# Tempted, but wary...



## JasonF (Oct 26, 2018)

I've never looked at the lease options on the Tesla web site before tonight. Once I did, it raised an interesting question...

I have a mid-2018 RWD long-range model with almost dead-on 10,000 miles, no AP, no FSD. The KBB Blue Book value of it is apparently $44-$46k (that sounds high, but whatever).

The lease payment for a new dual-motor model with the same options (except AP is now included) is significantly less than I'm paying now, for "more car" (dual motor, standard AP). If the trade-in is higher than I'm expecting (not based on the KBB value, around or just under $40k) the difference in payment could be much bigger.

I have always been someone who finishes paying off a car completely before buying another one, and hope that the trade-in value is enough to make the _next_ monthly payment reasonable. But this time around, I'm one of those people doing what @TrevP refers to as the "Tesla stretch". So a lower payment is very tempting. But it also feels like it's too good to be true. Like I'm missing something that would make such a transition much more costly than I expect, or maybe make it impossible. The fact that Tesla's ordering is entirely through an inflexible web site makes the complexity of it even more intimidating. That's the "wary" part in the subject line.

So for those of you more math-inclined than I am...what am I missing? Or am I second-guessing this for no reason, and it really is a good way to reduce the payment?

Also, as a side question the web site doesn't answer - does the lease come with a buyout provision at the end?


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## FRC (Aug 4, 2018)

Don't overlook...how long do you have to continue your current payments vs. total payments on a new contract. And, what do you own at the end of your current contract vs. a new contract?


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## Collier007 (Dec 26, 2018)

Have you checked with Tesla to see what they would actually give you for a trade in?


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## Gordon87 (Mar 5, 2019)

I don’t know whether you should do this, but it has been reported that Tesla leases for the Model 3 do NOT include a lease-end purchase option. Tesla envisions taking back all the leased cars for its autonomy service. (I’m not commenting on whether or not that expectation will actually come about.)


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## MelindaV (Apr 2, 2016)

remember though, you don't get anything in the end from a lease, except the temporary use of the car. compared to owning the car in the end when you buy.


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## NR4P (Jul 14, 2018)

“Please note, customers who choose leasing over owning will not have the option to purchase their car at the end of the lease, because with full autonomy coming in the future via an over-the-air software update, we plan to use those vehicles in the Tesla ride-hailing network.” – Tesla


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## Bigriver (Jan 26, 2018)

Yeah, as said above, the thing you are missing is that you then own nothing at the end of the lease. So you lose whatever down payment you put on your current car and it blows your whole scheme of having a trade in to soften the payments on the next car. At a minimum, you’d need to be stashing away the delta on the 2 car payments to have some down payment for the next car.

And if you got a new model 3, it would make noise at low speed. First new feature that has made me glad that I already purchased. 😁


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## shareef777 (Mar 10, 2019)

JasonF said:


> I've never looked at the lease options on the Tesla web site before tonight. Once I did, it raised an interesting question...
> 
> I have a mid-2018 RWD long-range model with almost dead-on 10,000 miles, no AP, no FSD. The KBB Blue Book value of it is apparently $44-$46k (that sounds high, but whatever).
> 
> ...


You'd have to sell privately to get anywhere near $40k (no chance if you trade in). A new 2019 AWD goes for $46k after the federal incentive. Contrary to what Elon states we all lose value, especially when they continue to drop the price of new units.


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## JasonF (Oct 26, 2018)

FRC said:


> Don't overlook...how long do you have to continue your current payments vs. total payments on a new contract. And, what do you own at the end of your current contract vs. a new contract?


Right now I have it financed, it has around 4.5 years left. At the end of _that_, I would own the car, but the value of it would be unknown right now. At the end of a lease, of course, it's worth zero.



Collier007 said:


> Have you checked with Tesla to see what they would actually give you for a trade in?


That's where the web site comes up a little short. I didn't see any way to find out the trade-in value without putting down a deposit first.



