Keeping a Leaf long-term: Buy@end of lease? Extend warranty?

[SaveOurPlanet]

Hello everyone. I am aware of the fact, that this is a long post, and there are a lot of questions here.

This thread is about the best strategy for keeping a Leaf long-term, when not wanting to pay it outright, and not wanting possible huge surprise repair bills down the road, while possibly also using it for a lot of miles, much more than the 15000/year typically included in a lease.

When someone wants to get a new car every 3 years, then leasing is the way to go.

Still when wanting to get a Leaf to drive it - possibly 8 years, or however long it may last - without buying it outright, the options to get it would be:
a) to lease it, then finance an end of lease purchase afterwards, or
b) to finance it from the beginning.
There would also be another option:
c) to lease it, and then after return of the leased car, finance a different, used car of the same model and age.

Option c) would have the disadvantage of not knowing the history of the used car one buys then, plus the options to extend the warranty might be limited, and in addition if one has exceeded the miles included in the lease a lot, one typically has to pay 15cents per extra mile. So say, in case one had 30,000 additional miles that one drove, that would be $4,500 extra. Also with options a) and b) the damages, and wear and tear of the car might not matter, and one might have to pay a lot for repairs when returning the leased car, especially when not leasing or buying another new vehicle at the same time.


To get the Leaf, for the lease option (for the state of California) there is an offer here on the forum.
a) 2500 drive off on all prices, 36 month leases which qualify for state rebate! 12k per year
SV WITH Quick Charge And led lights, 2500 +1st payment, 231+TAX NON VPP PRICE, 201+TAX VPP PRICE
As the $2,500 drive off cost is taken care of by the state rebate, the effective cost is $231+tax.
$231x36=$8,316 during the 3 years. Plus probably a fee of ca. $400 at the end of the lease.
Then, extra miles and damages/wear and tear would be added.

Questions:
Is it always possible to buy the leased vehicle at the end of the lease? With Nissan, does one have a right to this? Or is it completely up to NMAC/dealership, to offer anything, meaning there is no certainty, but one is dependent on them regarding this?
How much would one be able to buy the leased Leaf for after 3 years?
Is it definitely possible to finance buying the leased Leaf after 3 years, at least through a third-party bank, even if NMAC does not offer it themselves?

The other option would be to finance the Leaf:
b) An SV Leaf (without the QuickCharge option) has a MSRP of $32,000 (according to TrueCar, Nissan says $32,100).
According to TrueCar.com, one is able to get it for $29,087, plus $303 in regional fees and $850 destination fee.
So $30,241 in total (tax excluded), plus an MSRP of $1,630 for the quick charge package.
TrueCar states that $429/mo is the estimated loan payment for a 60 month loan at 2.50% APR and $6,048 due at signing (tax excluded).

So, if the purchase price of the leased Leaf after 3 years would be cheaper than the sum of $30,241+quick charge package+interest of finance minus $2,500 rebate minus whatever one can use of the $7,500 federal tax credit minus $8,316 paid for the lease during the 3 years (all excluding taxes)+finance costs for the purchase of the leased car after 3 years, then leasing+purchase would be cheaper than financing. Then option a) would be cheaper than option b).

Anything missing in this calculation?



Finally, what about keeping the Leaf for longer than its standard 3year/36,000mi warranty (5year/60,000mi on the battery/drivetrain)? What about not getting hit with expensive repairs down the road? Yes, in total electric cars possibly have less parts that can break than gasoline cars. Still it might happen. As I understood it, there is unfortunalty no way to extend the original Nissan warrenty, correct? As I understood it, all warrenty extentions are third-party products, or are they not?

Thank you for reading this post.

 

[GlennD]

You should be aware the resale value drops like a rock! Many people have had Nissan offer 4K to buy there expiring lease since the car is not worth the purchase price. Purchasing only makes sense it you live in a cool climate and you plan to keep the car forever.

In Southern California my 2013 34K Leaf SL Premium was going at auction for 13-15K. The dealer showed me the actual auctions when I said KBB was 19K plus.

