R2 for a leasing noob

[Wefty]

We currently have an R1T and Tesla M3. My wife and I are both excited about the R2 but the car we really want is the R3X. Our plan has been to sell the M3 and lease an R2 while we wait. I know next to nothing about leasing a car. Does this make sense?


FWIW - We got our R1T in June of '22 and live very close to the Chicago service center. Based on the newly live Configurator I think we will be OK with a Performance in Esker Silver or Launch Green. I'm guessing we may come up fairly early in the R2 cue.

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[MaskedRacerX]

We currently have an R1T and Tesla M3. My wife and I are both excited about the R2 but the car we really want is the R3X. Our plan has been to sell the M3 and lease an R2 while we wait. I know next to nothing about leasing a car. Does this make sense?

Leasing can be a great option there's sort of two requirements up front I ask people who are considering a lease:

1) Are your miles driven lower-ish, like in the 10-12K/year and preditcable?
2) Are your plans for short-er term ownership (like 24-36 months)

You've already answered #2 If #1 is yes, you're probably a good candidate for a lease.

Rivian leases have never been spectacular, even the ones with a decent monthly have a lot of money down up front. I've leased a lot of vehicles and one of my rules has been as little as possible up front and I've managed to achieve 0$ a few times.

Taxes: some states like Texas tax the entire amount of the vehicle which is non trivial impact to lease cost, here in FL is just the monthly payment that's taxed.

I mean there's really nothing to it you review the documents supply the required prepayment sine off start making payments. There are minimum insurance requirements but we greatly exceed those so it's never been an issue for us.

If you wait till full duration you basically return it hand over the keys done They might do a review and determine if there's any additional wear and tear that's not considered part of the lease, I've personally also never paid any additional wear and tear.

If you exit a lease sooner say 60 days before it reaches maturity, They not only want the balance of payments looking at the current market value and require you to pay the difference versus the originally agreed to value at the end of the lease which is called a residual.

A lease payment - and I realize for folks that know this really well this is pretty big simplification - but they look at what they expect the vehicle to be worth at the end of the lease duration. So you lease one for 36 months, they say "OK what is this worth in 36 months?" then they subtract that from the purchase price so that is what you're paying for - it's basically you covering the depreciation, plus interest (called money factor on leases) on that money, plus tax.

So it doesn't matter if the market suddenly plummets on a particular vehicle, if the residual (that agreed to value) at the end of 36 months was $35,000 and you can buy the them all day for $25,000 that's their problem

So what you want is vehicles with a nice residual at the end because there's less depreciation which reduces the cost of the payment. You also don't pay full price for a vehicle you can negotiate the purchase price on a lease like you can any other Purchase mechanism and then you also want a low money factor - All of those contribute to the lease payment price.

 

[ribuck97]

Sort of have to laugh... Wants a future model, rents a temporary replacement.

Lease of a base Performance R2 at $57,990 at or around launch will probably come in around $750-850/mo before tax for a 36/10 lease based on R1S numbers. This assumes $0 cap cost reduction, a 59% residual which aligns with the R1S Dual Standard (other R1S trims are lower at 57%, 53%, and 49%) and a low APR of 2.3%.

Most likely we will not see MFR lease incentives at launch (R1S inventory has $3k). If the vehicle is as popular as it appears, expect high APR too. A 4.8% (lower than Dual Max Perf) pushes the lease to $845/mo.

All of this is using the advertised $799/mo R1S Dual standard 36/10 lease for a $76990 MSRP with $7k cap cost downpayment, published 59+% residual, and calculated 2.6% APR. The $7k is $195/mo... is rough for a lease.

My guess is the advertised lease may come to $699 for 36/10 with $5k down.

If you do get lucky enough for an early R2 reservation... enjoy it.

 

[Dark-Fx]

1) Are your miles driven lower-ish, like in the 10-12K/year and preditcable?

Don't know what Rivian will charge per mile on the R2 lease. I do know that I'm paying multiple times per mile for base miles as I will for overage miles on my R1S lease. I also know I'm doing the same thing for my Sierra EV. And, bumping either up to the next mile range was more expensive than just paying the overage. I'd expect the R2 to be closer to parity here, but probably still better off just taking the lowest and paying the potential overage.

 

[Wefty]

It should be a low mileage vehicle. The model 3 replaced our 15 year old Honda Fit. It had about 45,000 miles when I sold it.

 

[ribuck97]

Right there with you on low mileage replacement. I have 18k on my 7 year old TM3. With lifestyle changes plus family plus dog additions I want to convert the R1S/R2... but don't want payments.

 

[srkz]

You have two EVs that aren't very old, receive regular software updates to keep them fresh, and still work fine?

Just wait until the R3X comes out and then buy it, don't waste your money on FOMO impulse car buying.

 

[RivAW]

Leasing can be a great option there's sort of two requirements up front I ask people who are considering a lease:

1) Are your miles driven lower-ish, like in the 10-12K/year and preditcable?
2) Are your plans for short-er term ownership (like 24-36 months)

You've already answered #2 If #1 is yes, you're probably a good candidate for a lease.

Rivian leases have never been spectacular, even the ones with a decent monthly have a lot of money down up front. I've leased a lot of vehicles and one of my rules has been as little as possible up front and I've managed to achieve 0$ a few times.

