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Old 09.04.2015, 17:02
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Help with Car Leasing example

Hi guys,

I am honestly not entirely stupid, only mostly, but I cannot get my head around the leasing concept, so I hoped someone who understands this can help me out, with the simple example I am using below.

New car costs: 100,000chf
3 year Residual (restwert): 40,000chf (guaranteed in advance)
Downpayment 20%: 20,000chf
Monthly: 1200
Period: 36 months

Ok, so, so far, so simple.

Costs after 36 months = 20,000 + (36x1200) = 63,200

Ok, also simple.

However, this is where i am getting confused. The manufacturer has provided a "guaranteed residual value" of 40% of new price. Does this mean that after 36 months, I can buy it for 40,000chf? Or is this residual used when I am finished with my payments to calculate the difference between guaranteed residual and actual residual, which I would also have to pay?

I think it is the guaranteed bit that is throwing me...have simplified the figures slightly, but basing it all around this:

http://my.teslamotors.com/de_CH/financing/faq

Thanks,
StirB
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Old 09.04.2015, 17:09
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Re: Help with Car Leasing example

A lease is basically a loan for the outstanding amount with the payments being monthly for N years and then a final payment to settle the outstanding amount.

In your case: 36mths @1200 per month and then a final payment of 40k - and you own the car outright.

A guaranteed future value (GFV) means that they will guarantee the car to be worth that amount and that if you hand the car back the debt is cleared.

Key points:
- the lease company is obliged to "buy" it back at the end of the lease even if the value has dropped well below i.
- you are liable for any additional charges from excess KM and/or damage.
- if at the end of the lease the car is worth considerably more than the GFV you are advised to pay out the lease and then sell the car.

The lease company is carrying the risk of the future value of the car.
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Old 09.04.2015, 17:19
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Re: Help with Car Leasing example

Thanks Ken, perfect. The margins seem very fine though.

Assuming the figures stack up, over the course of 3 years, then:

Original value: 100k
Paid back: 63,200

"Outstanding": 36,800

Residual: 40k

If I took up the option of buying, all things being equal, I will have paid 103,200 for a 100,000 car, over 3 years, so effectively got it on finance for 1% a year...seems very cheap to finance?!

I know interest rates are rock bottom, and my mortgage fixed for 6 years is pretty similar, but I expected it would be more.

This would suggest to me that the manufacturer isn't too bothered about making money on financing and the real money is on the profit margins of the car + extras...maybe that is common knowledge already!
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Old 09.04.2015, 18:01
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Some places are now offering an alternative to leasing where you are the owner of the vehicle and legally speaking you really get a loan. E.g. with lease-now it is called carFinance Plus or something. Porsche also offer this option.

This has a number of advantages:

1. You don't have to buy fully comprehensive insurance (you can of course).
2. You can actually deduct the interest from your taxes.

The second option is the dogs balls. Leasing costs are not tax deductible for private persons since the tax authorities do not consider leasing to be debt. This new form of financing is more or less like leasing, but the interest is deductible so in some ways you basically get the financing for free - e.g. you only pay for the depreciation of the vehicle.

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If I took up the option of buying, all things being equal, I will have paid 103,200 for a 100,000 car, over 3 years, so effectively got it on finance for 1% a year...seems very cheap to finance?!
Yeah this does sound like an exceptional deal. I've seen offers for 4%, or even slightly below, but nothing at 1%. Normally the interest rate paid is a variable that goes into the calculation and it is something that you should very clearly see in any offer that a dealer gives you. E.g. it should not be a figure that you have to reverse engineer from the final monthly payment.

Last edited by 3Wishes; 09.04.2015 at 21:03. Reason: merging successive posts
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Old 09.04.2015, 18:25
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Re: Help with Car Leasing example

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This would suggest to me that the manufacturer isn't too bothered about making money on financing and the real money is on the profit margins of the car + extras...maybe that is common knowledge already!
I think you may also find that the base "price" for the car is significantly higher than you may be able to get it for if buying outright. And don't forget that you'll be required to have it serviced by authorised dealers at correct intervals, and that probably the selling garage will then get that custom as well.
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Old 09.04.2015, 18:38
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Re: Help with Car Leasing example

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I think you may also find that the base "price" for the car is significantly higher than you may be able to get it for if buying outright. And don't forget that you'll be required to have it serviced by authorised dealers at correct intervals, and that probably the selling garage will then get that custom as well.
They actually have price comparison for Outright Purchase und Leasing on the same page, and use the same base value for both.

(http://my.teslamotors.com/de_CH/models/design)

I doubt any other garage would touch a Tesla tbh, so that one's a given, there's a 4 year serving pack included in the purchase anyway, so not so significant I guess.
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Old 09.04.2015, 19:04
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Re: Help with Car Leasing example

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They actually have price comparison for Outright Purchase und Leasing on the same page, and use the same base value for both.

(http://my.teslamotors.com/de_CH/models/design)

I doubt any other garage would touch a Tesla tbh, so that one's a given, there's a 4 year serving pack included in the purchase anyway, so not so significant I guess.
Ah that explains things. I think the financing is basically being subsidized by Tesla/included in the sticker price of the vehicle (depending on how you look at things).

I'm not saying it is a bad deal of course, I think a Tesla is the ideal luxury commuter. Bonkers fast, quiet and refined vehicle that you can drive with the distinguished smugness of someone who is effectively sitting in an Eco-friendly* Bentley.

* not really but the smugness can be nevertheless worn with great pride
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Old 09.04.2015, 22:10
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Re: Help with Car Leasing example

Hi there,

Does anybody know if leasing works with a 2nd hand car ? It seems it would do the trick to me with no upfront fee and no car value devaluation. Anybody know a website to check this ?

Thank you for your help,
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Old 09.04.2015, 22:33
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Re: Help with Car Leasing example

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Does anybody know if leasing works with a 2nd hand car ?
Try out these guys:
https://www.cashgate.ch/de/leasing
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Old 09.04.2015, 22:37
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Re: Help with Car Leasing example

Amazing , thanks !
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