Talk me out of buying a new 2017 SE e-Golf

[ckdavis]

I'm 50, and I've never leased a car in my life. If I've purchased a new car, I've usually financed just a small part of it and paid off the loan more quickly than when it was fully due.

So now, as I'm considering an electric vehicle for my next car, I am stuck in this quandary:

Buy or lease (which I know is the perennial question for those who can make that choice, but it seems even more challenging with electric vehicles)

My inclination is to buy, even though the salesman I spoke to today after test driving the 2017 e-Golf SE (which I found so much more luxurious and better riding than the Bolt I test drove a month ago) really encouraged the leasing option.

My usual pattern with cars is to keep them a long time. My current Golf (2001 model) has 180,000 miles (and yes, the check engine light is currently on). Not sure keeping a 2017 e-Golf that long is wise or even possible, esp. if replacing the entire battery pack is a necessity at some point beyond the 100,000-mile / 8-year warranty, and that may cost $15,000 or more (or less?).

Still, even if I keep the car up to the 8-year battery warranty, that is five years beyond the three-year lease. And if I do the lease, and I opt to pay the residual in three years, I'm basically paying the full MSRP of the vehicle today over a period of three years, making it a $31,000 car.

However, if I get that same vehicle for $29,000 plus tax and license (which I would expect I can do in a month or two when VW dealers are more willing to negotiate), then I'm paying about $32,000 total today, getting my $2500 California state refund at some point, and my $7500 federal tax credit next year, making this a $22,000 vehicle (which I know will have greater depreciation over the same number of years than an ICE vehicle). But still, I would be in better shape assuming I'm still liking the vehicle in 3 or 4 or 5 or longer years.

And if I lease the vehicle, then in three years I'm back to square one, hoping there is still the $7500 tax credit, and hoping that whatever new e-vehicles are out there are that much more efficient and cost-effective (which I imagine they will be).

I really don't like shopping for vehicles, and the thought of having to do that in three years again does not weigh in the favor of my choosing to do a lease.

I imagine there have been plenty of other stream-of-consciousness ramblings about this same issue over the years in this forum, but I hadn't read of any of you contemplating *buying* the 2017 e-Golf outright, and I wondered I was crazy to think about doing so.

Thanks for any feedback.
Chris

 

[forbin404]

I'm 50, and I've never leased a car in my life. If I've purchased a new car, I've usually financed just a small part of it and paid off the loan more quickly than when it was fully due.

So now, as I'm considering an electric vehicle for my next car, I am stuck in this quandary:

Buy or lease (which I know is the perennial question for those who can make that choice, but it seems even more challenging with electric vehicles)

My inclination is to buy, even though the salesman I spoke to today after test driving the 2017 e-Golf SE (which I found so much more luxurious and better riding than the Bolt I test drove a month ago) really encouraged the leasing option.

My usual pattern with cars is to keep them a long time. My current Golf (2001 model) has 180,000 miles (and yes, the check engine light is currently on). Not sure keeping a 2017 e-Golf that long is wise or even possible, esp. if replacing the entire battery pack is a necessity at some point beyond the 100,000-mile / 8-year warranty, and that may cost $15,000 or more (or less?).

Still, even if I keep the car up to the 8-year battery warranty, that is five years beyond the three-year lease. And if I do the lease, and I opt to pay the residual in three years, I'm basically paying the full MSRP of the vehicle today over a period of three years, making it a $31,000 car.

However, if I get that same vehicle for $29,000 plus tax and license (which I would expect I can do in a month or two when VW dealers are more willing to negotiate), then I'm paying about $32,000 total today, getting my $2500 California state refund at some point, and my $7500 federal tax credit next year, making this a $22,000 vehicle (which I know will have greater depreciation over the same number of years than an ICE vehicle). But still, I would be in better shape assuming I'm still liking the vehicle in 3 or 4 or 5 or longer years.

And if I lease the vehicle, then in three years I'm back to square one, hoping there is still the $7500 tax credit, and hoping that whatever new e-vehicles are out there are that much more efficient and cost-effective (which I imagine they will be).

I really don't like shopping for vehicles, and the thought of having to do that in three years again does not weigh in the favor of my choosing to do a lease.

I imagine there have been plenty of other stream-of-consciousness ramblings about this same issue over the years in this forum, but I hadn't read of any of you contemplating *buying* the 2017 e-Golf outright, and I wondered I was crazy to think about doing so.

