GM Volt Forum banner

1 - 20 of 20 Posts

·
Registered
Joined
·
16 Posts
Discussion Starter #1
The new deal from Cadillac on the 2016 ELR is both amazing and a real blow in that I just bought a 2014. You can lease it for $500 down and $500 a month for 3 years. Yes, it’s only 10K miles a year but not only does this remove the depreciation hit when selling, it’s about what you would pay per month for a car half its sticker. What do you folks think?
 

·
Registered
Joined
·
13,560 Posts
The new deal from Cadillac on the 2016 ELR is both amazing and a real blow in that I just bought a 2014. You can lease it for $500 down and $500 a month for 3 years. Yes, it’s only 10K miles a year but not only does this remove the depreciation hit when selling, it’s about what you would pay per month for a car half its sticker. What do you folks think?
You are better off paying less than half for sticker IMHO. I've seen others posting 2014 deals in the 30s after tax credit and rebates. I wish I had a crystal ball in October 2013 when I gawked at the $75k ELR price and proceeded to buy a $44k MSRP volt for $21k. It was right there in front of me, staring at me in the face, two years after product intro that ELR would approach half price too. Hindsight is ways 20/20. Had I been patient, I'd be driving a show car every day.
 

·
Registered
Joined
·
2,130 Posts
The new deal from Cadillac on the 2016 ELR is both amazing and a real blow in that I just bought a 2014. You can lease it for $500 down and $500 a month for 3 years. Yes, it’s only 10K miles a year but not only does this remove the depreciation hit when selling, it’s about what you would pay per month for a car half its sticker. What do you folks think?
How is $500 down/ $500/month for 36 months an incredible deal? You'd pay $18,500+ to drive a car for 3 years and have zero to show for it.

You state it removes the depreciation hit, but you're out a lot more money with this lease deal than if you bought a car.
 

·
Registered
Joined
·
13,560 Posts
How is $500 down/ $500/month for 36 months an incredible deal? You'd pay $18,500+ to drive a car for 3 years and have zero to show for it.

You state it removes the depreciation hit, but you're out a lot more money with this lease deal than if you bought a car.
It doesn't remove the depreciation hit... it is the depreciation hit
 

·
Registered
Joined
·
478 Posts
Also, for folks like me that are self employed, EREV leases are not great in terms of taxes.

Yes, the lease payment is deductible, but then you can no longer deduct on the mileage rate.
I can't deduct the electricity to charge it, because it's commingled with my house electricity. I can put a second meter in, but then the costs of that far outweigh any savings.
I can deduct gas and maintenance, but I use so little gas and EREVs are so low maintenance, that doesn't help.

With an EREV (or EV) I'm better off buying the car and taking the mileage rate.

Driving 16k miles/yr, my fuel cost is only $700, the depreciation limit is $3160, total $3860.
16k miles in deduction is $8640 (actual reduction in tax of $3024).
With a lease, $500/mo = $6000/yr, plus $700 in fuel = $6700. Still worse than taking mileage.
 

·
Registered
Joined
·
478 Posts
How is $500 down/ $500/month for 36 months an incredible deal? You'd pay $18,500+ to drive a car for 3 years and have zero to show for it.
ELRs are stickering at ~$65,000, and many dealers are throwing at *least* $10k on the hood, so you're at $55,000 to purchase (at worst, you could easily negotiate better).
Now subtract $18.5k in lease payments over 36 months, that's a residual of $36.5k at the end. You're paying 33% of the price of the car over 3 years, and handing it back to the company.

That actually may not be horrible. There's 2014 ELRs with zero miles selling for under $40k. They're about 2.5 years old, are selling as new, and have almost no miles.
A 3.5-year-old used 2016 with 30k miles, and an orphaned vehicle, you may have a very hard time getting $30k for it. The depreciation in the lease may actually be better than real-world depreciation.

There's absolutely no way you'd get me to buy a new 2016, looking at the prices of remaining 2014s. The only way would be if I wasn't putting many miles on it, and could do accelerated depreciation as a business expense, or if the dealer put $20k on the hood.
 

·
Registered
Joined
·
13,560 Posts
ELRs are stickering at ~$65,000, and many dealers are throwing at *least* $10k on the hood, so you're at $55,000 to purchase (at worst, you could easily negotiate better).
Now subtract $18.5k in lease payments over 36 months, that's a residual of $36.5k at the end. You're paying 33% of the price of the car over 3 years, and handing it back to the company.

