Is It Better to Buy or Lease an Electric Vehicle?
Which option is a better investment of your money?
Choosing to drive an electric car is an excellent decision for the environment and your wallet. And like any new vehicle acquisition, you have the option of purchasing or leasing the electric vehicle from a dealership. Based on the cost and getting the best value for your money, is it better to buy or lease an electric vehicle?
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Reasons why leasing an EV is better
As the sticker prices of brand-new cars continue to rise, more drivers are opting to lease instead of purchase their new cars. As with most lease deals, leasing an EV typically involves a smaller down payment and lower monthly payments compared to financing a brand-new car because lease payments are calculated according to how much value the car will lose during the contract period. Plus, any federal or state tax credits typically get applied to the transaction price to reduce the monthly lease payments even further.
Because modern electric powertrain technology is still relatively novel and rapidly evolving, new engineering innovations are constantly arriving. Leasing an EV instead of buying it allows you to swap the model out for a newer version every couple of years to ensure you have the latest electric tech. You could still trade in your purchased car for a new model, but you won’t get much credit for your trade-in.
The biggest maintenance cost of owning an electric vehicle is replacing the battery. It can cost multiple thousands of dollars and usually happens 8-10 years into its life. Leasing an EV allows you to dodge this hefty cost by relinquishing the car way before it’s an issue.
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Reasons why buying an EV is better
If you intend to drive your EV for as long as possible and want full control of it, buying the vehicle could be a better choice for you. The longer you own it, the more value you get from your investment (once you pay off the remaining balance).
If you purchase an electric vehicle, you may be eligible to receive a substantial state or federal tax credit for your eco-conscious purchase. Your monthly payments will still be higher than if you leased, but you’ll receive the full tax credit within your first year of ownership on your next income tax return.
Leasing an electric vehicle does come with certain restrictions, capping your monthly mileage, and prohibiting you from making major modifications to the car. If you don’t want these constraints affecting you, you’re better off just purchasing the vehicle entirely.
Because of how rapidly electric vehicles depreciate in value, there’s a chance that purchasing one brand-new could result in you owing more on the vehicle than it’s worth. Make sure whichever model you buy is one that is projected to retain its value.
In many cases, financial experts recommend leasing a new electric vehicle instead of purchasing it. It allows you to avoid the largest losses of owning an EV for a long time and lets you swap it out for a new model every couple of years. But if you want the very best deal on an EV, the most value comes from buying a pre-owned one.
Aaron is unashamed to be a native Clevelander and the proud driver of a Hyundai Veloster Turbo (which recently replaced his 1995 Saturn SC-2). He gleefully utilizes his background in theater, literature, and communication to dramatically recite his own articles to nearby youth. Mr. Widmar happily resides in Dayton, Ohio with his magnificent wife, Vicki, but is often on the road with her exploring new destinations. Aaron has high aspirations for his writing career but often gets distracted pondering the profound nature of the human condition and forgets what he was writing… See more articles by Aaron.