Thanks for any feedback.
Chris

If you want an eGolf, lease. The value drops too fast for ownership to work properly. If you think that changing a car every 3 years is rough, then leasing is not for you.
Look at the 500e, It's a 32k car, you spend 6k in leasing payment, get back $2.5k in rebate, and the car sells at used lots for $8k. $8k+6k = 14k for a 32k car.
I expect the VW to have a similar issue.

 

[RonDawg]

Just because you lease doesn't mean you must pay full MSRP. The "Capitalized Cost", which is the cost that the leasing company purchases the vehicle on your behalf, is just as negotiable as if you were buying the car outright.

In my case, I leased my car right before the 2016's came out, so VW was offering several grand off MSRP. That's on top of the Federal $7500 rebate and the $2500 state rebate. At this point I'm more likely to buy my car than give it back, because by that point it's mostly paid off when compared to the original MSRP.

BTW VW passes the full $7500 Federal tax credit onto the consumer, so you get this benefit immediately in the form of a "Capitalized Cost Reduction." If you purchase, you have to wait until next tax season to apply for it, and then you may not get all of it depending on your particular tax situation.

If you don't need the added range of the 2017 models, look into a used eGolf.

Unlike with Tesla and to a lesser extent Nissan, I wouldn't worry about the $7500 tax credit not being there 3 years from now. The program ramps down when the manufacturer reaches 200k units sold, and VW is a LONG way from that benchmark. Nissan only reached the halfway point within the last year.

 

[JoulesThief]

About 2 years ago, in 2015, at the end of the model year for the 2015's, when Vw was at the height of being in the news, I negotiated 11,000 off of a $36.3K 2015 e-Golf SEL. I think I paid 25,200. I got the 2500 rebate and the 7500 tax credit too, so my net cost, before sales tax on 25,200 was $15,200. Wait until the 2017's go on sale in another year, if you feel you need to get one cheap. The 2017 is just now coming out, VW is not going to be giving hardly any deals on them currently. They do deal on year end model sales, however.

There is no way I could have gotten that kind of price on leasing an e-Golf.

 

[bizzle]

There is no way I could have gotten that kind of price on leasing an e-Golf.

I got a similar deal leasing a 2016 SE. We pay $199 per month and with an $11,000 residual my wife and I would end up paying $15,465 out of pocket total (and that's including a $500ish wear and tear warranty).

I grew up thinking the same everyone else seems to have in regards to leasing vs. owning, but it's just another form of financing. With interest rates near 0%, and money losing value sitting in an account, lenders need to give it away. Buying outright doesn't necessarily get the bottom dollar pricing. Buying with cash isn't something car dealers care about these days and in some cases gets the worst incentives. I don't know if this will change in the future, but that's how it is right now.

With rates the way they are now, you are much better off putting that $20K somewhere else for the time being.

 

[MickM]

I got a similar deal leasing a 2016 SE. We pay $199 per month and with an $11,000 residual my wife and I would end up paying $15,465 out of pocket total (and that's including a $500ish wear and tear warranty).

Would you mind please elaborating on how you got from your $199/month & $11k residual to a total cost of $15,465.

Also, I'm new to leasing as well, but I'm mostly considering it because the real car I want is the VW ID (the concept car recently shown at a few trade shows) which is supposed to be available in 2020 i.e. in 3 years time. If I lease for 3 years then I can migrate to the ID. This reasoning is likely to be completely undermined by believing that VW will actually have that car available in 2020. Heck, they've been saying the 2017 e-golf was supposed to be available since November of last year and it's only just shown up now :-/.

 

[bizzle]

$17,965 ($11,000 + $6965 [$199x35]) - $2500 California EV rebate.

 

[MickM]

Thanks - I forgot about that rebate. Actually, I remember qualifying for a rebate on my Prius many years ago but after I did my taxes I only realized a fraction of that amount... It's not a given you get the full state rebate (although it is good they take off the full 7500 federal amount when you lease).

Also (I'm fairly ignorant of leasing details), how come 35 months instead of 36?

 

[bizzle]

The California rebate wasn't a tax rebate, it was a rebate check from the state so it was a given. Now I think it's income dependent but still a given as long as you're within the correct income bracket.

I believe the first month's lease payment is normally included in drive-off fees and down payment. I negotiated the $2,000 dollars incentive JoulesThief referenced and the $7500 pass-through credit to get the purchase price I wanted with $0 out of pocket. I drove off the lot with a signature and 35 payments to go.

