Comprehensive Lease vs Buy Financial Comparisons

[evnow]

That looks about right for the monthly lease payment, but the residual will be higher because it is based on TOTAL MSRP, which is more like $35,220. So 44% of that is about $15,500.

I rechecked the numbers. They are right - when I change the Sale Price to MSRP, I get $349 for SV.

The residual is calculated just on the MSRP shown - and does not include destination, taxes etc.

 

[DaveinOlyWA]

yielding how much?
and how can finance charges be prepaid when there is no purchase agreement possible until the end of the lease?

Not sure I understand the question. During the lease term, you're "borrowing" the residual part of the car as well as the part of the car which has not yet been depreciated (each month you pay off more of the depreciation which causes the balance to fall). You pay finance charges on both of these borrowed parts. Buying the car at the end of the lease for the pay-off price has nothing to do with these charges.

The yield is 6.7%. If you think that's low it's because the quality of the paper is high, probably better than a lot of rated paper. But if you're thinking a return of 6.7% is dinky, total returns for the last year have been more like 17% because interest rates have been falling. But that's not so hot in comparison to the 43% the Reit Index returned. My point is that I didn't understand why he was saying investments returns were so poor when it's hard to find an asset class -- stocks, international stocks, whatever -- that isn't up 10% -20% over the last year.

the reason i ask is that you are basically doing a lease with option to buy.

the advantage of lease; getting lower monthly payments. the disadvantage of the lease; possibly not getting favorable purchase terms since many things can change in 3 years.

lets face it. interest rates are unlikely to be lower in 3 years than they are now. so a finance of the remaining balance can very well be at a much worse rate. also new car financing is generally at a lower interest rate as well.

as far as return on your bonds. that is a good return if averaged over past year. you are right, nearly everything has gone up, but my rates dont seem to be consistant. i had GREAT returns for 2009 but the initial part of 2010 was relatively flat.

now i just received my statement on my 401K and all did boost a bit for the quarter, but the year stats are so-so with the exception of one investment loosely termed as
"high risk, foreign investments" also known as "emerging markets" and they did about 20% this year. but hopefully maybe the market will start to do its normal rise again but i am not confident that the next 2-3 quarters we will see consistent rise

 

[Gonewild]

I figure I can use my equity line of credit which is now at 2.25% that is 1% under prime. I figure in 3 year interest rate will normalize and be around 4%. Which will be about what the lease is now.

 

[evnow]

I figure in 3 year interest rate will normalize and be around 4%. Which will be about what the lease is now.

That is not what the markets are saying. Remember Japan went through a decade of low interest rates ... deflation is more of a problem now than inflation.

 

[LEAFfan]

That looks about right for the monthly lease payment, but the residual will be higher because it is based on TOTAL MSRP, which is more like $35,220. So 44% of that is about $15,500.

I rechecked the numbers. They are right - when I change the Sale Price to MSRP, I get $349 for SV.

The residual is calculated just on the MSRP shown - and does not include destination, taxes etc.

I was told by my PD that the residual ($15, 500) is based on the Total MSRP including destination. Leon also told me that.

 

[Coffee_Slurry]

Surely SOMEBODY here has friends in high places?
Someone that works at a Nissan dealership?

Walk into the Finance office, and ask them to draft a Leaf SL-e lease, preferably with -$1,000 discount , then post up the numbers that NMAC spits out.

Please?

 

[LEAFfan]

Surely SOMEBODY here has friends in high places?
Someone that works at a Nissan dealership?

Walk into the Finance office, and ask them to draft a Leaf SL-e lease, preferably with -$1,000 discount , then post up the numbers that NMAC spits out.

Please?

Yes, but also please include one with a -$1530 discount.

 

[SanDust]

the advantage of lease; getting lower monthly payments. the disadvantage of the lease; possibly not getting favorable purchase terms since many things can change in 3 years.

I don't see lower monthly payments as a benefit. The higher monthly payments for a sale means you're paying more than the car is depreciating.

The big advantage of a lease is that it shifts risk to the lessor. If the residual is less than expected you can walk. If it's more you can buy and then resell or trade-in or hold. You've limited your downside under all conditions. If you end up buying after the lease is over you will end up paying more but, given that the Leaf is new and unproven technology, the additional premium seems like rather cheap insurance against getting caught holding a car you may not want (because Gen II or whatever is more attractive) and/or the car's value has sunk faster than expected.

This risk is much greater than an interest rate risk for consumer credit. IMO.

 

[SanDust]

Yes, but also please include one with a -$1530 discount.

