Is It Better to Buy or Lease a Tesla? We Dive In

With Tesla’s skyrocketing popularity and massive growth in vehicle sales, it’s impossible to avoid what is now the largest vehicle manufacturer by market cap in the world. However, with all the craze of Tesla and their beautiful, minimalist machines, it is hard to ignore the fact that they are quite expensive.

This being the case, Tesla has recently started a lease program.

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About Tesla’s Leasing Program

Per Tesla themselves, their leasing program is a combination of a down payment and monthly payments. An advantage to this program is the attrition of a large amount of electric vehicle tax credits, especially when driving said Tesla for business purposes.

Tesla leases have many benefits, including:

  • A relatively low minimum down payment requirement.
  • Ownership flexibility, allowing for exchange for new models from a rapidly evolving manufacturer.
  • A variety of leasing terms allow you to customize your requirements to meet your individual needs. This includes changes in ownership length and mileage caps.
  • Massive tax incentives when driving for business purposes.
  • There is no security deposit of any kind required with a Tesla lease.

The terms of tesla leases typically include a three-year drive time, with annual mileage options of 10,000, 12,000, and 15,000 miles per year.

The Model S and Model X, their two more expensive models available for lease, require a $7,500 down payment, as well as a $695 acquisition fee, and the first month lease payment. These are all due when picking up your new Tesla.

Comparatively, the Model 3, their less expensive, entry-level model, requires a $4,500 down payment. Additionally, it requires the same acquisition fee and first month lease payment when picking up your Tesla.

Buy or Lease a Tesla? Basing A Decision on Total Price

Luckily, Tesla has a comprehensive and highly transparent website when it comes to their pricing structures. Let’s take an example for a spin and see what we come up with for total cost of ownership.

We start with a Tesla Model S model, current (May 2022) price, not including potential savings. It is a base price of $99,990. For these purposes, we are going Solid Black, with 21″ Sonic Carbon Twin Turbine Wheels. The interior will be black and white, and we are going to forgo autopilot. The total final price is $107,990.

With their lease option, the estimated lease payment is $1,528 per month for 36 months, in addition to $7,500 as a down payment and $695 for the acquisition fee. The total price over the course of 36 months ends up being $63,203 to lease this specific Tesla Model S.

Comparatively, with their loan option, the estimated loan payment is $1,558 per month for 36 months, in addition to $7,500 as a down payment. The total price over the course of the same 36 months ends up being $63,588. However, with the additional ~$385, you also have the car at the end of the 36 months, which can be traded in or sold for a new vehicle. Or continued to be kept.

The loan is for 72 months, so at the end of the loan term, the total paid is $119,676, or close to $11,686 more than the cash price. That is a 3.24 percent APR with the loan option.

Buy or Lease a Tesla? Basing A Decision on Pros and Cons

There are plenty of advantages and disadvantages to buying and leasing. Here are just a few of them to assist in deciding on whether to buy or lease a Tesla.

Pros of Leasing a Tesla

  • Down payment is lower than expected with comparatively priced vehicle leases.
  • After a three-year period, you can trade your leased Tesla in for a new model (which is solid, as the manufacturer is constantly coming out with great new vehicles).
  • Ample mileage limitations, with up to 15,000 miles of driving time.

Cons of Leasing a Tesla

  • If you drive more than the max of 15,000 miles in a year, you are going to face exorbitant additional costs.
  • Leasing a Tesla locks you into their vehicle for three years. For this reason, if they come out with your dream model three months into their lease, you remain stuck for another two years and nine months.

Pros of Buying a Tesla

  • The down payment is the same as with the Tesla lease, which is surprisingly low if you are purchasing a vehicle at a comparative cost.
  • There is no need to wait three years of locked in time before trading up to a new Tesla model (or a different vehicle if you decide an electric vehicle isn’t for you).
  • The APR of Tesla’s vehicle loans (3.24 percent) is relatively low when compared to standard percentage rates of vehicle loans on luxury sedans.
  • You can drive your “owned” Tesla as much as you want. There are no mileage limitations like when you are leasing.

Cons of Buying a Tesla

  • The monthly cost associated with a purchase (thanks to the interest on the loan) is higher than the comparative lease.
  • If at the end of three years you’d like to trade up into a new model of vehicle, you are going to need to deal with massive depreciation as it relates to selling your Tesla.

So, in the end, is it a better option to buy or lease a Tesla? The choice is up to you, and your specific circumstances. We hope that this explanation has provided some insight into your decision making!

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Hybrid Center Team
Hybrid Center Teamhttps://www.hybridcenter.org
Hybrid Center provides key resources to find out how hybrid and electric vehicles might fit into your lifestyle, detailed comparisons of their technologies, reviews, and comments from current hybrid and electric owners from around the nation.
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