Is there something wrong with Leaf lease numbers ?

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evnow

Well-known member
Joined
Apr 22, 2010
Messages
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Location
Seattle, WA
Let us look at the disclaimer.

Initial payment = 1,999 - 349=1,650

Adjusted Net capitalized cost : of $24,441 includes $7,500 manufacturer incentive for federal tax credit available to NILT by law, and $595 non-refundable acquisition fee

MSRP : Based upon $32,780 MSRP

Destination Charge : $820

The problem is, they don't add up. Net Capitalized Cost should be = MSRP + Dest Charge + Acq Fee - Tax credit - Downpayment
= 32,780+820+595-7,500-1,650
= 25,045.

But the Net Capitalized Cost is given as 24,441 !

Either NCC is wrong, or Destination charge is wrong. According to my calculations, if NCC is right, Destination Charge + acquisition fee = $820.

Can anyone straighten this out ?

OK solved : Acquisition fee shouldn't be included. SL is still different by 100 ...



$349 a month2 – 36 month lease
($1,999 initial customer payment)
Excludes tax, title and license. Initially available through online reservation process. Orders through dealers commencing in August (in limited areas) and sales by dealer commences in December 2010. LEASE payment of $349/mo. is an example of offer if vehicle were sold in April 2010. The actual lease offer for NMAC (or "NILT") will be announced in December 2010 when sales commence. Subject to change. Limited quantities available in select markets and states through online reservation system. Increased availability in Spring 2011with full market rollout through 2012. At start of sale, one order per household address until availability increases. Taxpayer must incur federal tax liability to receive full benefits. Consult your tax professional.

2 Estimated monthly payment based on proposed offer subject to change at start of sale. Estimates include assumed residual, money factor, and acquisition fee amounts. Excludes taxes, title, and license. $1,999 initial payment required at consummation (includes $1,650 down payment and $349 first month payment). 2011 LEAF SV subject to availability to well qualified lessees through Nissan-Infiniti LT ("NILT"). Subject to credit approval. Based upon $32,780 MSRP plus $820 destination charge. Adjusted Net capitalized cost of $24,441 includes $7,500 manufacturer incentive for federal tax credit available to NILT by law, and $595 non-refundable acquisition fee. Dealer contribution may affect actual price set by dealer. Monthly payments total $12,564. Lessee is responsible for maintenance and repair. Lease payment excludes the cost of the EVSE/charging dock charging equipment. Security deposit not required. Disposition fee due at termination of lease term. See participating dealer for details. Finalized lease terms available to be set upon start of sale.
 
Could these numbers assume a negotiated purchase price of $604 under MSRP? It does talk about "Dealer contribution" in the disclaimer. Would be nice!
 
garygid said:
Why do you add 829 instead of 820?
Using 820, the difference is $595, quite close to one of the other numbers, right?

Thats just a typo. Other numbers don't change (see the excel above).
 
Vlad92 said:
Could these numbers assume a negotiated purchase price of $604 under MSRP? It does talk about "Dealer contribution" in the disclaimer. Would be nice!

I think the destination charge at $820 is too high.
 
Hmm... that would me think that the Acq fee isn't rolled into the lease... meaning that it would have to be pre-paid along with $1999 initial payment. That makes the numbers match the advertisement, at least.
 
jhm614 said:
Hmm... that would me think that the Acq fee isn't rolled into the lease... meaning that it would have to be pre-paid along with $1999 initial payment. That makes the numbers match the advertisement, at least.

I was considering that - but look at the language in the disclaimer.

Adjusted Net capitalized cost of $24,441 includes $7,500 manufacturer incentive for federal tax credit available to NILT by law, and $595 non-refundable acquisition fee.

Someone with experience in this might know. I've never leased till now ...
 
evnow said:
jhm614 said:
Hmm... that would me think that the Acq fee isn't rolled into the lease... meaning that it would have to be pre-paid along with $1999 initial payment. That makes the numbers match the advertisement, at least.

I was considering that - but look at the language in the disclaimer.

