Finance vs. Lease the R2 -- the math

[cwq93r]

Yes…. Correct, one issue is the likelihood you find 60 and 84 month loans at the same interest rate is slim. Higher term loans carry more risk for the lender and thus, will carry higher rates. The end result is much higher values in interest paid In the 84.

Correct, but I input the wrong percentage rates for each loan example. With my credit union, the current interest rate for 1 to 60 months is 4.49% and 61 through 84 months is 4.62%. With reward levels you can get 0.50-1.00% off of each rate. I didn’t want get too complex in the prompt. My credit union max rewards level drops the auto loan rate to as low as 3.49% with 60 months and 3.62% with 84 months. Excellent credit score of course.

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[ribuck97]

Yes, lots of variables…

I’m just of the opinion that people should ignore the tax deduction. Make the basis for buying a vehicle and terms that fit your individual situation. The annual delta in true tax relief between the different loan types is relatively small. At least people that finance aren’t paying the 10% lease APR.

Those are some good rates. Most of those type of rewards include a huge one for “use our buying service”

 

[sparked]

Yes, lots of variables…

I’m just of the opinion that people should ignore the tax deduction. Make the basis for buying a vehicle and terms that fit your individual situation. The annual delta in true tax relief between the different loan types is relatively small. At least people that finance aren’t paying the 10% lease APR.

Those are some good rates. Most of those type of rewards include a huge one for “use our buying service”

Interest tax deduction should be ignored from the perspective of buying a new car as the benefit is too small. It's just some paperwork to be filed with your taxes to get a small amount of money. Hopefully more people figure this out.

There's also a few pages in this thread that dissect the interest tax deduction here: https://www.rivianforums.com/forum/threads/sad-but-i-think-i’m-out.60230/post-1022381

 

[Kidentist]

These numbers are crazy......buy a cheap used car. $1000 for a "lease" ? WTF.
Then again.....not my money.
FWIW my lease is $238 and I will glady keep it as long as it stays at that number, after that it makes no financial sense and I will return it.

 

[ribuck97]

Lease deals were great with tax credits, incentives, and low APRs when MFRs need to sell. Very little incentive to finance.

 

[DuoRivians]

I think most should just wait to get a used R2 in 2-3 years. Financially, that seems like the most prudent decision. These cars, like most EVs, are going to depreciate fast.

Generally, it makes sense to lease in this situation, but Chase finally seems to know this and charging a high money factor.

Financing a quickly depreciating car may make sense if one plans to drive the car for 7+ years. Anything less than that makes the payback less attractive.

But, if one waits 2-3 years to buy used, one eliminates a lot of the fast depreciation factor.

 

[ribuck97]

You are using the wrong terms. Estimated depreciation factors to the residual value at the end of the lease.

Do you really think Chase is driving the base rate? I don’t. It’s Rivian adding a much higher profit markup (similar to a dealership).

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