Tesla Finance: Production X Leasing Details & Top-Tier US Bank Financing Rates

engle · Oct 24, 2015

During "Alpha Release" :redface: of the Tesla Leasing and Tesla Lending "Apply online" links on Friday, I called Tesla Finance to inquire about the leasing money factor and residuals, and the top-tier financing rates for various terms. They appear to be the same/similar to Model S. Here they are. Note this was as of 10/23/2015. I repeated them back for confirmation and told the rep I'm going to share it on TMC. However, I take no responsibility for accuracy and you should definitely call Tesla Finance yourself at 1-650-681-6789 for confirmation when you configure your X.

The minimum down payment is 10%, and of course the $5K reservation is applied towards that.

Tesla Leasing

36 month lease with a 0.0016 Money Factor (MF) * 2,400 = 3.8%

Residual Values:

60% for 10K miles/year
59% for 12K miles/year
58% for 15K miles/year

The rep. said the X lease agreement will look just like the one used for the S. See at the end of this post for a sample Model S Motor Vehicle Lease Agreement - Closed-End - California.

Tesla Financing

I just asked about the financing rates for top-tier credit since I know I have 850 FICO. (I forgot to ask the minimum score for top-tier.) The rep. said the best rate for top-tier through them would be a loan funded by U.S. Bank at these rates:

36 months: 1.95%
48 months: 2.05%
60 months: 2.15%
72 months: 2.65%

The other financial institutions Tesla Finance LLC works with are: Wells Fargo, JPMorgan Chase, and TD (Ameritrade) Auto Finance.

I asked whether there is a Guaranteed Buyback Program offered for Model X. They said yes, and it works like this:

The customer can return your financed or owned vehicle to Tesla anytime between months 36 and 39. The customer will receive 50% of the original base price, and 42% of all the original cost of options (they depreciate more) on their vehicle. From my recollection, this works the same way as Model S?

I recall there are lower financing rates available from 3rd parties, but then you forgo the X Guaranteed Buyback Program. Based on the lease residual range of 58-60%, however, IMHO our X'es will most likely be worth more then a blended value of 50%/42% at the end of 36 months - so it's probably a moot point.

If anyone hears anything different or notices a typo, please post it. If it's confirmed by a second Tesla Finance rep, then I'll update these figures.

Tesla US Bank CA Sample Lease Agreement.jpg

Jeva · Oct 24, 2015

engle said:
The minimum down payment is 10%, and of course the $5K reservation is applied towards that.

Is that for financing, leasing or both? Usually, a down payment is not required on a lease and is actually not recommended because you lose that money in the event something happens to the car early on.

Also, where does the $7500 tax credit come into play in the above form?

aesculus · Oct 24, 2015

engle said:
Based on the lease residual range of 58-60%, however, IMHO our X'es will most likely be worth more then a blended value of 50%/42% at the end of 36 months - so it's probably a moot point.

Could you elaborate on this comment? I think I missed the point you were trying to make unless you felt we could do better on the open market than 50%/42% because the lease residual was higher.

patrick40363 · Oct 24, 2015

credit is usually applied to the residual value which lowers the monthly payment.

Jeva said:
Is that for financing, leasing or both? Usually, a down payment is not required on a lease and is actually not recommended because you lose that money in the event something happens to the car early on.

Also, where does the $7500 tax credit come into play in the above form?

kf93 · Oct 24, 2015

in leasing, the tax credit is claimed by the leasing company not the leasee. It lowers the overall tax payments but you don't get it back. That's one major difference between the purchase and lease options.

MsElectric · Oct 24, 2015

Thanks for sharing the details! I see you are putting down $32,550. Have you considered what would happen in the unlikely and unfortunate event that the car is totaled?

I realized there is gap insurance but gap insurance covers the leasing company in making up the difference if the insurance payout is less than the value of the car. In your case, with that $32,550 plus the insurance pay out, the leasing company will most likely end up with more funds than the value of the car. Those funds should be returned back to you but will it work out that way?

For example, let's say that 4 months after you acquire the car, the car is totaled. The insurance company writes out a check to your leasing company for $120,000 for a car that is worth $130,000 so in this case the lease company will have your $32,550 plus the insurance company's $120,000. They clearly will end up with more money than they put in because you made such a big Cap. Cost Reduction. Will you get that difference back or can the lease company just keep it?

timf · Oct 24, 2015

MsElectric said:
Thanks for sharing the details! I see you are putting down $32,550. Have you considered what would happen in the unlikely and unfortunate event that the car is totaled?

