New Leasing Option

[Vike]

Ah, Mitsubishi has just partnered with Ally to offer a lease deal for our favorite little EV:

http://mmna.wieck.com/releases/3a5b847d-dd77-4f37-a513-e2ae0d5f4b4f

Cutting directly to the fine print:

"Payments are $249 per month for 2012 i-MiEV with Quick Charge package and are based on an agreed upon value equal to its MSRP of $30,675. Monthly payment assumes $3,498 due at signing, including security deposit. Tax, title, license and dealer fees extra. 36 monthly payments total $8,974. Option to purchase at lease end for an amount to be determined at signing. Ally must approve lease. Mileage charge of $0.20 / mile over 36,000 miles. Lessee pays for excess wear."

. . . so about $3500 down, $250/mo. for 36 mos. For comparison's sake, a LEAF SL leases for $3000 down, $319 a month for 39 months. That's $500 less down, but nearly $3500 in extra payments over a 3-month longer lease.

Though I'm normally not interested in leases, I'm now thinking that a lease on a car based on radically new technology and uncertain market acceptance can be considered a risk management tool.

For instance, what if new battery technology greatly improves EV performance and/or pricing over the next three years? In that case, not only might you prefer to have a newer EV, but you also might find that your car has lost more value than expected. With the lease, your costs are all pre-determined, and at the end of your three years you happily turn in the keys and go shopping in the brave new world of modern EVs.

On the other hand, what if your lease ends in the midst of a fuel crisis, EV prices have spiked, and EVs are only available at high markups with long waiting lists? Well, gee, I sure wish I owned this car instead of having to turn it in. But don't forget, you'll have the option to purchase your car at lease end for a pre-agreed price; the net of that transaction might be more expensive than just having bought it to begin with, but at least the downside doesn't include giving up your EV. If the world is EV-crazy enough, your car might even have a market price greater than your pre-agreed "buyout" price. You decide what you prefer to do based on your situation and market conditions.

I have to admit, I like the flexibility in that overall picture. I'm going to have to ponder this. Since Mitsubishi and/or my local dealer have been dragging their feet on my pre-order and I've yet to take delivery, I might just cancel that and lease instead.

As a side point, I find it interesting that the advertised configuration is the ES w/Quick Charge package. This implies that Ally and Mitsubishi consider Quick Charge to be important to maximizing the car's residual value. I've been of this opinion all along, but find this a noteworthy bit of evidence on this point.

 

[Don]

. . . . you'll have the option to purchase your car at lease end for a pre-agreed price; the net of that transaction might be more expensive than just having bought it to begin with, but at least the downside doesn't include giving up your EV

It's pretty much guaranteed to be LOTS more expensive than if you'd bought it outright when you realize that the lease option gives you none of the $7500 tax credit. Of course, maybe you don't qualify for the tax credit anyway so it wouldn't matter. I didn't (qualify) but if I hadn't found a way to get it, I would never have bought my car. At $22.5K it made lots of sense (at least to me) but if I was paying the full $30K I personally wouldn't have considered it for a second

Don

 

[Vike]

It's pretty much guaranteed to be LOTS more expensive than if you'd bought it outright when you realize that the lease option gives you none of the $7500 tax credit. Of course, maybe you don't qualify for the tax credit anyway so it wouldn't matter.
Don

Oh damn - you make a very good point, and a sobering one. I haven't yet seen the "amount to be determined at signing", have I? And that could really wreck the whole deal. Let me run though the details, but now I think this only makes sense if I absolutely plan to walk away in three years, since it might be that buying the car at lease end won't make sense.

Before I get into that, you're not the first person that's mentioned "qualifying" for the tax credit. What does that mean? Even if your tax bill for the year is only $4500, you'd still get that much of a credit, wouldn't you? Or is there some issue other than a low tax bill? Assuming that it is just a matter of size of the tax bill, I should be able shift some events around to move enough liability into 2012 (i.e., that would otherwise have been incurred in 2013-2014, perhaps later) to claim the full credit for the car plus the charger install (or at least very nearly all of it). So I wasn't planning on missing out on that.

Now, back to the lease. Doing some quick/rough calculations, if we're paying 6% for the money (just guessing on that), a $250 monthly payment for three years tells us we're financing about $8250. Add in the $3500 down payment, that's a grand total of $11,750. Assuming no $7500 credit, if you deduct that from the MSRP, it sounds like they think they're going to get $19k when they sell this car. From whom???

