My ACTUAL Lease dollar amounts & comparison to purchase

[Coffee_Slurry]

As this was my first Lease transaction, I found it helpful to see other folks post their calculations.
I would like to give back by posting my actual Lease details for any one else to compare or comment.

With options, my car had an MSRP window sticker of
$35,230 (including options and $850 destination)
Our agreed RAQ price had a $1,000 discount, making
$34,230 the price of the car.

If I had paid cash, I would have cut a check for
$37,758 (includes CA tax, DMV, everything)
$25,258 out-of-pocket after the Fed & CA rebates

The Lease worked out to be
$2,000 down, plus 35 payments of $444 (Tier 0). I still get the CA $5k rebate, so overall it's
$12,532 out of my pocket after three years, or a real cost of $348 for 36 months.

This is $12,726 less than buying the LEAF outright -- half the cost.

The residual is $15,501, so and end-of-lease buyout would require another check for $17,157 (tax and option fee), so the "premium" for leasing is $4,431 (not counting TVM). (Thanks Wayne for the tax correction!)

So there it is.. a gamble that I will not be able to sell the LEAF for $13,000 in three years.
IF the car is worth more than $17,200, I can buy it out and resell it.
IF the car is worth less than $13,000, then I'll give it back to Nissan and delare #Winning.
IF the car is worth between 13,000 and 17,200, then I will have paid a bit more by leasing, but such is the nature of insurance.

By "sell", I mean I could list it in Auto Trader with a price that has the car sold in a weekend. Easy sale.

 

[IBELEAF]

As I understood you are trying to justify your leasing choice, but anyway I look at it, leasing is not really money saving option for Leaf. You are either loosing all of the money invested in the car by returning it or the $3k estimated premium if you decide to purchase on top of the buy out price. If you want to talk about saving as much as you can, buy the car and keep it as long as possible. If this was a 80k Mercedes then leasing might make sense because these cars loose a lot more value.

 

[Coffee_Slurry]

I see what you're saying, but I'm 90% certain I won't keep this car past three years, regardless of lease/buy decision. So with that in mind, I am looking at is as purely "What will it cost to have this car for three years", which does simplify things.

Economics *always* favors keeping a car for as long as possible, until the maintenance/repairs exceed the cost of replacing the car. For modern cars, that can be a very long time. If my goal was to spend as little as possible on driving for the next 25 years, that would be worth computing. I wouldn't be buying a new car, ever.

 

[smkettner]

I see what you're saying, but I'm 90% certain I won't keep this car past three years, regardless of lease/buy decision.

This is exactly what a lease is for. You made the right decision.

 

[evnow]

If my goal was to spend as little as possible on driving for the next 25 years, that would be worth computing. I wouldn't be buying a new car, ever.

Exactly.

The same can be said about purchase of any depreciating asset - including clothes. It will cost more to buy new set of clothes every 6 months rather than once in 5 years. Duh.

 

[IBELEAF]

I agree leasing is an attractive option for anyone looking for a new ride every 3 years or so, but as budget conscious person I chose to buy because I am betting on a few things here:

In 3 years we won't have anything that's revolutionary better then current Leaf aside from some minor upgrades; battery capacity loss is not substantial to be worried about based on some high mileage driving results; repair is nonexistent or very minimal; prices have not dropped substantially on EVs; Government credits could be reduced, cancelled or depleted. In the worst case scenario if I see some movement in the tech I could simply sell the car next year without taking much loss.

 

[Coffee_Slurry]

I made a list of (combined) reasons that the 3yr resale of a LEAF could underwhelm. It's pretty much the doom-and-gloom list, but taken as a whole, I have no idea how to factor the risk in.

