2-year vs. 3-year lease question

[ianlin]

Hello:

I am looking at leasing a LEAF SV. I was thinking about doing a 2-year. But after crunching the numbers, it appears the 3 year lease provided a lower total cost per month, as long as I get the $2500 California rebate. This leads to a number of other questions:

1. Is the rebate considered income, so I have to pay income tax on it?
2. The funding status page shows it's out of money. With 9 million unpaid reservations. Should I be worried that I won't get the rebate? Without it, the 3-year lease would be a worse deal.
3. With a 3-year lease, there could be additional maintenance costs. It is my understanding that the first two battery checks are free. Does anyone know what additional maintenance cost show up in a 3-year lease?

 

[planet4ever]

1. The rebate is apparently not considered to be income. I think someone actually got a ruling on this, but perhaps the best cue is that the state does not send out 1099 notices on it.
2. You shouldn't be worried about the rebate. They will be getting a big pot of new money sometime after the next fiscal year starts in July. But you might not actually get your money until September or so.
3. I don't think anyone knows yet what the battery check will cost, but you don't have to worry about it on a three year lease, since you have up to a three month leeway on each side of the date as to when you get the check. So you only need to get the two free ones before you turn the car in.

Ray

 

[c141medic]

Hello:

I am looking at leasing a LEAF SV. I was thinking about doing a 2-year. But after crunching the numbers, it appears the 3 year lease provided a lower total cost per month, as long as I get the $2500 California rebate. This leads to a number of other questions:

1. Is the rebate considered income, so I have to pay income tax on it?
2. The funding status page shows it's out of money. With 9 million unpaid reservations. Should I be worried that I won't get the rebate? Without it, the 3-year lease would be a worse deal.
3. With a 3-year lease, there could be additional maintenance costs. It is my understanding that the first two battery checks are free. Does anyone know what additional maintenance cost show up in a 3-year lease?

I had a similar question which I discussed with my Nissan salesman. According to him, there are going to be changes in 2015 to the leaf in terms of technology which may result in increased mileage. In my case I think a 2 year lease is best both fiscally and technologically. Just think, how often does the average person change their phone ( about every 2 years)? Also, you would be able to take advantage of the federal tax credit each time you lease. I think there was a real good post that went into detail how you would actually save money with a 2 vs 3 year lease.

 

[SanDust]

I'd go with the three year. It is cheaper per month and you're more likely to have more choices at the end of the three years. The only added maintenance would be a brake flush. Inconsequential.

 

[Deleted member 9549]

I don't understand how the CA rebate relates to the debate, but in my case the dealerships in my area were quoting LOWER payments for 2yr than 3yr leases. Doesn't make sense to me. Seems that the shorter lease should cost more. I couldn't pass up such an inexpensive 2yr lease.

 

[apvbguy]

I'd go with the three year. It is cheaper per month and you're more likely to have more choices at the end of the three years. The only added maintenance would be a brake flush. Inconsequential.

that may be the current situation however it wasn't like that in April of this year when the 24 month lease was equal to or a bit lower than the 36 month was.
the best advice is to find out about ALL the incentive and factory programs in effect when you are ready to finalize a deal. In addition there might be some localized promotions as well that people should keep a lookout for.
This advice is true for all car purchases or leases
YMMV

 

[surfingslovak]

I don't understand how the CA rebate relates to the debate, but in my case the dealerships in my area were quoting LOWER payments for 2yr than 3yr leases. Doesn't make sense to me. Seems that the shorter lease should cost more. I couldn't pass up such an inexpensive 2yr lease.

My friends signed a 24-month lease in CA recently. It was comparable to a 36-month lease with the rebate factored in, and they would prefer to look at the market again sooner than later. The technology is improving quickly, and they expect to see new and different choices when selecting their next EV. That said, I'm under the impression that the federal tax credit takes care of the majority of the depreciation on a 24-month lease. The CA rebate is quite nice, but the depreciation on a 36-month lease is greater, and you will have to apply for the rebate, and stay compliant for the following three years. It might be worth weighing the overall economic benefit, to see if it was significant enough and warranted a 36-month lease term. Plus, depending on where you live and how the car is parked and used, battery capacity loss could be more of an issue when you keep the vehicle longer.

 

[TomT]

Please don't ever give much do to what a salesman tells you about the Leaf... You'll be far less disappointed that way! :lol:

I had a similar question which I discussed with my Nissan salesman. According to him, there are going to be changes in 2015 to the leaf in terms of technology which may result in increased mileage.

 

[SanDust]

I don't understand how the CA rebate relates to the debate, but in my case the dealerships in my area were quoting LOWER payments for 2yr than 3yr leases. Doesn't make sense to me. Seems that the shorter lease should cost more. I couldn't pass up such an inexpensive 2yr lease.

To be eligible for the CA/CARB rebate the lease has to be at least 36 months long. You don't get the rebate if you lease for 2 years.

Payments are less on a two year lease because the $7500 tax credit is spread over only 24 months rather than 36 months, reducing the monthly by $312 rather than by $208. The larger reduction cancels out the greater depreciation you get in the first two years. The CARB rebate changes the numbers and makes the 36 month lease more attractive.

I wouldn't put too much faith in the time frames given to you by your salesperson. My guess is that new battery technology is further out than a year or two.