My Lease 70D Breakdown

smilepak · Jun 25, 2015

I've read a few thread on leasing and this being my first least, wanted to share my breakdown. I read on here many people say that US Bank adds the 7,500 to the total or at the end of vehicle. When looking at the lease, that doesn't seem to be 100% correct.

When financing a car, we pay a financing fee 0% - 3.9%. I assume when leasing the car, we do the same. Pay some form of financing fee %. That is on the leasing contract as a value, rather than indicating what % you are paying.

Base Car w/tax = 84,200
- downpayment = 5,000
===============
total = 79,200
- residual value = 51,284 (the value Tesla determine it cost after 3 years of ownership)
===============
total = 27,916
financing + 7,515 (this is the financing charge for leasing the car, I assume for me it's 3.7%)
===============
total = 35,431.72 (this is the total you will be paying for the lease
lease/mo = 36 months
===============
total 984.21 per month leasing before sales tax

My lease mileage is 15,000

That is what my lease breakdown is, hope that helps anyone who is curious what does the lease agreement look like.

So my my question is if you were to finance the car over 6 years, at 3 years mark, wouldn't the cost be similar? I think the only advantage for finance is lower interest rate, but need higher down payment to sustain low monthly fee. While leasing u have lower monthly fee, but higher interest rate.

Their GAP insurance coverage is a bit cryptic lol.

professionalr · Jun 25, 2015

What's your mileage allowance per year?

smilepak · Jun 25, 2015

professionalr said:
What's your mileage allowance per year?

15,000 per year

bjwModelS · Jun 26, 2015

smilepak said:
I think the only advantage for finance is lower interest rate, but need higher down payment to sustain low monthly fee. While leasing u have lower monthly fee, but higher interest rate.

Yeah, I think it all comes down to buyer preference. I crunched the #'s on a lease and came up with a similar monthly payment. Ultimately I decided to put 70K down in cash, finance 20K at .9% APR and I've got a nice little $425 payment for a few years. All said and done, I'll put about 90K into a vehicle worth 50K a few years down the road, losing 40K in depreciation but owning the car for 3-5 years past that. You'll put 40K towards a car, but then get a new one in 3 years and start again and get whatever new features they dream up. For me, leasing just didn't make sense, especially the payment.

aus · Jun 27, 2015

OP, not sure that that finance charge value is. The "Money factor" is the interest rate on a lease, and it's usualy 0.0XX number; hopefully it's more like 0.00X. You multiply the money factor by 2,400 to get an estimated % interest rate. The money factor for a MS lease must suck because the payments are pretty high for the MSRP compared to other luxury cars... but most other luxury manufacturers also have a finance company that can subsidize the lease in the form of a low money factor or artificially high residual. The dealer determines the sale price.

bjwModelS said:
Yeah, I think it all comes down to buyer preference. I crunched the #'s on a lease and came up with a similar monthly payment. Ultimately I decided to put 70K down in cash, finance 20K at .9% APR and I've got a nice little $425 payment for a few years. All said and done, I'll put about 90K into a vehicle worth 50K a few years down the road, losing 40K in depreciation but owning the car for 3-5 years past that. You'll put 40K towards a car, but then get a new one in 3 years and start again and get whatever new features they dream up. For me, leasing just didn't make sense, especially the payment.

That's not entirely true. He could guy the car at the $51,284 residual value and most likely be able to sell it for more than that amount since the MS seems to be holding it's value much better than the 60% calculated in the lease. If he/she sells it for $7,000 over the residual price, that's money you get to pocket. A HUGE reason many people lease is because they can write off the payment easily as a small business.
Tesla would LOVE for you to just return the car and they'll make a killing on CPO sale.
.

ahurst · Jul 5, 2015

You're actually paying 984 + 138 per month to lease because you paid $5,000 cap cost reduction.
5,000 / 36 = $138

- - - Updated - - -

ON A COMPLETELY DIFFERENT NOTE---

I'm not a CPA (standard disclaimer) but this is what I think I'll do...

