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Do you need to lease or purchase an the electric vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with interactive tools and financial calculators, publishing original and objective content. This allows you to conduct your own research and examine information for no cost – so that you can make informed financial decisions. Bankrate has partnerships with issuers such as, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site come from companies that compensate us. This compensation can affect the way and when products are featured on this website, for example for instance, the order in which they appear within the listing categories, except where prohibited by law. Our loans, mortgages,, and other home loan products. However, this compensation will affect the information we provide, or the reviews you read on this site. We do not cover the entire universe of businesses or financial offers that may be open to you.
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6 min read Published September 23, 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 to navigate the ways and pitfalls of taking out loans to purchase the car they want.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers to take control of their finances with precise, well-studied information that breaks down complex topics into manageable bites.
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The market has exploded in the last year, EVs and hybrids made up 4.5 or 6.6 percent of registrations between January and June 2022, according to a 2022 market trend report for the second quarter of 2022 report from . Although the options beyond Teslas and Toyotas expand, jumping the deep end to a new model of vehicle can be daunting. And with an average price of over $66,000 on the table for an electric vehicle there are plenty of options — financially and logically. If you fall into a category of curiosity rather than confidence, an electric vehicle can help you decide whether an eco-friendly car is right for you, and is a good choice for those willing to commit. Leasing versus buying an EV
The lease of an electric vehicle can provide you with hands-on experience of an otherwise expensive vehicle, but can cost more in the long run if you surpass restrictions or at the end of the lease.
Do you prefer to lease or purchase electric cars? In the decision of whether to go with it, it’s fairly easy to figure out which is best for you and your wallet. If you are planning to swap between vehicles every couple of years and can handle mileage restrictions then leasing can be great. If you’re looking for the freedom of ownership, buying is the option. However, the field of electric vehicles is still in its infancy, even with EV sales increasing each year. So signing off on long-term ownership for a vehicle which is not yet on the market can feel risky. To decide which option is best for you, consider the advantages and disadvantages of each. Electric car leasing pros to leasing an EV vehicle warranty Lower monthly payment Newest technology features
Cons of leasing an electric vehicle It is faster to depreciate the vehicle. Also, it is difficult to sell the vehicle
Benefits of leasing an electric car advantages to an electric car include increased security through a comprehensive — meaning fewer visits to the mechanicwhich means a lower cost per month and access to the most recent technology. Vehicle warranty Generally, vehicle leases last between 24 and 36 months. During that time your vehicle may encounter technical issues. In the case of EV maintenance, the need for a new battery is the most common issue you might encounter. However, when you lease your car, it is likely that the vehicle will remain covered under warranty — giving you the chance saving thousands. A lower monthly cost A car you lease gives you to use the vehicle for a set period of time and pay each month. It typically costs less per month than a car payment for the same vehicle. Along with a lower monthly cost, you will also spend less upfront and will likely to leave the dealership without any money down. Leasing costs less
The average monthly cost for leasing a brand new car during the 4th quarter 2022 cost $540. $667 when buying as per .