I realized there is gap insurance but gap insurance covers the leasing company in making up the difference if the insurance payout is less than the value of the car. In your case, with that $32,550 plus the insurance pay out, the leasing company will most likely end up with more funds than the value of the car. Those funds should be returned back to you but will it work out that way?

For example, let's say that 4 months after you acquire the car, the car is totaled. The insurance company writes out a check to your leasing company for $120,000 for a car that is worth $130,000 so in this case the lease company will have your $32,550 plus the insurance company's $120,000. They clearly will end up with more money than they put in because you made such a big Cap. Cost Reduction. Will you get that difference back or can the lease company just keep it?

All good points to consider, but this is a sample agreement and not what the OP is signing up for.

Frankly, I don't see the benefit in leasing from Tesla if the only way to get the payment under $1,000/mo is by putting a large amount down. You are better off using that down payment towards an outright purchase and claiming the tax credit yourself, having a monthly payment that's virtually the same, and having the flexibility to sell whenever you want for the prevailing market value.

ptsagcy · Oct 24, 2015

As has been thoroughly discussed in other threads, it makes absolutely no sense to put a large down payment on a lease since in the event of a total loss you lose that down payment. It has also been discussed that the $7,500 tax credit does come back to you since they appear to be adding it into the residual, which lowers the monthly payment. The examples that were shown appear to prove that almost the entire $7,500 comes back to the lessee over the term of the lease.

Alec · Oct 26, 2015

Anyone interested in providing a relatively dummy-proof breakdown of leasing vs financing pros and cons? Or directing me to something like that elsewhere? I think a lot of the posters on this thread are more familiar with the technicalities and trade-offs than I am. Never leased a car in the past and not sure how to think about residual values, IRs etc.

I have a three year planning horizon on this purchase for various reasons, so a lease is a viable option, but I'm not averse to owning/financing either...

ptsagcy · Oct 26, 2015

Alec said:
Anyone interested in providing a relatively dummy-proof breakdown of leasing vs financing pros and cons? Or directing me to something like that elsewhere? I think a lot of the posters on this thread are more familiar with the technicalities and trade-offs than I am. Never leased a car in the past and not sure how to think about residual values, IRs etc.

I have a three year planning horizon on this purchase for various reasons, so a lease is a viable option, but I'm not averse to owning/financing either...

LEASING ADVANTAGES:
Lower monthly payments
Better tax write-offs (if applicable)
Tesla's 3 month bail-out if unhappy
Protection against unexpectedly high depreciation
Ease of getting out after 3 years
Easier to get into a new car after 3 years to take advantage of enhancements (more range, autopilot improvements, new technology)

OWNERSHIP/LOAN ADVANTAGES

Ownership of the car at the end of the loan
Flexibility of longer term ownership
Ability to reduce the payments with a larger down payment
Possibly slightly lower cost to own if you keep the car many years
Tesla's minimum resale value guarantee if you finance with Tesla
Getting the $7,500 tax credit up front instead of over the term of the lease.
No mileage restrictions

If you're planning on getting rid of the car after 3 years, and not putting a lot of mileage on it, I think leasing is the simpler and better way to go. If, as stated above, the residual on the lease is around 60% it will probably be less expensive to lease. The reason I say this is the market value of the car after 3 years is likely to be less than that 60% figure. Leasing, simply explained, is financing the difference between the original cost of the car and the residual value. Therefore you are "financing" a lower value under the lease. Run the numbers by comparing the total cost of the lease over the 3 years (including down payments and fees); compared to: (the sum of the monthly loan payments, including fees) - minus (the realistic price you can get by selling the car at the end of 3 years). If your loan term is more than 3 years you also have to add in the cost, with penalties, to pay off the balance due on the loan.

Hope this helps. I'm sure I missed some points so everyone feel free to jump in.

jsm · Oct 26, 2015

For buying, you can get 1.49% from a bunch of places. I went through Logix Credit Union (Logix - Home) for my MS, there is also Penfed, which I think is national.

primetime · Oct 27, 2015

I just got my financing approved but I was confused because they approve it as a percentage of the whole sales price (142,000) instead of the difference (142,000-40,000 Sig Deposit-whatever trade in/downpayment you have).

So I still don't have a handle of the details of my monthly payment, though I understand it'll be less. Has anyone else found this to be true for them? Thanks for your help.

Gwgan · Oct 27, 2015

jsm said:
For buying, you can get 1.49% from a bunch of places. I went through Logix Credit Union (Logix - Home) for my MS, there is also Penfed, which I think is national.

Logix’s small print says "Logix finances vehicles purchased through franchised dealerships only”. Not really then.

brandeeno · Oct 27, 2015

Can the finance be paid off early? Say a year down the line, I am tired of the monthly obligation and just want to pay off for piece of mind. And if I am paying it off, which amount am I paying... the total extra money they would have received over the life of the loan, or just whats left on the car? Pardon the newbie lingo and questions, I have never borrowed money before and this concept is confusing to me.

