- There are pros and cons to leasing a Tesla.
- Pros: monthly payments, predictable costs, frequent upgrades.
- Cons: ownership, customization, insurance.
Car enthusiasts who want to drive a vehicle long term might want to look elsewhere.
It's sleek. It's modern. It's got a CEO with Twitter trigger fingers. It's Tesla, the maker of all-electric, luxury vehicles with impressive range, cutting-edge technology, and beautiful design.
Teslas don't come cheap. A basic Model 3 costs around $48,440, not including taxes and other fees. For many, the price tag is simply out of reach.
There's another option for wannabe Tesla owners: leasing. Some owners choose to lease a car even though they can afford to buy one. Leasing a Tesla has its perks, but is it worth it? Let's take a look at some pros and cons.
Pro: Low monthly payments
Leases are generally more affordable than loans, which allows drivers to get behind the wheel of their dream car for a lower monthly payment than they'd get by buying it. While it's a good idea for owners to check out the best personal loans for purchasing cars, these loans typically have higher interest rates.
Pro: Predictable costs
On leased vehicles, Tesla offers fixed-rate financing, which means the interest rate stays the same over the lifetime of the lease. This makes monthly payments predictable. Compare that to taking out a loan for a Tesla, which may come with variable costs.
It's easier to budget for steady payments than floating-rate loans, especially when interest rates are skyrocketing like they are now.
Pro: Frequent upgrades
Leases typically have shorter terms than loans (three years versus five to seven years), so you can upgrade to the latest Tesla model more frequently. Plus, should you decide to switch vehicle makes, you can easily do so without going through the hassle of trading in or selling your car.
Tesla offers leasing terms between two and three years. Tesla also provides direct loan options to qualifying customers. According to the website, customers can pay off loans over three to six years.
Con: Zero ownership
Tesla drivers who are looking for a long-term relationship may find themselves disappointed. According to the website, Tesla no longer allows drivers to purchase any of their vehicles post-lease. Drivers who want to drive the same car for more than four years need to buy a Tesla or look elsewhere.
Con: Less customization
Lease terms are generally stricter than loan terms, so drivers must be careful not to go over their allotted mileage (10,000 to 15,000 miles per year) or make any modifications to the car without prior approval from Tesla. So snazzy pink paint jobs are out of the question.
Con: Expensive insurance
A Tesla lease forces drivers to purchase more than bare-bones car insurance. The average annual insurance rate for a Model 3 is about $2,115. Teslas are among the most expensive cars to insure. Drivers who lease may end up paying thousands of dollars more in insurance fees than they would have if they owned the vehicle.
Leasing may be more affordable than purchasing a Tesla, but it isn’t cheap. It costs an estimated $499 per month to lease a no-frills Model 3 with a 10,000-mile annual cap over a three-year period. That's not counting insurance, taxes, fees, or the $4,500 down payment.
The best car insurance companies give drivers the best bang for their buck, regardless of ownership status.
When adding car payments to your budget, consider whether purchasing or leasing a Tesla is right for you. While there are some advantages to leasing, like lower monthly fees, there are also some notable disadvantages, especially if you spend a lot of time on the road.
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