Comprehensive Lease vs Buy Financial Comparisons

[DaveinOlyWA]

checked and mine is same. oh well. acronym have always been hard for me

 

[LEAFer]

Ok ... we're good. Phew! I was getting worried ... GMAC ?? No thanks! :lol:

 

[greenleaf]

Thanks for the very comprehensive spreadsheets.

After playing with the numbers, my penalty for leasing and then buy out is $2520.

How do you decide if this is a "good" premium to pay for the insurance of being able to dump the car after 39 months?

I am comparing financing with a 2.49% loan versus the 39month/12k-mile 4.9% lease. In both cases I am putting $6265 down.

Thanks for any pointers.

 

[DrillbabyDrill]

How did you calculate NPV of payments? I can't figure out what that is coming from.

 

[Anonymous]

Thanks for the very comprehensive spreadsheets.

After playing with the numbers, my penalty for leasing and then buy out is $2520.

How do you decide if this is a "good" premium to pay for the insurance of being able to dump the car after 39 months?

I am comparing financing with a 2.49% loan versus the 39month/12k-mile 4.9% lease. In both cases I am putting $6265 down.

Thanks for any pointers.

This is a decision that is going to be different for every person, because there are so many factors that come into play. Depends on your plans, cash-flow, driving habits (annual mileage limit when leasing), whether you want to modify in any way, when you want to upgrade, and whether or not you just LIKE owning versus leasing.

So is the penalty that you calculated a good deal or not? Some people would say "absolutely" and some would say "no way". That's a judgement call YOU are going to have to make.

 

[evnow]

How did you calculate NPV of payments? I can't figure out what that is coming from.

Just using excel formula.

 

[DrillbabyDrill]

How did you calculate NPV of payments? I can't figure out what that is coming from.

Just using excel formula.

Any chance you could provide more detail? =NPV(rate,value1,value2)..... what are value 1 and value 2.. etc?

 

[evnow]

I've cleaned up a bit and uploaded the spreadsheet. But it is nowhere being close to self-service. It is just for reference.

https://docs.google.com/leaf?id=0B1CIl2zp22pXYWQxZjI4NjctYzAyYi00MmNmLTgxYmQtNDE1N2EzMDAxZmEy&hl=en&authkey=COfpjZMB

There might be some changes that I need to make - now that we know the lease calculation of the dealers. Let me know.

 

[GoSolar]

My sales person at CN Nissan in WA tell me that I could set up a lease to get the IRS credit since it would go to Nissan and then buy out the lease one month later or at any point with no penalty. He seems to think it this would eliminate paying 3 years of interest and would therefore be a great way to go.

I'm skeptical and think that yeah, they'll let me pay off 3 full years of principle, interest, and whatever else but it won't be a big money saver. My key issue is that I will get very little IRS tax credit, maybe as little as $1000. If they'd delivered in December I would have been fine, but my income plummeted in 2011 due to being laid off. I really would like to take advantage of the federal tax credit and leasing seems to be the only way to do that in my case.

In the past I paid off a mortgage with no penalties or additional fees. Does the same thing work with a lease through GMAC or Nissan Leasing for a car?

 

[evnow]

In the past I paid off a mortgage with no penalties or additional fees. Does the same thing work with a lease through GMAC or Nissan Leasing for a car?

You will lose some lease fees - but won't have any penalty. People have tried it ... and written about it here.

 

[hcirlub]

It seems to me that the amount of tax credit that you qualify for is one of the biggest driving factors in deciding whether to buy outright or lease then buy. Using the spreadsheet it looks like $7050 or higher for tax credit makes buying more attractive. Where as if don't qualify for at least $7050 in tax credits you should lease. It seems like leasing is a no brainer for people with a low tax credit opportunity. Am I over simplifying this?

 

[QueenBee]

It seems to me that the amount of tax credit that you qualify for is one of the biggest driving factors in deciding whether to buy outright or lease then buy. Using the spreadsheet it looks like $7050 or higher for tax credit makes buying more attractive. Where as if don't qualify for at least $7050 in tax credits you should lease. It seems like leasing is a no brainer for people with a low tax credit opportunity. Am I over simplifying this?

I think leasing is super attractive if a person isn't going to qualify for the entire $7500. For me personally I figure it is going to cost an extra ~$30 a month ($1117 total) to lease and then buyout vs finance. I think it's a small price to pay for the ability to give the car back if things really go south with the Leaf and/or electric cars.

 

[evnow]

Am I over simplifying this?

