Hello, this is Chevy Phil. I’ve always been known for a providing a lot of information to my customers, but recently with the amount of responses I get it’s more and more difficult to give everybody the full explanation I would like to. So the goal of this document is to provide some basic general info to help us be on the same page when discussing lease cost and EV’s.
This is based on my FAQ and if you think there is something I can add (or leave out) please let me know. I hope this helps and feel free to share it with your friends and family.
Basics of leasing.
The vehicle has a residual value which is what it will be worth at the end of your lease term, and you’re responsible for paying the percentage that the vehicle depreciates. For example for a volt the residual value is 50% so you pay for the other 50%. bolt is 61%, So you would pay for the other 39%. Plus tax and fees and interest. Anything below that total is due to discounts from Chevrolet and the dealership. So with some quick math you can see with the lease “should cost” and what you are saving with discounts.
Why do EV’s Lease so well?
The reason plug in vehicle leases seem so much better than other cars of the same MSRP is the government requires car companies to sell EV’s no matter what. Otherwise they have to stop selling gas guzzlers where they make their money. So the residual value is inflated to save you money (because you pay for a smaller percentage), also they give you instant discounts (rebates) that they can’t afford, and they give the dealerships kickbacks to lose money on the deal. Those three things are what makes EV leasing such a great value compared to purchasing and paying 100% of the cost and getting the $7500 tax credit. With that said dealers who hit their quota are usually giving these cars away (except times when inventory is low and they will actually sell/lease for a Profit).
How does lease pricing work?
There are three variables that control lease price,
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The sales price of the vehicle which is controlled by the dealership. (Electric vehicles are the only cars we constantly lose money on, so the price is usually a $2000 loss. It makes business sense later with Chevy kick backs but a bigger loss then that doesn’t make sense. That’s why it’s easy for me to know what is the best price possible. (When someone is already losing money it’s tough to negotiate further)
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The money factor (interest rate). Now there is a “lowest available” rate provided by Chevrolet (which is what I use) but dealers can mark it up 2% and that’s a thing to watch for.
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Factory rebates, which come in as a instant down payment for you. These change throughout the year controlled by Chevrolet. They tend to rise and fall steadily and are easy to predict. They depend on how many vehicles Chevy has in stock in our local area and how quick they need to get rid of them. Last year Chevrolet made too many Bolts because it was the first year making them, so rebates were really high. This year they aren’t making as many so rebates aren’t as high. Some days of the month there are also special rebate coupons (Flex Cash), but you’d have to purchase while they are available. (usually a mon/tue)
How do you know you’re getting the best price?
If you’re getting the Lowest money factor, all of the rebates you qualify for, and the best dealer discount, then you know you’re getting the “best price”.
All you really have to do is compare sales price, any extra rebates, and MF.
Misinformation and incorrect assumptions.
The biggest difference actually seen by consumers is usually just misinformation. For example advertised specials do not include taxes and fees called “drive off” (all companies advertise like that), So when you get the deal including everything of course it is going to be more.
Taxes and DMV fees are based on the city you live in. Upfront fees called “drive off” are a ballpark of around $1500 on these EV’s using bay area tax rates. Then your monthly payment is plus tax based on your city tax rate.
It’s normal to not include sales tax in most industries advertisements, you can’t go to Jack-in-the-Box and buy tacos for $.99 you have to add sales tax. But in car lease add’s there is more then just sales tax. There is upfront tax, DMV fees, and dealership processing and document fees called, the total is called your “Drive off” cost.
(People like my deals because I give them everything total upfront)
The second thing to consider is the advertised price is usually a really really aggressive dealer discount. At a loss to the dealership. It’s normally limited to 1 or 2 vehicles. It will say that in the Fine Print. It’s meant to get your attention, it’s not meant to be the price that everyone gets.
They may include rebates that you do not qualify for like having a current lease in your name. It may even include a special coupon that is only available in the first few days of the month, But the advertising special stays up all month (those are the worst).
When dealing with advertisements you need to read all-inclusivet.
(I provide all inclusive pricing and full details on what is included)
Usually the way people get unrealistic expectations is the assumption that the Advertised specials are a starting point and not considering taxes and fees need to be added. Being realistic in what a vehicles costs is the key to finding a car that fits your needs and your budget.
Electric vehicle rebates and benefits. With the lease of a volt (plug in hybrid) you get an additional $1500 check from the state of California. With the Lease of a bolt (all electric) you get a $2500 check from the state of California (check income requirements https://cleanvehiclerebate.org/eng).
Plus if you are a PG&E customer you get a $500 rebate from them as well.
You also get HOV stickers (renewable in 2019 and guaranteed until 2022). In 2019 any car 2016 or older will have their stickers expire which will clear the carpool lane. Also a lot of people have companies that provide free charging. You also get free parking in the city of San Jose for getting a car from a San Jose dealership. ParkSj.org (check with you city and county for additional benefits. With all those benefits it makes these cars fly off the shelves.
I think that’s everything, if you have any questions I didn’t go over, feel free to ask me.
I Work from 12pm - 9pm daily. Email/text me for appointment availability. I am also available for morning appointments with advance notice.
Phil Gileno
415-596-6262
Capitol Chvrolet in San jose
PhilGileno@gmail.com