 

[SaveOurPlanet]

Thank you very much for your response.
Regarding "Purchasing only makes sense [if] you plan to keep the car forever", to keep the Leaf "forever" was the idea, that was meant by "long-term".

Yes, resale value drops. But as the idea is to keep a car "forever", the question is only if to finance at the beginning is a better idea. Or to lease first for three years, and then buy the vehicle at the end of the lease.

So the question was:
Is it always possible to buy the leased vehicle at the end of the lease? With Nissan, does one have a right to this? Or is it completely up to NMAC/dealership, to offer anything, meaning there is no certainty, but one is dependent on them regarding this?
How much would one be able to buy the leased Leaf for after 3 years?
Is it definitely possible to finance buying the leased Leaf after 3 years, at least through a third-party bank, even if NMAC does not offer it themselves?

 

[rogersleaf]

I'm convinced that some vehicles are intended to be purchased and some leased. The LEAF is one of those to lease due to quickly changing technology and unknown/poor residual values. The lease becomes the hedge against the resale/technology concerns, provides natural "gap" insurance, and still have the option of buying at the end of the lease if the car and numbers make sense.

After accepting this concept, does the lease cost of a LEAF make sense relative to alternative cars that can be obtained for similar expense? Also discuss honest mileage estimates with the dealer and have reasonable mileage built into the lease. They will likely offer a reduced excess mileage rate and extending the 3-year base warranty mileage for a nominal monthly fee if done in advance.

 

[Evoforce]

I just paid $10,500 for a 2011. 0 down and $192 a month payment. The car is like new. It has 10 bars at 29,000 miles. I may or may not qualify for a new battery before warranty runs out. But if not, the $6000ish new tech battery will be worth installing. I'm hoping for better range batteries to install by then too. But I'm a guy that owns vehicles for years. 87 jeep Cherokee, 87 Porsche, 87 T-bird, 81 Camaro, 94 metro, 87 Sprint, 80 Datsun, 65 Caprice, etc..

 

[LeftieBiker]

You can always buy a leased Leaf. It isn't one of those cars that the manufacturer won't sell, like the Fit EV. It might make more sense to lease then buy, if you get the residual reduction offer as the end of lease approaches.

 

[SaveOurPlanet]

Thank you very much for this reply.

You can always buy a leased Leaf. It isn't one of those cars that the manufacturer won't sell, like the Fit EV. It might make more sense to lease then buy, if you get the residual reduction offer as the end of lease approaches.

This is the answer to "Questions:
Is it always possible to buy the leased vehicle at the end of the lease? With Nissan, does one have a right to this? Or is it completely up to NMAC/dealership, to offer anything, meaning there is no certainty, but one is dependent on them regarding this?", I guess.

 

[TimLee]

Is it always possible to buy the leased vehicle at the end of the lease? With Nissan, does one have a right to this? Or is it completely up to NMAC/dealership, to offer anything, meaning there is no certainty, but one is dependent on them regarding this?", I guess.

The leased vehicle is owned by NMAC.
Whether to offer a residual reduction is up to NMAC.
Some dealers stay on top of what NMAC is offering and will make the customer aware of this.
Many don't and the leasee has to communicate with NMAC about their options.

NMAC did not offer any reductions on 2011.
Have on 2012 and 2013.

NMAC used way too high residuals on the 2013, to get low monthly lease payments and help boost sales.
So no one would buy the car for a residual that is way above market value.
Recently have been offering $5,000 reduction, or offering one year lease extension with no pay coupon for two months.

 

[tkdbrusco]

If you are going to go over the mileage and pay enough in taxes to be able to take the $7500 credit, there's some incentive to buy if you're keeping it long term. This is what I did.

