Hyundai Ioniq lease deals

[SlowMovingInvestor]

I was looking at the Hyundai Ioniq 5/6 EV. For the purposes of this post, I'm not interested in discussing alternative EVs, but just purchasing/leasing these particular EVs.

I'm generally not a fan of leasing but for EVs it makes some sense to me because of the rapid tech change, rapid price depreciation and making use of the EV credit (which I'm ineligible for, but the lease financier may pass on).

https://www.hyundaiusa.com/us/en/offers ... Type=Lease
https://www.hyundaiusa.com/us/en/offers ... Type=Lease

There are some great deals, including the 6 SE for $189/mo. My state has no tax on EVs. I'm sure there will be some dealer fees, but how reasonable is to expect dealers to honor those deals? I know the deals are specifically for lower end trims, but those are ones I'm interested in.

Or does one have to start from scratch when negotiating a lease deal even on those EVs?

[lazydavid]

You'll probably have to shop around a bit, as there are a fair number of Hyundai dealers that haven't figured out how to NOT be dirtbags. As such many will refuse to honor even published promotions like this. But you will find one if you put in the effort.

Of those deals, IMO the best one is the Ioniq 5 SEL for $229/mo, second best the 6 SE for $189/mo.

[IMD801]

I think you're going to have a lot of trouble getting the dealerships to honor these deals, as lazydavid said. I had a poor experience with the two Hyundai dealerships I tried last year with the usual mix of sleazy tactics deployed. Some people will probably say to contact them by email. This hasn't worked well for me in the past, but maybe you can at least waste less time that way if they can't commit.

They're great cars at least.

[bombcar]

"Lessee is also responsible for insurance, maintenance, repairs, $.20 per mile over 12,000 miles/year, excess wear, and a $400 disposition fee."

If all those work out for you, it may be a good deal. You need to do some research to understand how a dealer makes money on a lease, and how much. That will tell you how likely it is to find one.

You may have to contact dealers quite far away. Has to be from dealer stock which may reduce it further.

[flarf]

It's not the cleanest site to navigate or the most intuitive, but leasehackr.com has a lot of current information on the best lease deals, including the dealers where they can be found.

[vfinx]

making use of the EV credit (which I'm ineligible for, but the lease financier may pass on).

Not that it should sway you, given the other reasons you mentioned, but I believe Hyundai offers the $7.5k rebate even if you don't lease. Cash and purchase-finance qualify.

[realclemsongrad]

I was looking at the Hyundai Ioniq 5/6 EV. For the purposes of this post, I'm not interested in discussing alternative EVs, but just purchasing/leasing these particular EVs.

I'm generally not a fan of leasing but for EVs it makes some sense to me because of the rapid tech change, rapid price depreciation and making use of the EV credit (which I'm ineligible for, but the lease financier may pass on).

https://www.hyundaiusa.com/us/en/offers ... Type=Lease
https://www.hyundaiusa.com/us/en/offers ... Type=Lease

There are some great deals, including the 6 SE for $189/mo. My state has no tax on EVs. I'm sure there will be some dealer fees, but how reasonable is to expect dealers to honor those deals? I know the deals are specifically for lower end trims, but those are ones I'm interested in.

Or does one have to start from scratch when negotiating a lease deal even on those EVs?

This looks amazing. But what does this mean? "For 24 months with $3,499 due at lease signing includes $7,500 EV Lease Bonus"

Does it mean we get 7500$ lease bonus but owe 3499$?

Sorry for asking a very basic question. Never leased

[lazydavid]

This looks amazing. But what does this mean? "For 24 months with $3,499 due at lease signing includes $7,500 EV Lease Bonus"

Does it mean we get 7500$ lease bonus but owe 3499$?

Sorry for asking a very basic question. Never leased

Yes. The $7500 rebate that the dealer receives for selling the EV gets (sort of, more on that later) passed on to you in the form of a reduction of the capitalized cost (purchase price). The $3499 due at signing includes the first month's payment plus an additional capitalized cost reduction (down payment).

In the case of the advertised Ioniq 5 SEL, there is a net capitalized cost reduction of $13,020, comprised of 3 components:

$7,500 provided by the government to the dealer, and passed on to you
$3,270 from you as part of the $3499 due at signing
$2,250 in dealer contribution

This reduces the $48,775 MSRP (including destination) to a net capitalized cost of $35,755. That is the "agreed-upon purchase price". The lease payments are then based on the gap between this amount and the "residual value" (what the car is worth at the end of the lease).

Here's where the "sort of" comes back into play. If you turn in the car at lease end, this looks like a normal lease and a good value at that. However, if you choose to buy the car, you will pay $35,118--just $637 less than the net capitalized cost. That's because the $7,500 gets added back in. The real residual is likely somewhere in the $26-27k range.

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car. But don't you dare buy it out at the end.

[SlowMovingInvestor]

This looks amazing. But what does this mean? "For 24 months with $3,499 due at lease signing includes $7,500 EV Lease Bonus"

Does it mean we get 7500$ lease bonus but owe 3499$?

