R1S Lease vs. Buy - I did the math

[TM1]

We are about 8.5% sales tax
Here is another statement - this was pre official lease doc.

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[TM1]

I made the mistake of paying the closing fees early, thus the final agreement got sent to me a few days early with the start of the lease on the day I made the closing costs. I'm just going to wait until the delivery day to sign the final docs, because that will be when the lease should really start, plus I can actually verify that the mileage is under 100 miles. My sales guide said to just trust that it is under 100 miles and sign everything. I'll have to let him know that is not a good recommendation.

 

[RivianG2R1S2024]

I chose Lease for the following reasons:

I primarily use it for a new business so I write off a good portion of lease payments and related expenses.

Hedge against uncertain future value and vehicle accidents.

I’d like to see repairs and replacement costs go down over the next 2-3 years. Assuming Rivian continues to grow and rates decline, I’ll finance my next R1S.

 

[TM1]

Delivery delayed 5 days and vin number changed because the shipping from Ca just wasn't happening (3rd party shipper), but the same build as mine appeared locally, so will take delivery tomorrow. It would have been a mess (change of vin number would have caused issues) if I had signed the lease before the actual delivery with me looking at the odometer to verify that the mileage was under 100 miles.

 

[phaduman]

I have created a lease decoder (read-only so one needs to download and make their own inputs in the blue cells) and be able to decode a lease. If this survives the review of this group, I might post this as a main topic.

cheers
PN

Lease Decoder Google Sheet

 

[jlbeau]

Thank You PN. Valuable Tool. Well crafted. Wondering in the lease "early buyout" section should there also be a calculation for additional sales tax when purchased? Or has it been omitted because it is also not included if you go to end of lease terms and buyout/purchase at end of lease? Thank you...jim

 

[phaduman]

Thank You PN. Valuable Tool. Well crafted. Wondering in the lease "early buyout" section should there also be a calculation for additional sales tax when purchased? Or has it been omitted because it is also not included if you go to end of lease terms and buyout/purchase at end of lease? Thank you...jim

Thanks for reviewing. Good point. I have now added the sales tax.

I believe (I am going through the process now) that the $ to the bank/JPMC here is for the remaining residual value, and the sales tax is paid separately (I think direct to DMV?) - as you have predicted. I will update this after I have gone through that experience myself.

 

[UnsungZero_OldTimeAdMan]

Now that none are eligible for purchase credit, leasing is the only pathway for federal credit (until that too is gone).

https://riviantrackr.com/news/why-r...it-in-2025-but-you-can-still-save-on-a-lease/

 

[Donald Stanfield]

Perhaps. Worth pointing out that money for my rides I set aside. Making more money off it just might not be necessary at all. That is the job of other monies set aside for just that, make more money. It is all baked into the life cake and accounted for. Nothing is affected by paying cash.

I myself would be hard pressed to LOL while servicing debt even if at 0.00001% APR. Everybody's situation is different.

You're not thinking about the time value of money. I completely agree with your sentiment of having the money to fund your purchases fully, but I do not agree with using that money to buy the vehicle. Let's say your car cost 100K and you plan on keeping it 10 years. You give Rivian your 100K and get your R1 free and clear. I finance the whole thing for 60 months paying 5% interest. I then take the 100K I saved for my truck and put it in a mutual fund averaging 10% over 10 years; a few have paid better than that over the same period.

After those 10 years, assuming we both kept our R1s this entire time, I will have paid an extra 13,227.00 dollars for my R1 than you would have. However, the 100K I put in that mutual fund 10 years prior is now worth 259,374. So I would have an extra 146,147, over double my initial investment, in my pocket. If you have enough money that an extra 146K dollars doesn't mean anything to your financial picture then you're right paying cash doesn't matter.

 

[phaduman]

You're not thinking about the time value of money. I completely agree with your sentiment of having the money to fund your purchases fully, but I do not agree with using that money to buy the vehicle. Let's say your car cost 100K and you plan on keeping it 10 years. You give Rivian your 100K and get your R1 free and clear. I finance the whole thing for 60 months paying 5% interest. I then take the 100K I saved for my truck and put it in a mutual fund averaging 10% over 10 years; a few have paid better than that over the same period.

