Should You Lease Or Buy An Electric Car?

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If your next car is an EV, is it better to lease or buy it outright?

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When it's time for a new car, you have two options - buying or leasing. The same is true when you're looking at an electric vehicle (EV) - is it better to buy that Audi e-tron you've had your eye on, or lease it? Each option has its own benefits and drawbacks but when considering the higher starting prices of the best EVs, is it better to lease rather than buy an electric car? It certainly warrants a closer look.

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The Main Differences Between Buying and Leasing an EV

When you purchase, you pay it off over a set period in monthly installments, then take ownership of the car, after which it belongs to you completely. When you lease an electric car, you're essentially renting it. So, in terms of leasing vs buying a car, your monthly payments are lower when leasing, but you have to give the car back afterward and start a new contract.

When you lease an electric vehicle, you rent it for two to four years. This gives you the opportunity to always drive the latest models, but it never becomes your property. But, while you never have to worry about selling or trading in, you may also find yourself spending more in the long run on perpetual leases. However, there is more to the discussion than simple numbers when it comes to deciding whether to lease or buy an electric car.

How Does Leasing an EV Differ from a Traditional Vehicle?

How Does Leasing An EV Differ From A Traditional Vehicle?

So you've seen that electric car for lease from a local dealer and the deal looks good. Should you do it? Probably. Leasing can be great for an internal combustion engine (ICE) car, but you need to know how EVs are different. Several factors come into play that make leasing an electric car the best way to acquire one right now. It might not matter much for ICE cars, but when it's buying versus leasing for EVs, there are some very noticeable differences.

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Leasing an Electric Car

Here we compare the advantages and disadvantages of leasing an EV:

Pros and Cons

  • The latest technology - As the monthly costs may be a little lower, you may have access to the best tech that you may not have had if you were purchasing. Leasing can help keep you on the cutting edge - take a look at the various models from Tesla!
  • Depreciation - Usually a con, EVs depreciate faster than ICE cars, mostly because EV tax credits reduce their original MSRPs. But lease agreements take this into account, enabling you to benefit from the lower price.
  • Tax incentives or credit - The leasing company benefits from these credits but may pass this on to the consumer, resulting in lower lease costs. Hunt for good deals when you lease; electric-car deals abound currently.
  • All the normal pros - As with ICE cars, these include being able to afford a better car, a smaller down payment, no maintenance, warranty cover, etc.
  • Depreciation. You still pay for the car's depreciation, plus all lease fees, taxes, insurance, and interest.
  • It's never yours. You never actually own the vehicle and have to give it back even after all the money you've put into it.
  • Expensive exit clause. You cannot terminate the lease early without paying penalties.
  • Limitations. There are mileage and wear-and-tear limitations - business owners beware. And you are not allowed to customize the vehicle if you lease it.

Buying an Electric Car

If some of these are deal-breakers, you could consider buying that EV, but this has its own set pros and cons, too:

Pros and Cons

  • Ownership. The car belongs to you and you never have to give it back.
  • Termination. You can trade the car in or even sell it at any time during the agreement period.
  • No limitations. None of the above limitations apply.
  • The tech curve. EVs are still improving and you may miss out on the latest innovations if you are saddled with an older model for too long.
  • Buyer confidence. People are still wary of EVs and might not want to keep them for too long, for fear of an expensive failure like a battery.
  • Cost. EVs are still more expensive in general, so monthly payments are higher.

Verdict: Leasing vs Buying an Electric Car

Whether you choose to buy or lease an EV, there are numerous benefits and trade-offs to consider. However, there are slightly more advantages to leasing it. This may change in the future as tax credits eventually fall away and EVs become cheaper and more widely accepted. Right now, leasing is the more sensible option for most. Use an online calculator (there are many) and do the math to see for yourself how much your monthly payments will be.

An EV revolution is upon us and, to take advantage of the slew of new EVs entering the market, leasing is the best way to experience a new one every few years. Importantly, it lowers the cost of joining the EV movement and makes it possible for more people to 'go electric'.

Electric Vehicle Tesla

FAQs

How long do EV cars last?

EVs have fewer moving parts than traditional combustion or hybrid vehicles, and their electric motors are very reliable. As such, they don't wear out easily and require less maintenance. The fact that their batteries carry 200,000-mile warranties should give you some idea of how long they last. For this reason, buying a recent-model used EV car is low-risk.

Why should we switch to electric cars?

There is a reason so many automakers are focusing on this segment of the market. It is our zero-emission future. Range and charging concerns will diminish over time and ICE cars will eventually die out.

Should I purchase an electric car in 2021-2022?

If your local charging infrastructure is good and you have Level 2 home charging, it may be a good option. If you are in retirement or only drive in town, a cheaper, low-range EV like the Nissan Leaf is fine. Or start by looking at used cars to save money and get into the game.

Why are EVs so expensive?

Though the technology behind EVs isn't overly new, making it viable for mass production is. As such, these vehicles are naturally more expensive than their more commonplace contemporaries. However, the technology will become cheaper as it scales up in volume. Several automakers are working on sub-$30,000 EVs. In the meantime, you can buy an electric car used, if you want to save a few bucks.

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