Adjusted Net capitalized cost of $24,441 includes $7,500 manufacturer incentive for federal tax credit available to NILT by law, and $595 non-refundable acquisition fee.

Someone with experience in this might know. I've never leased till now ...
I don't have experience in this either, but my interpretation when I originally saw it a week ago was the same as jhm614's. I thought they were saying "Adjusted Net assumes we will receive the $7500 from the government at some point in the future and that we have already received the $595 from the customer." In other words, that as customers we have to put up the $595 when we commit to the lease, then the $1999 + tax and license when we sign the final papers and get the car.

Several things don't look right to me in your numbers. A residual percentage of 61% seems very high, but then you calculated it on "effective price". Isn't that typically in the low fifties, but calculated on MSRP? Because of that, you ended up with a lower residual value than I expected, and hence a considerably higher monthly depreciation. It looks like you tried to compensate for that with an unusually low money factor, but you still didn't end up with the right base payment. Here are the numbers I was estimating for the SV model:

32,780 - Sticker price
53% ---- Residual
17,373 - Residual value
24,441 - Net capitalized cost
=7,068 - Depreciation
196.32 - Monthly depreciation payment
8.75% -- Interest rate
152.45 - Money factor payment
--------
348.77 - Base lease payment before tax
349 - - - Advertised payment

I'll admit that I'm probably a ways off myself, since if I apply those same residual and interest percentages to the SL I end up with only $370.69 instead of $379. (I hadn't tried that until just now -- back to the drawing board.)
 
planet4ever said:
I'll admit that I'm probably a ways off myself, since if I apply those same residual and interest percentages to the SL I end up with only $370.69 instead of $379. (I hadn't tried that until just now -- back to the drawing board.)
OK, I give up. Surely the money factor would be the same for both models. If so, either my formulas are bad or else the residual percentage is different between the two. I suspect strongly that it must be my formulas.

Well, I guess there is one other possibility. Nissan might have a numerical error somewhere in its fine print. ... Nah ... the lawyers would never let something like that get out.
 
planet4ever said:
I thought they were saying "Adjusted Net assumes we will receive the $7500 from the government at some point in the future and that we have already received the $595 from the customer." In other words, that as customers we have to put up the $595 when we commit to the lease, then the $1999 + tax and license when we sign the final papers and get the car.

That is probably what it is. The lease is looking increasingly not so good :cry:

Several things don't look right to me in your numbers. A residual percentage of 61% seems very high, but then you calculated it on "effective price". Isn't that typically in the low fifties, but calculated on MSRP? Because of that, you ended up with a lower residual value than I expected, and hence a considerably higher monthly depreciation.

I was just going by a rumored residual of 16k.
 
planet4ever said:
OK, I give up. Surely the money factor would be the same for both models. If so, either my formulas are bad or else the residual percentage is different between the two. I suspect strongly that it must be my formulas.

See my new calc. They are completely depreciating SL premium in 3 years.
 
I have never leased before, so I am interested in these calculations.

In any given car lease, there is the finance component. What is the effective "loan" interest rate given the money factor and perhaps other applicable variables?

I suppose the idea is if the effective "loan" interest rate in the Nissan lease offer comes up to say 8% per annum, why would someone go with the lease when you could easily get say 3.5% vehicle loans from any financial institution ?

I understand that in lease scenario, the "loan" dollar amount is only for the portion of the car (i.e. minus the residual) and in a full loan, it's for the full purchase price, but a full loan scenario wins out if the car is worth quite a lot more than the theorectical residual computed in the Nissan lease offer.

Please help me understand why the lease is still the best approach to owning the Leaf?
Thanks!
 
mxp said:
I have never leased before, so I am interested in these calculations.