Sorry for asking a very basic question. Never leased

Yes. The $7500 rebate that the dealer receives for selling the EV gets (sort of, more on that later) passed on to you in the form of a reduction of the capitalized cost (purchase price). The $3499 due at signing includes the first month's payment plus an additional capitalized cost reduction (down payment).

In the case of the advertised Ioniq 5 SEL, there is a net capitalized cost reduction of $13,020, comprised of 3 components:

$7,500 provided by the government to the dealer, and passed on to you
$3,270 from you as part of the $3499 due at signing
$2,250 in dealer contribution

This reduces the $48,775 MSRP (including destination) to a net capitalized cost of $35,755. That is the "agreed-upon purchase price". The lease payments are then based on the gap between this amount and the "residual value" (what the car is worth at the end of the lease).

Here's where the "sort of" comes back into play. If you turn in the car at lease end, this looks like a normal lease and a good value at that. However, if you choose to buy the car, you will pay $35,118--just $637 less than the net capitalized cost. That's because the $7,500 gets added back in. The real residual is likely somewhere in the $26-27k range.

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car. But don't you dare buy it out at the end.

Thank you, very helpful to a leasing newbie like me. Further questions

1) if dealers don't honor this deal and offer less favorable deals, do they reduce dealer contribution, or reduce the 'agreed upon purchase price' or increase the 'money factor'? Or any of the above?

2) I've read that one should not put any money down at signing. As far as I can make out, the main benefit is that if the car gets totaled, you don't lose that down payment. So if one were to ask for a 0 down payment, would a dealer keep the other terms of the deal, and just spread the down payment + interest over the lease period?

It seems that leasing has a lot of knobs the dealer can tweak and that makes it hard for a newbie lessee to figure out whether a deal is good or not.

[runswithscissors]

A friend of ours approached a Hyundai dealer in our area and they laughed at the deal. They will not honor nor come even close to the nationally advertised deal.

Having said that, if one could actually get the advertised deal they are pretty hard to beat.

[realclemsongrad]

This looks amazing. But what does this mean? "For 24 months with $3,499 due at lease signing includes $7,500 EV Lease Bonus"

Does it mean we get 7500$ lease bonus but owe 3499$?

Sorry for asking a very basic question. Never leased

Yes. The $7500 rebate that the dealer receives for selling the EV gets (sort of, more on that later) passed on to you in the form of a reduction of the capitalized cost (purchase price). The $3499 due at signing includes the first month's payment plus an additional capitalized cost reduction (down payment).

In the case of the advertised Ioniq 5 SEL, there is a net capitalized cost reduction of $13,020, comprised of 3 components:

$7,500 provided by the government to the dealer, and passed on to you
$3,270 from you as part of the $3499 due at signing
$2,250 in dealer contribution

This reduces the $48,775 MSRP (including destination) to a net capitalized cost of $35,755. That is the "agreed-upon purchase price". The lease payments are then based on the gap between this amount and the "residual value" (what the car is worth at the end of the lease).

Here's where the "sort of" comes back into play. If you turn in the car at lease end, this looks like a normal lease and a good value at that. However, if you choose to buy the car, you will pay $35,118--just $637 less than the net capitalized cost. That's because the $7,500 gets added back in. The real residual is likely somewhere in the $26-27k range.

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car. But don't you dare buy it out at the end.

Thank you for taking time to explain me. Appreciate your patience.

[bikesandbeers]

I leased two Nissan leaf’s with similar deals. No regrets paying $200 a month for a car I didn’t own. I put under 11k miles a year, save $100/ a month on gas, and had just enough tire tread left to pay nothing.

The first one they offered to take money off the residual to bring in closer to marke if I wanted to buy. but then they offered me an even better deal to lease another one. I would have bought the second one but there was no biding on a residual.

[bombcar]

It’s strangely annoying that they can advertise nationally a deal that no dealer will honor.

[CletusCaddy]

It’s strangely annoying that they can advertise nationally a deal that no dealer will honor.

Lease brokers will honor it

[Valuethinker]

It’s strangely annoying that they can advertise nationally a deal that no dealer will honor.

Not strangely annoying. It's the whole car dealership business model. It's systemic.

In software terms "A feature. Not a bug"

It's why, among other reasons, Tesla avoided creating dealers and dealerships. Which was fought fiercely and in some states was actually illegal. I think in Texas you literally could not buy a Tesla, you could look at it in a showroom and then you had to order from out of state? You can bet your local owner of a few car dealerships is an active financial and political supporter of state representatives. Like life insurance agents, a pillar of the community.

