Lease to buyout within 1st month, down payment amount [CA]

[nwafvsneaf]

Hi all,

Here's some background info:

1. Our current Gen 1 R1S Dual Large was a lemon and we are getting a check from Rivian.
2. We paid full in cash when we purchased around a year ago (California).
3. Since they don't do replacements anymore, we are now shopping for a Gen 2 R1S Dual Max.
4. I did some research online and it seems like lease to buy within the 1st month saves you the most money vs. buying cash upfront (especially with the current $3000 Dual Max and $7500 lease credit deals).
5. I understand there may be more financially responsible ways to purchase vehicles, but we are set on either paying full or lease to buy.

This would be my first time leasing a car so please feel free to correct me.

From what I learned in the last couple weeks, everyone seems to be doing the following for lease to buy situations:

• 36 months
• 10,000 miles
• $0 down

Now here's the question: would it make sense to put the max amount of down payment allowed (in my case $34,000) to lower my first month payment? I understand putting money down on a lease is not advised since you lose it if you total your car, among other issues, but I'm just trying to see if it will help lower the total out of pocket cost compared to buying it full in cash upfront.

In the example below, would I be saving ~$1000 from my total out of pocket cost when buying out the lease in the first month? My reasoning is the first month payment is decreased by ~$1000 and the increase in taxes just means I'm paying more taxes now vs later with the payoff amount from Chase.

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[Ngkgb]

Are you planning to buy the lease out immediately? If so all that matters is the purchase price.

 

[nwafvsneaf]

Are you planning to buy the lease out immediately? If so all that matters is the purchase price.

Yes, we are planning to buy it out immediately within the first month, as long as the lease posts on our Chase account fast enough.

 

[Ngkgb]

Also. You had enough faith in the company to get another Rivian? I’d live to hear your thoughts about how you came to this conclusion. I’m not being an ass just genuinely curious.

 

[Ngkgb]

Yes, we are planning to buy it out immediately within the first month, as long as the lease posts on our Chase account fast enough.

Then all that matters is the purchase price.

 

[nwafvsneaf]

Also. You had enough faith in the company to get another Rivian? I’d live to hear your thoughts about how you came to this conclusion. I’m not being an ass just genuinely curious.

There were 2 main mechanical issues, 1 was fixed (not completely but I can live with it) after 4 SC visits and the other just started around December.

I liked how my local SC didn't try to minimize my issues and feelings towards the issues I had and tried their best to fix things. The buyback offer was the full amount I paid including tax minus <$1000 for mileage adjustment. Ultimately we like the car and feel that we just got a lemon.

I live 10 minutes from a SC so the way I'm looking at this situation is definitely different than someone who lives much farther away from one.

 

[Ngkgb]

There were 2 main mechanical issues, 1 was fixed (not completely but I can live with it) after 4 SC visits and the other just started around December.

I liked how my local SC didn't try to minimize my issues and feelings towards the issues I had and tried their best to fix things. The buyback offer was the full amount I paid including tax minus <$1000 for mileage adjustment. Ultimately we like the car and feel that we just got a lemon.

I live 10 minutes from a SC so the way I'm looking at this situation is definitely different than someone who lives much farther away from one.

thanks for clarifying. How many miles did you have? I’m not sure if you’re in OC, but the QC at both service centers has been very bad for me. Dropped truck off last Friday for a weird rattling and creaking from the front driver suspension and they called me yesterday and said it’s ready. I specifically as if someone test drove the vehicle and if the noises were gone and they said yes. When I got there, I test drove my truck with a technician and nothing had changed so I had to leave the truck there again I have to basically take another hour out of my day and lunch break to deal with that. It’s getting very frustrating.

 

[nwafvsneaf]

thanks for clarifying. How many miles did you have? I’m not sure if you’re in OC, but the QC at both service centers has been very bad for me. Dropped truck off last Friday for a weird rattling and creaking from the front driver suspension and they called me yesterday and said it’s ready. I specifically as if someone test drove the vehicle and if the noises were gone and they said yes. When I got there, I test drove my truck with a technician and nothing had changed so I had to leave the truck there again I have to basically take another hour out of my day and lunch break to deal with that. It’s getting very frustrating.