The car dealer doesn't care whether you have cash in hand, want to finance, or want to lease. It's all the same at the end. It's the same with buying a house with cash...the seller gets cash in the end regardless. The difference is whether you can close the deal, usually related to your credit-worthiness. If you have a credit rating high enough and you pay attention to the fine print, the different ways of financing a vehicle are identical. The difference is the fine print where terms can be hidden if someone isn't paying attention, but the same can be said for an all cash deal if the buyer isn't careful and the dealership stuffs a $495 car wash or whatever into the package.

 

[johnnylingo]

Lease unless you can get at least 20% off MSRP (which I doubt you'll be able to do on a 2017).

I was leaning towards owning as well, but now only 14 months in to my lease, I'm very much looking forward to it being over. 86 miles of range is fine for getting to work and back but the car is so nice to drive I'd love to be able to take it up to SF, Napa, and beyond without having to plan charging.

Even with 125 miles of range and a DCFC, I'd still face the same fundamental issue. Range is king and the best way to do that is plan for a new EV every 2-3 years.

 

[bizzle]

Even with 125 miles of range and a DCFC, I'd still face the same fundamental issue. Range is king and the best way to do that is plan for a new EV every 2-3 years.

That's where we're at. If VW keeps dragging their feet we'll have to get an eTron or possibly a Kia Niro. Although, I am tempted to give the 125 range a try for 3 years but this time I might just wait until they're giving them away at the end of the year again.

 

[ckdavis]

Lease unless you can get at least 20% off MSRP (which I doubt you'll be able to do on a 2017).

I was leaning towards owning as well, but now only 14 months in to my lease, I'm very much looking forward to it being over. 86 miles of range is fine for getting to work and back but the car is so nice to drive I'd love to be able to take it up to SF, Napa, and beyond without having to plan charging.

Even with 125 miles of range and a DCFC, I'd still face the same fundamental issue. Range is king and the best way to do that is plan for a new EV every 2-3 years.

If one is able to apply the $4000 credit bonus from VW financing and get perhaps $1500 off (or more) the MSRP (which seems possible, even this early into the model year), that would make a bottom-end 2017 e-Golf SE that has a sticker price of $31,500 worth buying (in my mind) if one is looking to keep the car for 7 years or more. $31,500 - $1,500 - $4,000 - $10,000 (federal and CA rebates/refunds), and the vehicle is now $16,000 plus tax and license, or about $19,000 total.

(That's not to say that I don't appreciate all the arguments for leasing that many of you have articulated here. I'm perhaps putting in more faith that the vehicle will still be worth driving past its lease life, and that given that our family has an ICE vehicle and we do very very short commutes to and from work and around the LA area, that even with battery degradation over the years, the current range of this model year Golf would be very serviceable for us.)

 

[bizzle]

Yes, if you qualify for the $4,000 credit bonus and you qualify for the full $7,500 tax credit, then that makes buying in this particular circumstances better. If neither of those apply, however, you're better off leasing because the full $7,500 will pass through to you.

People need to understand that leasing is simply financing with an option to buy. There aren't any extra fees to leasing that don't exist with financing except in regard to the return fee if you don't purchase at the end of your term. If you purchase the leased vehicle at the end of the term, then that fee is waived anyway.

The concept of "owning" a car vs. leasing a car is irrelevant. You don't "own" a financed car, either.

 

[JoulesThief]

Yes, if you qualify for the $4,000 credit bonus and you qualify for the full $7,500 tax credit, then that makes buying in this particular circumstances better. If neither of those apply, however, you're better off leasing because the full $7,500 will pass through to you.

People need to understand that leasing is simply financing with an option to buy. There aren't any extra fees to leasing that don't exist with financing except in regard to the return fee if you don't purchase at the end of your term. If you purchase the leased vehicle at the end of the term, then that fee is waived anyway.

The concept of "owning" a car vs. leasing a car is irrelevant. You don't "own" a financed car, either.

I financed my passat for the first month, to qualify for a significant discount, then at the end of the month sent VW payment in full. Title was issued in my name with no lien holder. So yes, I own a financed car. Once it's no longer financed and the lien is removed.

 

[RonDawg]

People need to understand that leasing is simply financing with an option to buy. There aren't any extra fees to leasing that don't exist with financing except in regard to the return fee if you don't purchase at the end of your term. If you purchase the leased vehicle at the end of the term, then that fee is waived anyway.

Except for Nissan. They do charge a fee at the end, I want to say it's around $350 to buy vs. $395 if you turn in the keys and walk away. I'll have to dig up my Leaf lease contract.

The concept of "owning" a car vs. leasing a car is irrelevant. You don't "own" a financed car, either.

Legally there is a difference. When you finance a car, you are the owner, free to do what you wish with the car. All you promise is that you reimburse the bank for the principal and agreed-upon interest.

