate (0.00125 MF). Not totally out of bounds.
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Old 04-18-19, 08:01 AM
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From my experience, you can easily lease a $50k vehicle like RX or ES for about $500 per month with $0 down.

This model 3 lease is a HUGE ripoff.
If you really like the car, it will probably be better to finance it.

Also I donít see the cost of charging the model 3 in your analysis vs what your currently spending on gas.

Last edited by RNM GS3; 04-18-19 at 08:04 AM.
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Old 04-18-19, 08:06 AM
  #13  
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Originally Posted by RNM GS3 View Post
From my experience, you can easily lease a $50k vehicle like RX or ES for about $500 per month with $0 down.

This model 3 lease is a HUGE ripoff.
If you really like the car, it will probably be better to finance it.

Also I donít see the cost of charging the model 3 in your analysis vs what your currently spending on gas.
Good points and appreciate the frame of reference on other $50k lease values. I would have no issue or concern financing instead of leasing if the numbers worked out to my advantage (at a minimum I would get the $3,750 credit).
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Old 04-18-19, 09:36 AM
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Originally Posted by RNM GS3 View Post
From my experience, you can easily lease a $50k vehicle like RX or ES for about $500 per month with $0 down.

This model 3 lease is a HUGE ripoff.
If you really like the car, it will probably be better to finance it.

Also I donít see the cost of charging the model 3 in your analysis vs what your currently spending on gas.
Yes you can but the difference is with other manufacturers there are so many incentives and discounts off MSRP and close to zero interest rates that the lease payments can be low. My IS350 had a MSRP of $51k and with absolutely zero down (I financed all taxes, which in MD you pay a full 6% up front on the price of the car, and tags and Lexus picked up first months payment) and my monthly payment with 12k/36mos was $525. With Tesla, they know with the demand they don't have to discount the car and can charge a higher interest rate.
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Old 04-18-19, 11:22 AM
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Originally Posted by RNM GS3 View Post
From my experience, you can easily lease a $50k vehicle like RX or ES for about $500 per month with $0 down.
.
I'm not sure where your Lexus leasing experience is from, but locally, with zero down a $50000 ES lease is around $700/month with sales tax included. That is with a 55% residual and .001 MF. To get there, a cap reduction of around $7500 by the dealer was required.
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