I'll finance the MS in my name and then lease it to my c-corp. The lease payment to me from the corporation will be rent money and not taxable and basically make my loan payment.
Leasing assets to your corporation is a perfectly legal and advantageous way to reduce your overall tax liability.
Here is what I found on the internet (which I know can be DANGEROUS)

When you lease assets to your corporation, the business pays a lease or rental payment and you in turn claim the lease or rental income.
By doing this, you as the lessor, get to deduct items such as acquisition interest, depreciation, repairs and maintenance, insurance and administrative costs.When interest and depreciation deductions are exhausted you can then transfer the assets to a family member in a lower tax bracket or you can sell the assets to the corporation.
A sale to the corporation would give it a higher tax basis (cost) than it had in the hands of the lessor (you).
This would increase the corporation’s depreciation deductions, thereby reducing its tax liability.

If you haven’t noticed already, leasing assets to your corporation is a fabulous way to pull money out of the business instead of through payroll. When you take a paycheck, you’ve got payroll deductions to consider. Not so when you take a rent check.

MsElectric · Jul 5, 2015

smilepak said:
So my my question is if you were to finance the car over 6 years, at 3 years mark, wouldn't the cost be similar? I think the only advantage for finance is lower interest rate, but need higher down payment to sustain low monthly fee. While leasing u have lower monthly fee, but higher interest rate.

Well, for one if you had bought the car you will receive $7,500 in rebate fees and if you live in CA, MD, and some other states with EV incentives you benefit from about $10K in incentives. That $10K right there makes it more appealing to finance the purchase.

The only time think leasing makes financial sense is if you own a company and can write off the lease payments.

travwill · Jul 5, 2015

Dunno, leases don't seem to make sense in this car right now. Sales tax is pretty high, usually around 7K+ in most markets depending on state/city. But you save that with the Federal Tax Credit (if you make sure to realize it). You are then putting down a complete loss of $5K really up front it seems as well - $0 down leases are the only ones that could start to make sense. The sales tax is going to increase payment 100-200 monthly in reality and by that point you are so close to a true purchase that it doesn't make sense not to use the 5K for a downpayment on traditional purchase instead, not have limited miles, etc.

aus · Jul 5, 2015

ahurst said:
You're actually paying 984 + 138 per month to lease because you paid $5,000 cap cost reduction.
5,000 / 36 = $138

- - - Updated - - -

ON A COMPLETELY DIFFERENT NOTE---

I'm not a CPA (standard disclaimer) but this is what I think I'll do...

I'll finance the MS in my name and then lease it to my c-corp. The lease payment to me from the corporation will be rent money and not taxable and basically make my loan payment.
Leasing assets to your corporation is a perfectly legal and advantageous way to reduce your overall tax liability.
Here is what I found on the internet (which I know can be DANGEROUS)

When you lease assets to your corporation, the business pays a lease or rental payment and you in turn claim the lease or rental income.
By doing this, you as the lessor, get to deduct items such as acquisition interest, depreciation, repairs and maintenance, insurance and administrative costs.When interest and depreciation deductions are exhausted you can then transfer the assets to a family member in a lower tax bracket or you can sell the assets to the corporation.
A sale to the corporation would give it a higher tax basis (cost) than it had in the hands of the lessor (you).
This would increase the corporation’s depreciation deductions, thereby reducing its tax liability.

If you haven’t noticed already, leasing assets to your corporation is a fabulous way to pull money out of the business instead of through payroll. When you take a paycheck, you’ve got payroll deductions to consider. Not so when you take a rent check.

Guy at work does this, except he buys his cars cash, and his corp leases it from him.
.

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My Lease 70D Breakdown

smilepak

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professionalr

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smilepak

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bjwModelS

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aus

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ahurst

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MsElectric

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travwill

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aus

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