If leasing is not available, would you cancel your Gravity order?

[WildRide47]

I've searched the forum for an answer to my question, but haven't found one.
Also checked to make sure I hadn't already asked it. I know me.

In the event of my death, I do not want my wife or my estate to be responsible for fulfilling a lease agreement.
If I lease a Gravity and pass away during the lease term, I'm thinking the balance due on the lease agreement becomes the responsiblity of my estate (i.e. my wife or my designated estate administrator if my wife has also passed).

My credit union offers credit insurance on car loans.
The insurance covers any loan balance in the event of my death.
No liability to my wife or estate.

I don't see where BoA offers such credit insurance for a financed car, so I'm guessing the same is true for a lease agreement.
Anyone know for certain?
Does BoA reclaim a leased car upon the death of the leasee?

Yes, I had the same issue when my mother in law died in 2003. She had a new leased BMW(6 months before her death) with 2+ years left on the lease. The answer was yes the estate is responsible for the lease even though the lessee has passed. We had 3 options. 1. Keep the car and continue to pay the lease. 2. Find someone else who would agree to take over the lease(BMW would have to approve this person). 3. Put the car up for auction and pay the difference between what the car brings in and what is left on the lease. Since my wife and I were in Portland Oregon and my wife's mother was in Miami, we choose the third option as we had no need of a 3rd car. Hope this answers your question

 

[msaunders9430]

With EVs the biggest hit is usually the incentives provided by the same company who sold you the vehicle, and while leases can try and guesstimate the damage done after 3 years, anyone purchasing a vehicle is on the hook for an unknown loss, the shorter the term the bigger the loss.

Which is why the chart is currently 70/30 to abandon deal if no leasing is available, it’s a huge gamble for short term buyers. Doesn’t help that company existence isn’t guaranteed.

A few questions for more learning and clarification:

What kinds of unknown losses do you mean?
I was thinking unexpected or unwarranted repairs, but I believe as a leasee I'd still be responsible for those.
Same with accident repairs.

"Shorter the term the bigger the loss"?
I would think most losses/repairs occuring in the first three years would be covered by the manufacturer's warranty.
Long term, as the warranties expire the owner is responsible for repairs previously covered.

Gamble for short term buyers, I think I get.
You mean buyers planning to own for a short period of time; 2-3 years.
Instead of owning short term and experiencing depreciation and paying for that loss value during a trade-in, I get.
I agree.

Existence of company not guaranteed, I definitely get.

 

[msaunders9430]

Yes, I had the same issue when my mother in law died in 2003. She had a new leased BMW(6 months before her death) with 2+ years left on the lease. The answer was yes the estate is responsible for the lease even though the lessee has passed. We had 3 options. 1. Keep the car and continue to pay the lease. 2. Find someone else who would agree to take over the lease(BMW would have to approve this person). 3. Put the car up for auction and pay the difference between what the car brings in and what is left on the lease. Since my wife and I were in Portland Oregon and my wife's mother was in Miami, we choose the third option as we had no need of a 3rd car. Hope this answers your question

Your response definitely helps. Thank you.

 

[037]

A few questions for more learning and clarification:

What kinds of unknown losses do you mean?
I was thinking unexpected or unwarranted repairs, but I believe as a leasee I'd still be responsible for those.
Same with accident repairs.

"Shorter the term the bigger the loss"?
I would think most losses/repairs occuring in the first three years would be covered by the manufacturer's warranty.
Long term, as the warranties expire the owner is responsible for repairs previously covered.

Gamble for short term buyers, I think I get.
You mean buyers planning to own for a short period of time; 2-3 years.
Instead of owning short term and experiencing depreciation and paying for that loss value during a trade-in, I get.
I agree.

Existence of company not guaranteed, I definitely get.

The warranty is 4 years so the only losses I was referencing was depreciation value, most of which will occur once Lucid is forced to discount heavily after the first year customer interest starts to wane and competition ramps up.

 

[msaunders9430]

The warranty is 4 years so the only losses I was referencing was depreciation value, most of which will occur once Lucid is forced to discount heavily after the first year customer interest starts to wane and competition ramps up.

OK.

I suppose Lucid has been discounting heavily with the Air lease deals I see posts about.

Leases allow companies to minimize car depreciation, correct?
Instead of cars sitting unsold and depreciating, leases are offered if sales are slow or slower than planned.
So lease revenue offsets depreciation losses?

The hope is once the leases end, the remaining depreciation loss is offset either by a new lease or a sale of the previously leased car, correct?
The trick is how much to charge in finance fees during the lease period and what residual value to recieve if lease is not renewed, correct?