That actually may not be horrible. There's 2014 ELRs with zero miles selling for under $40k. They're about 2.5 years old, are selling as new, and have almost no miles.
A 3.5-year-old used 2016 with 30k miles, and an orphaned vehicle, you may have a very hard time getting $30k for it. The depreciation in the lease may actually be better than real-world depreciation.

There's absolutely no way you'd get me to buy a new 2016, looking at the prices of remaining 2014s. The only way would be if I wasn't putting many miles on it, and could do accelerated depreciation as a business expense, or if the dealer put $20k on the hood.
Comparing $55k to under $40k is a no brainier. There isn't a must-have feature or option in the 2016 worth over $15k vs. a 2014.. Alas, I have a perfectly working volt in the garage that I need to take a 100% depreciation hit before parting with it. No amount of tax benefit outweighs paying nothing but electricity, fuel, and maintenance on a car using the 100% down, 0% interest, $0 per month, unlimited miles deal on a car.
 

·
Registered
Joined
·
2,130 Posts
Also, for folks like me that are self employed, EREV leases are not great in terms of taxes.
*snip*
There's another myth, that it's better financially to lease to 'write off' lease related expenses. This goes for any vehicle really.
 

·
Registered
Joined
·
13,560 Posts
There's another myth, that it's better financially to lease to 'write off' lease related expenses. This goes for any vehicle really.
No different than the other myth that you want the home mortgage tax deduction. Sure, pay many thousands in interest to the bank to get a few hundred or thousand back from Uncle Sam. I'm happy to get the deduction because its there, but far too make people keep it around and even refinance pushing their term dates out to always keep it like a bad pet that never dies.
 

·
Registered
Joined
·
478 Posts
No different than the other myth that you want the home mortgage tax deduction. Sure, pay many thousands in interest to the bank to get a few hundred or thousand back from Uncle Sam. I'm happy to get the deduction because its there, but far too make people keep it around and even refinance pushing their term dates out to always keep it like a bad pet that never dies.
Yep. There's certain logic in paying off *last* the debt that has a low rate and deductible interest, but it's better to be debt free than deduct the interest.
 

·
Registered
Joined
·
478 Posts
There's another myth, that it's better financially to lease to 'write off' lease related expenses. This goes for any vehicle really.
Depends. Given the limits of depreciation and depending how many miles are driven, it may make sense. Like anything else, run the numbers and figure it out.
 

·
Registered
Joined
·
13,560 Posts
Yep. There's certain logic in paying off *last* the debt that has a low rate and deductible interest, but it's better to be debt free than deduct the interest.
Except there's a behavioral thing that happens if you pay from smallest debt to largest. The math nerds in us want to pay from lowest interest to highest interest. But by going smallest debt to largest, when the small one is gone, you get a little (hey, that was easy). Then you throw what you used to pay on the smallest on the next one up and things start to snowball. When you're done you've knocked out the debts faster than you thought you could. Whereas the person who pays the highest interest first which is sometimes larger keeps at it for months, not feeling any wins, and eventually gives up, reverting back to bad habits and overspending on credit cards. Interest rate isn't usually the problem, it's the large debts that are. Pay big chunks off with gazelle-like intensity does a lot more to know out that principle than shifting the interest payments around.
 

·
Premium Member
Joined
·
14,156 Posts
With an EREV (or EV) I'm better off buying the car and taking the mileage rate.
+1 since it agrees with what I've been saying for several years. :D However that was based on the old mileage rates. Not sure what the new ones are. And of course it assumes you're using a decent number of miles.

I have a 2014 ELR. Love it. It's a big step up from the Volt. The biggest difference between a 2014 MY and a 2016 MY is a faster 0-60 time. Is that worth something? Sure. But given that I've had the car for a year and haven't ever needed it I can't say it's a must have. For some people maybe. It will all depend on the person. For me the delta would be $5K. For some it might be much more.
 

·
Registered
Joined
·
16 Posts
Discussion Starter #15 (Edited)
Great conversation! Another way to look at it is, if you lease a 2016 3 years at $500 a month you have put $18.5K out of pocket and used the car 3 years. If you take the same $18K and put it into a almost new 2014 sold at let’s say $40K over three years, at the end you will owe $22K. The car, guessing now, at 5 years old might be worth $20K-$25K. So it’s probably actually a wash except in the first case you get to drive a 2016.
 

