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Should you lease or purchase an the electric vehicle? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by providing you with interactive tools and financial calculators that provide objective and original content, by enabling you to conduct your own research and compare data for free – so that you can make sound financial decisions. Bankrate has agreements with issuers such as, 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 pay us. This compensation could affect how and where products appear on this site, including, for example, the order in which they appear in the listing categories, except where prohibited by law. Our loans, mortgages, and other products for home loans. But this compensation does have no impact on the information we provide, or the reviews you see on this site. We do not contain the entire universe of businesses or financial offers that may be available 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 has a specialization in helping readers with the ways and pitfalls of using loans to buy a car.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping their readers to control their finances with concise, well-researched and well-read information that breaks down complex topics into manageable bites.

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The market has seen a dramatic increase over the past year, hybrids and electric vehicles comprised 4.5 as well as 6.6 percent of registrations in the period from January to June 2022, in the 2022 second quarter market trends report from . However, even as alternatives outside of Teslas and Toyotas increase, committing head first to a brand new car could be a daunting task. In addition, with an average cost of over $66,000 on the table for an electric vehicle, the options are endless both financially and rationally. If you fall into a class of curiosity and not confidence, an electric vehicle can help you decide if an eco-friendly ride is the right choice for you, while is best for drivers willing to commit. Lease versus purchasing an EV

A lease on an electric vehicle could provide you with hands-on experience of an otherwise expensive vehicle However, it can be more expensive in the long run if you exceed the limits or when you reach the end of your lease.

Is it better to lease or buy an electric car? In terms of the decision of whether to it is fairly simple to decide which option is the best choice for you and your wallet. If you are planning to swap up your vehicle every few years and can handle mileage restrictions then leasing can be great. If you’re looking for the flexibility of ownership then buying is the option. But the world of electric vehicles is in its infancy, even the sales of electric vehicles are growing year over year. Therefore, committing to the long-term ownership of a vehicle which is not yet on the market can feel risky. To decide which is the best option for you, consider the advantages and drawbacks of each. The pros to leasing an EV Vehicle warranty Lower monthly payment Newest tech features

Cons to leasing an EV Faster vehicle depreciation Inability to sell vehicle Vehicle restrictions

Benefits of leasing an electric vehicle The advantages of an electric vehicle come down to added protection through a comprehensive that means less trips to the mechanic- a lower monthly cost and access to the most recent technology. The warranty for vehicles generally leases last 24 or 36 months, and during the course of time, your vehicle could encounter technical problems. In the case of EV maintenance, the need for a new battery is probably the most typical issue you might encounter. If you lease, however the vehicle, it will still be covered by warranty — giving you the potential to save thousands of dollars. Lower monthly payments leasing a car gives you to drive the car for a predetermined amount of time, paying every month. It often costs less each month than a monthly car loan for the same vehicle. On top of having a lower cost per month you’ll also pay less money upfront and likely quit the dealership without any money down. Leasing costs less

The cost per month for leasing a new vehicle in the fourth quarter of 2022 was $540. the $667 cost for purchasing as per .

Newest tech features While models change from year to year for traditional vehicles aren’t dramatic, the EV field is growing at a faster rate. Leases give you the chance to be ahead of the curve when it comes to available technologyinstead of being stuck with last year’s additions. The Hyundai Kona, for instance, was upgraded in 2021 to 2022 models which include a modernized infotainment center and new driver assistance technologies. Drawbacks of leasing an electric car While leasing an electric vehicle may give you the opportunity to experience the thrill of driving on electric power, it can also come with some downsides. The main issue is leasing approval, the inability to end the lease and the limitations on your vehicle. A lease approval for a vehicle can prove to be much more difficult than for an auto loan — especially for those with bad credit. Although you still may be able to lease without an excellent credit score, it could lead to a more expensive monthly payment. Think about that the credit score average for drivers leasing new cars in the second quarter of 2022 — 736 — which falls above the 729 average for an loan as per Experian. Inability to sell the vehicle The process of letting a car lease end isn’t simple or cheap. So if you end up not enjoying the car you lease you will likely be trapped within the lease or expected to pay hefty fees to end the . Depending on your lessor, you may be expected to pay the remaining value in addition to remaining lease payments and fees. Vehicle restrictions When signing to a lease there are several key factors to consider: mileage, maintenance and modification of the vehicle. If you lease an electric vehicle you will likely be limited to driving from 12,000 to 15,000 miles a year, may have to foot the bill for and cannot customize the car. Buying an electric car Pros to leasing an EV Full ownership No vehicle restrictions Tax incentives and credits

