New to Leasing

[Song Sparrow]

We have an appointment scheduled to pick up our DM R1S next Saturday. We typically pay cash for our cars, but this time we decided to lease the vehicle to get the tax credit and then just buy out the lease at the first opportunity. My question is when you are planning on buying out the lease early, does it matter if you go for 24 or 36 months and how much money you put down? Thanks!

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[hobbyjogger71]

Don't put any money down on a lease. It's taking on additional upfront risk to lower the monthly payment. If you were to have a total loss event before the vehicle is yours, that money would be gone forever.

 

[Joe Hoffman]

Total loss events are why we have insurance .

if you’re truly planning on buying out the lease as soon as possible, then I’m not sure it really matters how much you put down. Think of leasing is just a financing mechanism. The more you finance the more you pay, so if there’s an opportunity to put more upfront and lower your monthly payments, that’s simply financing less principle.
Did you confirm that you can buy out the lease prematurely?

 

[Kuro-Rivian]

If you plan to buyout, the term doesn't really matter. Put as little down on lease as possible....it also doesn't matter much with gap insurance and fact your buying out...but preserving options is always nice. Chase is Rivian's leasing agent, you can request a buyout price at anytime, even on day 1 of leasing.

 

[sevengroove]

Since you want to buy out your lease asap, the key factor to keep in mind is the money factor (MF) being used on your lease. You'll want the terms that have the lowest possible MF because that's the equivalent of interest on a lease. The MF is baked into your monthly payments and you will be paying for it even if you buy out your lease. So my suggestion would be to find the best combination of term and down-payment that results in the lowest MF.

 

[Song Sparrow]

Thank you everyone for the helpful advice. I have a follow-up question. I just submitted the lease application and got it approved. It looks like I have to accept the offer before it shows me a detailed breakdown of the terms. The thing that is confusing me is that the MSRP of the vehicle is 83,750, but the vehicle price on the lease offer is 85,550. Does that include fees or is that a mistake? Thanks in advance!

Edit: it's the destination fee

 

[monsterlag]

Since you want to buy out your lease asap, the key factor to keep in mind is the money factor (MF) being used on your lease. You'll want the terms that have the lowest possible MF because that's the equivalent of interest on a lease. The MF is baked into your monthly payments and you will be paying for it even if you buy out your lease. So my suggestion would be to find the best combination of term and down-payment that results in the lowest MF.

This is not how it works. You DO NOT PAY UNEARNED RENT charge on an early buyout. Early buyout is different from lease termination. It’s literally in the lease contract.

Having said that, 2023 R1Ts have 0.024% APR so it doesn’t really matter.

 

[monsterlag]

Also @Song Sparrow Rivians future is precarious at best right now and I would not purchase one without the security of a lease. You do not want to face a Fisker situation.

 

[atebit]

This is not how it works. You DO NOT PAY UNEARNED RENT charge on an early buyout. Early buyout is different from lease termination. It’s literally in the lease contract.

Having said that, 2023 R1Ts have 0.024% APR so it doesn’t really matter.

I think that actually depends on the lease language, state laws etc. I’m sure that the OP has thoroughly reviewed the lease agreement before making the decision.

 

[monsterlag]

I think that actually depends on the lease language, state laws etc. I’m sure that the OP has thoroughly reviewed the lease agreement before making the decision.

No it doesn’t. It’s clearly stated in the contract. I know what I am talking about.

 

[dlucas589]

@monsterlag is right. The lease is a financing tool. If you buyout the car early, the lease is over at that point in time and the financing tool is done. You do not keep paying interest to the lease or need to pay the remainder of the interest that would be if he kept it until lease end.

That is like walking into the bank with a check to pay off your mortgage principal 15 years early and they say sorry you owe us for the rest of the interest even though you are paying the entire principle today. Doesnt work like that

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