The original dealership model came about in the 1920s because car manufacturers needed to manage their inventory - too much working capital. Also cars required a lot of after sales support (maintenance etc) in those days - a lot more than now (conversely car owners could do much of it themselves; I have read that one of the reasons for the success of the US Army (starting from absolute scratch in 1940) in WW2 was the high level of mechanical skill of even the average GI. The US Army was the most motorised army in the world in WW2* - the US had the oil reserves and the technological and productive might of the US auto industry behind it. (Rubber was in short supply because the Japanese had conquered the main rubber producing areas, but I believe Du Pont developed a workable synthetic rubber).

Cory Doctorow is a very good writer on these sorts of abuses of the consumer - writing more on the internet level, but perceptive and articulate generally. Rip-off capitalism one might call it. The similarities to the era of the US around 1900 when Teddy Roosevelt became President are striking.

* because of all the very photogenic pictures and movies of Panzer tanks, most people probably don't realise that the German Army in WW2 was 80-90% horse drawn transport. They concentrated their motor vehicles in the hands of the elite Panzer (tank) and Panzer Grenadier (motorised infantry) divisions. The Soviet Union still had real cavalry divisions. Useful for reconnaissance and mobility on the flat plains and swamps of Ukraine & Belarus.

[SlowMovingInvestor]

It’s strangely annoying that they can advertise nationally a deal that no dealer will honor.

Lease brokers will honor it

For leasing newbies like me, how does one go about finding a broker? Looking on leasehackr (which is not easy to navigate)? Do they find 'local' deals?

[plannerman]

Last spring, I was in the market for an EV. I looked at several EV makes and decided on an Ioniq 5. At the time, they were selling for about $10k over MSLP--which I wasn't willing to pay. I continued to peruse nearby dealer's websites waiting for prices to come down. In early May, there was an advertised deal on my local dealer's website for about $15k under MSLP including the $7,500 lease rebate. I called up the dealer and said I'll take it. The sales rep I talked to disclaimed any knowledge of the offer. She looked it up on their website, purportedly asked the internet sales manager about it, and then told me it was a mistake--nobody was selling Ioniq 5s at that price (you dummy).

I was more than a little annoyed with this tactic and started looking at hybrid Toyotas, which were also in short supply at that time.

On May 30th, the Hyundai sales rep called me (and emailed and texted) and said if I could close before the end of the month I could have the deal.

After considering whether I wanted to do business with this dealer, I capitulated, leased the car and then immediately paid off the lease.

I love the car.

plannerman

[Jack FFR1846]

I know you're set on this Hyundai, but a near identical vehicle is the Ford Mustang Mach e. I would expect you could obliterate that Hyundai deal with the Ford. Ford has been losing gobs of money on the model which after the initial success has gone down the tubes. Matt Farrah (the smoking tire) leased one for 3 years and mostly has good things to say about it. Ford dealers were given the ultimatum over a year ago to spend a million or so dollars to sell EVs. Many dealers said "no thanks" and are better off today with dismal sales, way too high of an allocation, price drops and leased vehicles returning with no buyers for them used. In any case, dealers have to pay floor plan dollars every month so will be ready to deal to get one of these turds off their lot. I say turd only because EVs have dropped in demand and Ford has become one of the brands not looked at for the few remaining EV customers who can buy a Tesla for tens of thousands less. At least go look at a Mustang Mach e. I didn't drive the Ionic but did drive the near-twin Kia EV6 followed directly by the Mustang Mach e and found them to be nearly identical to drive. Give it a try.

[vfinx]

It’s strangely annoying that they can advertise nationally a deal that no dealer will honor.

Lease brokers will honor it

For leasing newbies like me, how does one go about finding a broker? Looking on leasehackr (which is not easy to navigate)? Do they find 'local' deals?

They usually have arrangements with dealerships to serve as off-take. For something like the Ioniq 5 they very likely already have pre-negotiated terms.

Leasehackr lets you filter by location and brand in the “marketplace” forum. The brokers advertise their stuff there.

I would post into leasehackr directly actually, and ask questions there. It’s a great forum.

[aquaman]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

[bombcar]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

The biggest advantage for leasing is if you can claim it as a deduction (which is why so many businesses lease, they can avoid having to depreciate).

Otherwise you really need to look at the overall costs in toto - for some people, $350 a year for always driving a "never older than 3 years" car is worth it. Or because you believe the dealer/lease is wrong about something (usually the residual value being way too high) you may take the deal and return it.

[lazydavid]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

I goofed on the term (24 months vs. 36), but you’re looking at a different car. The Ionia 5 SEL is $229/mo, not $189. But everything else was right, as I took the “sum of payments” directly from the fine print on the offer.

I’d still argue that $4600/year to “rent” a brand new $50k car is still a hell of a bargain.

[PoorPlumber]

https://youtu.be/dr3mFzh0KSk?feature=shared

https://youtu.be/EEXieo06ta8?feature=shared

[BHFTW]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

I goofed on the term (24 months vs. 36), but you’re looking at a different car. The Ionia 5 SEL is $229/mo, not $189. But everything else was right, as I took the “sum of payments” directly from the fine print on the offer.

I’d still argue that $4600/year to “rent” a brand new $50k car is still a hell of a bargain.