Bought a 2015 S wQC
-$3500 NMAC rebate
-$2600 Dealer discount
+$1250 100K warranty (ground them down from over $2K, not sure if I should have bought the warranty or not, but was a bit worried about the fact that there are no independent shops I can go to post warranty for the leaf.)
+ Taxes, license, delivery, etc...
Total Price = 29,686

-$2500 State Rebate
-$7500 Federal Credit
Total Cost = 19,686

Gas Savings for 3 years/16K miles a year (est.) ($4500)
Savings in depreciation of my other vehicle over 3 years due to reduced mileage (est.) ($1800)

True cost of car in 3 years = $13,386

So I need to sell it for $13,386 to break even on the deal. Perhaps even less because I can sell back the unused portion of the warranty, which might yield me $700-800. Even though the prices do drop significantly on the leaf, I can't imagine that I wouldn't get at least $11-12K for a used 2015 Leaf three years from now. When I compared this to the lease (at an increased mileage rate of 15K, the lease was a bit higher cost over the three year time (just under $10K total payments and if you subtract the gas savings and other car depreciation, it would be about $4K total cost to me after 3 years) So this means that if I wind up having to sell my leaf for $10K or even slightly less, I will be in the same place I would have been with a lease.

Other things to keep in mind when considering resale...

1. The State $2500 rebate will be expired by then and this may impact the ability to lease cheaply.
2. The replacement battery situation may change in the future. Right now a new leaf battery will cost you $6000 installed, but if that price drops in a few years, or if the price stays the same but replacements offer increased range, then we could see a resurgence in the used leaf market, or even incentive to keep the car longer.

 

[DuncanCunningham]

Good questions and great answers.

 

[SaveOurPlanet]

Thank you everyone for your replies.
This seems like an amazing forum, where there are so many replies within such a short time.
In order for this to be helpful to others in the same situation in the future, I'm going to respond as well and include some of the info I found in the meantime.

 

[SaveOurPlanet]

So in order to answer my own question:

Questions:
Is it always possible to buy the leased vehicle at the end of the lease? With Nissan, does one have a right to this? Or is it completely up to NMAC/dealership, to offer anything, meaning there is no certainty, but one is dependent on them regarding this?

There is a page on Nissan's official website about the options at the end of the lease:

Nissan USA: End of Lease

When your lease is at the end of its term, there are a few things to keep in mind as you prepare for what's next. Nissan Motor Acceptance Corporation (NMAC) makes the process easy for you.

We'll be in touch with you as the end of your lease approaches. NMAC sends out letters prior to the end of your lease. The letters outline your options (see below) and include a wear-and-use guidebook.

Of course we would like for you to lease or buy a new Nissan, however, you have three (3) options once you fulfill your lease obligations.

[Option 1)]Get a New Nissan
Turn in your current vehicle and lease or buy a new Nissan.

[Option 2)]Keep Your Nissan
Keep the Nissan you are currently driving and avoid potential charges.

[Option 3)]Return Your Nissan
If you decide to return your Nissan, we'll make the process as easy as possible.

So this official Nissan website stating that indeed there are three options at the end of the lease makes it appear like it is pretty much guaranteed that one can buy the leased car. This is important because f.e. in other countries, Nissan leases do not work like this at all, and there is no guarantee in any way, that one will be able to buy the vehicle, quite contrary, it may happen that the only option is to return it.

 

[SaveOurPlanet]

To answer my own question about the warranty:

Finally, what about keeping the Leaf for longer than its standard 3year/36,000mi warranty (5year/60,000mi on the battery/drivetrain)? What about not getting hit with expensive repairs down the road? Yes, in total electric cars possibly have less parts that can break than gasoline cars. Still it might happen. As I understood it, there is unfortunalty no way to extend the original Nissan warrenty, correct? As I understood it, all warrenty extentions are third-party products, or are they not?

It turns out, there is an actual Nissan extended warranty, not only third-party warranties. Me personally, I would not choose a third-party warranty, only the one from the manufacturer.

There is a old thread here on the forum, from 2011, called "Cost of Warranty".

The best (most comprehensive) warranty is called "Service+Plus "Gold Preferred"" - though it is not as comprehensive as the original warranty. The extended warranty only includes a list of items that is not covered, and everything else that is not on that list is indeed covered by it (exclusionary contract). This is a service plan (extended warranty) for new Leafs. There is a different one for used Leafs.