There are multiple reasons why some one might want to lease - including the one you state. A lot of us are leasing because we want to have greater flexibility after 3 years to upgrade to better models as we expect more options in 3 years. This calculation puts a financial cost to such flexibility.

 

[N952JL]

Here is another way to compare. In this case, I'm taking a loan such that the pay off left on loan is exactly equal to the lease residual (balloon loan). In the case of buy out, you would either pay the residual or pay cash to close the loan. In the case of sell off, you would sell the car and use that money to pay off the loan.

Notice that since I'm using 5%, the difference is close to the acquisition cost, which is extra in lease. I've left out any financing fees etc you may have to pay to the bank in the case of financed buy. In the case of sell off - the difference is greater because of disposition fee. Again, I'm ignoring the selling cost.

Again, as you lower the int rate, the bigger the difference between lease and buy becomes.



So, when you compare this way, you see that lease vs buy comes down to
- Extra fees you pay for leasing (Acquisition of 595 and disposition of 350)
- Difference between the 4.9% offered by Nissan and the interest rate offered by your lender

Hope this helps demystifying the lease.

I believe you have made an incorrect assumption. If you lease the car, my understanding is the 7,500 tax credit is used by the leasing company and is applied as your down payment to the lease, giving you more than the required down payment resulting in lower monthly payments.

 

[evnow]

I believe you have made an incorrect assumption. If you lease the car, my understanding is the 7,500 tax credit is used by the leasing company and is applied as your down payment to the lease, giving you more than the required down payment resulting in lower monthly payments.

The downpayment (2,000 in 2011, 2500 in 2012) is the assmued downpayment (apart from 7.5K) to come to the $349 lease monthly payment (now $369). You can have more or less than this figure and that will change the monthly lease figure.

 

[smilingbee]

I believe you have made an incorrect assumption. If you lease the car, my understanding is the 7,500 tax credit is used by the leasing company and is applied as your down payment to the lease, giving you more than the required down payment resulting in lower monthly payments.

The downpayment (2,000 in 2011, 2500 in 2012) is the assmued downpayment (apart from 7.5K) to come to the $249 lease monthly payment (now $269). You can have more or less than this figure and that will change the monthly lease figure.

Did you mean $349 and $369 as the monthly lease payments?

 

[evnow]

Did you mean $349 and $369 as the monthly lease payments?

Thats' right.

 

[redLEAF]

Not to over complicate things on Lease vs Buy comparisons but I need to add this in as it may apply to some of the Tier 2 areas where if the state offers an incentive, it may only be for "purchased" not leased vehicles. I'm still waiting for a response back from the manager of this program for the state of Illinois but as it stands today, their 10% of MSRP rebate for EV's (up to $4K) ONLY applies to "purchased" cars, not leased ones and although you wanted to leave out sales taxes, we get taxed on the entire purchase not just the lease payments so some would argue that leasing wouldn't offer the best deal -- to add insult to injury, at the end of the lease you pay sales tax again!! on the now diminished value of the car if you decide to buy it when you change the title from the leasing company to yourself. If IL decides to include leased EV's in their program, even with the 'extra' sales tax if could be a good deal as both the Fed rebate and IL rebate could perhaps be applied as a huge down payment but we'll see what happens. IL's program isn't immediate (believe they mail a check within 4 to 6 months) so perhaps that's one of the reasons behind it as well as 'paying' a possible non-resident of the state (in this case the leasing company). Still have 2 months or longer but this analysis is good just be sure to include the 'major' state level EV incentives (even though sales tax really should be a consideration as well in high tax states).

 

[ttweed]

Not to over complicate things on Lease vs Buy comparisons but I need to add this in as it may apply to some of the Tier 2 areas where if the state offers an incentive, it may only be for "purchased" not leased vehicles. I'm still waiting for a response back from the manager of this program for the state of Illinois but as it stands today, their 10% of MSRP rebate for EV's (up to $4K) ONLY applies to "purchased" cars, not leased ones...

That could definitely change the "lease vs. buy" equation for IL residents. It's too bad they don't include leased vehicles--seems shortsighted to me. CA doesn't care if you lease or buy for their rebate program, you just need to register and use the car in the state for at least 2 years. Unfortunately, the amount of the rebate has dropped from $5K to $2,500 in CA. It will allow more people to get the incentive $$$, but at a lesser amount.

TT

 

[Koki]

Hi guys,

Newbie here.

If I didn't have any income tax, I can't obviously take advantage of the income tax credit incentive for the Leaf.

So leasing should be my obvious option right ? I mean the dealer would pass on to me the $7500 savings when I lease.

Is this correct ? Please advise. Thx.