The latest tech features Even though models change from year to year for standard vehicles aren’t dramatic, the EV field is growing at a quicker rate. Leases give you the chance to be ahead of the curve in terms of available technologyinstead of having to use the same old accessories. The Hyundai Kona model for instance was upgraded in the 2021 to 2022 model, including an updated infotainment centre and a new driver assistance technologies. The drawbacks of leasing an electric car While leasing an electric vehicle can give you the opportunity to experience the thrill of driving electric, it does come with some downsides. Primarily the challenge of lease approval, inability leave the lease and restrictions on the vehicle. The approval of a lease to lease the vehicle could be more challenging than obtaining an auto loan — especially for those with bad credit. While you may still be able to lease without a perfect credit score, it could mean a steeper monthly payment. Take a look at the average credit score for people leasing new cars in the second quarter of 2022 -736, that is above the average 729 score for an loan as per Experian. The inability to sell the car Leaving a car lease isn’t easy nor cheap. If you do end up not liking the vehicle that you lease, you’ll likely be entangled within the lease or expected to pay hefty fees to end the . If you lease from a lessor and the terms of your lease, you could be required to pay for the residual value in addition to remaining dues and fees. Vehicle restrictions When signing off on a lease, you will need to consider a number of things to be aware of: mileage, maintenance and modification of the vehicle. If you lease your EV you’ll be restricted to driving anywhere from 12,000 to 15,000 miles a year, may have to pay for and cannot 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
The disadvantages of leasing an EV Expensive upfront cost Rapidly changing technology Out-of-pocket repair costs
Benefits to buying electric cars The primary appeal of not leasing is the excitement of full ownership. You are able to do what you would like with your vehicle and not be restricted by the options that leasing companies have to offer or worrying about charges. If you own an electric vehicle you are also able to take all the tax benefits and credits that otherwise would be given to the lender. Full ownership Depending on your financial position buying an electric vehicle will allow you to move at your own pace and place you in total control of the vehicle. You’ll have a solid grasp on your total cost upfront instead of worrying about the potential cost of wear and tear that can add up at the end of the lease. No vehicle restrictions If you feel that the freedom of the open road should not have any restrictions, getting an EV might be a better option for you. It means you won’t be restricted by the odometer of your vehicle, and can enjoy the freedom of the road. In addition to the freedom to drive without limitation the full ownership gives you the option of adding any bells and whistles that fit your preferences to create a unique vehicle. Credits and tax incentives when purchasing an EV, you can benefit from a multitude of financial incentives. One of which, the , can be valued up to $7500. Some states also offer rebates to reduce the cost to purchase an environmentally friendly vehicle. However, these rebates are only available to the owner of the vehicle, so when you lease it, you wouldn’t be eligible for these incentives. There are some disadvantages to buying an electric car The EV space has expanded and more affordable options are popping up however, these cars have more cost as compared to conventional options. Higher prices also come with quickly changing tech and higher maintenance costs. Expensive upfront cost tend to be much more expensive than conventional vehicles, the average being $66,997, according to Kelley Blue Book June 2022 data. Electric vehicle drivers typically carry almost identical credit profiles that those who finance luxury cars and pay , according to a . This can make the process more difficult for those with less than perfect credit scores. Save money and shop for an electric vehicle requires the same method as it can use to reduce the cost of the traditional loan: Shop around, apply for loan and be prepared to walk away. The pace of technological advancement in the field of electric vehicles is fast, and this is especially true as legacy manufacturers, like Ford and Mustang Mach-E and Chevrolet’s Bolt, 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 that is in the car you purchase. While the advancements might seem minor to the naked eye, if flashy tech is the main reason for buying a car you should consider leasing in order to keep on top of the latest trends. Repair costs out of pocket As with any vehicle that is yours you are responsible for any maintenance that comes during ownership. But when it comes to an electric vehicle, the maintenance can be much more expensive than typical trips to the mechanic. Although the warranty for the battery’s component is likely to extend five to 10-years, EVs require replacement for other expensive repairs such as screens and system updates that are more advanced. The bottom line is it is ideal to think about the decision of leasing versus purchasing an electric vehicle the same manner as you would when for a conventional car. For some, the advantages of the latest technology could outweigh the inconvenience of ownership in full and, for others, taking the steering wheel of a car with confidence and incentives makes sense. If you choose to purchase an EV, to understand the additional costs of ownership and take advantage of . Lease an EV on the other hand will require the same care like it normally. Check out a few leases and understand the whole of the contract before committing to the lease.
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Written by Auto Loans Reporter
Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ways and pitfalls of taking out loans to purchase a car.
Editor: Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to manage their finances by providing clear, well-researched facts that break down complex topics into manageable bites.
Auto loans editor
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