In that thread, there are quotes for the best kind of extended warranty available, with $0 deductable:

LEAF Gold Preferred 60 Month 75,000 Mile Coverage: $727
LEAF Gold Preferred 72 Month 75,000 Mile Coverage: $859
LEAF Gold Preferred 60 Month 100,000 Mile Coverage: $913
LEAF Gold Preferred 84 Month 70,000 Mile Coverage: $937
LEAF Gold Preferred 72 Month 100,000 Mile Coverage: $1,022
LEAF Gold Preferred 84 Month 100,000 Mile Coverage: $1,297
LEAF Gold Preferred 96 Month 100,000 Mile Coverage: $1,344

Of course these are old numbers, still as Nissan of Santa Rosa website is not available until April 5, these can serve as a ballpark estimate.

The fact that this warranty is only available at the point of purchase of the new vehicle (or at the start of the lease) means that it is a bit of a gamble, because if one leases, would like to keep the car "forever", but then the residual is really high and there is no residual reduction at the end of lease to purchase it, and one chooses to rather return the leased vehicle and buy another cheaper used vehicle of the same age and model, then one effectively bought an extended warranty for someone else, while the different used vehicle bought then probably does not have an extended warranty, or could only get a less comprehensive used Leaf warranty, to be bought extra then.

PS: Any extended warranty is in addition to the standard "Nissan New Vehicle Limited Warranty", which includes 36-month/36,000-mile basic "bumper-to-bumper" coverage, and 5-year/60,000-mile limited powertrain coverage. As I read here: "The Nissan LEAF warranty period begins on the date the vehicle is delivered to the first retail buyer or put into use, whichever comes first. There is no deductible for warranty repairs. If your vehicle is inoperative due to failure of a warranted part, towing service to the nearest authorized Nissan LEAF dealer is reimbursable for 36 months or 36,000 miles, whichever comes first. Rental car reimbursement is a benefit of most of the Nissan Security+Plus® Service Agreement plans, however is not provided with the original 3 year / 36,000 mile Nissan LEAF Warranty."
Corrected, edited paragraph: And then there's a standard battery warranty covering some aspects of the battery, but not the capacity loss, of 96 months or 100,000 miles. Then finally there is the questionable capacity loss battery warranty of, which is only for 60 months or 60,000miles, to replace the battery if it's below 9 bars, to a state that is at least at 9 bars (doesn't necessarily have to be a new battery that is put in, though currently this is what is done, still this might not help in the future as one doesn't have a right to get a new battery. This capacity warranty doesn't apply to vehicles that have "B0133 - No EV battery capacity warranty" attached to the VIN in Nissan's computer system).

 

[tkdbrusco]

Well, I'm glad I ground the dealer on my warranty and given that these are 2011 prices, I think getting the 72mo/100K for $1250 was reasonable. They started at $2200 and the guy kept saying that he's not making any money on it at $1250, not sure if I can ever believe that. From what I gather and have read on other posts, Santa Rosa Nissan has the lowest warranty costs out of any dealers. I also have heard that you can purchase your warranty from any Nissan dealer within a certain period of time after buying the car.

I almost never buy extended warranties on anything! This was perhaps the first time that I did. Here's my thinking on the warranty... With nearly any other car (ICE Cars) you can take them to 3rd party repair shops for any out of warranty repair and the repair shop will often give you a better deal than the dealership. I have two local mechanics I trust and have brought my ICE cars to them in the past. Taking cars to a dealer for out of warranty repairs will cost you an arm and a leg. They rip you off! With my Leaf, I have no option of a 3rd party repair shop, so if I incur a costly out of warranty repair, I will have no choice than to take it to the dealer. Given this alternative, I'm thinking that this piece of mind is worth $1250 and that one out of warranty repair will pay for this.

I doubt I'll keep the car more than 3-4 years. I will likely sell it or trade it in toward a next gen BEV in 2017/2018 because I want to get the next gen before the $7500 credits go away for good, so I'll likely have anywhere between 45K-50K miles on the leaf at that point. I'll be barely out of the standard 36K warranty. At that point I can either negotiate the inclusion of the warranty into the selling price to the new buyer, or sell back the unused portion to the dealer.

