The Truth about Leasing vs. Buying a Tesla in 2023 - What You Need to Know!
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So you are ready to place an order for your new Tesla Model Y or Tesla Model 3 and due to the EV Tax Credits, you are not sure if you should lease or buy. I'm here to help you with the decision and provide you some compelling details on the numbers behind both options.
First and foremost, you need to determine if you qualify for the EV Tax Credits that are a part of the Inflation Reduction Act of 2022. These new tax credits allow all Tesla Model Y's and Model 3's to qualify for the full $7,500, assuming your income is qualified. These credits will potentially be changing once the Secretary provides input on the Battery Critical Minerals and Components requirements some time in March 2023.
Until then, all Model 3's and Model Y's get the full $7,500. If you do qualify, you want to consider the implications of leasing vs buying. If you lease, you don't get the credit. The bank that is funding your lease gets the tax credit and they have the option to apply some, all or none of that credit to your lease. In the case of Tesla, they are applying most or all of the credit to the lease payment, which is why the Model 3 SR+ is leasing for a low cost of $349/mo.
On the other hand, if you buy, you will get that $7,500 back at time of filing your 2023 taxes, which can then help to offset the full cost of the car. That said, you won't be seeing that $7,500 until 2024. Starting in 2024, this will be a rebate at time of sale, meaning you would get that credit the day you take delivery off the price of the car.
Next, we look at the total cost of the lease and the purchase over the next 3 years. Using Tesla's default financing options, you would be looking at $349/mo for the lease with $4,500 down and $652/mo for the loan with $4,500 down. Both require the same down payment, and the lease seams so much cheaper. The lease is actually cheaper, but only when you consider the cost of the payments and the down payment together.
At the end of the lease, you have nothing to show for it. You have paid roughly $17k to rent a Tesla Model 3 and have $0 or assets at the end of that 3 years. On the other hand, if you buy the same Model 3, you would spend a little over $20k after the rebate is factored in over that same 3 years. You would still own the Tesla, and have an outstanding balance just over $21k.
But what is a 3 year old Tesla Model 3 worth? Well, when we look at the market today, we can see that a clean used Model 3 SR+ is currently selling between $31-35k. So that means after spending $3k more over 3 years, you would have about $10k in equity in the car.
This makes the purchase a way better deal in the end. Tesla Model 3's continue to be extremely popular and they have a strong market. That all said, the market fluctuations for Tesla's can be extreme, in both directions. Because of this, there is risk involved in this math and the market today does not necessarily reflect what the market will be in 3 years.
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I want a new one every 3 years. I did this with BMW's now with Tesla's. Im good with the Lease. I also never have to worry about anything as I am always under warranty. Moreover, Tesla is getting better and better and just keeps getting better - I would want to experience, enjoy the latest build with a new battery.
I've owned lots of great cars. As it gets old I end paying for everything trying to keep the car as good as I had it when it was new is in denial that its already dated. Prefer worry free and just drive. Yes I'll always have a car payment - all good and factored it as cost of living. Years down the road the end result is the same - pay up! Great video!
There is the benefit of no worries
I’m thinking about trading in my car and leasing a new mustang mach e and have the same thought process! EVs will evolve over time and getting a new one every 3 years or so sounds amazing! And honestly paying off cars seems like an old concept that the car would still have value and last vs nowadays with interest rates going up by the time the car is paid off it’s gonna be more expensive cause the car will need repairs more and more by wear and tear! So that money you’d be paying into the loan is now going towards repairs and such or if you still owe money on the car you gotta factor in the repairs PLUS the loan payments too
“Nothing to show for it” is not always the best way to look at leasing or renting. The question is whether the asset will appreciate or depreciate. Rent vs. buying a home that appreciates makes no sense because you own none of the increased value at the end of renting. Leasing a car is different because it is losing value the second you purchase it. With a lease you only own the lost value on the portion that you use, the rest of the devalued car is the dealership’s burden. They have to deal with trying to resale it. In a lease, there is very little maintenance needed within 3 years. If you own, and the battery dies in year 4,5, or 6 then that $20,000 hits your wallet, not so with a lease. Also if you do buy, you’d better plan on keeping that car for 6 to 7 years to make it financially comparable to leasing, but that means your car’s hardware is 7 years old. Good luck with that. Take a look at the difference in tech between a 2017 and a 2023, then imagine the tech in a 2030 vehicle, while you’re driving your 2023.
there are situations where leasing is worth it, but all things equal, I personally would prefer to purchase over lease.
Still, if you lease for 6 years for example, you will have no car at the end of it. In 6 years of owning, even with depreciation you will still be able to sell for a reasonable price. Anything beyond 6 years and no more payments if you decide to keep. Leasing it only good if you want the newest car and don’t care about finances. Also, teslas battery warranty is 8 years.
