Am I crazy for wanting to buy instead of lease?

[MontereyEV]

I will be getting an EV+ this coming weekend if all goes according to plan. Still haven't decided whether to buy or lease, but seems more people are leasing. I on the other hand am thinking of buying for several reasons. One, leasing is new to me; always buy and keep for about 10 years. Two, I can use the $7500 federal credit and $2500 state rebate. Three, my commute is only 40 miles round trip so even with 30% battery loss in the 10 years, I will be able to commute to work without a problem plus get around town. Anybody out there that has bought, please tell me if you feel that was the right choice. Those of you leasing, please tell me why I'm crazy and need to lease or if you'd buy if you were to do it again. Thanks!

 

[JejuSoul]

The short answer is lease.
Cost to buy = 25,000USD
Cost to lease then buy = 11,000 lease + 10,000 used cost = 21,000USD
You get the same car for less.

The long answer requires understanding why the value of some EVs depreciates so fast in the first 3 years.
For this I recommend looking at the sister forum http://www.mynissanleaf.com/viewtopic.php?f=23&t=19362
Now that the Nissan Leaf has set a trend it is probable that the Soul EV will follow.

 

[tractioninc]

I had never leased a vehicle before my Soul, so like you, my initial instinct was to buy. In addition to the pretty compelling financial argument posted above, it's also worth considering that mass market EVs are still a pretty new technology and each new generation of vehicles seems to offer compelling new features and enhancements. 24-36 month leases combine a lower monthly payment (than a purchase) with a specific termination point if your driving needs change or a more compelling option comes to market.

Just as an example, my wife and I purchased a car in late 2012 that I intended to keep for 10 years. This summer we found out that we have another child on the way, so we will soon need a car with room for three booster seats. If I had leased, not only would our payments have been lower over the past three years, but our lease would be ending just in time to get the new Sedona that my wife really wants now.

 

[iletric]

Buy when the tech settles at about 400-600 miles range. Then you can keep your EV for 10 years and even get a better/bigger battery for "cheap" as the prices will be down in 10 years' time to about $35 per kWh. You will be able to replace it with new 100 kWh battery for a price if new ICE tranny.

Your Soul's value will drop precipitously in 4 year's time (there's gonna be a 250-mile Soul by then) and you're paying for a car whose value is below its remaining loan. Look at the 2011 Leafs and you know the whole story. Nobody wants them. And Nissan is no help. Kia will be just the same.

Btw, plan your yearly mileage and get 15,000 mile per year if needed. That's what we did...

 

[MontereyEV]

The short answer is lease.
Cost to buy = 25,000USD
Cost to lease then buy = 11,000 lease + 10,000 used cost = 21,000USD
You get the same car for less.

The long answer requires understanding why the value of some EVs depreciates so fast in the first 3 years.
For this I recommend looking at the sister forum http://www.mynissanleaf.com/viewtopic.php?f=23&t=19362
Now that the Nissan Leaf has set a trend it is probable that the Soul EV will follow.

Thanks for your response and all the data. I definitely understand why leasing is such a good idea, plus it's hard to argue against the data you have provided if the Soul EV does follow suit.

 

[MontereyEV]

I had never leased a vehicle before my Soul, so like you, my initial instinct was to buy. In addition to the pretty compelling financial argument posted above, it's also worth considering that mass market EVs are still a pretty new technology and each new generation of vehicles seems to offer compelling new features and enhancements. 24-36 month leases combine a lower monthly payment (than a purchase) with a specific termination point if your driving needs change or a more compelling option comes to market.

Thank you for your response. Yes, I'm beginning to feel the risk of the unknown in terms of the technology and how by committing to 10 years I will not only pay more but may end up with a vehicle I do not want. Your change in family needs is a point we'll taken as I had to trade in a two year old Ford Edge for a Toyota Sienna about six years ago when my wife ended up pregnant again and we needed more space for cars seats and cargo. Never thought I'd be driving a mini van, but I'm a convert Lol. Now I spread the gospel and try convincing people to not get SUVs, but mini vans instead. When is the electric mini van coming?

 

[MontereyEV]

Buy when the tech settles at about 400-600 miles range. Then you can keep your EV for 10 years and even get a better/bigger battery for "cheap" as the prices will be down in 10 years' time to about $35 per kWh. You will be able to replace it with new 100 kWh battery for a price if new ICE tranny.

Your Soul's value will drop precipitously in 4 year's time (there's gonna be a 250-mile Soul by then) and you're paying for a car whose value is below its remaining loan. Look at the 2011 Leafs and you know the whole story. Nobody wants them. And Nissan is no help. Kia will be just the same.

Btw, plan your yearly mileage and get 15,000 mile per year if needed. That's what we did...

Thanks for your reply. Yes, I can only imagine what will be available for the Soul EV and other EVs in 3 years. I was also thinking of going with the 15K miles to be on the safe side. Do you happen to know the difference in monthly lease payment between the 12K and 15K miles?