Jeva · Oct 27, 2015

ptsagcy said:
LEASING ADVANTAGES:
Lower monthly payments
Better tax write-offs (if applicable)
Tesla's 3 month bail-out if unhappy
Protection against unexpectedly high depreciation This could be a biggie. If there are advances in battery technology (the landscape is rapidly changing), the value could plummet.
Ease of getting out after 3 years
Easier to get into a new car after 3 years to take advantage of enhancements (more range, autopilot improvements, new technology)

See comment in red

Sokar · Oct 27, 2015

brandeeno said:
Can the finance be paid off early? Say a year down the line, I am tired of the monthly obligation and just want to pay off for piece of mind. And if I am paying it off, which amount am I paying... the total extra money they would have received over the life of the loan, or just whats left on the car? Pardon the newbie lingo and questions, I have never borrowed money before and this concept is confusing to me.

Depends on the bank and the terms of your loan, but how it works most of the time is that you can request a "Payoff Quote" from the bank. Most banks have the ability to do so on their website. This will give you the total you owe (Principal + Interest that has accrued since last payment) plus a date of when this quote is valid until. Just payoff that amount by the date provided with your bank and you'll be paid off. Doing this also allows you to save on interest that would of been charged to you each month.

-Sokar-

- - - Updated - - -

brandeeno said:
Can the finance be paid off early? Say a year down the line, I am tired of the monthly obligation and just want to pay off for piece of mind. And if I am paying it off, which amount am I paying... the total extra money they would have received over the life of the loan, or just whats left on the car? Pardon the newbie lingo and questions, I have never borrowed money before and this concept is confusing to me.

Depends on the bank and the terms of your loan, but how it works most of the time is that you can request a "Payoff Quote" from the bank. Most banks have the ability to do so on their website. This will give you the total you owe (Principal + Interest that has accrued since last payment) plus a date of when this quote is valid until. Just payoff that amount by the date provided with your bank and you'll be paid off. Doing this also allows you to save on interest that would of been charged to you each month.

-Sokar-

ronmerkord · Oct 27, 2015

Yes, the loans through Tesla Financing can be paid off early. However, as per their email today,

"About the Resale Value Guarantee- Financing with Tesla’s lending partners qualifies for the Resale Value Guarantee. I’ve attached a sample of the program for your review. Please note, there is no financial penalty for early payoff, but payoff prior to 36 months will void the Resale Value Guarantee."

Also, for those interested, my Tesla financing was through Chase, with the following interest rate options:

MAXIMUM TERM MONTHS	48	60	72
CONTRACT RATE	1.74%	2.09%	2.14%

I think these are pretty good rates, especially since they come with the buyback guarantee, just in case the EV market radically changes in the next three years.

Ron
SigX VIN 484

aesculus · Oct 27, 2015

ronmerkord said:
Yes, the loans through Tesla Financing can be paid off early. However, as per their email today,

"About the Resale Value Guarantee- Financing with Tesla’s lending partners qualifies for the Resale Value Guarantee. I’ve attached a sample of the program for your review. Please note, there is no financial penalty for early payoff, but payoff prior to 36 months will void the Resale Value Guarantee."

Boy. What a buzz kill you are :smile:

But if the interest rate is low enough, it might be moot anyway. I really am worried that the value might plummet within the first three years with some significant enhancements coming in a updated vehicle.

brandeeno · Oct 28, 2015

I probably shouldn't be spending so much on a car (I am a Honda kind of guy). But I do have a reservation for the model X with 85% intention of proceeding in 6 months (depends on wife, stocks and my DIY job on the basement

). With that said, if I do get the X, I plan to hold on to it for 10+ years to maximize my value.

Gwgan · Oct 28, 2015

I have leased when I new I only wanted the car for a few years and did not want to part with cash for a large deposit but purchased new when I planned to keep the car for 100k miles and could pay down the financed portion. With the MX I've already paid a significant deposit and plan to keep the car for many years; I'll get my shiny fix with the addition of the M3 to the garage.

When looking for loans I did find the best terms at Logix but they ... only offer loans in AZ, CA, DC, MA, MD, ME, NH, NV, and VA.

Edit: what I wrote about having an initial NJ title for a ME car was not true. My car will be “sold” by the NJ store and have temporary NJ plates but “The Manufacture's Certificate of Origin...and the Bill of Sale will both have (my) ME address listed for registration...(and)...be sent to (my) home within 14 days of delivery. “. Sorry for spreading the confusion.

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