I'd have to say "not from me." I'd be better off going out and buying a used EV on the secondary market if I could find it, but in the "EV prices have spiked, and EVs are only available at high markups with long waiting lists" scenario, I probably couldn't (at least not conveniently). I guess the idea of buying out the car in three years would only be worthwhile as a "last resort" option if there are no reasonable alternatives.

So the real choices are lease for 3 years and then go buy another EV, betting that everything will be better in 2015 than it is now, or just buy the i-MiEV now at a known price and don't worry about what's going to be improving for the next several years.

 

[Don]

Yes, as I understand it, whatever your tax bill would otherwise be (up to $7500) you'll get credit for - That $7500 was the difference between buying and not buying for me

There's always a risk whenever you buy something new when it forst comes out that in the next year or two there will be a better/cheaper product - If you're willing to waitand see, perhaps you're still watching a tube type TV?

I'm pretty darned sure there will be lighter, more powerful and cheaper battery packs in another year or two . . . . but then the $7500 tax credit may not be renewed for next year either - It's a crap shoot, but I figured that the gas savings for the next year or two might ease the pain a bit when I find out that the next generation is even more desirable . . . . and if the credit isn't renewed, *or* the price of gas goes through the roof in the meantime, at least I won't be stuck on a neverending waiting list to buy a car . . . . and it could turn out that my car's resale value will go up as well if either of those scenarios turns out to be correct

Don

 

[archie_b]

Has anyone actually leased an i?

Or, has anyone sat down with a dealer and seen the numbers for what it would cost to lease and what the buy out at lease end would be?

Looking at the general parameters of an ES lease:
Selling price: Full MSRP of $30,675
Tax Credit: -$7,500 (goes to lessor, not you)
Total payments: -$8,974
Down payment: -$3,498

Potential value of car at end of 3 years.....??

 

[jlsoaz]

Has anyone actually leased an i?

Or, has anyone sat down with a dealer and seen the numbers for what it would cost to lease and what the buy out at lease end would be?

Looking at the general parameters of an ES lease:
Selling price: Full MSRP of $30,675
Tax Credit: -$7,500 (goes to lessor, not you)
Total payments: -$8,974
Down payment: -$3,498

Potential value of car at end of 3 years.....??

A few weeks ago I contacted a dealer several hours away and was quoted something like this:

Monthly payment,
$266.34, 48 month.
$372/mo, 24 month.
10k miles
$275 security deposit.
250 for plates.
Net residual value 17385.50 (on the 2 year deal?).

A key point is that I am not 100% certain if the monthly figures they were quoting me were the final out-the-door numbers. For example, I sat down with my Chevy Volt dealer and went through a similar exercise, and the amount I would actually pay every month would be $98 higher per month than the advertised lease price per month when all taxes, fees and what-not were counted. The dealer claimed to me that this was pretty standard in his experience (about $100 difference between the advertised and the actual), and then another dealer worked up terms for me and more or less confirmed within a dollar what I would actually pay. Note that I'm in Arizona, and some of this is high state taxes/fees, so other states might be different.

Nissan Leaf and particularly Chevy Volt have been aggressive with their lease specials (Chevy has a deal for $249 per month for 2 years with something like $2500 down, 10 or 12k miles, ending early Sep., though I think keeping the mileage down on a Volt would be much harder than on a BEV).

It makes sense that Mitsubishi is advertising a decent deal through Ally (the old GMAC, doing the deal with Chevy Volt), but if Ally were taking into account the $10,000 or so lower MSRP on the i, and the same tax benefit ($7,500), I wonder if they could see their way clear to offering an even better lease deal than what they've been offering. Maybe depreciation could be a bit more of a concern on the i, given that the thermal management system for the battery is (it appears) not nearly as good as on the Volt.

 

[Vike]

. . . Maybe depreciation could be a bit more of a concern on the i, given that the thermal management system for the battery is (it appears) not nearly as good as on the Volt.

True - but then, it's scads better than the thermal management system on the Leaf. :mrgreen:

 

[Brian]

About the $7,500. The tax credit goes to the original owner. In the case of a lease, it goes to the leasing company. So, they typically factor the tax credit into the amount they base the lease price on.