In any given car lease, there is the finance component. What is the effective "loan" interest rate given the money factor and perhaps other applicable variables?
See this article. My calculation is based on that.

http://www.edmunds.com/advice/leasing/articles/48365/article.html


I suppose the idea is if the effective "loan" interest rate in the Nissan lease offer comes up to say 8% per annum, why would someone go with the lease when you could easily get say 3.5% vehicle loans from any financial institution ?
Actually, current auto rates are around 6.5%.

http://www.bankrate.com/auto.aspx

I understand that in lease scenario, the "loan" dollar amount is only for the portion of the car (i.e. minus the residual) and in a full loan, it's for the full purchase price, but a full loan scenario wins out if the car is worth quite a lot more than the theorectical residual computed in the Nissan lease offer.
Not really. You are paying finance charges for the full price - afterall someone has to pay for the full car - and that won't be the auto manufacturer or leasing company. What you are not paying for is the full depreciation.

Please help me understand why the lease is still the best approach to owning the Leaf?
Lease is attractive since Leaf is a V1 product.
- In 3 years we can expect lot more options
- In 3 years we can expect better batteries with higher range
- You don't have to worry about the capacity degradation of batteries

But, when the full lease details come out - if I see that I'd have to pay a lot more for leasing vs buying, I'll buy instead of lease.
 
Hi EVNow,
Thanks for your explanation and the example lease numbers breakdown you provided in this posting. It was very helpful indeed.

:)
 
evnow said:
mxp said:
I suppose the idea is if the effective "loan" interest rate in the Nissan lease offer comes up to say 8% per annum, why would someone go with the lease when you could easily get say 3.5% vehicle loans from any financial institution ?
Actually, current auto rates are around 6.5%.
Some Credit Unions have much better than 6.5% rates, sometimes "on sale" or seasonal. Assume for a minute my/your C.U. offers a 3.5% rate. What would be the process ? Could it still work ? Because at the moment the $7,500 tax credit goes to the "purchaser" of the car (i.e. the Leasing Company). Will this work for and apply to your C.U. so that the savings of the lower rate is not negated by a higher financed amount ? Would the willingness/ability of the C.U. doing the deal with you depend on the complexity of the (tax credit) paperwork ? Are there other obstacles keeping the C.U. from substituting for Nissan's Leasing arm ?
 
LEAFer said:
Because at the moment the $7,500 tax credit goes to the "purchaser" of the car (i.e. the Leasing Company). Will this work for and apply to your C.U. ...

No - when you buy the car with financing you own the car, though the lender has a lien on it. You will get the tax credit.

You can
- Finance full amount & pay back $7.5K when you get the tax credit
- Finance only $25K, assuming you can come up with the rest

BTW, I see that some places like BOA and Pen fed are offering rates from below 4%. My CU offers 3.8% minimum - though not sure whether they do that for $32K and longer terms. I'll find out (though I'll pay cash if I decide to buy).
 
Could the C.U. buy the car (they get the Fed Tax Credit) and lease it to you ? ( I've only leased once ... thru the mfg's finance company, similar to the Nissa LEAF lease setup. )
 
LEAFer said:
Could the C.U. buy the car (they get the Fed Tax Credit) and lease it to you ? ( I've only leased once ... thru the mfg's finance company, similar to the Nissa LEAF lease setup. )

I guess so - but I doubt any CU would do it. Esp on a new car like Leaf.
 
evnow said:
LEAFer said:
Because at the moment the $7,500 tax credit goes to the "purchaser" of the car (i.e. the Leasing Company). Will this work for and apply to your C.U. ...

No - when you buy the car with financing you own the car, though the lender has a lien on it. You will get the tax credit.

You can
- Finance full amount & pay back $7.5K when you get the tax credit
- Finance only $25K, assuming you can come up with the rest
One other variant to consider, if you normally pay at least $7500/year in taxes, and if you get the car early in 2011, as many will:

- Finance the full amount, but reduce your income tax withholding by as much as you can, up to $625/month.
- That will give you the extra money you need to make the higher payments, and also sock some away for 2012.
- Restore your normal withholding in Jan 2012. Start using that money you saved last year to continue making the car payments.
- You should come out even or slightly ahead on your taxes in April, 2012.

Of course you are still going to be stuck with high car payments for the next four years or more, but by that time you are going to be making more money (you hope) or, at worst, you can sell the Leaf a year or two later for a really great price (we all hope).
 
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