Car lovers looking to drive a vehicle long-term should look elsewhere.
- There are pros and cons to leasing a Tesla.
- Pros: monthly payments, predictable costs, frequent upgrades.
- Cons: ownership, accommodation, insurance.
It is smooth. It’s modern. It has a CEO with a Twitter finger on the trigger. It’s Tesla, the maker of all-electric luxury vehicles with impressive range, cutting-edge technology and beautiful design.
Teslas aren’t cheap. A base Model 3 costs about $48,440, not including taxes and other fees. For many, the price tag is simply out of reach.
Another option for would-be Tesla owners is leasing. Some owners choose to lease a car when 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.
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Pro: Low monthly payments
Leasing is generally cheaper than credit, allowing drivers to get behind the wheel of their dream car for a lower monthly payment than they would get if they bought it. While it’s a good idea for owners to check out the best personal loans for car purchases, these loans tend to have higher interest rates.
Pro: Predictable costs
For leased vehicles, Tesla offers fixed rate financing, which means the interest rate stays the same throughout the lease term. This makes the monthly payments predictable. Compare that to taking out a loan for a Tesla, which can have variable costs.
It’s easier to budget for recurring payments than variable-rate loans, especially when interest rates are skyrocketing like they are now.
Pro: Frequent upgrades
Leases tend to have shorter terms than loans (three years versus five to seven years), allowing you to upgrade to the latest Tesla model more often. In addition, should you decide to change car brands, you can do so easily without having to trade in or sell your car.
Tesla offers lease terms of between two and three years. Tesla also offers direct loan options to eligible customers. According to the website, customers can pay off loans over three to six years.
Disadvantage: zero ownership
Tesla drivers looking for a long-term relationship might be disappointed. According to the website, Tesla no longer allows drivers to purchase one of their vehicles after they are leased. Drivers who want to drive the same car for more than four years will have to buy a Tesla or look elsewhere.
Disadvantage: Less customization
Lease terms are generally stricter than credit terms, so drivers must be careful not to exceed their allotted mileage (10,000 to 15,000 miles per year) or make modifications to the car without Tesla’s prior approval. Chic pink finishes are out of the question.
Disadvantage: Expensive insurance
A Tesla lease forces drivers to buy more than just car insurance. The average annual insurance rate for a Model 3 is approximately $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 if they owned the vehicle.
While leasing is cheaper than buying a Tesla, it’s not cheap. It’s estimated to cost $499 a month to lease a no-frills Model 3 with an annual cap of 10,000 miles over three years. Insurance, taxes, fees or the $4,500 deposit are not included.
The best auto insurance companies offer drivers the best bang for their buck, regardless of ownership status.
As you add car payments to your budget, consider whether buying or leasing a Tesla is right for you. While leasing has some advantages, like lower monthly fees, there are also some notable downsides, especially if you spend a lot of time on the road.
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