@@ceeIocteslas don’t lease for 6 years
@@tklerts 3 yrs then 3 more yrs. Unless you don’t need a car anymore.
Yes, the big question is how much a 3 year old standard range is worth 3 years from now.. think about how many Model 3s were on the road 3 years ago vs today.. vs the number sold in the next 3 years. if that car is worth about $20K, which is very very realistic (to me) .. you are under water, your model 3 standard range will be worth less than you owe. Save that monthly payment, and invest it. or just put it in a CD, you'll be assured to have money at the end of the lease (for your next lease)
There’s a good strategy for both directions. Good tips thanks for sharing
What’s a CD
@@stunnerkumahcertificate of deposit, basically you give money to the bank and they guarantee a certain interest rate return on it, it's the opposite of debt
"If it flies, floats, or f. Rent it. Do not buy depreciating assets."
😂😂
100%. Buying a Tesla (when you don’t need to drive much) is like buying an iPhone. It will QUICKLY become outdated with fast moving technology. Depreciating assets aren’t meant to be owned.
You are paying for depreciation either way.
Leasing is better imo for people on a budget. No strings attached. New car every 3 years.Take the rest of $600 and start making reoccurring buys into Tesla shares For the term of the lease. Now you have an investment you can use for your next car in 3 years. Win win.
Interesting strategy
For every new lease, u pay 1400 destination fee and 1000+ license/registration fee and 250 order fee. So you pretty much can pay off the car at the beginning of your 3rd lease.
And also down payment so if you crash your lease on your first day you will lose that down payment instantly. I never do down payment on my loan so there is no fear on that. Most credit union loan you up to 110% to 130% of MSRP to cover taxes and mark-up. O ly thing you need to worry about is gap insurance and you are cover on all base.
Wish I could leave put I drive about 20k miles a year
Leased my MY mainly because I was buying my first EV and wanted to limit the cost and have a certain exit strategy. It was also before the $7,500 tax credit - I would buy if I was in the market today.
There’s nothing wrong with leasing. But now you know
I did the same thing in 2020 coming to my end of my lease in a few months...car has been excellent. Tip: Closer to the end of your lease you will get an email from customer loyalty they will offer you some deals to jump into the next tesla. Good luck!
@@kylehill4437 yessir! Personally lease is better (my opinion) everything is taken care of too if you’re leasing
@@VladimirJpgv careful they will get you at the end of the lease. They have VERY broad "wear and tear" guidelines. They can get you for all kinds of additional costs, I've seen people paying $5k for all kinds of silly things at the end of the lease inspection. You better return a near perfect car.
@@kylehill4437 oh shoot, thanks for that insight, I would have never known 😱
Tesla is not disadvantaged in leasing compared to other ice cars because you can put all the federal credits up front on the lease. However, they do a very strict inspection when returning the lease and if the vehicle is not completely new you will have to pay an average fine of 1-2k
I looked into buying a Model 3 back in 2016. I put a $1000 deposit and waited my turn in line. Unfortunately, my son’s car was involved in an accident and had to be repaired at a local body shop. Fortunately, there was a Tesla Model 3 in the body shop and the auto body shop representative told me it had been there for months waiting for parts from Tesla. She said that repair was going to be very expensive! After that conversation, I immediately went home and cancelled my Tesla order. My $ was refunded by Tesla. I know now that these cars are expensive to maintain and repair!! I’ll stick to my hybrid Lexus for now.
the most rational analysis of buying v. leasing an auto that i have seen. Too many people are blindly driven by either payment amt. and, therefore, less. Or, on the other hand, the advice that you should always own bc you’re gaining equity has them blindly purchasing. In reality, what’s most important is what will financially benefit the individual customer. Good job clearly outlining the pros and cons of both! And highlighting market volatility. Bravo!
BTG,
Great concluding statement about leasing might be a benefit IF you didn't qualify for tax break if you were to buy. Perhaps you're a few yrs from an income reduction like a mom staying Home to care for child, or retirement when you might qualify with less income.
We are retired, and having our Model Y really allowed us to travel much more, due to low cost of travel.
Cheers, Eric
Cheers Eric
Elon has made it very clear that Tesla’s priority is to reduce prices. So an equivalent a new Tesla bought three years from now will likely be substantially cheaper. This will destroy the value of used teslas. Until prices stabilize and the technology stops advancing so rapidly, used teslas will depreciate substantially assuming production can keep up with demand. So if you want new, lease. Otherwise buy used.