 

[MontereyEV]

So I'm definitely leaning towards leasing now. Any thoughts whether being able to use the $7500 federal credit would sway anybody from leasing?

 

[tractioninc]

No need to worry, the Federal credit is applied to both EV sales and leases.

 

[BigEdgar]

This is the first time I've leased, so for me, there was a lot to learn. Some thoughts in case they help others:

1. This spreadsheet at My Nissan Leaf helped me understand all the components of the lease: http://www.mynissanleaf.com/viewtopic.php?t=17898
2. Speaking of the My Nissan Leaf site, there's alot of info over there on leasing the Leaf, which I found really helpful when contemplating the Soul EV.
3. I feel like I knew all of the levers that the dealers had to make money on a regular old outright purchase. But leasing introduces a whole new set of levers, knobs and dials that are available to dealers For example, Dealer 1 sent me a quote that looked good, Dealer 2's quote was better. But upon closer inspection, Dealer 2 had reduced the annual mileage allowance down from 12k to 10k which allowed him/her to bring the price down. In another example, I assumed that the Money Factor was fixed based on my credit rating, but in one of the deals that I was trying to work, the dealer met all of my asks for Purchase Price, down payment, etc; but then jacked up the MF (which I thought was fixed) to make some money.

Hope this helps, and good luck!

 

[iletric]

Do you happen to know the difference in monthly lease payment between the 12K and 15K miles?

20 cents per mile pre-paid, 25 cents post-paid (returning the car with more miles than allowed).

You save 5 cents per mile and it's spread out evenly over the payments, rather than having to pay a "fine" when you return the lease withe extra 2000 miles on it (at a cost of 500 bucks). So to answer your question, the 3000 miles difference costs $600 per year, or 50 bucks a month.

A caveat: prices may vary. Check with the finance person at the dealership (but not the salesperson - they know next to nothing).

 

[MontereyEV]

This is the first time I've leased, so for me, there was a lot to learn. Some thoughts in case they help others:

1. This spreadsheet at My Nissan Leaf helped me understand all the components of the lease: http://www.mynissanleaf.com/viewtopic.php?t=17898
2. Speaking of the My Nissan Leaf site, there's alot of info over there on leasing the Leaf, which I found really helpful when contemplating the Soul EV.
3. I feel like I knew all of the levers that the dealers had to make money on a regular old outright purchase. But leasing introduces a whole new set of levers, knobs and dials that are available to dealers For example, Dealer 1 sent me a quote that looked good, Dealer 2's quote was better. But upon closer inspection, Dealer 2 had reduced the annual mileage allowance down from 12k to 10k which allowed him/her to bring the price down. In another example, I assumed that the Money Factor was fixed based on my credit rating, but in one of the deals that I was trying to work, the dealer met all of my asks for Purchase Price, down payment, etc; but then jacked up the MF (which I thought was fixed) to make some money.

Hope this helps, and good luck!

I feel exactly the same way, that I am at a disadvantage because I have never leased. What is the Money Factor and how does it affect your monthly payment?

So did you end up with a Soul? If so, what deal did you get?

I read in another post that people were getting 12K miles with zero at signing for 36 months at about $350. So far that same deal for me has been $420 at one dealership and $450 at another. Is there a way to lower that number without putting money down?

Don't understand how the national deal for $299 with 1 $1999 due at signing gets to the $400 range by not putting the $1999 down.

 

[tractioninc]

I read in another post that people were getting 12K miles with zero at signing for 36 months at about $350. So far that same deal for me has been $420 at one dealership and $450 at another. Is there a way to lower that number without putting money down?

Don't understand how the national deal for $299 with 1 $1999 due at signing gets to the $400 range by not putting the $1999 down.

That's $299/mo after $1999 down... plus taxes and fees. For example, here in Georgia taxes on a $35,000 car are over $2,600; add in the misc fees and that figure moves past $3000. So this lease is actually more like $299/mo after $5,000 down. And if you want to pay $0 down that $5,000 gets divided across the monthly lease payments, inflating them to the $400+ rates you've been quoted.

I ended up paying about $4,000 down on my car to get a $279 monthly payment, but that will be offset soon by the $5,000 state tax rebate I qualified for by leasing a new EV.

 

[BigEdgar]

So did you end up with a Soul? If so, what deal did you get?

I posted the deal I got here: http://www.mykiasoulev.com/forum/viewtopic.php?f=3&t=319

FWIW, I had been in discussions with a few dealers over the past month and did not need to buy the car as my 20 year old ICE was still running fine. One dealer contacted me on the last day of the month saying his dealership needed to hit a number. I just stuck to my guns and after some back and forth, they agreed to my offer.