I had been planning to make a sizeable down payment to minimize monthly payments and finance charges.
However, as I've seen the 60% residual values on '23 Airs (two years old), I considerd the possibility that a three year old Gravity might have a 50-55% residual value.
So, the down payment planned at the beginning of a purchase could instead by used at the end of a three year lease while also gaining the traditional benefits (mainly uncertainty of company continued existence) of a lease. Even though three years isn't much protection against a company's future changing.

 

[borski]

Doesn’t help that company existence isn’t guaranteed.

No company's existence is ever guaranteed.

 

[037]

OK.

I suppose Lucid has been discounting heavily with the Air lease deals I see posts about.

Leases allow companies to minimize car depreciation, correct?
Instead of cars sitting unsold and depreciating, leases are offered if sales are slow or slower than planned.
So lease revenue offsets depreciation losses?

The hope is once the leases end, the remaining depreciation loss is offset either by a new lease or a sale of the previously leased car, correct?
The trick is how much to charge in finance fees during the lease period and what residual value to recieve if lease is not renewed, correct?

I had been planning to make a sizeable down payment to minimize monthly payments and finance charges.
However, as I've seen the 60% residual values on '23 Airs (two years old), I considerd the possibility that a three year old Gravity might have a 50-55% residual value.
So, the down payment planned at the beginning of a purchase could instead by used at the end of a three year lease while also gaining the traditional benefits (mainly uncertainty of company continued existence) of a lease. Even though three years isn't much protection against a company's future changing.

With a lease, you take the unknown out as well as multiple risks.

1. You have a set price for the term, from 18 months usually up to 39 or 48 and a bunch in between. You also get a solid buy number at the end of the lease, assuming they don’t block buy out, and totaling the two you can get idea if you are buying at msrp, over or under and by how much.

2. Lease downside is usually being forced into buying a new vehicle with its higher cost, if you do it anyway it’s not really a penalty.

3. At the end of the term you get to look at the market and compare your residual on lease contract vs used market, you aren’t stuck with the vehicle and you can pick the better deal.

4. If company goes out of business you aren’t stuck with a financed vehicle nobody wants as it’s impossible to fix if anything goes wrong

I don’t usually dissect vehicles quite this much but as this is my first planned EV from a company with questionable future, lease is the only path for me. Usually I am the pay cash in full and forget it kind of a person if good financing terms aren’t available to make it a no brainer.

 

[HC_79]

I don’t usually dissect vehicles quite this much but as this is my first planned EV from a company with questionable future, lease is the only path for me. Usually I am the pay cash in full and forget it kind of a person if good financing terms aren’t available to make it a no brainer.

I don’t think Lucid’s future is questionable. Heck, the factory is basically ready to build the mid-market model. Luxury EV’s depreciate quicker in general but EV’s are copping a beating on depreciation also so it’s like a double whammy. To me, that’s why leasing is more favorable at the moment. Hopefully in years to come it stabilizes out a bit but time will tell.

 

[msaunders9430]

1. You have a set price for the term, from 18 months usually up to 39 or 48 and a bunch in between. You also get a solid buy number at the end of the lease, assuming they don’t block buy out, and totaling the two you can get idea if you are buying at msrp, over or under and by how much.

Yep. I definitely see that.

2. Lease downside is usually being forced into buying a new vehicle with its higher cost, if you do it anyway it’s not really a penalty.

I'm hoping to not buy a different vehicle. I'm a Gravity hostage. I love the car.
I'm more of a long term owner. Hate any kinda payments.
I'm a find good financing, buy the car, and go enjoy it. I don't need a new car every few years.
I don't need a car, just want one, so I won't be forced to buy one, but I get your point.

3. At the end of the term you get to look at the market and compare your residual on lease contract vs used market, you aren’t stuck with the vehicle and you can pick the better deal.

Yep.
A few other members mentioned that to me as well.

4. If company goes out of business you aren’t stuck with a financed vehicle nobody wants as it’s impossible to fix if anything goes wrong

I don't see that happening to Lucid, but you never know.
The longer a company exists, the possiblity of parts increases. That takes awhile.
If Lucid was in a Fisker type situation (even before bankruptcy), I'd definitely be concerned.
However, again, I get your point.


Thanks

 

[msaunders9430]

I heard from my sales advisor today. I know, here we go again with the SAs and their information.

According to mine, the Gravity will be available for leasing once deliveries start.
Lucid will announce the money factor and lease prices as we get closer to deliveries.