I have been leasing for the last 10 years and 3 of them have been with Tesla. The thing I like about leasing is a new car every 3 years and don’t have to own something that depreciates in value. The miles thing is the worst part but I always do the 15000 a year and seems to work good for me. As far as buying at the end of the lease you can only do that with the models S & X,. I am on my second model 3 so I will not have the option to buy. When I did my credit app online it was instant approval, didn’t have to wait at all. I went with Tesla insurance and it’s pretty cheap. I got the new 2024 model 3 performance and had to put down $6000. The first Tesla was a 2021 model three performance and had to put down $5000. My payment actually went down from last time. It’s was $781 for the 2021 and now it’s $741 for the 2024 a month. I have solar on my roof at home that covers all the electricity charges even charging the car. So in my opinion, for me, leasing is an amazing option.
Great video and break down! 🎉🤠 I agree with most of the analysis, however, while it's true, in general, purchasing verses leasing is usually the best option, there are a LOT of situations in which leasing is a good option for many people. Many, many folks won't be able to take advantage of all or even most of the tax credit. A lot of us just don't have enough tax liability and won't benefit from the $7500 credit. Removing the credit from the equation, the figures tell a different story. Also, here in 2023, leasing may work for many people because of several factors - even if the tax credit won't benefit them in a purchase, they will be able to take advantage of the credit through the ridiculously low rate on a lease. In addition, with new refreshes for the Model 3 & Y on the horizon, rather than waiting for them to become available, you can lease a Tesla now, for 24 or 36 months, and then, at the end of the lease, purchase one of the new refreshed models, with Hardware 4, etc, etc. Also, after a 24/36 month lease, you are done. On a purchase, you still have another 36 or more months of $650+ payments. There's a lot of folks that can afford $349 a month, that CAN'T afford $650+ a month. Financially most are better off purchasing, however practicality-wise a lease makes more sense for some of us. In my own case, my particular situation doesn't even justify leasing. I factored in all the costs, and it makes more sense for me to just "Rent" a Tesla, when I need a car! .......Thank you Hertz! 😉💜
All great points, and as I said, there are some situations where the lease makes sense. You have outlined a number of those situations. Thanks for sharing.
Renting a car for weekend groceries and using metro otherwise, is "the move" in DC area.
I purchased my 2019 Toyota Highlander 0E January 6, 2019… It’s just me and my son in a seven seater SUV. Other than that I am not a person do you have to need some sort of extra space! I simply just wanted this vehicle
and looking back. I wish I would’ve leased it because now I’m looking at buying a Tesla because to cut out the cost of gas now but I’m doing lyft and Uber and DoorDash would be a tremendous savings.
I am tired of getting laid off and I’ve been laid off three times since the pandemic old from mortgage company… Whether I got a full-time work from home job and didn’t have to drive that much, I still want to ride share on the weekends for extra money.
But then, if I became a realtor again, I would definitely need the cost of gas not to increase driving around driving people as I would still have to do Uber and Lyft for income, while I’m trying to make income as a realtor.
Just removing the cost of gasoline every month that is now costing me $250-$300 a month would be amazing!
I’m still waiting to hear from progressive insurance to see what the monthly cost would be because that would be just about the only thing that would keep me from buying a Tesla but I’ve heard another videos with so many safety features. It actually can keep the insurance low
On a positive note, I do have some positive equity in my current vehicle but again I’m a single mom I lost my job last year. I have some assets that will qualify me still for a new car.
And right now I am thinking of my monthly expenses and how I would love nothing more than for my gasoline (and now maintenance is a warranty has expired) to just go away
Yes, I write those things off when I am ridesharing in the past still to pay those costs every month or even once or twice a year would be a tremendous savings even if it meant going from a $465 car payment to even $500 car payment to lease or buy a Tesla
In addition to the savings of having an electric vehicle, I would get a discount through Uber for charging as long as I stay Uber Pro AND make a dollar extra per ride
Also, even if getting rid of my SUV meant I could not take XL rides. I’m actually OK with that! It makes me nervous to see five guys trying to shove them selves into my seven seater SUV when my second row is the captains chairs so you can only fit two people! Then there’s a third guy in the front
And then you still have to shove to grown guys in the third row
And then you’re trying to fit their luggage on top of that …. I’ve already have one other time where someone had to call another Uber simply because they had six extra large luggage is because they were going to Africa so that was not my problem.
But I already had a case where a group of guys were saying maybe they should call another Uber .
All in all, I’d much rather not see a bunch of people, shoving them selves into my car to possibly break parts of my vehicle .
One guy was hovering himself over the center consul of my second row, and it was making me nervous because it’s not meant for someone to sit on the plastic where the cupholder is located in the middle of the seat s!