You can look up Money Factor to get a more professional understanding, but it's essentially the interest rate you pay for "renting" the vehicle over the period of the lease. In terms of "how-I-justify-leasing-a-car-over-buying", I look at the MF as insurance against the likely steep decline in the value of the vehicle over the 3 years of the lease. As another poster noted earlier, those people that paid for their Leafs outright in 2011 for $30k+ discovered that the value of the vehicle dropped so precipitously over the next 2-3 years, that they could have leased for 3 years at a cost of about $10k, and then bought a 2-year used Leaf for another $10k, essentially getting them the same car for a total outlay of $20k.

 

[MontereyEV]

I read in another post that people were getting 12K miles with zero at signing for 36 months at about $350. So far that same deal for me has been $420 at one dealership and $450 at another. Is there a way to lower that number without putting money down?

Don't understand how the national deal for $299 with 1 $1999 due at signing gets to the $400 range by not putting the $1999 down.

That's $299/mo after $1999 down... plus taxes and fees. For example, here in Georgia taxes on a $35,000 car are over $2,600; add in the misc fees and that figure moves past $3000. So this lease is actually more like $299/mo after $5,000 down. And if you want to pay $0 down that $5,000 gets divided across the monthly lease payments, inflating them to the $400+ rates you've been quoted.

I ended up paying about $4,000 down on my car to get a $279 monthly payment, but that will be offset soon by the $5,000 state tax rebate I qualified for by leasing a new EV.

Cool, got it. Thanks for explaining how I'm getting to the 400s. Cool about the $5000 tax rebate. We get half of that in CA.

 

[MontereyEV]

So did you end up with a Soul? If so, what deal did you get?

I posted the deal I got here: http://www.mykiasoulev.com/forum/viewtopic.php?f=3&t=319

FWIW, I had been in discussions with a few dealers over the past month and did not need to buy the car as my 20 year old ICE was still running fine. One dealer contacted me on the last day of the month saying his dealership needed to hit a number. I just stuck to my guns and after some back and forth, they agreed to my offer.

You can look up Money Factor to get a more professional understanding, but it's essentially the interest rate you pay for "renting" the vehicle over the period of the lease. In terms of "how-I-justify-leasing-a-car-over-buying", I look at the MF as insurance against the likely steep decline in the value of the vehicle over the 3 years of the lease. As another poster noted earlier, those people that paid for their Leafs outright in 2011 for $30k+ discovered that the value of the vehicle dropped so precipitously over the next 2-3 years, that they could have leased for 3 years at a cost of about $10k, and then bought a 2-year used Leaf for another $10k, essentially getting them the same car for a total outlay of $20k.

You got a great deal at under 35K! I'm trying to get the sun and fun package EV+ too but so far one place is not budging under msrp and the other is going 1500 under. Sent inquiry for under 2500 at a third place and going to try a fourth place for even more. We'll see. Any suggestions on negotiating to almost $4000 under msrp?

 

[BigEdgar]

If you're not in WA, getting the purchase price below $35k may not be as impactful as it is here due to the tax laws. I'm no expert on leasing by any stretch of the imagination, but here are some other thoughts:

1. Be ready to make a deal on Halloween (last day of the month). Troll the dealers for the week beforehand so they have you in their thoughts when their sales manager tells them to "make a sale, no matter what!".

2. Make sure you're looking at vehicles that have the bare minimum in terms of add-ons that will jack up the MSRP. For example, a dealer could add a bunch of stuff (protective coatings, pin striping, etc.) that add to the cost of the car and could jack up the MSRP by a few hundred, and thus make it harder for them to come down in price.

3. My initial bottom line was that I only wanted to spend $11k on a 3 year lease. You could just tell the dealer the total you want to spend on the lease, and see what levers they can pull on their side to make that work. For example, they may be highly motivated to make a sale that month, and would be willing to drop the Purchase Price as a result. Or they may be highly motivated to profit off of leases that month, and could lower the purchase price and jack up the money factor to make their money. As consumers, we never really know how dealers make their money off these sales...

4. It'll be interesting to see what Kia does in November when the 30kwh Leaf starts rolling out. That'll be some more direct competition and may encourage Kia to offer more rebates. But if the cars sell well and the supply is sufficiently low, they won't need to do that. Who knows.

 

[GenZeJohn]

Unlike most of the commenters here, I bought. Leasing an ICE is usually a bad deal for a lot of different reasons, and even if it is an EV, I don't believe in having my mileage dictated. I drive when I want, without watching the odometer to avoid excess charges.

It's a great car, and I'm the kind of guy who drives a car for 150,000+ miles anyway. From an EV-philosophy standpoint, leasing is for people who are testing the waters and aren't sure if they want to do this or not. Well, I'm in 100%. When the tech changes, maybe we'll be able to upgrade.

 

[tractioninc]

After my dad and I both leased our EVs my brother started to feel the same way--he just found a great deal on a used Leaf. We now have three EVs in the family!

 

[MontereyEV]

Thanks to everyone who took the time to comment. I ended up leasing (first time ever) the titanium gray EV+ with sun and fun package. So far love this little car and so does everyone that sees it or rides in it.