Ready for a new EV? How to decide whether to buy or lease
U.S. consumers continue to see the benefits of driving electric vehicles. About 3.3 million EVs were on the road by late 2023, compared to 2 million in 2022 and 1.3 million in 2021, according to an Experian Automotive Market Trends report for the fourth quarter of 2023.
If you’re ready to get a new EV, one thing to consider is whether to buy or lease. Both options come with unique advantages and challenges, and understanding them can help you make a choice that fits your lifestyle and budget.
Benefits of leasing
The process of leasing an electric vehicle allows you to have a vehicle for a set number of miles and months. Leases tend to cost less than purchasing a vehicle through an auto loan — an average of $132 less on top models, according to recent Experian data. Shoppers can use a lease calculator to determine how much it will cost in total to lease the model you are considering.
Some reasons to lease an EV include:
- Lower monthly payment: Leasing often results in a lower monthly payment. This is because your payments are only based on the duration of the lease and the expected sale price when the lease period is up. In addition, you could avoid a large down payment — although this could mean a higher monthly payment.
- Newest tech features: While major year-over-year redesigns for conventional vehicles are not dramatic, the EV field is advancing much faster. Leasing allows you to use the latest technologies rather than being stuck with last year’s add-ons.
- Options for tax credits: If you have your eye on an EV that doesn’t qualify for the aforementioned federal tax credit, leasing might be the way to go. Eligibility requirements are less stringent for leased vehicles under the commercial clean vehicle credit, so you’ll have a wider selection of models to choose from.
Benefits of buying
Buying an EV makes sense for those who can afford it. EV ownership is a good fit for drivers who have done their research and understand how vehicle range fits into their driving habits.
Owning the vehicle will relieve the concern of always monitoring the odometer to stay within the mileage limits. And, let’s face it, it’s nice when you make that final payment and have something tangible to show for it.
- No surprise costs: Buying an EV can allow you to pay off the loan under terms that you negotiate with a lender. You won’t have to worry about potential wear-and-tear or mileage-overage charges, which can add up at the end of a lease.
- No mileage restrictions: If freedom of the open road is a priority, buying an EV might be a better option. This way, you will not be held captive by the vehicle’s mileage limits and can customize your vehicle without restriction.
- Options for tax incentives and credits: When buying an EV, you might be able to benefit from federal and state financial incentives, such as a federal EV tax credit worth up to $7,500. Just make sure the vehicle you want qualifies under the Inflation Reduction Act, which requires that the bulk of the manufacturing takes place in North America, among other things. If you’re buying, you should also look into taking advantage of green auto loans.
Whether you buy or lease an EV, do the research to understand the costs. As with any big financial decision, review offers and terms and make sure you understand the contract before you sign on the dotted line.
Mark Maynard has been writing about cars, their people and products for 30 years. Find him at MaynardsGarage.com.
The news and editorial staffs of SCNG and the U-T had no role in this post’s preparation.