Again, this is looking at Sell-in-3-years vs Lease only. (Not 15-year ownership)

• Rebates/incentives may INCREASE, such as the fed conversion to rebate from credit.
• First-gen battery pack could experience "gradually reduced" capacity over three years
• Mass-media failures of EVs harming perception (garage fires, stranding, battery collision fire, etc). "Hindenberg-level event"
• Next-gen cars will likely come with 6.6kW charger, and awareness that Charge Speed is more important than battery capacity.
• Significant warranty issues damage the long-term reliability perception of the car, especially out of warranty.
• Interior options for 2012+ will likely improve on stain-magnet white cloth interior. Interior may simply shred/pill/deteriorate faster than normal due to ECO-content.
• Multiple new EV market entrants could offer something more compelling or more affordable by 2014. (BYD, Ford, Tesla, Honda, etc)
• 2012 LEAF sales could underperform, leading to significant new-car cost markdowns under MSRP for 2013.
• EV Project could totally fail to roll out public infrastructure (just as they have so far!)
• Competing SAE DC quick-charge port could gain traction.
• ESFlow or Infiniti-badge EV could dilute LEAF interest.
• "Early Adopter" syndrome -- everyone who knows what it's about is rushing to get one soon. Demand peters out in 3yrs.
• Cost of installing/permitting an EVSE goes up, incentives dissolve.
• Difficulty in private-party sale of an EV with the required charger. Similar to selling a CG car.
• Boneheaded taxes/fees on EVs to head off any loss of gasoline road tax leads to increased cost per mile.
• Significant battery improvements on next-gen (less likely)
• Events that lead to a totally unpredicted decrease in the cost of gasoline
• My relocation to an area where electricity is too expensive (HI), or gas is much less expensive (Venezuela).

 

[Boomer23]

I made a list of (combined) reasons that the 3yr resale of a LEAF could underwhelm. It's pretty much the doom-and-gloom list, but taken as a whole, I have no idea how to factor the risk in.

Again, this is looking at Sell-in-3-years vs Lease only. (Not 15-year ownership)

Very nicely written and well considered list. I made the same decision as you did, for a few of the same reasons.

One big one for me was: The EV I really want, a sports car, isn't available now. The LEAF will do for now as a starter car, but choices will definitely be more numerous in 3 years.

Second big one: I have other uses for the capital right now, including helping my kids with their growing family needs. I can take the hit on the lease costs over several years while my kids get to use the money now.

 

[IBELEAF]

That's great bets to have and while I can see some happenning, some are less likely. At the end of 3 years I can see another list in the making which is twice as long of "what if" things while debating to lease or to buy Gen 2 Leaf or whatever. I think we all know that there is always going to be something better in the technological world "next year", but 3 years for EVs to evolve is not enough. Personally I would rather keep curren gen Leaf as long as possible and skip Gen2 (just like with Prius) and hop on Gen3 in 6-8 years, by that time I would think we'll have something more viable.

 

[DaveinOlyWA]

my Leaf aint going nowhere. in 3 years, the tax credit from any Nissan will be long gone and for anyone else maybe getting into the game, probably nearly gone.

tax credits are not guaranteed and the incentive to buy EV will probably never be greater now than ever.

i already decided that even if i only got 50 miles of EV range, it would work for me and i hope that to be many many years from now. Also got news that Providence will break ground on new facility off Britton Parkway in Hawks Prairie making our only out of town commute, across town.

might strongly consider ANOTHER Leaf and store the Prius for those out of towners we do 10-15 times a year.

one thing i have found and that is the Leaf's range is being extended daily. in less than a year, i could go to Salem 160 miles away with a mere two quick charges that would cost me well... might not cost me anything!

 

[scharlj]

one thing i have found and that is the Leaf's range is being extended daily. in less than a year, i could go to Salem 160 miles away with a mere two quick charges that would cost me well... might not cost me anything!

How exactly is the range of the LEAF being extended daily? Are you saying this is an instance of the car learning your driving, or are you doing something to it? This seems to go contrary to battery science that says the battery will lose a fixed capacity every year. Please explain!

