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Should you lease or buy an electric vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive financial calculators and tools that provide objective and original content. We also allow you to conduct research and compare data for free – so that you can make informed financial decisions. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website are provided by companies that compensate us. This compensation could affect how and where products appear on this website, for example for instance, the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law for our mortgage, home equity and other home loan products. However, this compensation will affect the information we provide, or the reviews you see on this site. We do not contain the universe of companies or financial offerings that could be open to you.
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6 minutes read. Published 23rd September 2022
Written by Rebecca Betterton Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of using loans to buy an automobile.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to take control of their finances with precise, well-studied data that breaks otherwise complicated topics into bite-sized pieces.
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The market has seen a dramatic increase over the last year. hybrids and electric vehicles accounted for 4.5 or 6.6 percent of new registrations between January and June 2022, respectively according to a 2022 market trend report for the second quarter of 2022 report by . Although the options outside of Teslas and Toyotas grow, diving in with both feet into a new model of vehicle can be daunting. In addition, with an average cost of more than $66,000 on the market for an electric vehicle, the options are endless both financially and rationally. If you’re in the category of curiosity , not confidence, an electric vehicle will help you determine whether an eco-friendly car is the right choice for you, while is best for drivers who are ready to commit. Lease versus purchasing an EV
Leasing an electric car can provide you with hands-on experience of the vehicle that is otherwise costly however, it could cost you more in the end if you go over the limit or when you reach the end of your lease.
Do you prefer to lease or purchase an electric car? In terms of the issue of whether or not it’s easy to figure out which is most beneficial for you and your wallet. If you intend to switch between vehicles every couple of years and you are able to manage mileage restrictions then leasing can be ideal. If you’re looking for the flexibility of ownership purchasing is the best most suitable option. However, the field of electric vehicles is just beginning to take off, when sales of electric vehicles increase year over year. Therefore, committing to the long-term ownership of a vehicle which is not yet on the market isn’t always a good idea. To decide which option is best for you consider the benefits and drawbacks of each. Leasing an electric car Pros to leasing an electric vehicle warranty . Lower monthly cost. tech features
Cons to leasing an EV Faster vehicle depreciation Inability to sell the vehicle
Benefits of leasing an electric car benefits of leasing an electric car include increased security by a complete that means less visits to the mechanic- a lower monthly cost and access to the newest technology. The warranty for vehicles generally leases last 24 or 36 months. During that time your vehicle may run into technical problems. When it comes to EV servicing, it is the need to replace the battery is the most frequent problem you could face. However, when you lease, your vehicle will likely remain covered under warranty — giving you the chance to save thousands of dollars. Lower monthly payments A car you lease gives you to use the vehicle for a set period of time and pay every month. It often costs less each month than the monthly car payment for the same vehicle. Along with the lower monthly cost it also costs less upfront and will likely quit the dealership without any cash down. Leasing costs less
The monthly average cost of leasing a brand new car in the fourth quarter of 2022 was $540, compared to $667 for buying the car, according to .