Agreed. It's a really good deal if one can get it. If one were to buy something similar, one'd pay around $2000/year just on the interest (or the equivalent opportunity cost) alone. So the deprecation is really only $2600/year, which is pretty insane. And I believe the car comes with 2-year Electrify America free charging? An equivalent ICE car with the 12000 miles/year allowed would cost around $2000/year on gas (at least in California).

[SlowMovingInvestor]

Last spring, I was in the market for an EV. I looked at several EV makes and decided on an Ioniq 5. At the time, they were selling for about $10k over MSLP--which I wasn't willing to pay. I continued to peruse nearby dealer's websites waiting for prices to come down. In early May, there was an advertised deal on my local dealer's website for about $15k under MSLP including the $7,500 lease rebate. I called up the dealer and said I'll take it. The sales rep I talked to disclaimed any knowledge of the offer. She looked it up on their website, purportedly asked the internet sales manager about it, and then told me it was a mistake--nobody was selling Ioniq 5s at that price (you dummy).

I was more than a little annoyed with this tactic and started looking at hybrid Toyotas, which were also in short supply at that time.

On May 30th, the Hyundai sales rep called me (and emailed and texted) and said if I could close before the end of the month I could have the deal.

After considering whether I wanted to do business with this dealer, I capitulated, leased the car and then immediately paid off the lease.

I love the car.

So, if the manufacturer lease cash is MLC,
MSLP = MSRP - MLC, right?
MLC would typically include a pass through of the Federal 7500 rebate, plus any extra cash the manufacturer ponies up.

And dealers can add any so-called market value adjustments, add-ons etc.? As they did initially in your case.

[SlowMovingInvestor]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

I goofed on the term (24 months vs. 36), but you’re looking at a different car. The Ionia 5 SEL is $229/mo, not $189. But everything else was right, as I took the “sum of payments” directly from the fine print on the offer.

I’d still argue that $4600/year to “rent” a brand new $50k car is still a hell of a bargain.

Agreed. It's a really good deal if one can get it. If one were to buy something similar, one'd pay around $2000/year just on the interest (or the equivalent opportunity cost) alone. So the deprecation is really only $2600/year, which is pretty insane. And I believe the car comes with 2-year Electrify America free charging? An equivalent ICE car with the 12000 miles/year allowed would cost around $2000/year on gas (at least in California).

I had the exact same thought. It's a killer deal for someone with a good charging situation.

The negative is that the Ioniq 6 SE is in short supply. I can see only one in the 100 miles around me, and it says to call for pricing. The Ioniq 6 SEL is a good deal too, but less so.

The Ioniq 5 SEL is a good deal and is available at local dealers. But not clear if they will honor manufacturer lease deals.

[BHFTW]

This looks amazing. But what does this mean? "For 24 months with $3,499 due at lease signing includes $7,500 EV Lease Bonus"

Does it mean we get 7500$ lease bonus but owe 3499$?

Sorry for asking a very basic question. Never leased

Yes. The $7500 rebate that the dealer receives for selling the EV gets (sort of, more on that later) passed on to you in the form of a reduction of the capitalized cost (purchase price). The $3499 due at signing includes the first month's payment plus an additional capitalized cost reduction (down payment).

In the case of the advertised Ioniq 5 SEL, there is a net capitalized cost reduction of $13,020, comprised of 3 components:

$7,500 provided by the government to the dealer, and passed on to you
$3,270 from you as part of the $3499 due at signing
$2,250 in dealer contribution

This reduces the $48,775 MSRP (including destination) to a net capitalized cost of $35,755. That is the "agreed-upon purchase price". The lease payments are then based on the gap between this amount and the "residual value" (what the car is worth at the end of the lease).

Here's where the "sort of" comes back into play. If you turn in the car at lease end, this looks like a normal lease and a good value at that. However, if you choose to buy the car, you will pay $35,118--just $637 less than the net capitalized cost. That's because the $7,500 gets added back in. The real residual is likely somewhere in the $26-27k range.

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car. But don't you dare buy it out at the end.

Is this true? This is the first time I've heard that the $7500 can be added back in a buyout. Is it a Hyundai thing?

[lazydavid]

Is this true? This is the first time I've heard that the $7500 can be added back in a buyout. Is it a Hyundai thing?

That is my supposition given that, after having paid almost $9,000 into the lease, the buyout price is just $637 less than the capitalized cost. There could be a different reason, but it makes sense given the facts.

[BHFTW]

Is this true? This is the first time I've heard that the $7500 can be added back in a buyout. Is it a Hyundai thing?

That is my supposition given that, after having paid almost $9,000 into the lease, the buyout price is just $637 less than the capitalized cost. There could be a different reason, but it makes sense given the facts.