After those 10 years, assuming we both kept our R1s this entire time, I will have paid an extra 13,227.00 dollars for my R1 than you would have. However, the 100K I put in that mutual fund 10 years prior is now worth 259,374. So I would have an extra 146,147, over double my initial investment, in my pocket. If you have enough money that an extra 146K dollars doesn't mean anything to your financial picture then you're right paying cash doesn't matter.

good example. Perhaps not as clear - the $146K extra, that would raise your overall tax bracket when you liquidate the Mutual Funds, and so tax on $146K + additional tax due to tax bracket increase needs to be accounted for, for a true apple to apple. May be 25% (assuming long-term 20% + additional 5% due to tax bracket increase)?

 

[Jonger1150]

Always lease.

 

[Jonger1150]

I chose Lease for the following reasons:

I primarily use it for a new business so I write off a good portion of lease payments and related expenses.

Hedge against uncertain future value and vehicle accidents.

I’d like to see repairs and replacement costs go down over the next 2-3 years. Assuming Rivian continues to grow and rates decline, I’ll finance my next R1S.

Hedge against an 800V solid state version with 500 miles and equal weight hitting the market in 2027 to 2028. That's why I lease.

 

[bigsky]

You're not thinking about the time value of money. I completely agree with your sentiment of having the money to fund your purchases fully, but I do not agree with using that money to buy the vehicle. Let's say your car cost 100K and you plan on keeping it 10 years. You give Rivian your 100K and get your R1 free and clear. I finance the whole thing for 60 months paying 5% interest. I then take the 100K I saved for my truck and put it in a mutual fund averaging 10% over 10 years; a few have paid better than that over the same period.

After those 10 years, assuming we both kept our R1s this entire time, I will have paid an extra 13,227.00 dollars for my R1 than you would have. However, the 100K I put in that mutual fund 10 years prior is now worth 259,374. So I would have an extra 146,147, over double my initial investment, in my pocket. If you have enough money that an extra 146K dollars doesn't mean anything to your financial picture then you're right paying cash doesn't matter.

Living 100% debt-free is an incredibly satisfying, liberating, priceless feeling, one of life's greatest pleasures and accomplishments in my view.
Not having banks, loansharks, cc companies ordering you, telling you what to do, their grimy, filthy paws in my wallet, my cars, my house, etc. No way in hell. They all can just bugger off.

The monies set aside for my expenses have no purview in making more money for me. 100% N/A. That is the job and mission of other monies set aside for just that. Give me total debt-free liberty or give me death, the way I see it.

 

[Donald Stanfield]

Living 100% debt-free is an incredibly satisfying, liberating, priceless feeling, one of life's greatest pleasures and accomplishments in my view.
Not having banks, loansharks, cc companies ordering you, telling you what to do, their grimy, filthy paws in my wallet, my cars, my house, etc. No way in hell. They all can just bugger off.

The monies set aside for my expenses have no purview in making more money for me. 100% N/A. That is the job and mission of other monies set aside for just that. Give me total debt-free liberty or give me death, the way I see it.

Fair enough, I see things in a similar manner except I view it as so long as my investments and income exceed my debts I’m debt free as I could liquidate and pay them off whenever.

 

[Donald Stanfield]

good example. Perhaps not as clear - the $146K extra, that would raise your overall tax bracket when you liquidate the Mutual Funds, and so tax on $146K + additional tax due to tax bracket increase needs to be accounted for, for a true apple to apple. May be 25% (assuming long-term 20% + additional 5% due to tax bracket increase)?

Depends on your current tax bracket but usually the idea is to leave that money alone until retirement when it’s your only income so you only draw enough off to keep you under whatever bracket you can live off the intersection of the amount saved and your lifestyle.

You’re right though you’d have to pay tax on the gain via capital gains but unless you’re over 500k a year it’s only 15%.

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