You can approximate this or any other discount fairly easily. The discount is money that you don't have to borrow or pay back during the lease period. You can approximate the finance charges by using half the nominal interest rate (since you will have paid half back after 18 months so you wouldn't be borrowing this money) over three years. So 1.025^3 X 1530 = $1647. That's what you don't have to pay over three years, so to get the savings per month divide by 36 months. Over 36 months you'd save $45.76/month. To add in options just work it the opposite way. Just take the cost of the options, multiply by 1.025^3, and divide by 36 to give you the additional monthly payment.

That won't give you the exact amount but it will be close.

 

[Gonewild]

I have a question.

If I lease then buy it before the 36 month is up does that save me money. Say I buy it after 12 month instead of waiting until month 36?

 

[evnow]

I was told by my PD that the residual ($15, 500) is based on the Total MSRP including destination. Leon also told me that.

If I do that - I get a monthly payment of $339 for SV (no discount). If I use just MSRP (without destination charge) I get exactly $349. Hmmm ...

ps : Total msrp is what Leon says in this thread as well ...

http://www.mynissanleaf.com/viewtopic.php?f=23&t=1056

 

[mwalsh]

Walk into the Finance office, and ask them to draft a Leaf SL-e lease, preferably with -$1,000 discount , then post up the numbers that NMAC spits out.

Please?

New 2011 Nissan Leaf 4dr Sdn SL AT (17211)
NMAC Nissan Leaf Lease Program - Select States only) /RG/Tier 0
Term: 36
Rate Adjustment: Graduate Program
Residual Adjustment: N/A

Original MSRP: $35410 (SL, QC option, floor mats)
Base Invoice: $344410
Vehicle Price: $34410
DMV Misc Fees: $442
Acquisition Fee: $595
Gross Cap Cost: $35447
Cash down: $262.41
Cap Reduction; $262.41
Rebate: $7500
Adjusted Cap Cost; $27684.59

Vehicle MSRP: $35410
Residual Basis: $35410
Book %: 44%
Net Residual: $15580.40
Sell Rate: 0.00204
Credit tier: 0

DMV Fees (c)=cap (u)=upfront

Doc fee (c): $45
Registration fee (u): $ 88
License fee (c): $397

Monthly Payment: $461.83
Due at Signing: $9000
Rebate: $7500
Cash due: $1500
Actual Miles: :15,000
Standard Miles 15,000
Initial charge: $0.10
Excess Charge: $0.15
Monthly use tax: $37.14
Monthly use tax rate: 8.75%
Cap Reduction tax: $679.21
Cap Reduction tax rate: 8.75%

 

[Coffee_Slurry]

Thank you mwalsh!

 

[mwalsh]

Thank you mwalsh!

You're welcome. Now, just don't ask me how that comes out to be a $460 a month payment! My PD says he'd be happy to go through it with me, if I'd care to stop by. But I don't see any point in doing that yet. And besides, I still haven't 100% made up my mind about lease vs. purchase.

Oh, and of course, this isn't SL-e. Sorry, I didn't see that bit.

 

[cdub]

Thank you mwalsh!

You're welcome. Now, just don't ask me how that comes out to be a $460 a month payment! My PD says he'd be happy to go through it with me, if I'd care to stop by. But I don't see any point in doing that yet. And besides, I still haven't 100% made up my mind about lease vs. purchase.

Oh, and of course, this isn't SL-e. Sorry, I didn't see that bit.

9k due at signing?

 

[Coffee_Slurry]

9k due at signing?

The $7,500 fed 'rebate' is included.

 

[mwalsh]

9k due at signing?

The $7,500 fed 'rebate' is included.

Yes, $7,500 plus $1,500 cash.

 

[Bob4017]

As I read all of the good info in this thread, and ponder my choice - buy or lease - I came up with a thought.

If I lease a Leaf and for some unforseen situation I have to move to a home (rent, condo, etc.) that cannot accomodate a level II evse, I will be stuck with a car that I may not be able to charge (the trickle evse that comes with the Leaf will not work for my driving needs).

Not a problem if I buy because I would sell the Leaf in the above senario.

Something else to ponder.

 

[Coffee_Slurry]

If you sell in the first three years, you lose the $5k rebate too.
And the EVSE (first two years).

It seems like, for EV Project folks and CA in general, the Leaf is a 3yr commitment no matter how you look at it.
You'd be trickle charging.

 

[johnr]

Thanks evnow for the financial analysis. As I expect my taxes to be only about $5000 it looks like I would likely be paying less by leasing than by buying, whether or not I keep the car after 3 years.