Cons to leasing an EV Expensive upfront cost Rapidly changing technology Repair costs out of pocket

Benefits to buying an electric car The main appeal of not leasing is the joy of ownership. You are able to do what you would like with your vehicle and not be restricted by the lease options the company makes available or worrying over charges. If you own an electric vehicle, you can also take full advantage of tax incentives and credits which otherwise would be attributed to the leasing company. Full ownership Depending on your financial situation purchasing an electric vehicle can allow you to at your own speed and place you in total control of the vehicle. You will have a firm understanding of the total cost before you start worrying about wear-and-tear costs which can mount up after the expiration of a lease. No vehicle restrictions If you believe that freedom and the open road shouldn’t be restricted, then purchasing an EV might be the right choice for you. It means you won’t be restricted by the vehicle odometer, and you can take advantage of the open road. Other than the ability to drive at your own pace, full ownership allows you the freedom to include any bells or whistles that suit you to customize your vehicle. Credits and tax incentives when buying an EV you are able to avail a myriad of financial incentives. One of these is the credit, worth up to $7,500 dollars. A lot of states offer rebates to reduce the cost of purchasing an environmentally friendly vehicle. However, these rebates are only available to the owner of the vehicle, so if you were to lease you would not benefit from them. There are some disadvantages to buying electric vehicles The EV market has exploded, and more budget-friendly alternatives are appearing however, these cars nevertheless have costs that are higher than a conventional option. Prices are higher, but they also include rapidly changing technology and higher maintenance costs. Expensive upfront cost tend to be much more expensive than conventional cars, with at an average of $66,997 according to Kelley Blue Book June 2022 data. Electric vehicles also tend to carry almost identical credit profiles as those who finance luxury vehicles and paying , according to an . This makes approval more of a challenge for those who have less than perfect credit scores. Save money and shop for an electric vehicle requires the same method as it would take to save money on a conventional loan Check out the options before submitting an application for loan and don’t be scared to leave. Rapidly changing tech Innovation in the electric car field is swift and this is particularly true as legacy brands, such as Ford and Mustang Mach-E and Chevrolet’s Bolt, Mustang Mach-E and Chevrolet’s Bolt have entered the market. However, this means that you’ll have to live with the current technology that is in the car you purchase. While the advancements might seem minor to the untrained eye, if flashy tech serves as a main attraction, consider leasing to stay up with trends. Repair costs out of pocket As with any vehicle under your ownership it is your responsibility to pay for any required maintenance that comes during ownership. However, when it comes to an electric vehicle, the maintenance can be much more expensive than normal visits for a mechanic. While the warranty on the battery’s component is likely to extend five to the 10-year mark, EVs require replacement for other costly repairs like screens and advanced system updates. The bottom line is it is ideal to think about the decision of leasing or purchasing an electric vehicle the same manner as you would in the case of a conventional vehicle. For some, the advantages of the latest technology might outweigh the disadvantages of full ownership — while, for others, getting behind the steering wheel of a car with confidence and incentives makes more sense. If you decide to purchase an EV, to understand the additional costs associated with ownership and make the most of . leasing an EV on the other hand is as demanding as it would typically. Take a look at a few lease offers and understand the whole of the contract before committing to an agreement to lease.

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Writen by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ins and outs of securely borrowing money to purchase a car.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to manage 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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