I see you're looking at the numbers in the lease terms. But look at these numbers again:

IONIQ 5 SEL
MSRP $48,775
Option to purchase at lease end $35,118
$35,118 / $48,775 = 72%

IONIQ 6 SE
MSRP $43,600
Option to purchase at lease end $31,828
$31,828 / $43,600 = 73%

These whole numbers are probably not a coincidence. They appear to be their residual values after the 2-year term. These are unrealistically high residual values, which is why the lease is a a good deal but the buyout would be a bad idea.

[aquaman]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

I goofed on the term (24 months vs. 36), but you’re looking at a different car. The Ionia 5 SEL is $229/mo, not $189. But everything else was right, as I took the “sum of payments” directly from the fine print on the offer.

I’d still argue that $4600/year to “rent” a brand new $50k car is still a hell of a bargain.

Agreed. It's a really good deal if one can get it. If one were to buy something similar, one'd pay around $2000/year just on the interest (or the equivalent opportunity cost) alone. So the deprecation is really only $2600/year, which is pretty insane. And I believe the car comes with 2-year Electrify America free charging? An equivalent ICE car with the 12000 miles/year allowed would cost around $2000/year on gas (at least in California).

It's the usual exchange about the lease vs. buy process. With a subsidized lease, you can certainly come out ahead financially, but only if you're inclined to be replacing your cars every 2-3 years anyway. On the other hand, with a buy and hold strategy, vehicle depreciation tends to slow down significantly, so that on average, long term ownership of a vehicle will cause you to come out way ahead financially.

There's nothing wrong with a Hyundai Ioniq, but people aren't generally driving it because they're so in love with the vehicle itself. They do so because they're trying to save money. Hence, I don't quite understand the excitement that comes from paying $4K+/year to drive around a Hyundai Ioniq. Sure, free charging with EA is nice, but is it really your plan to be regularly sitting around at EA charging stations?

[TheGreyingDuke]

The tax credit has been paid to the leasee, it is not clawed back by either the IRS or Hyundai finance

[lazydavid]

Is this true? This is the first time I've heard that the $7500 can be added back in a buyout. Is it a Hyundai thing?

That is my supposition given that, after having paid almost $9,000 into the lease, the buyout price is just $637 less than the capitalized cost. There could be a different reason, but it makes sense given the facts.

I see you're looking at the numbers in the lease terms. But look at these numbers again:

IONIQ 5 SEL
MSRP $48,775
Option to purchase at lease end $35,118
$35,118 / $48,775 = 72%

IONIQ 6 SE
MSRP $43,600
Option to purchase at lease end $31,828
$31,828 / $43,600 = 73%

These whole numbers are probably not a coincidence. They appear to be their residual values after the 2-year term. These are unrealistically high residual values, which is why the lease is a a good deal but the buyout would be a bad idea.

But if there were no funny business going on, the actual monthly lease payments would be like $30. Because while the residual is indeed based on the MSRP, the lease payments are essentially a loan on the difference between the “Selling price” (net capitalized cost) and the residual, plus the interest represented by the money factor (MF x 2400 = interest rate). So the “principal” portion of the lease payment averages out to $26.54/mo, and the interest would bring that up by a couple of dollars.

There’s simply no way to get to a $229 lease payment unless games are being played with the $7500 or the interest rate is like 1000%.

The tax credit has been paid to the leasee, it is not clawed back by either the IRS or Hyundai finance

The last part of your assertion does not jive with the actual numbers. I’m totally open to considering an alternative explanation as to why it costs $9,000 to finance $637 for 2 years if you’d like to present one.

[mecht3ach]

We ended up leasing an Ioniq 5 about a year ago, after never leasing a car before in our lives. It always seemed like a terrible idea financially, but this made sense for us for many of the same reasons OP listed - constantly improving battery technology, ability to take advantage of the EV $7500 discount which we are not otherwise eligible for, etc., plus both kids off to college in a couple of years, meaning our car needs would change shortly. We also drive <10k miles per year (well under that), and I was able to install the Level 2 charger myself in our garage, and paid an electrician $100 to check and certify my work.

We have been very pleased with the car, and with our ability to get a good deal on the lease (which is similar to what was listed by OP). We also saw a nationally-advertised deal, created a burner gmail address, and emailed every Hyundai dealership in our area to see if they would honor it. One of them did - I don't remember the exact terminology, but that dealership was something like 'direct-owned' by Hyundai rather than a franchise, so they have a different incentive structure for their employees, and it was an incredibly low-pressure interaction. Within a week after we closed on the deal, a couple of other dealerships who originally didn't want to match the national offer came back and emailed again saying they would do so, but too late for them.

[BHFTW]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

I goofed on the term (24 months vs. 36), but you’re looking at a different car. The Ionia 5 SEL is $229/mo, not $189. But everything else was right, as I took the “sum of payments” directly from the fine print on the offer.

I’d still argue that $4600/year to “rent” a brand new $50k car is still a hell of a bargain.

Agreed. It's a really good deal if one can get it. If one were to buy something similar, one'd pay around $2000/year just on the interest (or the equivalent opportunity cost) alone. So the deprecation is really only $2600/year, which is pretty insane. And I believe the car comes with 2-year Electrify America free charging? An equivalent ICE car with the 12000 miles/year allowed would cost around $2000/year on gas (at least in California).