When you lease the car, in essence it's a long-term, fixed-term rental, just like if you lease your home. You agree to a fixed monthly rent for the term, and when the term is up you agree to hand back the vehicle in a condition acceptable to the owner, just like you agree to leave your home in an acceptable condition when you move out. The difference is that with most (but not all) leases there is an option to purchase the vehicle for a fixed price. But until that happens, you do not own the car.

You can make any modifications to a financed car just like you can on a home you own but need a mortgage to buy. With leased cars and homes modifications are limited or even prohibited by contract, and to return the vehicle or home with unauthorized modifications can incur significant financial penalties.

 

[bizzle]

There isn't any point in taking my comments out of context.

We are talking about VW leases (or at least I was), not Nissan leases, and the financial differences between leasing versus financing--not the legal or theoretical limits of a lease (and to be clear, it's not true that one "owns" a financed car regardless of whether people believe they can do whatever they want with it--don't have to take my word for it, almost certainly your financing paperwork will clarify that you may not modify the vehicle once you check the fine print carefully).

It's factually incorrect to label a lease a "long-term rental." You are, in fact, paying down principle ownership. A lease is paying the value of use and expected depreciation during the lease span. In the past, car manufacturers inflated residual values to get low lease payments to entice people into leasing. They had high fees and inflated interest rates. All of these practices came back to bite them in the butt and now manufacturers need to lend out, they are doing it at historically low rates (sometimes 0%), and their residuals are more accurate leading to people building equity during their lease terms. Now, manufacturers don't want you to buy the car at the end of the lease as they'd rather take your car, keep your equity, and lease you a new one.

The old ways of leasing don't apply to the current market. Most people don't buy cars frequently so they aren't necessarily operating from up-to-date information. Compare the latest lease rates and interest offerings and talk to those of us who are actually in leases if you want know the most current information regarding leasing.

If you rent a house, you have no equity in it. When you lease a vehicle, you build equity and can purchase the vehicle for the residual when the lease is over.

The correct analogy to a home purchase would be renting/leasing with an option to buy.

 

[johnnylingo]

If one is able to apply the $4000 credit bonus from VW financing and get perhaps $1500 off (or more) the MSRP

That would work out to 18% off MSRP which is still a bit short of where you want to be to buy.

I was offered 21% off MSRP, so would have been looking at $18k after adding taxes but subtracting federal rebate. Looking ahead to next summer, I think the car will be worth about $13.5k used which is slightly less than the residual but a bit more when the turn-in fee is applied.

In my case buying would have been the better deal because my 2-year lease missed out on the $2500 rebate, but the point remains - if we're talking financial, roughly 20% off MSRP is the break even point. Any less than that, leasing is usually the better way to go.

But lease vs. buy is a lifestyle choice too. I bought a house because I wanted to spend weekends laying outside drunk, stoned, and naked with no fear of eviction. I'll probably buy my next EV just because I want to customize it with personalized plates, tinted windows, and maybe even installing a sunroof in the sucker.

 

[JoulesThief]

If one is able to apply the $4000 credit bonus from VW financing and get perhaps $1500 off (or more) the MSRP

That would work out to 18% off MSRP which is still a bit short of where you want to be to buy.

I was offered 21% off MSRP, so would have been looking at $18k after adding taxes but subtracting federal rebate. Looking ahead to next summer, I think the car will be worth about $13.5k used which is slightly less than the residual but a bit more when the turn-in fee is applied.

In my case buying would have been the better deal because my 2-year lease missed out on the $2500 rebate, but the point remains - if we're talking financial, roughly 20% off MSRP is the break even point. Any less than that, leasing is usually the better way to go.

But lease vs. buy is a lifestyle choice too. I bought a house because I wanted to spend weekends laying outside drunk, stoned, and naked with no fear of eviction. I'll probably buy my next EV just because I want to customize it with personalized plates, tinted windows, and maybe even installing a sunroof in the sucker.

Yeah, and a EVSE in the garage for when you want to party while recharging, and tone it down in public at public EVSE's with the drunk and naked. Stoned is probably OK, if you have it prescribed? Let's talk about women, lease or own? Lease to own? What are the financial obligations there and your thoughts on bolt on modifications? ;-)

 

[f1geek]

I think there may be some women on this forum who would suggest JoulesThief needs a bolt on his mouth and on his hands, and maybe on something else, too.

 

[JoulesThief]

I think there may be some women on this forum who would suggest JoulesThief needs a bolt on his mouth and on his hands, and maybe on something else, too.

Been to Cuba lately? How about North Korea?