 

[DaveinOlyWA]

How exactly is the range of the LEAF being extended daily? Are you saying this is an instance of the car learning your driving, or are you doing something to it? This seems to go contrary to battery science that says the battery will lose a fixed capacity every year. Please explain!

let me ask you; what is your current range? 100 miles? or is it 50 miles because you cant plug in anywhere but home?

now if you have a Leaf, that means you are most likely living in an area that will have/has several public charging facilities, but many are slow. not worth plugging in if you have too far to go.

now, i have done 122.8 miles on my Leaf in a day. drove to the Seattle area, had a meeting with fellow Leaf owners, plugged in at the dealership for a few hours, then drove home. now that 240 volt charging which is slow, but had the time.

soon, EV Highway Project in conjunction with the State of WA who has agreed to extend the L3 charging from border to border will allow me to go to Salem which is already in the EV highway project from WA border.

remember, your gas car could not go out of the area if there were no gas stations where you are headed.

 

[scharlj]

OK I see what you mean. That makes sense. Infrastructure is getting stronger.

But unfortunately I still don't have my car....so I'll get to experience this a little later. I am still thinking of leasing, mostly because I believe this car and the few others launching in the next year will spawn an EV revolution that will have the next batch of cars (those available in three years) will have better battery life, amenities, etc. This is where competition is going to take place, mostly, on range I believe. And I strongly think that manufacturers that do not have EVs out now, WILL in three years with better range. And so I think this will negatively impact my resale value in 3-5 years. A lease would protect me from that, but of course it would require me to purchase (or lease) a new car in 3 years again.

You raise a good point that in three years the infrastructure may get so good that even though other cars may have greater than 100 mile range, it won't matter too much, because the only thing it'll save me is charging time. I hadn't thought of that, I had merely thought of the present situation, where it'd be difficult for me today to take my (hopefully soon to be here) LEAF to Portland, or even Vancouver CA.

 

[Anonymous]

If this was a 80k Mercedes then leasing might make sense because these cars loose a lot more value.

Same rules apply whether it's an 80k Mercedes or a $35k Leaf. The big issue is resale value. Nobody knows how much value the Leaf will lose in 3 years. It could be a small percentage, it could be huge, there are too many factors that could come into play.

 

[IBELEAF]

OK I see what you mean. That makes sense. Infrastructure is getting stronger.

But unfortunately I still don't have my car....so I'll get to experience this a little later. I am still thinking of leasing, mostly because I believe this car and the few others launching in the next year will spawn an EV revolution that will have the next batch of cars (those available in three years) will have better battery life, amenities, etc. This is where competition is going to take place, mostly, on range I believe. And I strongly think that manufacturers that do not have EVs out now, WILL in three years with better range. And so I think this will negatively impact my resale value in 3-5 years. A lease would protect me from that, but of course it would require me to purchase (or lease) a new car in 3 years again.

You raise a good point that in three years the infrastructure may get so good that even though other cars may have greater than 100 mile range, it won't matter too much, because the only thing it'll save me is charging time. I hadn't thought of that, I had merely thought of the present situation, where it'd be difficult for me today to take my (hopefully soon to be here) LEAF to Portland, or even Vancouver CA.

What people don't realize is that 3 years for car industry is not much, yes we will have an improvements in Leaf, but nothing revolutionary. Also, unlike Apple, car manufacturers usually let us know what's coming in the concept form. Leaf was announced in the summer of 2009, although it was in concept form before that, Volt has been in concept form for probably twice as long before it came out. So, don't expect that other manufacturer out the blue comes out with electric car one day. Either the information is already known or will be released in the form of concept. Mitsubishi announced 8 electric cars by 2015 which sounds appealing, but I will wait until we get more info.

Better range? Leaf already has acceptable range for roughly 90% of people for daily commuting. So even if Nissan improves range to 150 miles in 3 years that may help some, but what's the point? You are still not going to be able to drive across state without proper infrastructure. If someone is ok with 100 mile range today 30% improvement is not going to make huge difference for most. I am just crossing 1k mileage and I did not have need to drive more then 100 miles in a day yet, for that purpose I have gas car waiting on standby.

 

[IBELEAF]

Same rules apply whether it's an 80k Mercedes or a $35k Leaf. The big issue is resale value. Nobody knows how much value the Leaf will lose in 3 years. It could be a small percentage, it could be huge, there are too many factors that could come into play.

Rule is the same, but $$$ are different.... would you rather loose 40% value on a $80k Mercedes or even 60% value on a 25k Leaf (after rebate)?