BTW - On another note... and this is really important if you are going to buy a new Leaf since there's quite a few sitting on lots right now. Make sure you get one with a fresh battery! You do not want a car that's been sitting on a lot with a high charge baking in the sun all summer. I made this mistake and got a car that sat on the lot from May-Aug of last year. My battery seems to be fine and is still reading 287 Gids at 100% with about 9K miles, but there are others out there on the blog that are better than mine. Those few months on the lot may have taking a small fraction of life out of my battery. Check the door sticker for manufacture date and buy the freshest one there. Better yet, if you can get leafspy or leafstat and a OBD reader beforehand, take that with you and run tests on the batteries yourself.

 

[tkdbrusco]

Also to correct what someone said above about the battery warranty. The capacity warranty is separate from the other battery warranty. You only get 5yr/60K miles on capacity (less than 9 bars) the 8yr/100K battery warranty is for other non-related issues to capacity. If you drop below 9 bars at 65K miles, you're not getting a new battery from Nissan. Also yes, they only agree to replace it with a battery at 9 bars or higher, but at this point, everyone is getting brand new batteries. My guess would be that in the future they will start rebuilding these replacement batteries out of the cells of old ones, picking and choosing good cells to re-assembly into a 10 or 11 bar pack and then using those as replacement. The capacity is pretty much a moot point for 2015 cars though. It seems like the new lizard packs are holding up much better and it looks like you'll be hard pressed to get to less than 9 bars by 5yr/60K

 

[LeftieBiker]

I did actually write that you can always buy a leased Leaf at lease's end, but now you know it from the crooks, er, NMAC's, mouth. ;-)

 

[SaveOurPlanet]

@tkdbrusco: Thank you very much for your responses. And especially for the correction regarding the standard battery warranty. I updated the respective post above. (Somehow I already thought, 8 years/100,000mi was a long time to get a replacement for the battery. And I was aware that currently, a new battery is provided as a replacement, but that probably won't help much in a few years, as the current practice might likely change and one also does not have a right to get a new battery in the future.)

@LeftieBiker: That was very funny post. And indeed, you stated it first, that one can always buy the leased Leaf, and one can see several posts ago, there was already stated that it was the answer to the question. Now it will only be more difficult I guess to find out if one definitely can finance the purchase at the end of the lease. Can one finance that directly through NMAC? Or through third-party lenders, possibly credit unions? Or is it not sure that it will be possible to get it financed at all? It's so helpful to find all this info here, because in Europe leasing a Nissan Leaf definitely works differently...

 

[LeftieBiker]

It's my understanding that dealerships will finance a purchase off-lease, but I don't know specifics, and I assume you can get a better deal if you qualify for a credit union loan or something similar.

 

[LightningLeaf]

You can finance to purchase the car at the end of lease anyway you like. You can pay cash, get a used car loan from your bank or finance the loan through NMAC.

I just leased Leaf recently and I find the interest rate offered by NMAC is quite competitive.

When leasing, NMAC already pre-determined the residual value of the car. So the residual value of the car is fixed 3 years into the future. So NMAC is taking the risk of the depreciation.

At the end of lease, if the car is worth less than the pre-determined residual value, you just walk away and NMAC takes the hit on the depreciation. If the car is worth the same or more than the pre-determine residual value, then you have options to buy and keep it, buy it then sell to a private party or trade in and use the difference in next down payment.

IMHO, leasing is the only option for EV right now. The technological change in EV is very fast and thus makes prior years model depreciates quickly. The idea of owning a car has changed for me as I see EV no different from typical household appliances such as aa cell phone or computer. Unless Leaf range increases to 200 miles, I don't see myself purchase the car.

 

[LightningLeaf]

I forgot to add that the leasing is cheaper for me is that I cannot fully deduct the $7500 federal credit if I buy. When I lease, that $7500 is deducted from the cost of the car immediately through NMAC. So NMAC takes the credit but passed to me in the lease agreement and lower the cost of the car. This is why the cost of a leased car is $199 for Leaf S without quick charger.

So the bottom line for lease is that you are renting the car by paying the depreciation and tax for 3 years. You only pay 3 years portion of the tax, not the tax on the whole car.

Just make sure you negotiate the lease price as you would for buying a car.