Is that true because the lease includes an interest rate.
according to the author of the Reddit post, the buyout only requires you to pay the remainder of the principal. The only interest you pay is what was included in the payments you’ve already made.
Au contraire! If you are lucky enough to have the cash to buy the R1T outright, the investment lost by buying out early can amount to up to $10,000 if one assumes a 6.4% return on investments, a very low MF, and the earliest possible buyout. Even at current money market rates (~ 4%), you’re talking two-thirds of that. Also, if you have to finance your buyout of an incentivized lease of almost zero APR (effective based on MF), then you are losing money too. Plus leasing protects against significant depreciation, which is a real possibility for EV’s and the Rivians. The downside to leasing is you can’t make real modifications (since you don’t own the vehicle) and you pay if you go over lease mileage terms. I did this math on my 23 R1T and leased a vehicle for the first time in my 50 years of driving. If my Rivian actually is worth the lease residual value at the end of 36 months, I am thousands of dollars ahead by buying out at the end of the lease. CAVEAT: you need to do the math and figuring out the MF (money factor) in terms of an effective APR to really see this. A high MF will reduce these gains and eventually reverse them depending on one’s investment position. My effective APR was less than 1%.
I doubt any state double taxes. Some states require full sales tax up front and others add a portion of the sales tax with each lease payment. In these latter states you are simply paying sales tax on the residual value plus the amount yet to be paid on purchase price if early buyout.
Agreed. Hence my caveat. But I was replying that there were reasons to consider a lease over buying, situation dependent.