It's the usual exchange about the lease vs. buy process. With a subsidized lease, you can certainly come out ahead financially, but only if you're inclined to be replacing your cars every 2-3 years anyway. On the other hand, with a buy and hold strategy, vehicle depreciation tends to slow down significantly, so that on average, long term ownership of a vehicle will cause you to come out way ahead financially.

There's nothing wrong with a Hyundai Ioniq, but people aren't generally driving it because they're so in love with the vehicle itself. They do so because they're trying to save money. Hence, I don't quite understand the excitement that comes from paying $4K+/year to drive around a Hyundai Ioniq. Sure, free charging with EA is nice, but is it really your plan to be regularly sitting around at EA charging stations?

I haven't driven a Hyundai Ioniq but the 6 and 5 are at the top of Car and Driver's best electric cars and SUVs, respectively. I guess there must be something good about them to be rated so high?

Please suggest another car that would carry an annual cost on deprecation (in its first 10 years for a buy and holder) + gas + maintenance + repairs + interest (or the equivalent opportunity cost) of less than $4000~5000 and that would be exciting to drive.

[CletusCaddy]

Bottom line: The lease is a great deal, at effectively $3k/year (plus tax, but including the DAS amount) to rent a $50k car.

$3,499 + $400 (disposition fee) + $4,347 ($189/month times 23, as the first month is included in the $3,499) over 24 months = $343.58 plus tax, plus dealer fees. So, it averages out to $4,122/year plus tax, plus dealer fees.

Depending on your charging situation and other options, it can still make sense, but isn't particularly inexpensive.

I goofed on the term (24 months vs. 36), but you’re looking at a different car. The Ionia 5 SEL is $229/mo, not $189. But everything else was right, as I took the “sum of payments” directly from the fine print on the offer.

I’d still argue that $4600/year to “rent” a brand new $50k car is still a hell of a bargain.

Agreed. It's a really good deal if one can get it. If one were to buy something similar, one'd pay around $2000/year just on the interest (or the equivalent opportunity cost) alone. So the deprecation is really only $2600/year, which is pretty insane. And I believe the car comes with 2-year Electrify America free charging? An equivalent ICE car with the 12000 miles/year allowed would cost around $2000/year on gas (at least in California).

It's the usual exchange about the lease vs. buy process. With a subsidized lease, you can certainly come out ahead financially, but only if you're inclined to be replacing your cars every 2-3 years anyway. On the other hand, with a buy and hold strategy, vehicle depreciation tends to slow down significantly, so that on average, long term ownership of a vehicle will cause you to come out way ahead financially.

By year 10 into owning a new $50k car it is still likely depreciating at $3k/yr.

Hence the excitement about these deals.

[BHFTW]

Is this true? This is the first time I've heard that the $7500 can be added back in a buyout. Is it a Hyundai thing?

That is my supposition given that, after having paid almost $9,000 into the lease, the buyout price is just $637 less than the capitalized cost. There could be a different reason, but it makes sense given the facts.

I see you're looking at the numbers in the lease terms. But look at these numbers again:

IONIQ 5 SEL
MSRP $48,775
Option to purchase at lease end $35,118
$35,118 / $48,775 = 72%

IONIQ 6 SE
MSRP $43,600
Option to purchase at lease end $31,828
$31,828 / $43,600 = 73%

These whole numbers are probably not a coincidence. They appear to be their residual values after the 2-year term. These are unrealistically high residual values, which is why the lease is a a good deal but the buyout would be a bad idea.

But if there were no funny business going on, the actual monthly lease payments would be like $30. Because while the residual is indeed based on the MSRP, the lease payments are essentially a loan on the difference between the “Selling price” (net capitalized cost) and the residual, plus the interest represented by the money factor (MF x 2400 = interest rate). So the “principal” portion of the lease payment averages out to $26.54/mo, and the interest would bring that up by a couple of dollars.

There’s simply no way to get to a $229 lease payment unless games are being played with the $7500 or the interest rate is like 1000%.

The tax credit has been paid to the leasee, it is not clawed back by either the IRS or Hyundai finance

The last part of your assertion does not jive with the actual numbers. I’m totally open to considering an alternative explanation as to why it costs $9,000 to finance $637 for 2 years if you’d like to present one.

There is no funny business going on. You misunderstood how interest works in a lease. You're not paying interest on the deprecation (selling price - residual value), you are paying interest on the car value on a gliding path from the selling price to the residual value, which is ((selling price + residual value) / 2) on average. So the deal's high residual value is working against you a bit on the interest.

