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The Chevy Volt Lease and Why it’s so Cheap

Chevy Volt Lease Offers

Recent headlines have proclaimed that getting a Chevy Volt lease is a spectacular deal.  Getting a 2013 Volt lease is in fact quite appealing, though the math behind how it works is actually not that complicated.  Below you’ll see how a Chevy Volt lease breaks down and why it makes a lot of sense.

First off some basic definitions for the uninitiated, an auto lease is basically like a pre-arranged contract for you to “buy the car new, finance it, and agree to sell it back at a pre-determined time and price”.  Another way people have described it is that you are paying for the depreciation of the car for the period of the lease (+financing charges on it).  In the purest terms, a 36 month lease is no different than you buying the car new, financing most of the value of the car, and then selling it at the end of 36 months.

Of course, there are actual specific differences to leasing a car like the Chevy Volt.  First, because the lease pre-determines the future selling price, you as the lessee are not subject to the risk of the car’s residual varying.  Also, a lease typically has limits on the mileage you can put on the car so as to make sure that you don’t return a car that’s been run into the ground after 3 years.

But perhaps the biggest reason to lease a car like the Chevy Volt is the availability of $7500 worth of federal tax credits.  Typically, to take advantage of the credit, you need to make sure that you will owe at least $7500 in taxes and also that you don’t run into other tax issues like AMT.  Some would-be buyers of the Volt cannot take full tax advantage of the Volt for various reasons, so in that case leasing is an excellent option.  Why?  Because the leasor takes the federal tax credit and deducts it from the cost of the car.  It’s as if the federal tax credit were the down payment on the car.  See below how the math for a typical Chevy Volt Lease breaks down (numbers rounded and simplified for ease of reading).

If you want to know the nitty gritty of lease calculations, there are many good calculators out there that explain leasing in greater detail, but the simple assumptions for leasing a Volt are below.  I’ve ignored taxes even though that is a substantial cost for simplicity’s sake, so make sure you “add” that in as well when you do your calculation – which is part of the reason why you’ll notice differences in specific lease prices.  Also, additional options obviously increase the cost of a lease.

Price of the Chevy Volt:  $40,000

Typical Down Payment:  $2,000

Federal Tax Credit:  $7,500

Financed Cost (Also called capitalized cost) = $30,500

Residual Value % (36 month) of the Volt for common lease terms = 59%

Depreciation of the Car:  = $40,000 x 41% = $16,400

Interest Rate/Money Factor:  3.3% / 0.0014

Total Monthly Payment = $266.05  :  use a lease calculator with the above values to get this

Compared to even a regular car like a Camry or Accord, you commonly see lease payments around $200 /month.  So for just $60-100/more a month, you can own a very nice car like the Volt for 3 years!  Plus, with the fuel costs you save, the car  can practically pay for itself compared to another typical vehicle.

The main reason why the Chevy Volt lease is so attractive is that while the federal tax credit is in place, it is as if Uncle Sam put down $7500 towards the Chevy Volt for you on top of the $2000 you put in.  This, and also the presence of record low interest rates is really what makes the Chevy Volt lease so appealing.  By the way – if you lease in the state of California for a minimum of 36 months, you can also get another $1500 from the state!  See the Chevy Volt Incentives and Rebates page for more.

There are also stories of folks leasing Volts (albeit for 24 months only) for as little as $200 a month! This was in August of 2012 when GM was running a special with very low financing rates and additional cash contribution.  Sorry – that deal is gone.  But if you can negotiate a lower price with the dealer, you can also drive down the cost of the lease even more.

Did you lease your Volt?  If so how did you make out?  Probably better than me as I bought the car day 1 for MSRP ;)

24 Responses to “The Chevy Volt Lease and Why it’s so Cheap”

  1. Stuart says:

    I tried to walk through these numbers with my local dealer, and he quoted me a 36 month lease rate at close to $500/month. He showed me the lease terms, however, which showed a residual value of 57% and did not account for the $7500 tax credit explicitly. When I asked, he said the leasing firm (Ally) included the tax credit in the residual value, not as a cap cost reduction. Sadly, that means I won’t lease a Volt. Has anyone else had that issue?

    • Steve says:

      This is the experience I had in the Chicago area. Ally addes the tax credit to the residual, rather than taking it out of the total price up front. Illinois gives a $4000 tax *rebate*, regardless of your state tax bill. They just send a check for $4000 as I understand it, so with expensive leases and potentially $11,500 in tax benefits, buying may be the best deal in Illinois.

    • NoLease says:

      I tried to lease one on Friday with the same issue. The Chevy Volt page says $269 but the dealer wanted $490. I drove it and really liked it but I won’t be getting it now.

    • Michael says:

      When it comes to leasing the Volt, go into the dealer and demand the GM Chevrolet Volt lease. I went to 4 dealers before easing my Volt and the last one gave me the GM lease. The other dealers all had their own interpretation of the GM lease but you have to demand the GM Volt lease on the GM website. Only one dealer here in San Diego did it the way GM proposed the lease for the Volt. The GM deal at the time was $2419 dn and $299 for 36 mo. and that’s what I got. If the dealers you visit won’t work out the GM Lease terms for you, walk out.

    • Baranca says:

      Just went through this yesterday. With tax and license, it’s about $36,500, total, and the lease is at about 7% (not fantastic, by any means). Even so, if you figure the residual at ~ 23k, and throw in the $600 to the dealer for the paperwork, the $2500 down / $270/month numbers work…

      But that’s not what happens.