Latest tech features Although model changes year over year for traditional vehicles aren’t as dramatic for electric vehicles, the field is advancing at a much quicker rate. Leasing gives you the opportunity to stay ahead of the curve when it comes to available technologies, instead of being stuck with last year’s additions. The Hyundai Kona for example was upgraded in the 2021 to 2022 model, including an updated infotainment system and the latest driver assistance technology. There are some disadvantages to leasing an electric car While leasing an electric vehicle can give you the opportunity to experience the thrill of driving on electric power, it can also come with some downsides. Most notably, the issue of leasing approval, the inability to quit the lease, and limitations on your vehicle. Lease approval to lease a vehicle can prove to be a lot more difficult than obtaining an auto loan — especially for those with poor credit. While you may still be able to lease without an excellent credit score, it’s likely to mean a steeper monthly payment. Think about the average credit score for people leasing new cars in the 2nd quarter 2022736 — which falls above the average of 729 for the loan as per Experian. The inability to sell the car Leaving a car lease isn’t easy nor cheap. Therefore, if you decide not liking the vehicle you are leasing, you could remain in the lease or be forced to pay huge penalties to get out of the . If you lease from a lessor, you may be expected to pay for the residual value, in addition to the remaining dues and fees. Car restrictions when signing to a lease you will need to consider a number of things to be aware of: mileage, maintenance and modifications to the vehicle. If you lease your electric vehicle, you’ll likely be restricted to driving between 12,000 to 15,000 miles a year, may have to pay for and will not be able to customize the vehicle. The benefits of buying an electric car to leasing an EV Full ownership , no restrictions on vehicle size Tax incentives and credits
Cons to leasing an EV Pricey upfront cost, rapid changing technology Out-of-pocket repair costs
Benefits to buying an electric car The main benefit of buying an electric car instead of leasing comes down to the joy of ownership. You are able to do what you would like with your vehicle without having to limit the lease options the company makes to offer or worrying about fees. If you own an electric vehicle you also have the option of taking the full benefit of tax incentives and credits that would otherwise be attributed to the leasing company. You can own the vehicle completely based on where you stand financially buying an electric vehicle will let you go at your own speed and put you in complete control of your vehicle. You’ll have a clear understanding of the total cost upfront instead of worrying about potential wear-and-tear charges that can add to the total cost at the end of a lease. No vehicle restrictions If you think that freedom and the open road should not limit you, getting an electric vehicle could be the right choice for you. This way you will not be held captive by the odometer of your vehicle, and can enjoy the freedom of the road. In addition to the freedom to travel without restriction the full ownership gives you the option of adding any bells or whistles that fit your preferences to create a unique vehicle. Tax incentives and credits purchasing an EV you are able to avail a myriad of financial incentives. One of which is the credit, worth up to $7,500 dollars. Some states also offer rebates to reduce the price of acquiring the most environmentally-friendly vehicle. These incentives are available only to the owner of the vehicle, which means even if you lease the vehicle, you would not be eligible for these incentives. Drawbacks of buying electric cars The electric vehicle market has exploded and more affordable alternatives are appearing, but these vehicles do still tend to carry more cost as compared to conventional options. Higher prices also come with rapidly changing technology and higher maintenance costs. Prices for upfront costs can be more costly than conventional cars, with the average being $66,997, according to Kelley Blue Book June 2022 data. EV drivers also tend to carry almost identical credit profiles that those who finance luxury cars and paying for them, as per an . This could make getting the approval process more difficult for borrowers with less-than-perfect credit scores. Saving money and shopping for an electric car requires the same method as it could use to reduce the cost of a conventional loan You should shop around before submitting an application for loan and be prepared to walk away. Technology is constantly evolving. Innovation in the electric car field is rapid, and this is especially applicable when older brands, such as Ford which has the Mustang Mach-E and Chevrolet’s Bolt are able to enter the market. However, this also means that you’ll be stuck with the currently available tech for the car you purchase. While advancements may seem slight to the naked eye, if a flashy technology is the main reason for buying a car you should consider leasing in order to keep on top of the latest the latest trends. Out-of-pocket repair costs As with every vehicle you own, you must pay for any necessary maintenance required during the ownership. But when it comes to the electric vehicle, this maintenance may be more costly than regular visits for a mechanic. While the warranty on the battery will probably be extended for five to 10-years, EVs require replacement for other expensive repairs such as screens as well as advanced system updates. The main point is that it’s recommended to consider the issue of leasing or purchasing an electric vehicle in the same manner as you would in the case of a conventional vehicle. Some people find the benefits of the latest technology could outweigh the inconvenience of ownership full-time and, for others, getting behind the steering wheel of a car with confidence and incentives makes sense. If you decide to buy an EV make sure you understand the extra costs that come with ownership and take advantage of . leasing an EV, on the other hand will require the same care like it normally. Take a look at a few lease offers and be aware of the entirety of the contract prior to signing a lease.
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Authored by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ins and outs of securely taking out loans to purchase the car they want.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances through providing concise, well-researched and well-informed data that breaks complex topics into manageable bites.
Auto loans editor
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