If we estimate the interest to be 6% (0.0025 MF) with a 72% residual value, we would come very close to the advertised lease terms: https://leasehackr.com/calculator?make= ... _mode=true

[lazydavid]

There is no funny business going on. You misunderstood how interest works in a lease. You're not paying interest on the deprecation (selling price - residual value), you are paying interest on the car value on a gliding path from the selling price to the residual value, which is ((selling price + residual value) / 2) on average. So the deal's high residual value is working against you a bit on the interest.

If we estimate the interest to be 6% (0.0025 MF) with a 72% residual value, we would come very close to the advertised lease terms: https://leasehackr.com/calculator?make= ... _mode=true

The sad part is I actually knew that. Thanks for setting me straight.

[aquaman]

I haven't driven a Hyundai Ioniq but the 6 and 5 are at the top of Car and Driver's best electric cars and SUVs, respectively. I guess there must be something good about them to be rated so high?

There's nothing wrong with them, but we are talking about an affordable vehicle segment (and, so far, the EV segment also just doesn't have nearly as much competition as ICE).

I am not trying to dissuade you or others from the vehicle or the deal. I am just surprised to see excitement, particularly on BH, over a $4K+/year lease on basic transportation.

Please suggest another car that would carry an annual cost on deprecation (in its first 10 years for a buy and holder) + gas + maintenance + repairs + interest (or the equivalent opportunity cost) of less than $4000~5000 and that would be exciting to drive.

As I mentioned above, unless you're planning on hanging out at EA chargers for all your charging needs, which sounds like a nightmare, you aren't getting free "fuel."

As for the alternatives, it all depends on what you're looking for. Other than the most recent vehicle shortage, which we are mostly out of, driving a significantly nicer ICE vehicle (which people bought slightly used) with total ownership costs at a fraction of the amounts discussed here generally has not been difficult. If you're only looking at EV's, however, I can certainly respect that.

[aquaman]

By year 10 into owning a new $50k car it is still likely depreciating at $3k/yr.

Except that it's a $50K vehicle the same way that mattress retailers advertise a $4K mattress that they've always sold for far less than that. People aren't actually paying $50K for these vehicles and they do not compete with the ones actually selling for $50K.

I'll leave this discussion alone, as I don't want to sidetrack this thread, but continue to be very surprised to see this on BH.

[CletusCaddy]

By year 10 into owning a new $50k car it is still likely depreciating at $3k/yr.

Except that it's a $50K vehicle the same way that mattress retailers advertise a $4K mattress that they've always sold for far less than that. People aren't actually paying $50K for these vehicles and they do not compete with the ones actually selling for $50K.

I'll leave this discussion alone, as I don't want to sidetrack this thread, but continue to be very surprised to see this on BH.

Hey we are kindred spirits here. I agree with you 100%.

I’m talking about new cars that actually sell for $50k OTD (excluding tax). So maybe $55-60k MSRP

[TravellingTechOnFire]

I'm not sure a low price on a vehicle that depends on a horribly unreliable charging network is a great deal. Personally, I wouldn't consider buying, leasing, or renting an EV that does not have full access and flawless software integration with the NACS network. I speak from experience. We just sold our two year old Kia Niro EV. Great car for around town.

[SlowMovingInvestor]

By year 10 into owning a new $50k car it is still likely depreciating at $3k/yr.

Except that it's a $50K vehicle the same way that mattress retailers advertise a $4K mattress that they've always sold for far less than that. People aren't actually paying $50K for these vehicles and they do not compete with the ones actually selling for $50K.

I'll leave this discussion alone, as I don't want to sidetrack this thread, but continue to be very surprised to see this on BH.

Actually, I find your comments very useful, since I'm not totally sold on leasing or even getting an EV right now, and your comments provide a useful reality check.

I think the Ioniq 5 SEL would sell for around 40K (no EV sales tax in my state).

My alternative idea is to buy a new ICE compact sedan or SUV around 23-30K MSRP. Sales tax. The lack of sales tax and pass through of the EV credit gives EV leases a benefit of around $10K over an ICE sale. So leasing an EV if I can get an advertised deal seems like a good alternative to buying a new ICE.

[onourway]

Are people confusing the old Hyundai Ioniq with the new 5/6? The old one was a compact budget car. The 5/6 are decidedly mid-range and I'd think perfectly reasonable vehicles for Boglehead consideration?

[vfinx]

By year 10 into owning a new $50k car it is still likely depreciating at $3k/yr.

Except that it's a $50K vehicle the same way that mattress retailers advertise a $4K mattress that they've always sold for far less than that. People aren't actually paying $50K for these vehicles and they do not compete with the ones actually selling for $50K.

I'll leave this discussion alone, as I don't want to sidetrack this thread, but continue to be very surprised to see this on BH.

Actually, I find your comments very useful, since I'm not totally sold on leasing or even getting an EV right now, and your comments provide a useful reality check.

I think the Ioniq 5 SEL would sell for around 40K (no EV sales tax in my state).

My alternative idea is to buy a new ICE compact sedan or SUV around 23-30K MSRP. Sales tax. The lack of sales tax and pass through of the EV credit gives EV leases a benefit of around $10K over an ICE sale. So leasing an EV if I can get an advertised deal seems like a good alternative to buying a new ICE.