Taxes: some states like Texas tax the entire amount of the vehicle which is non trivial impact to lease cost, here in FL is just the monthly payment that's taxed.

I mean there's really nothing to it you review the documents supply the required prepayment sine off start making payments. There are minimum insurance requirements but we greatly exceed those so it's never been an issue for us.

If you wait till full duration you basically return it hand over the keys done They might do a review and determine if there's any additional wear and tear that's not considered part of the lease, I've personally also never paid any additional wear and tear.

If you exit a lease sooner say 60 days before it reaches maturity, They not only want the balance of payments looking at the current market value and require you to pay the difference versus the originally agreed to value at the end of the lease which is called a residual.

A lease payment - and I realize for folks that know this really well this is pretty big simplification - but they look at what they expect the vehicle to be worth at the end of the lease duration. So you lease one for 36 months, they say "OK what is this worth in 36 months?" then they subtract that from the purchase price so that is what you're paying for - it's basically you covering the depreciation, plus interest (called money factor on leases) on that money, plus tax.

So it doesn't matter if the market suddenly plummets on a particular vehicle, if the residual (that agreed to value) at the end of 36 months was $35,000 and you can buy the them all day for $25,000 that's their problem

So what you want is vehicles with a nice residual at the end because there's less depreciation which reduces the cost of the payment. You also don't pay full price for a vehicle you can negotiate the purchase price on a lease like you can any other Purchase mechanism and then you also want a low money factor - All of those contribute to the lease payment price.

**EXCEPT** as applied here....you are not negotiating on a purchase price for your Rivian. The price is set by Rivian, the deprecation and money factor (APR) are set by Chase (current banking partner). The only variables are how states handle sales and excise taxes and whether Rivian incentivizes the leasing (by negotiating a lower APR or through some sort of discount or rebate).

 

[Wefty]

You have two EVs that aren't very old, receive regular software updates to keep them fresh, and still work fine?

Just wait until the R3X comes out and then buy it, don't waste your money on FOMO impulse car buying.

This is very reasonable advice. The problem is that neither of us are really into the Tesla and we share cars. I also bought the M3 used which makes this a bit less ridiculous.

 

[MaskedRacerX]

Don't know what Rivian will charge per mile on the R2 lease. I do know that I'm paying multiple times per mile for base miles as I will for overage miles on my R1S lease. I also know I'm doing the same thing for my Sierra EV. And, bumping either up to the next mile range was more expensive than just paying the overage. I'd expect the R2 to be closer to parity here, but probably still better off just taking the lowest and paying the potential overage.

We are always so far under the allocated mileage, e’ve never even had to factor that in!

We had 10,000 miles a year allocation for the BMW and at the current use rate will be somewhere between 7K and 8K miles under at 36 months.

Oh that’s another FYI for @Wefty , even though they specify a number of miles per year it’s not audited per year so to speak, it’s still just total miles over the course of the lease so other words 10,000 miles a year means 30K for the duration of a 36 month lease.

 

[DeafPug]

I wouldn't lease a vehicle starting the clock on when you have a future mandatory replacement with a vehicle that doesn't even have a stated timetable for its release.

In 2013 I purchased a Nissan Leaf with the intention of replacing it with a Tesla Model 3. At the time, the rumors were that the Model 3 would be out in 2016, which would have worked fine for a 3-year lease. My actual delivery date with a first-day reservation on the Model 3 was in 2018. If I had done a lease instead of a purchase, I would have been forced to do a second temporary vehicle lease to bridge that gap.

 

[marcellorivian]

We currently have an R1T and Tesla M3. My wife and I are both excited about the R2 but the car we really want is the R3X. Our plan has been to sell the M3 and lease an R2 while we wait. I know next to nothing about leasing a car. Does this make sense?


FWIW - We got our R1T in June of '22 and live very close to the Chicago service center. Based on the newly live Configurator I think we will be OK with a Performance in Esker Silver or Launch Green. I'm guessing we may come up fairly early in the R2 cue.

We leased are R1S and it was a great price and option. Especially if you then want to trade it in for the R3X in the future. Would agree to figure out how many miles you're expecting to drive etc. The service on the leased R1S that we have has been great.

 

[MaskedRacerX]

**EXCEPT** as applied here....you are not negotiating on a purchase price for your Rivian. The price is set by Rivian, the deprecation and money factor (APR) are set by Chase (current banking partner). The only variables are how states handle sales and excise taxes and whether Rivian incentivizes the leasing (by negotiating a lower APR or through some sort of discount or rebate).

Oh, yeah, important point, you're not going to be negiating much with a Rivian lease.

However, you can still consider if it's decent.

One good rule-of-thumb is ~1% of the MSRP as the monthly payment, as a minimum, then anything under that is better and better. Of course over that is considerered a less optimal lease, that's up to the individual, but there's a point where my financial sense kicks in and overrides my desire

Our iX is ~0.8%, our 4xe is ~0.72%

 

[atx_wapiti]

I am also a leasing noob and am more just worried about the quick pace of advancement in the EV industry as a whole. I have an announcement day R2 reservation, but I don't know if buying when there are major changes (800V Architecture, LiDAR & Autonomy Hardware, Battery Chemistry, etc.) potentially coming. The R2 could be a very different vehicle in 2 to 3 years and I would hate to regret an early VIN purchase.

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