It’s a great car if there’s more than two people in the family but right now it’s just me and my son and I’m trying to survive as a single mom living in Austin Texas. When I moved my rent is already going to go up a little bit more just because I need to move it to a bigger, one bedroom For me, and my little one other than that I would love nothing more than to find other ways to pull back on monthly expenses since most people lives month to month
Yes, I have money invested but obviously I still have to make sure I pay my bills every month
Great video. It seems to me that your forté is doing videos like this: what are the best Tesla buying, owning, and selling strategies, especially breaking news or explainers on price changes and/or Tesla-relevant legislation changes or potential changes, and real-world use of accessories and products, rather than reporting on general Tesla and other EV news as other TH-cam channels (e.g. Ryan Shaw, Rob Mauer's Tesla Daily (stock ownership oriented), or Tesla Time News weekly) do regularly. The reason I say this is that you do the ownership aspect so, so well, and usually quicker with breaking news than anyone else, and often this valuable content is unique to you.
Appreciate you for being here so long and continuing to provide helpful feedback
@@BeardedTeslaGuy Luckily, the vehicles change almost weekly (only slight exaggeration), and/or the prices, and/or the law/Treasury/IRS rules, so even just this lane could keep us hearing from you at a very brisk pace!
I’ve never leased a car but was considering it when I just got my Model Y. With the 0.99 rate it didn’t make sense for me to lease it. I do plan on keeping it more than 3 years.
I think in your spreadsheet you've made a mistake----in the Tesla calculator it showed the payment based on 72 months, however, in your spreadsheet it was 36 months.
Sorry, I just realized that the context was about the value. Good point!
It’s not a mistake. I am comparing where you would be in 36 months, so that way the 36 month lease and 3 years of payments is the same time to compare how much you still owe vs what the walk away from lease situation is
You forgot to mention that most of the earlier monthly payments on goes towards the interest. So if you’re gonna trade in your Tesla in 3 years, it’s still better to lease.
Wrong numbers. You compare 36 months lease and 72 month finance payments.
I took delivery of a MYP in September 2022 and paid a whopping $70k, I wish I would of leased, I feel screwed by today's prices 😡
That’s a tough one for sure
I think this hits in a very good point in that who is to say withe the refreshed M3 prices come in even lower or with a car industry crash looming Elon lowers M3 prices sub $40K? I think also Tesla owners have been delusional in thinking any EV will continue to appreciate rather than depreciate like history tells us. This is all to say leasing to begin with is not a one size fits all product and a lot of people to begin with shouldn’t even consider it do to the no modding and mileage restrictions but for people who already lease, a Tesla lease right now is an insane deal
Prices will go back up no doubt, Tesla is no longer locked in with the IRS EV thing especially with Model Y.
@@kylehill4437They just dropped the prices again
@@LuckyAeon Thanks for the heads up! Appreciate it!
Taxes are also a factor! You only pay the taxes on a lease monthly based on the 3 year lease total price so the monthly will never be $349 but closer to $400 a month. On a financed car you pay the full tax based on the full price of the car so that’s added to your loan. The monthly difference between the lease and a financed loan is closer to $400 a month on the base Model 3. If you can afford it, it is probably better to finance since you can always sell the car even if you are not done paying for it. The current lease offer on the model 3 however is a very good deal in terms of affordability as a monthly payment. You can’t get that rate on a lease right now. Car dealerships are marking up everything right now. With Tesla you don’t have to worry about a dealer trying to rip you off!
Yea, and watching the death of the dealer model will have been a long time coming
Question: Our combined income is more than 300k per year. In that case does it make more sense to lease since we don't get the $7500 break. I also get bored with cars quickly.
Anyone that finances does not "Own" the car, until every red cent is paid to the bank that you finance with the car is not yours, once it's yours you have a high mileage low value, outdated vehicle
True
Excellent video. The biggest unknown is resale value three years from now. Resale values on used Teslas have recently fallen rather dramatically. The lease payment for a vehicle with higher miles per year (say $15k) isn't that much more money.
Agreed
Especially since the Model 3 is about to be refreshed. A lease might make sense if you want an M3 now and then take advantage of the refreshed car in 36 months.
For small business owners like myself, the lease is a no brainer. I get many tax deductions and depreciation, conformed this with my CPA. Plus after 3yrs I turn it in a new model
Yea huge benefits for business owners
@@BeardedTeslaGuy Agreed, and living in IL I don’t get the $7500 tax credit. Called my tax guy and he said don’t worry between the lease payment and depreciation I’ll be good to go. It’s worth it having an amazing CPA
But are you using the car exclusively for business purposes? If not, you only get to deduct the portion that is used for business purposes.
@@johnlabernik4599 yes it’s primarily business.
Got any tips for what to do when Tesla lease is ending? Should I buy out the car or turn it in for new lease
The only thing i saw on the tesla website is: financing is super higher the price, i dont know why the APR is so high even if you have a good credit score. I dont know if that real or what. But i always heard that tesla actually gives good promos with the APR
Great video! Can you use this same comparison for a Model Y since Tesla is not buying down the apr on the lease?
Sure
A friend bought her 3 a couple years ago and upgraded at CarMax. They paid her 6k for the trade. Presuming she had paid in cash, she drove for the last few years for free!! This only works if you have wealth.
Yea, thats incredible
@@BeardedTeslaGuy no that’s inflation lol
What about road tax and maintenance costs for 3 years when you purchase the car? What about battery deg and replacement costs if any? For someone new to electric cars, purchasing may not be the best option.
Battery is covered for 125,000 miles road tax. I’m not sure what you mean but for plates it’s basically the same.
So here is one problem I see with your math, (unless I am missing something) you are calculating payments on a 36 month lease vs payments on a 72 month loan. Which means at the end of 36 months, a loan would not be paid off which means you’re not taking into account the true balance. Meaning someone may still be upside down on the car which would mean negative equity instead of having equity. Again, unless I am missing something.
THANKS BEARDED…FOR SHARING THIS USEFUL INFO ℹ️👍💚💚💚
My pleasure!!
Buying a Tesla or any EV is a risk given how rapidly the technology is changing. What is a 250 mile range EV going to be worth in 3 years, if a new one is getting 400 miles range?
Always risks
Simple, if you can deduct car or you like switching cars often, then lease. If plan to keep, buy it
Simple
But teslas are not that reliable to keep it for more than 5 years right?
The Tesla, even with the tax credit, will cost you about 50k over 5 years. If you put that 50k into the stock market ( or just 10k a year), your money will grow to $83,000 at 10% yoy growth. You now have 33k to put on a new car, but your total assets would basically be 83k minus 16k (total cost of your lease). Whereas if you buy and pay for the 50k outright for the next 5 years, you are basically left with a depreciating asset that's probably worth 40k.
But that cost is going to be a real cost anyways with the need for a car. In the case of a Tesla, or any EV for that matter, there are thousands in savings vs gas that add up pretty quick
I think you're significantly overstating the "equity" after three years when owning. You need to subtract the payoff of the remaining loan. Assuming your $30k residual value, subtract the $24.9kK payoff and you have around $5k of equity, if the $30k residual value holds, which is a pretty big if given the recent and I think lasting drop in the value of used M3s.
Watched your video that was a year ago and you did ur own Ceramic application and wonder how it worked out for long term? Thanks.
If you don't follow me on Instagram, you should check it out. One thing you will find in all the pictures I post is "how the hell do you keep it that shiny?!" its the ceramic!
@Bearded Tesla Guy I do follow ur TH-cam videos 📹. Thanks 😊
It is incredibly hard to predict where the economy will go, but for now its hard to compare current used prices to future used prices considering the current macroeconomic situation. Tesla is just shooting ahead of the running deer and crushing its competitors that cannot afford the margin cut to also lower prices.
So many unpredictable variables
I don't see anyone buying the 3 years old Tesla for 33k though. The new ones are under 40k no mileage and newer tech. Batteries are significantly better today
Can you buy the car at the end of the lease like other auto makers or is Tesla still making people return them? If you can buy the car at the end then leasing could be a good option. Thanks
Still cannot to my understanding
Then leasing from Tesla doesn't sound like a good idea. Thanks
You need to factor in the requisition fee for the lease, the upfront taxes, the dealer fees, and license fees. Those add up. If you finance, you are looking at 72 months (6 years) of $600+ per month plus deposit and all the taxes and fees. After 6 years, the car will not be worth much. SO I am not sure if it's worth financing.
Do you have any numbers on trade in value (at Tesla dealership) as opposed to for sale by owner?
no
It's definitely worth leasing any luxury car, especially if you're just an average person that doesn't have all of the money in the world. Leasing it means you don't have to worry about repairs and maintenance on the car, because it will always be covered until the lease is up. And you're saving yourself from a lot of deprecation as the car ages. Now on the other hand, if you're rich, just buy the car out right. With the finance market being the way it is, you will get ripped off big time if you finance. The interest rate is above 6%, even with people who have excellent credit. It's awful. Later on you can always refinance, but if you can't afford it as it is, just don't do it.
If I lease, at the end of the lease I have to put another down payment for a new lease? Or do I just keep making payments and get the newer vechicle ?
With Tesla everything randomly changes over night. Best to talk to Tesla to get latest terms/promotion info.
If you took the difference in price and invested that else where, you have more money than you would in equity for your car. The monthly difference is substantial. But if you don’t want the latest and greatest every 3 years. And actually plan on owning it for more than 5 years. Then you’re definitely better off buying
Vehicles are a depreciating asset. I get how people will try to minimize the loss at the end. I live in California and most of us commute and can’t do leasing. So I don’t even bother doing the calculations. If I had to finance, I try to get the lowest APR and pay down the loan ASAP. I usually have equity once it’s time to trade in. Usually 100K miles or 4-5 years and recycle the process. But since switching to EV, I see myself keeping the cars longer because of lower frequency of maintenance. Also, I just enjoy my cars and use it to the fullest rather worry about how much I get out of it in the end.
I think these cars will last much longer as well
This exactly its a car not a stock market investment.
@Bearded Tesla Guy. Rebate is based on MAGI not AGI. Please check and correct me if I’m wrong.
MAGI and AGI are so similar for most people, but yes, it is MAGI
Thank you as always. Very knowledgeable and things I really did not know. Whoop there it is. Thanks again.
Glad it was informative!
you guys in the comments are way overthinking and overcomplicating this more than it is.
its simple, not everyone lives in a first world country with a 5k monthly salary.
The average income in Estonia is around 700 net with taxes deducted. Take off of it the living expenses, apartment and you'll be left with only a couple hundred if even that.
You either buy a used car for a few thousand euros or you lease a car.
The only ones who pay for Tesla upfront are either upper class people, retired people with a lot of savings or those who get the car through their company.
Even the highest paid jobs here wont allow you to pay for the cheapest model upfront unless you save for years.
So without any statistics, nor calculations, lease is the best, at least here.
Thanks for sharing perspective from somewhere else
This is a great video. Unfortunately now you lose $17,000 in depreciation the first year on a 2023. And it’s $25,000 in depreciation over the first 3 years. It’s probably influenced by the highland coming out but it would take 4-5 years plus to get even on your loan. It’s crazy how quick the market can change.
it is crazy how fast things change.
Needing some clarification......Current owner of '21 Model Y. Looking to add a Model S (still deciding which trim) to the line-up. I understand if purchasing no $7500 tax credit is available but when I go to the leasing option on the Tesla website....it shows that it applies. Can someone confirm? I'm considering leasing and tying the vehicle to my LLC for a write-off. Any advice would be greatly apprecited. TIA
Thanks for the news and info brother. I am waiting till next year to get a Tesla 😅 have to focus on my wedding this year. It’s hard with all these tempting prices.
Cheers
Did you get the 0.99% financing promotion in May 2024?
Does the leasing process just restart when the 3 years are up? Do you have the option to just continue your current monthly payment and get a new vehicle or is there a whole new higher or lower payment?
Tesla has several options at end of lease but they randomly change. Best to call or visit in person to get the latest.
What you need to compare is your equity at the end of three years agains the amount of depreciation over that time. If you have $10k in equity, but the car depreciated $12k then you would have been better off leasing.
Leasing = Paying for the car's depreciation of 6 years but you can only use it for 3. They wouldn't provide this option if they are on the losing side.
With Tesla's depreciation rate the car pay for itself after 4 years since you won't be losing money at that point if you want to trade it in you'll definitely be equity positive :)
It’s not so simple in the end. Leasing does cost you more
Not necessarily true. The lease program is designed to build up the fleet as big as possible for robotaxi purposes. There’s a reason they won’t let you buy out your lease…
So if you lease a Tesla, you get 7,500 off sticker price ?
Mostly the same issues that have existed for years with gas cars. The only hook with gas cars was "lease factor" which is an element in the equation that I didn't hear mentioned. Lease Factor as it was explained to me has to do with the particular model of car's ability to retain value. Generally high end cars have a higher lease factor than ordinary cars which means one gets a lower payment. Or simply put value cars will cost more to lease because they are considered almost disposable.
It is simply another benefit that more affluent people enjoy. Most don't know that credit scores influence insurance premiums and so many other things, other than lending rates.
Lease factor is the "interest rate" that is applied to a lease. You can find those numbers online for most manufacturers, but Tesla's is not public. Instead of offering you a clean and clear "5% APR" in a lease you get a money factor that is an interest applied to the portion of the car you are "renting"
@@BeardedTeslaGuy It is interest rate... sort of. I say sort of because different vehicles have different rates. A lower priced vehicle usually has a higher rate. It is more of the vehicle qualifying than the buyer. The buyer also qualifies. With loans, it is mostly about the buyer.
Gotta clarify AGI vs net income. Some folks don't understand.
True story
is the income limit based on your 2022 taxes, or when you buy the car which would be 2023. Because my income is above/below 150 for those years
$7500 is a credit not a refund right? So if you don’t owe anything on your taxes there’s no benefit on that $7500 tax credit?
Correct. But make sure you understand the difference between a tax refund and tax liability.
Great helpful video, thank you!
Cheers
While the bank can pass the 7500 to us, i don't believe tesla does that. Only some brands do it and they apply selectively to some models
The true reality, people pay for loan 200 and some change more than leasing for 3 years. Then another new model shows up and they trade in the current car. The dealer pays whatever they want, with will be the same or less than the amount you own, then they keep buying instead of leasing and paying more. If anyone want to buy the car keep it for 8-10 years, that is the only way it will make sense.
interesting perspective
Exactly!
I saw on the tesla website and the financing prices are crazy even if you give a good downpayment and have good credit score you still pay like 580 per month
This was helpful. I mean I never understood why people lease cars unless it’s a super high end car that I don’t want to pay for up keep. But my culture is about ownership and that’s how I was raised! So I don’t lease anything but you running the numbers proves I have been doing the right thing all these years. I ordered my Tesla and pick up date is in a few days and I declined a lease when offered. I can only see myself leasing a car if I accept a job overseas and it’s only for 2 years. once I am The country I plan to reside in for the future no leasing.
Cheers
I always lease because I like a new car every 2-3 years thats always under warranty.
I lease to buy. Put $0, have a cheaper monthly payment, get a brand new car, then 3 years later I buy the car for wayyyyyy less then I could at that time or later.
Example:
I leased a Mazda 6 Turbo, Grand Touring Edition. Brand new, $0 down, paid $400 a month for 3 years. At the end I bought the car, which had 50,000 miles on it for $18,500.
I looked just now and that same model car with 13,000 more miles 2 years later is posted for $28,900.
I’m sure this isn’t everyone’s cup of tea but lease to buy has worked out for me and my family for a long time. My brother is about to buy his leased 2020 Pickup Truck for example.
I was disappointed to see Tesla doesn’t offer a buy option sadly.
@@user-gf3zq1hk9d That's similar to what I do, although I sell my leases and typically make a few thousand profit. (although it's much harder to do that now). And nope, no buyouts with Tesla. Never has been.
@@doomsday9973how do you sell your leases to make profit?
Leasing my Tesla for Uber, Total Win. I wouldn't lease If i didnt do business. Owning and having low mileage would be ideal.
Lease works great for business write off.
I am leasing my MYP but I plan to keep it after the contract ends. The price will be identical to financing it, however it gives me options. I'm from Italy so the conditions are probably different from leasing in the states
Could be. Here you are not allowed to buy the car after lease
@@BeardedTeslaGuy oh wow really? It's common practise here in Italy
@@patrikmedia It's common in the US as well, however, Tesla changed their terms in April that prevents you from purchasing after lease end. It may be the only brand in the US to do so, since this is the first time I have seen a car manufactuer do this.
@@rcmadiax oh so buying the car after the leasing contract ends is common, just not for Teslas? is that what you meant? I didn't lease my MYP via Tesla directly, but with a partner leasing bank instead. Probably thats why it's possible to do so here in Italy.
You haven’t considered sales tax, if u own car that’s positive but if u need to return then sales tax shouldn’t be put on leasee as tax credit is not give to leasee ..
Sales tax is added to the lease payment after the fact, depending on state. In the case of these credits, the lease financer is the one getting the $7,500, and they can apply that whole amount, some of, or none of that amount to the lease, making the payment higher or lower. sales tax is always separate on a lease, again, depending on each state.
Thanks, so helpful
What I don’t understand is the lease, and loan option. Do you own the car after your lease payment is over ?
Or is that just with the loan option?
no you dont
You forgot to mention the savings of sales tax.
"I'm not a financial advisor, but I stayed at a Holiday Inn Express last night"- Bearded Tesla Guy
Lol
Not sure if this has been asked before, but is the $4500 required for the lease, or can it be less? Tesla’s calculator lets you put in $0, but then everything I read says the $4500 is unavoidable.
I’m not entirely sure
It can be less. I have my approval at 2500 down
@@Jay-vb5oh is that a lease?
@@janetfelder4536 Yes
@Jay-vb5oh what was your score @ the time of applying
We are about to lease a M3 RWD 36/15 with $2500 cost cap reduction at $500 a month. IMO besides not being able to buy out the lease which very few people who lease do anyways, this is one of the most competitive leases since it has a 1.9% MF since Tesla is using the tax credit to maybe offset the terms. So why lease? Well for us this is just a secondary car and our primary car is paid off. We didn’t want to put $4500 or even 20% down which is close to $9k down since this is our first Tesla let alone our first EV and we can’t charge at home since we live in a co-op. Also if you know anything about the auto industry it’s been in a bubble and there will be a crash sooner or later and the fact that Tesla has historically lowered Model 3 prices. So it’s not unthinkable after three years the car is worth less than the 3 year residual value. Also after three years off M3 leaders not being about to buy I think there will be a hefty CPO M3 market via Tesla this the cars prices could be even lower
I agree, the M3's keep pumping out and in turn, the used market is expanding. Makes for some excellent deals on used 3's though!
And remember there may also be state incentives as well.
Indeed there may! I unfortunately have never lived anywhere where that is available
It does not make sense why a company or leasing company would get a tax credit.
Whoever owns the qualified car gets the credit, minus personal income limitations. So the bank owns the car for a lease
@Bearded Tesla Guy I get that part. But if there's a limit on our income to qualify...what's the limit on the company? Sounds like if I bought the car through my LLC there would be no limit...so a loophole
I have had 19k miles on my 11-month old MY. Leasing would never give people a chance to enjoy the real fun of these cars.
Completely agree, but of course I am a avid road tripper!
I don't 3 yrs from now the 2023 model 3 will be the same due to the 7500 rebate. Granted not everyone's going to qualify but I suspect many will
Yep, no way to predict what the market will be in 3 years unfortunately
If you buy the car at the end of your lease, do not they re-evaluate your car according to the mileage of the car and its current value?
You can't buy the Tesla at the end of the lease. You have to get a new one or nothing.
I can’t imagine leasing a vehicle and not having the option of purchasing at end of lease. Is a pretty sweet dill for Tesla who can sell it to the next guy again tho
Yea they did good on these lease turn ins
Never put money down on a lease. All you are doing is kissing that money goodbye if the car gets wrecked. The bank gets a reduced cost of the car and you get zip. Never put money down on a lease.
I’m about to lease because it’s a write off for my business
Is the tax credit a one time thing or every year you own the car?
one time lol
$652 is for 72 month term but in your calculation you multiplied $652 with 36 instead of 72. See time stamp 5:41
I was showing the 3 year mark what you would have paid for each. Then I show after that 3 years, you still have 23k in payments to go
Not sure how to say this without sounding like a jerk...You should not be looking at Tesla's (or any financial commitment) if this simple math confused you. Watch the video again.
Thx man
don't think we can purchase model y or 3 at lease end, can we?
No
Another factor is that Tesla does not allow you to purchase your car after the lease.
indeed
Only lease if you can write of a portion of the cost
That’s the best scenario for leasing
Not always the case, there's also a risk factor, u are taking a gamble that the prices will drop in 2-3 of the lease.
Very true
Thanks 🙏
Welcome
Not for nothing but the car is not paid off at the end of 36 months. I know this is just cost. Payments must continue for 36 more months to pay off the car. There is equity at 36 months but with taxes and all it gets eaten up.
Yep, and I included the additional cost of remaining payments, as well as the remaining balance in the comparison. Just showing you in 3 years, what your situation would look like in both scenarios.
what about leasing then buying at the end of the lease?
Tesla doesn't allow purchasing the vehicle after the lease is complete.
@@S3XYEV didnt know that, thanks.
Unfortunately Tesla does not allow you to buy at Lease end.
You have the purchase amount set to 72 months on Tesla’s website for the purchase. Why are you multiplying the payments by 36?
To compare the 36 month cost, and then look at the remaining balance at that time. That's how you figure out if the remaining balance after 3 years puts you ahead or behind.
How does the sales tax factor into this equation?
States all have different rules so no one perfect answer. But where I live, you pay sales tax on the lease payment every month instead of paying tax on the whole car
He should have compared a span of 6 years. One side is leasing 2 times with 3 years each lease vs the other side is paying a 6 year loan plus the value of the car after 6 years.
But I discounted the loan (6 year) option to compare cost over that time and having nothing vs owing the other half plus the value of the car at that point
It's like apartment vs a home without the appreciation 😭
Good analogy
Excellent presentation for pro and con of lease vs buy.
Cheers
It’s better to lease if you own a business and if you don’t get the tax credit. I leased because it’s a 100 percent tax write off and we got the rebate. I feel the value of the vehicle will decrease as the sticker costs will decrease with higher production.
Indeed
Good Job!
Cheers
You don’t, “have nothing to show for it.” You have roughly $22000 that you didn’t loose to depreciation plus the excess $$ that you didn’t spend on the higher monthly payment. I would never finance any electric car. Out of all vehicle they have the least chance of holding value.
Great video. Personally never thought smart to lease, this confirms. Thanks.
Cheers
Central FL here too
Cheers
Great info.
Glad it was helpful!