MelindaV said:


> remember though, you don't get anything in the end from a lease, except the temporary use of the car. compared to owning the car in the end when you buy.


That's part of what gives me pause. I wish I knew the future here though, because Elon Musk indicated once that cars would become too expensive for most people to purchase soon. I assume he means they would _all_ be leases soon (because contrary to what GM says, it would be stupid for car companies to make cars that they would own, and sell rides to people), and then I don't know if previous purchased cars would be worth more or less.


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## JasonF (Oct 26, 2018)

shareef777 said:


> You'd have to sell privately to get anywhere near $40k (no chance if you trade in). A new 2019 AWD goes for $46k after the federal incentive. Contrary to what Elon states we all lose value, especially when they continue to drop the price of new units.


That wouldn't be worth it to me, if Tesla lowballs the trade-in. I have the car financed, and if the trade-in value is too close to the amount that's left to pay, the transactional costs will make me lose too much to be worth it.


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## jmaddr (Apr 10, 2019)

JasonF said:


> I didn't see any way to find out the trade-in value without putting down a deposit first


http://www.tesla.com/tradein


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## garsh (Apr 4, 2016)

JasonF said:


> That's where the web site comes up a little short. I didn't see any way to find out the trade-in value without putting down a deposit first.


Unlike dealerships, Tesla isn't in the used-car business. They will generally only offer wholesale prices for your trade-in. I'd be extremely (and pleasantly) surprised if they offered you KBB money.

As @shareef777 says, you'll probably need to sell the car yourself privately to get that kind of return.


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## TrevP (Oct 20, 2015)

Tesla trade-in values are extremely low, my contacts there pretty much told me straight out they don't want to be in the used car business because it's a liability on their books when they're trying to cut costs to be profitable.

Sell it privately. Sure it's a hassle but you'll get more.


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## iChris93 (Feb 3, 2017)

Something else to keep in mind with leases is the mileage agreement. I would be crushed by overage charges.


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## TrevP (Oct 20, 2015)

iChris93 said:


> Something else to keep in mind with leases is the mileage agreement. I would be crushed by overage charges.


Been there, done that. Never again


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## shareef777 (Mar 10, 2019)

TrevP said:


> Been there, done that. Never again


Agreed, I've been buying new cars for almost two decades and usually trade in after 3 years. My last trade in (for my 3) was only a year old. Even with all that said, I'm always ahead when compared to going with a lease. I'm never over the mileage limit, but you lose so much residual value on a lease that buying/financing, and then selling yourself is always more cost effective. IMO, leases are for those that want convenience and a new car every few years, regardless of cost penalities.


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## MelindaV (Apr 2, 2016)

Leases only (financially) make sense for businesses that can write them off. Individuals that lease nearly always come out way upside down compared to buying. Exception may be the car manufacturer throw away lease deals, like when Fiat was offering the e500 for something like $90/month for 36 months. That you could hardly turn down if you needed a car or not , but most other lease “deals” are not so much of a deal at all.


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## JasonF (Oct 26, 2018)

jmaddr said:


> http://www.tesla.com/tradein


That form doesn't have Tesla on the list. Kind of funny, really. It also says it's KBB based.



garsh said:


> I'd be extremely (and pleasantly) surprised if they offered you KBB money.


I always take KBB's amounts with a huge grain of salt. And that's even AFTER I purposely don't give it the best chances of a high number - I select "Trade In Value" and then the condition just below Excellent (because that generally means it's never been driven or outside).



MelindaV said:


> Leases only (financially) make sense for businesses that can write them off. Individuals that lease nearly always come out way upside down compared to buying.


That's one of the things that makes me wary - that 3 years from now I'll pay for it big time. I might not have as good a down payment, or the price of the car might be higher, or the lease or purchase interest rate might be higher, so my _next_ monthly payment might be much higher. I might get a lower payment for 3 years, but only by robbing Future Self to do it. With a financed car I'd probably keep it longer after it's paid off, but then it might lose so much value that it's not much of a down payment either (especially with possible advances in battery tech in 6-8 years). Either way it's a gamble - I'm weighing which side of the gamble is safest.