I had just over 10,000 miles on it. Sorry to hear about the issues. I know the drive to the SC is annoying but if the issue continues keep making appointments and ask about the buyback program if the issue is not fixed after 3-4 visits. I waited until 4 visits with the same issue to start the conversation on buybacks since you qualify for CA lemon law if they can't fix the issue after 4 attempts. Technically my situation was a buyback from Rivian without using the lemon law, although I was prepared to call a lawyer if Rivian denied my buyback request.

 

[nwafvsneaf]

Then all that matters is the purchase price.

Did you also go through the lease to buy process? I'm so new to leasing and I have to make a decision soon since the new car is arriving mid March.

 

[Ngkgb]

Did you also go through the lease to buy process? I'm so new to leasing and I have to make a decision soon since the new car is arriving mid March.

I haven’t. But I’ve leased a lot of vehicles. The bottom line is the purchase price. On leases you get taxed only on the monthly payments(in CA) so when you buy the truck out youll be responsible for a majority of the sales tax.

 

[nwafvsneaf]

Looking back at your comment history, it seems you have a narrative already set in stone in your mind about the well documented method of buying immediately after leasing. It doesn't take a lot of work to research to learn that this is saving people money (in most states) so I'm not sure where the denial is coming from. Thanks for your opinion and hope all is well.

 

[jspolly]

Hi all,

Here's some background info:

1. Our current Gen 1 R1S Dual Large was a lemon and we are getting a check from Rivian.
2. We paid full in cash when we purchased around a year ago (California).
3. Since they don't do replacements anymore, we are now shopping for a Gen 2 R1S Dual Max.
4. I did some research online and it seems like lease to buy within the 1st month saves you the most money vs. buying cash upfront (especially with the current $3000 Dual Max and $7500 lease credit deals).
5. I understand there may be more financially responsible ways to purchase vehicles, but we are set on either paying full or lease to buy.

This would be my first time leasing a car so please feel free to correct me.

From what I learned in the last couple weeks, everyone seems to be doing the following for lease to buy situations:

• 36 months
• 10,000 miles
• $0 down

Now here's the question: would it make sense to put the max amount of down payment allowed (in my case $34,000) to lower my first month payment? I understand putting money down on a lease is not advised since you lose it if you total your car, among other issues, but I'm just trying to see if it will help lower the total out of pocket cost compared to buying it full in cash upfront.

In the example below, would I be saving ~$1000 from my total out of pocket cost when buying out the lease in the first month? My reasoning is the first month payment is decreased by ~$1000 and the increase in taxes just means I'm paying more taxes now vs later with the payoff amount from Chase.

So i've gone deep on this myself as we just leased a R1T. Apologies in advance if I have detail here you already know. My reply is based on what I've learned going through the process. So, the monthly payment is depreciation + rent (interest) + tax. Tax will be a wash as you'll pay the same tax, just different timing. Depreciation is Adjusted Cap Cost (ACC) - Residual Value divided by the 36 month term. If you pay $34k down, you are reducing your ACC and thus the amount of depreciation you pay in the first month payment. Similarly, Rent is ACC + Residual Value times your money factor (implied interest rate). So again, if you reduce your ACC by $34k, you will be reducing the amount that you pay rent on. So yes, you should save money in your first month payment by paying a down payment. Since you plan to pay off the lease within the first month, you should save money with the down payment.

 

[CGriding]

I was planning on doing this too in California. I’ve seen some mix messaging here on whether the 7500 lease credit would be clawed back if you paid it off right away. Is there a certain amount of time you need to wait so that the 7500 is not clawed back?

 

[jspolly]

@CGriding - just make sure you look at the lease docs when they send to you. As long as the lease agreement hasn’t changed in the last 2 months, there shouldn’t be a clawback. There is a section in the lease that spells out what your payoff will be if you pay early. In my agreement there was no penalty and the payoff amount was what I expected.

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