Can you take the full $7500 federal tax deduction? That is a key issue in making the lease/buy decision. A 2% difference in financing costs (given the quoted 4.9% "money factor" rate vs. 2.9% bank/CU rate) is going to make a difference of roughly $2200 over a 3-year period. You have to add in the $395 acquisition fee you paid to set up the lease, so there is something like a $2600 difference, by my calculation. If you can't take more than $4900 off your taxes with the federal credit, the lease may be a better proposition from a financial perspective.mxp said:
Right. If the idea is to look for a "better" car in 3 years lease makes sense.ttweed said:
One factor that is driving me towards the "buy" side of the equation is that we will probably not put more than 8-9,000 miles per year on the car even if we try hard. Is there a lower mileage allowance possible on a lease than 12,500/year? If we leased and gave the car up after 3 years, we are going to end up giving them back a cream puff of a car with way less than the maximum miles on it, in all likelihood. I know there is a penalty for any miles over the max allowed, but is there any bonus for less? Seems like there should be, but I'm pretty sure there is not--at least I've never heard of such an allowance for low mileage use under a lease.LEAFer said:
Ask your dealer. I think you can "buy" a higher residual with a lower-miles lease. That could make sense.ttweed said:
You can always buy the car at the end of the lease if the going market rate is good.ttweed said:
Ya, I will add that to my list of questions whenever our car actually arrives and we can get down to the business of actually buying it! That will be right after the question about how the hell they are going to assure me about the battery capacity over time if there is nothing in the warranty to indicate what a "normal" rate of loss should be?LEAFer said:
Oh I understand that part, but if the car ends up performing that well over time, I will be pissed at myself for not having the confidence in it to buy it outright in the first place, saving myself the $2500 "insurance policy." It's sort of a "damned if you do, damned if you don't" kind of situation, especially since I have never leased and always bought cars for the long run... :evil:evnow said:
Think of it this way. At the end of a month are you unhappy that you didn't have an accident ?ttweed said:
I'm not sure that is a fair calculation. Since you are only putting $2K in up front when leasing, you should figure $2K down when purchasing. If you are in a state like CA with nearly 10% tax, that means you will have to borrow more than $35K for an SV at MSRP with no accessories. To get down to a monthly payment roughly equivalent to the lease payment (about $425 including tax) it will have to be a 8-year loan. Let's assume you get the whole $7.5K back a year later and use it to pay down your loan. Very roughly:ttweed said:
Yes, your calculation is more rigorous and "apples to apples" than mine. I did not allow for equalizing monthly payments, and didn't include the $7500 fed credit in the cap reduction on the lease, and I was using cost figures I did for my own SL purchase (not SV) "off-the-cuff" several weeks ago when I came up with the $2200 figure. Now that I think back on it, I was not even figuring interest differences at the time but the total out-of-pocket cost for purchasing my car vs. leasing and buying out the residual at the end, so I blew it in my previous post. I simply looked at the total lease payments plus the residual and subtracted that from the cost of buying the car with a 2.99% loan for 36 months. The calculation was roughly $41K for lease costs vs. $38.8 for buying with 100% financing. This also ignored the $2000 down payment for the lease and assumed I would keep the car at the end of the lease and not finance the residual. My bad....planet4ever said:
Isn't there also an additional $650 in sales tax you pay up front with the lease on the $7500 fed credit which would not apply if you purchase? I know this is true in CA, maybe not in other states? There is also the $400 disposition fee if you give the car back at the end of the lease, which may or may not be negotiable, depending on what you do to replace the vehicle. These are the kinds of factors I struggle with when trying to figure the true cost of "buying first-adopter EV insurance" by leasing instead of buying.
By "rebate" you clearly seem to mean here the federal tax credit. At this point you won't be able to get that credit until 2012, unless you can get a little bit of it every paycheck by adjusting your withholding. There is no way that you can have all - or even very much - of it available at the time you purchase the car. That is why I assumed you would need to finance the entire cost of the car, including the $7500.Gonewild said:
No, you have to pay sales tax on the total price whether you purchase or lease.ttweed said:
True. I was focusing on interest and tax in my post. There are other leasing costs.ttweed said:
Congratulations on your financial position. I could only wish I was as well off, and it would indeed make a significant difference in the lease/buy decision. The opportunity cost of money is a huge question mark at this point. It is at an historic low at the moment and I have no idea how quickly it will recover.ttweed said:
I'm not sure why the "help" items you listed matter in the lease/buy decision. You get them to the same extent either way with the possible exception of the federal tax credits. But on the best case vs. worst case analysis, it seems to me that leasing has no down side and a possible up side. If you want to keep the car it doesn't matter (at least not much - maybe 3%) which way you paid for it. So let's assume you decide not to keep it. On the lease side, if the car is worth a lot more than the residual, you can buy it, turn around and sell it, and pocket a nice profit. If it is worth a lot less, you can walk away and not lose anything. On the buy side, you can also pocket the profit if it is worth more, but you are stuck with taking a loss if it is worth less.ttweed said:
This is not really true, is it? If you lease the car and walk away, you pay tax only on the up-front costs (the $7500 + $2000 down) plus the total of your lease payments over the 3 years, not on the residual value, no? You never bought that, why would you pay sales tax on it? The next owner would. Am I missing something?planet4ever said:
I can't help but see the extra 3% cost (and I'm not convinced it isn't closer to 6%) as a "down side."
No, but I am required by state law to carry insurance on my car. I am not required to lease it, so there is a choice involved. I am trying to rationalize that choice for my particular situation. There are different ways of looking at the deal. Rather than thinking that the car is going to be a dog (why am I buying it then?) with a very low resale value after 3 years that makes it worth paying $3000 (or $2500, or whatever) in "insurance" by leasing, so as to be free to give it back to the dealer, I could look at it as saving that $2500 through the purchase option, which will be a hedge against the resale value dropping $2500 below what Nissan expects it to be in 3 years, represented by the residual value figure. Unless they really suck on this implementation, I just don't see a 3-year old Leaf selling for less than $13K, but who knows?evnow said:
