Financing options?

[electruck]

It makes a lease/subscription option slightly more attractive because Rivian will presumably subtract the full 7.5k from your lease payments, correct?

With a lease, the credit goes to the leasing company. It generally makes sense for them to pass on the savings to the lessee.

However, I'm not sure how things work when the lessor is also the manufacturer. If there is no sale, there may be no tax credit. Similar for subscription. Dunno.

It remains to be seen whether Rivian will offer a lease where they retain the title (like Tesla) or if the lease will be handled through a third party which would certainly be entitled to the credit and likely to pass along the savings. And if Rivian is the lessor, will there be an option to purchase at the end of the lease or not (iirc, Tesla doesn't offer an end of lease purchase option)? Lot's of unknowns in this space.

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[DucRider]

However, I'm not sure how things work when the lessor is also the manufacturer. If there is no sale, there may be no tax credit. Similar for subscription. Dunno.

Manufacturers generally have a financing division (Honda Financial Services, GM Financial, etc). In order for a vehicle to be registered and insured, it must be titled. A financed vehicle will be titled in the purchasers name with the finance company as the lien holder. A leased vehicle will purchased and titled by the lessor (finance company) and "rented" (that is the actual term used in a lease contract) to the lessee. Rivian, Cox Automotive or your local credit union could be the lessor, but the the vehicle will be purchased and titled by them. There will always be a sale before a vehicle can be registered and driven on the road.

 

[ajdelange]

Wife (CPA) & I were discussing this the other day. You can even take regular 401K distributions (penalty-free) due to COVID (CARES Act) legislation, and spread the tax liability over several years.

Better than that, you don't have to take an RMD this year. Note: an RMD is where you are required to take some rather large chunk of money out of your IRA, move it to another account and write a check to the IRS for half of it.

 

[skyote]

Better than that, you don't have to take an RMD this year. Note: an RMD is where you are required to take some rather large chunk of money out of your IRA, move it to another account and write a check to the IRS for half of it.

I'm not there yet.

For others here, RMD is Required Minimum Distribution. At a certain age, you have to withdraw money from traditional 401K/IRA accounts & pay the associated income tax on them.

 

[jjwolf120]

Note: an RMD is where you are required to take some rather large chunk of money out of your IRA

RMDs also come from retirement plans, but the requirement is removed for 401k, 403b plans this year. Defined Benefit plans still have to take an RMD in 2020. The Secure Act (passed in 2019) changed the RMD start date from 70.5 to 72 for those that hadn't already begun taking their RMD.

Sorry, I work in the industry and couldn't resist.

 

[ajdelange]

And he doesn't mean at capital gains rates either.

 

[OldEVGuy]

Well, I found out, through emails from Customer Support, that both leases and a subscription program are not options at this time. I was also told we can’t use a third party leasing company. The options are cash, finance through Rivian Financial Services (RFS), a bank or credit union.

Unfortunately, that takes me out of the game. I’ll need to have my deposit refunded. Hopefully, they’ll have leases and/or subscriptions in the future. I’ll be watching closely!

Happy Trials.

 

[ajdelange]

I was also told we can’t use a third party leasing company. The options are cash, finance through Rivian Financial Services (RFS), a bank or credit union.

How would they prevent me from buying a truck and leasing it to you?

 

[OldEVGuy]

How would they prevent me from buying a truck and leasing it to you?

Good question...I wondered the same thing.

 

[St Bernard]

I think you got some bad info from someone!

 

[DucRider]

Well, I found out, through emails from Customer Support, that both leases and a subscription program are not options at this time. I was also told we can’t use a third party leasing company. The options are cash, finance through Rivian Financial Services (RFS), a bank or credit union.

Unfortunately, that takes me out of the game. I’ll need to have my deposit refunded. Hopefully, they’ll have leases and/or subscriptions in the future. I’ll be watching closely!

Happy Trials.

I wouldn't trust the CS reps info anywhere near 100%. We've seen too many times where different reps have contradicted each other.

Plus, things may change even if no leasing option is the current situation.

Not sure how they would know what the 3rd party financing company arrangements are. 36 month loan, 72 month loan, 36 month lease all result in the full purchase amount being transferred to Rivian.

A little research turned up a company that provides Credit Unions the option to add leasing.
The "Residual Calculator" page lets you work they a configuration and payments.
https://residuals.cula.com/vehicleresidualcalculator/consumer-lease.aspx
Just for Fun I chose a CU in New Jersey and a Polestar 2. You might be able to either find a Credit union o their list or convince local Credit union to sigh up for the program (if they don't already have one).
Residuals come in at 44% for a 36 month lease with 15K miles/yr. This is a reasonable number.
You often see manufacturer subsidized leases at 60% residual or more to reduce the payment number. Sometimes they use part of the Fed Tax Credit to offset the loss they will take at lease end, so you may not see the entire amount as a Capital Cost Reduction.

If the primary goal of leasing for you is to get the full Fed Tax Credit (I've heard this before from retired people with little "income"), it may or may not save you much depending on your particular situation.
Leasing can be a much more expensive way to finance for eventual purchase (with things like acquisition and disposition fees), and the added expenses may offset the reduction in the Fed Tax Credit you would receive.

Some people are able to increase their tax liability when they purchase an EV by converting a traditional IRA to a Roth or selling stocks/mutual funds that have increased in value to generate capital gains. There likely other ways as well.

 

[ajdelange]

Good question...I wondered the same thing.

I guess the larger question is as to why they would want to prevent you from leasing. I can understand why they might not want to be in that business but I would think they would want to support anything that would help them to sell more trucks.

In any case I hope you can work something out. Is leasing that much less onerous than financing?

 

[OldEVGuy]

In any case I hope you can work something out. Is leasing that much less onerous than financing?

I appreciate your concern, and also @DucRider. I’ve already requested a refund on my deposit, and am moving on. I’m not sure what I’m going to do, but will definitely be getting an EV.

I’ve learned a lot from this forum regarding EV’s, and will continue to monitor it. Thank you!

 

[Jehorton]

I appreciate your concern, and also @DucRider. I’ve already requested a refund on my deposit, and am moving on. I’m not sure what I’m going to do, but will definitely be getting an EV.

I’ve learned a lot from this forum regarding EV’s, and will continue to monitor it. Thank you!

I sadly had to pull my deposit as well. I’m looking forward to the 2023 F150 EV

 

[My 1st Truck]

I too may need to pull my deposit. I have always leased my cars, this is very disappointing. I may get the Volvo Polestar 2, very reasonable lease payments and very good reviews. I would think Rivian will need to evolve their financing options.Waiting to get a test ride soon.

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