      They put the residual at $20,500. Not sure what the rest of the machinations were, but it was 4300 down and 291/month, and so I walked.

      Now, a 2011 Volt (less range on that one, uglier) with 34000 miles is selling for around 26k, so how do they figure that a 2014 Volt will be worth less than that, in three years time? The answer is, they either know something negative about the car that I don’t, or they are betting that the buyer won’t or can’t buy out the lease and re-sell or trade in the car to get the value back, pocketing the extra $ on the lease. Selling cars isn’t something I do, so I won’t consider that avenue.

      The Volt would be cool, if the price were as quoted.

      At the stated cost, you would save a bit on fuel, but spend a bit more on the new car. Overall, it would cost more than driving the car you already own, but you’d get the multiple airbags, etc.

      At the cost the dealer presented to me, it doesn’t make financial sense. Also, I LOVE the performance and function of the car, but I’m not wowed by the the hard interior surfaces, and the less than glamourous exterior shape.

      At least that’s what I’m telling myself.

      Uhhhggggg.

      • Mike S says:

        Sadly, you’re dealing with car sales people. I made them build the National Lease Special (with a fictional car). At first it didn’t work, then they found their “error”. I asked for the lease work sheet, filled in my specific vehicle price, same money factor, mileage/year, etc. Then we got ti to work. With my gas savings and state tax credit they’re paying me to drive the car. Don’t buy the car as you can see what they already did to the MSRP.

  2. Sanjay says:

    Ditto – I got a quote of $416 a month with about 2k down so total about 17k residual 25k close call leaning towards purchase based on the expectation I will come out ahead as long as the car is worth more than 16k (44k inclusive tax less 11k ca and fed and GM rebates less 17k) which is quite likely, and I retain option of keeping the car at residual 16k for rest of life if I like it.

  3. greg says:

    This article is incorrect–the $7500 is baked into the 59% residual, not taken out on top of it.

    • PatrickZWang says:

      Hey Greg,

      I’ve heard that the lenders have changed how they structured things recently, but when Volts were leasing for $260/month (Last July/August) this was roughly the way it was done to get down to that lease level. I seems like lease rates have come up somewhat since last year.

  4. Java says:

    My lease deal went down very similar to the example . I also just found some 2013′s in my area that are very similar . A $40,000 Volt should have a selling price of $33,000-$35,000 after GM discounts . The $7500 tax credit goes on top of a 43% residual .

    Use an online lease calculator to verify payment for your situation .

  5. BA says:

    Over the last 10 days I’ve requested lease deals from 4 dealers who who showed the exact Volt in their inventory that I am interested in buying. One has still not answered and the other 3 have stated that e 7500 does not come off the top; and am getting quotes in the mid 400′s per month
    By the way, this is completely opposite of what I am hearing from Nissan, they are taking the 7500 off the top of the leaf price

    Btw, I am in Jersey.

  6. Colleen says:

    Dealer on michigan can get me I’m a lease for $287.00. $750.00 down. $41,000. Is sticker.

  7. Jentry Poss says:

    Here is the lease deal I just got in Texas.
    $2682 down, including first month payment, $308 per month for 36 months, 12,000 miles. My Volt also has leather and Nav, so MSRP was a little over 43k.
    I’m thrilled with this deal. Another dealer had quoted me $458 per month with $3500 down on a base model…

  8. Michael says:

    Go into the dealer and ask for the current GM Chevy Volt lease. (From the GM Chevrolet website, not any dealer’s website) Demand those terms and make them show them to you on one their Volts. If they can’t/won’t match the GM Volt lease terms then they are trying to upsell you or worse. Get up and walk out. I got my Volt at the GM Chev Volt terms off the GM website after trying to deal with three other dealers who didn’t want to lease with the GM terms. The fourth dealer did exactly as the GM Volt lease stated and I got my Volt. I got 2419.00 dn and 299.00 a month 36 months. Plus dealer installed extras were thrown in with no extra charges. At Jimmie Johnson Chevrolet San Diego

  9. My dealer is trying to talk to me into a lease, he thinks it’s cheaper – but it’s far more beneficial (I believe) to buy it and take both the Federal and State tax rebate. No lease headaches (and I still feel leasing is “renting” anyway).If you know you won’t keep the car then the lease works. But if you think there is even a substantial possibility that will want to buy the car at the end of the lease then the lease is a bad deal because you lose the $7500 credit.

  10. Rick says:

    Leased my volt in June Love it ! Paid $440 down with 1st months payment. $256/mo.!!!!!! 30,000 mi. 36/mo. Got it in Mich Beat that!!!

  11. Eric says:

    Back in September I leased my Volt but had to do some talking to get the deal I wanted. I ended up out the door at $299/mo $0 down 36mo 12,000mi/yr for a 13′ with everything except nav. Steve Moore Chevrolet here in Charlotte, NC!!!

  12. Stefan says:

    This is shocking, I don’t feel like running around town playing games with people of low to no moral compass for what GM advertisers on their website. Starting to look at the Nissan leaf now as if GM have a hoot about their customers they would have said something in this thread. Very sad situation.

  13. Josh says:

    it sounds like I had a pretty decent experience. I just leased a Volt tonight. Mind you my credit is TERRIBLE after some long term medical issues, so I didn’t even expect to get approved. In the end though we signed the papers tonight for $343/mo with $3,000 down. That’s with all taxes, fees, licensing, etc in there. We got a Volt that has basically everything except that Nav system, and has the premium cost red paint. I’m very happy with the way the deal turned out.

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