Lease Buyout

[Apatel323]

I'm currently in the process of confirming my vehicle for the lease that I would otherwise not qualify for the ev rebate. Once I can talk to some at finance I will share the details here as well

Thank you. That would be fantastic!

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[Golfer04]

Per the post’s title, the comparison I thought is between:

- Purchase v
- Lease and then exercise purchase option

If you exercise purchase option, there is no disposition fee, and miles don’t matter, since it’s your car ultimately anyway.

Are you sure if you buy out the lease you don't have to pay the per mile charge (if over the annual limit)? That would be unusual, but those types of leases do exist. They are called TRAC leases (or used to be when I was involved in it) and the buyout provision is to complicated to explain here. Has to do with a mutual guarantee of the residual.

Per mile charges generally run 25-40 cents. About what normal per mile depreciation is.

 

[yetti96]

so when u lease the USD 7,500 is added back to the amount of the residual?

It reduces the cap cost by $7,500. The residual is based on the MSRP(+destination).
Just helps to close the gap you have to pay for the known depreciation.

 

[djsider2]

Per the post’s title, the comparison I thought is between:

- Purchase v
- Lease and then exercise purchase option

If you exercise purchase option, there is no disposition fee, and miles don’t matter, since it’s your car ultimately anyway.

There's a "lost opportunity cost" if you purchase outright due to lost investments with that money.

If you're financing, the rates are roughly the same as the lease now.

I would still go for a lease at this point especially if it's not known whether Rivian will last in its current form or Rivian improves the vehicle by a great margin and I get to buy a new one.

 

[Eric9610]

Where are you seeing finance rate = to lease rates? Current lease rates are at 3.5% APR. I have not seen anything under 5% on purchase.

 

[djsider2]

Where are you seeing finance rate = to lease rates? Current lease rates are at 3.5% APR. I have not seen anything under 5% on purchase.

For R1S, I haven't seen it below 5% for lease. If it's lower then thats even better for the leasing front.

 

[Galve2000]

It reduces the cap cost by $7,500. The residual is based on the MSRP(+destination).
Just helps to close the gap you have to pay for the known depreciation.

sounds like the $7,500 tax credit gets added back on to the residual. No good.

 

[yetti96]

sounds like the $7,500 tax credit gets added back on to the residual. No good.

How is that no good? It lowers the sale price and the residual is based on MSRP.

 

[Galve2000]

My personal preference would be a reduction on the residual. YMMV.

 

[yetti96]

My personal preference would be a reduction on the residual. YMMV.

To get the lower lease payment you want the residual as high as possible.

 

[djsider2]

sounds like the $7,500 tax credit gets added back on to the residual. No good.

The residual should not be affected by the credit. If it is, then it's not a federal tax credit because you'll have to pay that fee later.

 

[Galve2000]

The residual should not be affected by the credit. If it is, then it's not a federal tax credit because you'll have to pay that fee later.

this is the point i'm trying to make.

listen, I get it. if u are going to walk away from the lease after 24 or 36 months, then yes.,. u want to lower monthly payment.

however, if u are considering keeping the car at the end of the lease its obviously better if the $7,500 is used to reduce the MSRP.

 

[djsider2]

The way

this is the point i'm trying to make.

listen, I get it. if u are going to walk away from the lease after 24 or 36 months, then yes.,. u want to lower monthly payment.

however, if u are considering keeping the car at the end of the lease its obviously better if the $7,500 is used to reduce the MSRP.

The cost of the lease is effectively the depreciation between purchase price and residual + interest costs for loaning the whole car. The $7,500 is being applied after all those calculations are in place.

If the 7,500 is used to calculate the residual, that's something I have not seen yet. The 7,500 is a reduction in costs after all calculations are made and the residual value is set.

 

[Galve2000]

i'm saying that the $7,500 should be used to reduce the MSRP.

currently they do not do this.

u only get the benefit of lower monthly payments and then have to walk away from the car. if u buy the car at the end of the lease, the $7,500 goes either to the bank underwriting the lease or to Rivian.

Not ideal.

 

[djsider2]

The way you're wording this is distorting the facts. They are not raising the residual so you have to pay more later. Look at the reddit post with a picture of the contract someone else got. The 7500 is included in the "adjusted capitalized cost"

If you're saying that Rivian is deliberately setting the residual higher, then the capitalized cost reduction would not include that 7500

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