·
Registered
Joined
·
13,560 Posts
Great conversation! Another way to look at it is, if you lease a 2016 3 years at $500 a month you have put $18.5K out of pocket and used the car 3 years. If you take the same $18K and put it into a almost new 2014 sold at let’s say $40K over three years, at the end you will owe $22K. The car, guessing now, at 5 years old might be worth $20K-$25K. So it’s probably actually a wash except in the first case you get to drive a 2016.
I'd buy the 2014 new now, take the $7500 fed tax credit, take the steep discount, then drive the car far more than 3 years and 36k miles and ultimately take a 100% depreciation hit. This trading in of cars every 3 years is a really bad habit that people think is normal. It's insane, unless you are filthy rich are always want and can afford to be driving a new car.

Steve Jobs traded in his nearly new Mercedes every 6 months because of a loophole in California laws that allowed him to drive a leased vehicle for 6 months without plates. The leasing company would happily deliver an identical car every 6 months then sell his discarded car at a premium to the next owner on the premiss that Steve Jobs owned it, you are owning a part of Silicon Valley history.

An ex-coworker of mine bought a used AMG Mercedes 500 series sedan that used to be owned and driven by Jimmy John, the CEO of Jimmy John sandwiches. They had a false perception that they got a great deal, but the car isn't worth anything more than what Kelly blue book lists.
 

·
Registered
Joined
·
43 Posts
We leased the ELR as we thought it was a great deal as well. The residual is 44K, if it's worth that (or more) as a "collector car" at the lease-end I'll buy it. If it's worth 30K (probably) as technology goes crazy over the next few years, I'll give it back.
I like the idea of a three year "test drive" with this type of vehicle. Driving a "concept car" for $500ish a month isn't too bad!
 

·
Registered
Joined
·
435 Posts
We leased the ELR as we thought it was a great deal as well. The residual is 44K, if it's worth that (or more) as a "collector car" at the lease-end I'll buy it. If it's worth 30K (probably) as technology goes crazy over the next few years, I'll give it back.
I like the idea of a three year "test drive" with this type of vehicle. Driving a "concept car" for $500ish a month isn't too bad!
Exactly! I like leases for that reason. I don't want to pay off a car that will be an old car, with better choices available in 3 years. The anti-lease people say that by the end of 3 years, I don't "own" anything. But, I don't want to own a 3-year old car. Of course, I only lease when the terms are good.
 

·
Registered
Joined
·
13,560 Posts
Exactly! I like leases for that reason. I don't want to pay off a car that will be an old car, with better choices available in 3 years. The anti-lease people say that by the end of 3 years, I don't "own" anything. But, I don't want to own a 3-year old car. Of course, I only lease when the terms are good.
Timing is the other problem with leases. A coworker of mine leased a 2012 volt and the g2 didn't come soon enough for him to move to a newer volt. He is driving a borrowed Miata from family members until the g2 arrives. You don't have much control of when you need to replace the car as it's almost set in stone of when the previous lease expires. I absolutely love the 0%, $0 per month, unlimited mile, unlimited term of my cars. Plus nothing is forcing me to get a new car, except when I can find a deal of the decade. My last two cars were 30% and 50% off MSRP respectively.
 

·
Banned
Joined
·
7,289 Posts
Exactly! I like leases for that reason. I don't want to pay off a car that will be an old car, with better choices available in 3 years. The anti-lease people say that by the end of 3 years, I don't "own" anything. But, I don't want to own a 3-year old car. Of course, I only lease when the terms are good.
Timing is the other problem with leases. A coworker of mine leased a 2012 volt and the g2 didn't come soon enough for him to move to a newer volt. He is driving a borrowed Miata from family members until the g2 arrives. You don't have much control of when you need to replace the car as it's almost set in stone of when the previous lease expires. I absolutely love the 0%, $0 per month, unlimited mile, unlimited term of my cars. Plus nothing is forcing me to get a new car, except when I can find a deal of the decade. My last two cars were 30% and 50% off MSRP respectively.
He should have leased a Cruze for dirt cheap, then flipped it once the Gen 2 was available for sale. :sunglasses:
 
1 - 20 of 20 Posts
Top