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## MelindaV (Apr 2, 2016)

JasonF said:


> That's one of the things that makes me wary - that 3 years from now I'll pay for it big time. I might not have as good a down payment, or the price of the car might be higher, or the lease or purchase interest rate might be higher, so my _next_ monthly payment might be much higher. I might get a lower payment for 3 years, but only by robbing Future Self to do it. With a financed car I'd probably keep it longer after it's paid off, but then it might lose so much value that it's not much of a down payment either (especially with possible advances in battery tech in 6-8 years). Either way it's a gamble - I'm weighing which side of the gamble is safest.


but with owning the purchased car, you at least OWN it regardless of what it's end value is. with the leased car you own ZERO at the end and you are back to square one. do the math over something like 10 years and see how it works out. you are much better to buy. always.
there is an old thread here from 2016 with calculations comparing two scenerios (before a Model 3 lease was an option and we all were just speculating), but you can see the leasing is essentially just a perpetual payment with no value to it besides the use of the car for that moment.


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## shareef777 (Mar 10, 2019)

MelindaV said:


> but with owning the purchased car, you at least OWN it regardless of what it's end value is. with the leased car you own ZERO at the end and you are back to square one. do the math over something like 10 years and see how it works out. you are much better to buy. always.
> there is an old thread here from 2016 with calculations comparing two scenerios (before a Model 3 lease was an option and we all were just speculating), but you can see the leasing is essentially just a perpetual payment with no value to it besides the use of the car for that moment.


Exactly. With a lease, you have absolutely nothing to show for it after 3 years. Whereas with a financed vehicle, the slightly high payment will give you a vehicle that should still be worth more than you owe. Odds are the slightly higher payments made over those 3 years are more than offset by the value of the car.

For example, you can lease a car for $100 cheaper per month. After 3 years you saved $3600, and then repeat another lease for 3 more years for a total savings of $7200. If you'd bought the vehicle from the start, after 6 years you'd have a paid off vehicle that'll likely still be worth well over $15k (double your lease savings). The only con to this is that you'd be driving a 6 year old car. Though with the lease, you'd have no car at all after 6 years.


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## shareef777 (Mar 10, 2019)

@Jason F I forgot to mention, when I traded in my Honda for my 3, the SC stated that they'd offer me whatever KBB offered for trade-in "very good" value. That was really low for my Honda so I had them match CarMax. Give it a shot, if that's still their policy you can make out really well. Though I wouldn't be surprised if they come back and state that it doesn't apply to their own cars seeing how they're being over-valued at KBB.

BTW, I priced out a 2018 LR RWD and KBB put its value at $37-$40k. I can see the lower end being offered.


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## Mr. Spacely (Feb 28, 2019)

Maybe I was just lucky, but Tesla actually offered me more than CarMax on my 6 year old Infiniti G-37. Either way, do not lease a car. Even if you insist on a new car every couple years and you drive less than 12,000 miles it normally comes out better to buy...


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## slacker775 (May 30, 2018)

Is insurance higher or lower on a lease or perhaps about the same? I’ve never leased myself and have never seen a benefit to it short of the business write-off scenario.

Tho like Mr Spacely, when I traded in my 2014 Sonata last year, I got a better price from Tesla than Carmax. Likely part of their 3Q delivery push last year, but I’m not complaining!


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## Needsdecaf (Dec 27, 2018)

FYI, my LRAWD Model 3 has 19's, EAP and the Black / White interior. It has 20,000 miles and is a late 2018 build. Tesla just offered me $40k in trade, or roughly $22k less than the MSRP back in December of last year. 

(for those of you curious, I got one of those "available inventory in your area" emails and wanted to see what it would take to upgrade to an M3P. Answer: too much).


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