 

[Amary]

So there it is.. a gamble that I will not be able to sell the LEAF for $13,000 in three years.
IF the car is worth more than $16,000, I can buy it out and resell it.
IF the car is worth less than $13,000, then I'll give it back to Nissan and delare #Winning.
IF the car is worth between 13,000 and 16,000, then I will have paid a bit more by leasing, but such is the nature of insurance.

Thanks GroundLoop. I've never leased before, but this is my thinking exactly. To this I'd add:

IF the car is worth less than $13,000, then give it back to Nissan. IF I still think the LEAF is still the best option, buy a used one, and pocket the difference!
IF the car is worth more than $16,000, then keep it. IF I find other better options at that time, resell it, and pocket the difference!

And, as noted, this doesn't take TVM into account. If you have the cash to buy outright, then compare to a one-pay ("prepaid") lease, where you prepay the entire lease up front, getting a better money factor, and saving on finance charges. (This is probably what I'll do.) Also, remember that 24-month (and sometimes, even 12-month) leases are available, if you want to minimize finance charges.

If you will be purchasing with financing, then you need to add the finance charges in when comparing with a traditional lease.

The maximum "penalty" I'd pay for leasing (36-months) is about $3,000, and that's only if Nissan guessed exactly right on the future market value of the car. The further they are off in either direction, the lower the "penalty", and one could quite easily come out ahead by leasing. With such a new technology, and uncertainty about replacement battery costs, future tax credits/rebates, etc., the chances that Nissan guessed exactly right aren't very high.

All of this is assuming you can get the FULL $7,500 tax credit when purchasing. In my case (business losses), I probably won't be able to take advantage of any of the federal tax credit. So I'm $4,500 better off leasing right off the bat. The market value "insurance" plus 3 years extra use of $15K is just icing on the cake.

 

[Coffee_Slurry]

And, as noted, this doesn't take TVM into account. If you have the cash to buy outright, then compare to a one-pay ("prepaid") lease, where you prepay the entire lease up front, getting a better money factor, and saving on finance charges. (This is probably what I'll do.) Also, remember that 24-month (and sometimes, even 12-month) leases are available, if you want to minimize finance charges.

The 36-month lease is required to get full Fed+CA rebates. A shorter lease wouldn't qualify.

I do intend to 'pay off' the three year lease as soon as I can figure how, and what the risks are.

If you will be purchasing with financing, then you need to add the finance charges in when comparing with a traditional lease.

In terms of lease advantage, I'm the worst-case here.. I am fully eligible for the $7,500 credit, since Uncle Sam gets a full tithe from me every year. In your case, it's a real no-brainer, as you want access to the tax credit.

I have cash, but can't get it to safely generate more than about 3%.
If I'm paying Nissan 4.9%, that's really just 1.9% over my TVM.

With such a new technology, and uncertainty about replacement battery costs, future tax credits/rebates, etc., the chances that Nissan guessed exactly right aren't very high.

I agree. Even Nissan's best knowledge about the car can't factor in the market changes that are about to happen in the EV area.

 

[evnow]

I do intend to 'pay off' the three year lease as soon as I can figure how, and what the risks are.

If the car is totaled you may lose all the money you have payed.

I have cash, but can't get it to safely generate more than about 3%.
If I'm paying Nissan 4.9%, that's really just 1.9% over my TVM.

I used the cash to reduce my mortgage - the lease is about 1% higher than mortgage.

Next year when we get a plug-in hybrid to replace our other car, we will probably buy it. In 3 years I'll either get a smaller EV (ESFLOW !) or one with a slightly longer range (100 miles EPA range) or a better one.

 

[Coffee_Slurry]

I do intend to 'pay off' the three year lease as soon as I can figure how, and what the risks are.

If the car is totaled you may lose all the money you have payed.

That would be.. bad.

Is that really the case? Wouldn't insurance pay the lien-holder the value of the car? Then they would subtract the residual and give me the rest? Not really sure how this works, but I have heard before that paying off a lease early is "risky". I'd like to fully understand why.