Should I lease or finance?

[robbiec]

I’ve received my vin and still waiting patiently for a delivery date. Now that Tesla lets you buy out your lease at the end of your lease, I wonder what are people thinking would be the better option? And why?

I’m planning on putting down a large down payment to minimize the monthly payments if I finance. I calculated the total I’d pay for a lease after three years and it comes out to roughly the same…

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[CarMan ElecTruck]

I’m in the same boat.. vin assigned as of yesterday, however I’m on Turkey Vacation.

Quick run of the number shows a few thousand more overall spent with lease/buyout

…they think highly of the residual

 

[devdrone6]

Lease, that way you get the updated version assuming there is a gen2 later. If not then you buy it.

 

[Jack27]

This is something only you can decide. I’ve always felt leasing is like renting and you lose all the money you been paying for 3 years and walk with zero. I’ve also always felt that leasing is for people who can’t afford a car they want unless they lease it so you can get into a better car than you can afford .
IMO leasing only makes sense if you do it through a company and get a write off . Or you just want to drive a brand new car every 3 years and don’t care about the money.

 

[carsonag01]

IMHO, If you're buying a vehicle as expensive as this one, you should be paying all cash, and it should not equal more than 50% of your annual income.

(Yes, I follow Dave Ramsey's principles *smile* - we're fully debt free and thriving!)

 

[SMWIII]

I am leaning towards lease after 2 VIN's issued (Cyberbeast Foundation) and unable to take delivery for various reasons; currently on hold. I initially was planning to walk away since I love my S Plaid but did not want to own two vehicles; this further confirmed by trade in offer of $34,000 for car less that 3 years old (83,000 miles) that I paid over $140K cash. Now that there is an option to lease and I don't have to worry about trade in value or resale later, I find it somewhat more palatable to lease as business vehicle for woods and farm work with option to buyout at end of lease, which I have never had before with Model Y lease. (I bought my wife a Ford Lightning but she won't let me use it for work.) I also would not have to come out of pocket with a chunk of change; and I have always avoided leasing as not a financially sound practice and prefer to own (without financing when I can). Also, I am not ready to part with my S. Looking for opinions.

 

[mbdsb]

Wow! only $34k? Sure, it's a good amount of miles but still. Ugh. Sorry. The fast fall in the value of the model S plaid is remarkable. Although most cases aren't that bad, a friend of mine has complained about the lack of resale value for his Model 3 too.

These things change the calculations on leases-- maybe it's actually the conservative financial choice in some cases. E.g., in the case where it is a new model that will have a price drop, and you want to trade-in / upgrade within 5 years, maybe leasing will save money. Maybe.

The rules on leases can vary, and how companies handle them can vary as well. The best case scenario is that you only pay for depreciation and you have some control over the terms at the end. During the crazy used car price days of the pandemic, the dealership tried to block me from selling my leased car (it was worth a lot more than the original lease had estimated). I found a workaround, but it was a headache I'd like to avoid in the future. So I just buy cars with cash now. YMMV. You pick the problems / risks that you want to deal with. I don't judge other people's decisions on this. I don't know their parameters.

 

[Kaz109]

IMHO, If you're buying a vehicle as expensive as this one, you should be paying all cash, and it should not equal more than 50% of your annual income.

(Yes, I follow Dave Ramsey's principles *smile* - we're fully debt free and thriving!)

I don’t agree with this at all. Why would I want to part with that much cash when I can use it to invest to cover the very low interest rate. The stigma of payments is severely overblown

 

[NJCyberbeast]

Just leased a Beast instead of financing because Tesla just enabled lease buyouts. So I get the lease incentive of 7500 off. Then I can buyout the lease. Wife and I do not qualify for the 7500 federal tax rebate, so I figured this lease incentive off plus a 2k dollar referral code made sense. Then I can decide if I want to keep the CT for longer than 3 years, in which case I will buy out the residual. I also maxed out the lease downpayment which was like 24k. I pick it up on MoNDAY....so excited.

 

[carsonag01]

I don’t agree with this at all. Why would I want to part with that much cash when I can use it to invest to cover the very low interest rate. The stigma of payments is severely overblown

For the same reason that you wouldn’t take out a HELOC and invest that cash.

 

[Kaz109]

For the same reason that you wouldn’t take out a HELOC and invest that cash.

Try again

 

[carsonag01]

Try again

I'm a numbers guy, so bear with me.

When you invest cash, you take a risk. You can lose or gain cash and there are no guarantees.

If you invested in the S&P 500 between 2004 and 2011, your average rate of return would be 5.46%, and when you sell, you'll need to pay capital gains tax, which varies according to the powers that be.

The current long term capital gains rate is 15% (this too varies depending upon your income, but you're likely in that bracket). A Net Investment Income Tax (NIIT) of 3.8% may also be tacked onto that, depending upon your income.

If you had invested $100,000 in 2004 and sold in 2011, you would have had an effective annual rate of return of 4.74%.

Of course, gains are higher or lower in different annual timeframes; it's all a risk you're taking.

When you pay with cash, you risk nothing.

(Yes, I do invest long term in real estate, mutual funds, and high yield savings accounts.)

For someone with a prime credit score, a new car loan averages 10.60% nationally.

So, with the scenario above, you would have lost 5.86% of your hard earned cash, been more restricted with your auto insurance options (paying with cash opens up more options), and would have been driving a depreciating asset that's under lien in the process.

 

[kpanda17]

With the current lease buyback offer, can someone check my math?
scenario, lease CT AWD with immediate buyback to capture the $7500 fed EV lease credit

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