 

[DennisIS]

New EVs (anyone's) decline in value fast - technology is moving and the car you just got isn't. Let the leasing company deal with trying to get residual value from the next guy. 3 years is a along time in "EV Lives."
At least for me, the leasing math for my 2025 Air GT made the decision to lease for 3 years really easy. No way I'd have written a check of taken out an auto load at today's interest rates.

 

[037]

I heard from my sales advisor today. I know, here we go again with the SAs and their information.

According to mine, the Gravity will be available for leasing once deliveries start.
Lucid will announce the money factor and lease prices as we get closer to deliveries.

I heard that cars should start showing up in reviewer hands and Lucid locations in April. Based on that, seems like summer deliveries to the rest are likely to go in the May-Summer range at which point they better be labeled 2026.

 

[WeighingGravity]

I was planning to buy but now I see a lease is probably better for a lot of reasons, even though I hope to buy the Gravity at the end of the lease term.

- $7500 credit may be available
- Bailout option if the car has quality issues
- May be able to negotiate a better lease-end buyout if market value is well below residual

I will be gambling a bit on interest rates (lease money factor may be worse than purchase finance rate, but no way it's $7500 better) and used car interest rates are usually very high, but I will be able to pay cash if I really want to avoid that.

BTW does anyone know if you can prepay a lease and dodge the money factor?

 

[037]

I was planning to buy but now I see a lease is probably better for a lot of reasons, even though I hope to buy the Gravity at the end of the lease term.

- $7500 credit may be available
- Bailout option if the car has quality issues
- May be able to negotiate a better lease-end buyout if market value is well below residual

I will be gambling a bit on interest rates (lease money factor may be worse than purchase finance rate, but no way it's $7500 better) and used car interest rates are usually very high, but I will be able to pay cash if I really want to avoid that.

BTW does anyone know if you can prepay a lease and dodge the money factor?

No dodging money factors, it’s like asking the seller to skip the profit making part.

 

[HC_79]

BTW does anyone know if you can prepay a lease and dodge the money factor?

I think the only thing you save by paying upfront is the interest which in the scheme of things probably isn't going to be massive savings. Could be wrong.

 

[037]

I was planning to buy but now I see a lease is probably better for a lot of reasons, even though I hope to buy the Gravity at the end of the lease term.

- $7500 credit may be available
- Bailout option if the car has quality issues
- May be able to negotiate a better lease-end buyout if market value is well below residual

I will be gambling a bit on interest rates (lease money factor may be worse than purchase finance rate, but no way it's $7500 better) and used car interest rates are usually very high, but I will be able to pay cash if I really want to avoid that.

BTW does anyone know if you can prepay a lease and dodge the money factor?

Took a breath and here is a better response. I think if you put a good chunk of money down before starting the lease this would save you the interest you wanted.

Also, if you manage to total the car, that part would be lost, so I don’t necessarily recommend that.

 

[msaunders9430]

May be able to negotiate a better lease-end buyout if market value is well below residual

I've read in other places about leasees negotiating buyout price.

Lucid offers CPOs, which possibly includes lease returns. IMO, the residual the previous leasee chose to not pay, may appeal to another customer unless market value is really really low. Lucid can also auction returns off to dealers willing to pay more than previous leasee

Depending on the rv vs. mv difference, I wonder if that difference would be eaten up by the continued high insurance premium on a new car along with the high personal property tax on that new car. A continuous loop of lease payments, high insurance premiums, and high ppt.

I'm not chasing technology. That's an endless chase, even with ICE cars. The automotive tech and definitely battery tech will continue to advance. I don't plan on chasing it with my money.

 

[msaunders9430]

I think the only thing you save by paying upfront is the interest which in the scheme of things probably isn't going to be massive savings. Could be wrong.

How would interest costs be saved paying upfront on a lease? Isn't that interest already factored into the lease at signing?

 

[msaunders9430]

Took a breath and here is a better response. I think if you put a good chunk of money down before starting the lease this would save you the interest you wanted.

Also, if you manage to total the car, that part would be lost, so I don’t necessarily recommend that.

I would think the chunk of money would lower the interest paid, but depending on how much you're talking, that money could go toward the residual if you want to buyout without needing to finance.

Large down payment lowers monthly lease costs. Interest still there, but less?

 

[tonybot]

Took a breath and here is a better response. I think if you put a good chunk of money down before starting the lease this would save you the interest you wanted.

Also, if you manage to total the car, that part would be lost, so I don’t necessarily recommend that.

Experienced lease hackers advise against putting down down-payment inline with your comment on totaling the car part and other reasons. One of the advice used to be invest that money - but I guess it is a hard pill to swallow, given the market. May be hold on to the cash and buy the dip, whatever the heck that means these days!