I haven’t really followed along in detail, but given that very last paragraph, I’ll just repeat that with the Ioniq 5, I don’t believe you have to lease to get the $7.5k credit. Hyundai is just offering it anyway (out of their own pocket) for cash / finance. There may be some extra juice on the lease incentive, but it’s likely offset a bit by lease acquisition fee and disposition fee. So cash / finance may not be that far off.

[SlowMovingInvestor]

We ended up leasing an Ioniq 5 about a year ago, after never leasing a car before in our lives. It always seemed like a terrible idea financially, but this made sense for us for many of the same reasons OP listed - constantly improving battery technology, ability to take advantage of the EV $7500 discount which we are not otherwise eligible for, etc., plus both kids off to college in a couple of years, meaning our car needs would change shortly. We also drive <10k miles per year (well under that), and I was able to install the Level 2 charger myself in our garage, and paid an electrician $100 to check and certify my work.

Thanks for describing your experience.

Question -- were you able to get auto insurance for the Ioniq at a reasonable price? I know this is very state/company/driver dependent, but I wanted to get an idea of whether I should expect to be unpleasantly surprised by the cost of insuring an EV.

[SlowMovingInvestor]

My alternative idea is to buy a new ICE compact sedan or SUV around 23-30K MSRP. Sales tax. The lack of sales tax and pass through of the EV credit gives EV leases a benefit of around $10K over an ICE sale. So leasing an EV if I can get an advertised deal seems like a good alternative to buying a new ICE.

I haven’t really followed along in detail, but given that very last paragraph, I’ll just repeat that with the Ioniq 5, I don’t believe you have to lease to get the $7.5k credit. Hyundai is just offering it anyway (out of their own pocket) for cash / finance. There may be some extra juice on the lease incentive, but it’s likely offset a bit by lease acquisition fee and disposition fee. So cash / finance may not be that far off.

Yes, but saw that, but I'm not entirely sure they're equivalent, since in one case, Hyundai is paying out of pocket, in the other case it's getting the money from the Feds. That matters to me as a consumer because it seems to me that Hyundai has extra cash as a result of the credit and has sweetened the lease deal a little more by upping the residual. [ I should add that I'm a lease newbie, so I could be wrong too!]

[vfinx]

My alternative idea is to buy a new ICE compact sedan or SUV around 23-30K MSRP. Sales tax. The lack of sales tax and pass through of the EV credit gives EV leases a benefit of around $10K over an ICE sale. So leasing an EV if I can get an advertised deal seems like a good alternative to buying a new ICE.

I haven’t really followed along in detail, but given that very last paragraph, I’ll just repeat that with the Ioniq 5, I don’t believe you have to lease to get the $7.5k credit. Hyundai is just offering it anyway (out of their own pocket) for cash / finance. There may be some extra juice on the lease incentive, but it’s likely offset a bit by lease acquisition fee and disposition fee. So cash / finance may not be that far off.

Yes, but saw that, but I'm not entirely sure they're equivalent, since in one case, Hyundai is paying out of pocket, in the other case it's getting the money from the Feds. That matters to me as a consumer because it seems to me that Hyundai has extra cash as a result of the credit and has sweetened the lease deal a little more by upping the residual. [ I should add that I'm a lease newbie, so I could be wrong too!]

Ah yes I see what you mean. A clever ploy on Hyundai’s part. Those residuals do seem inflated. Definitely a lease machine then.

[mecht3ach]

Thanks for describing your experience.

Question -- were you able to get auto insurance for the Ioniq at a reasonable price? I know this is very state/company/driver dependent, but I wanted to get an idea of whether I should expect to be unpleasantly surprised by the cost of insuring an EV.

We called our insurance company to get an estimate before buying the car, and found it to be pretty reasonable. *However* that number went up substantially for the yearly renewal we just passed. It is my understanding that is somewhat standard in the industry right now, but it almost doubled. I'm working with the insurance company now to try to figure out how to bring it back down somewhat.

[lazydavid]

We called our insurance company to get an estimate before buying the car, and found it to be pretty reasonable. *However* that number went up substantially for the yearly renewal we just passed. It is my understanding that is somewhat standard in the industry right now, but it almost doubled. I'm working with the insurance company now to try to figure out how to bring it back down somewhat.

When a car is new in the market, insurance companies often do not have enough data to build model-specific actuarial tables for it. So they use a generic table based on vehicle class and MSRP to determine rates early on. A year or two later, the data is there, and rates get updated.

[mecht3ach]

When a car is new in the market, insurance companies often do not have enough data to build model-specific actuarial tables for it. So they use a generic table based on vehicle class and MSRP to determine rates early on. A year or two later, the data is there, and rates get updated.

That makes a lot of sense, and I do think that is part of it - thanks for that info. I also want to look at re-allocating our drivers (4) between the 2 cars, and see what that does to both rates!