Is Leasing that great of a deal?

[ChargedUp]

Sorry, this is a very basic question.

I'm looking for a 2015 Class-B ED with Premium and Multimedia packages (MSRP a bit over $49K) in SF Bay Area. I have been to a few dealers and every time the sales staff brings up leasing and suggests that leasing is a no-brainer for the EV. Even before any price negotiations. That, of course, makes me suspicions.

I have never leased before, and I'm able to pay cash (but would then no longer have that money invested). Probably will drive about 10K miles/year, don't have a garage, wife spills coffee, messy kids, etc.

Can anyone provide some guidance on determining when a lease makes more sense than purchasing, and how to factor in Fed and State credits and taxes? Does The B-Class being an EV factor in to the equation?

 

[AznFamilyBEV]

Sorry, this is a very basic question.

I'm looking for a 2015 Class-B ED with Premium and Multimedia packages (MSRP a bit over $49K) in SF Bay Area. I have been to a few dealers and every time the sales staff brings up leasing and suggests that leasing is a no-brainer for the EV. Even before any price negotiations. That, of course, makes me suspicions.

I have never leased before, and I'm able to pay cash (but would then no longer have that money invested). Probably will drive about 10K miles/year, don't have a garage, wife spills coffee, messy kids, etc.

Can anyone provide some guidance on determining when a lease makes more sense than purchasing, and how to factor in Fed and State credits and taxes? Does The B-Class being an EV factor in to the equation?

I usually buy my car if I plan to drive for a long time...
For an expensive car, I would sometime lease...
For EV, it's another story after some careful thinking...

Why I leased:
1. Good selling price - decent discount
2. Decent residual value
3. Want to try out the car before I purchase (small amount to pay)
4. lease rate is low - < 1% apr for me
5. battery technology is always advancing
6. For a lease: (selling price - residual value) <- this is the portion I pay tax on. If I don't like the car, I'm not losing all the tax paid.
7. If I do a quick calculation, leasing vs buying, I am probably pay just a few hundred more to try out the car compared to straight purchase.
8. Hopefully battery improve by a lot and get higher range/cheaper... I would buy the car and swap the battery if needed
9. don't need to worry about warranty
10. from a financial standpoint, unless keeping the car for a long time or some special vehicle (NSX, S2000)...
it is mostly a depreciating asset (regardless how much love I have for the car)

I am sure others must have better reasons than me.

 

[JeffRay]

Leasing is a no brainer because of the upfront Fed and CA incentives are amortized over three years. That is if you only look at financial aspects, i.e. do it again in three years. Plus dealers love repeat customers (your suspicion).

I leased because as generation one, I expect in three years, the range will be better so why be stuck selling an inferior electric. The residual value assumption in the lease is also good in my opinion.

Up to you. I normally keep for 10+ years but this time, the two above factors drove me to lease for the first time ever.

 

[Stretch2727]

I agree with AznFamily and will just put emphasis on a few key points.

-The advancing battery technology and declining prices on BEV's. In a few years there will likely be 3-4 cars out there with 200 mile range at prices in the same range as the MB or they will be a lot cheaper. This will further erode the residuals on the current cars. I leased Ford Focus Electric in early 2013 for 2 years and the residual was about $22k. I got a good deal at $199 per month. In the time I had the car they dropped the MSRP by $10K. At the end of the lease, I could actually buy a new one (including the fed tax credit) for the same price as the residual on my used car. If I had bought it new I would have lost another $6-7K. I recently saw my car for sale at a dealer for $16K. This was retail so the real residual value was somewhere below this.

-The lease financing is almost zero. It would be better to put you money away somewhere else, and not have it sitting in the car.

With the above, why would you take the risk buying? In 3 years if you want the car you can buy it at the residual price. If gas prices go to $8 a gallon it may be worth it. With the lease you put all the risk for the resale value on the manufacturer. If it is good you can buy the car at that point, if it is not so good, you turn it back in.

With Electric cars still in their early stages of innovation and the resale values not very clear, this is the key point to lease the car.

 

[zony]

+1 to all who have replied...
Z

 

[pavan]

I thought leasing was a no-brainer because in three years, battery-electric vehicles will be on the market that will do twice the range for the same price. So your 2015 EV will be worth a lot less in 2018 than a gas car that sold at the same MSRP in 2015. When $50k cars are capable of 200+ miles, I will likely want to upgrade so I can eliminate range anxiety. And I can't imagine getting a good resale price for my 2015 EV at that time. Why would anyone pay a good price for a 2015 EV in 2018, when mid-market or entry-level EVs offer twice the range?