Leasing an electric vehicle is actually one of the most popular ways to get an electric vehicle. Many auto manufacturers have lease programs available for their electric vehicles, and many of these companies heavily market this option in order to make electric vehicles more appealing to consumers.
The cost of vehicles in America has been going up for years, but the last several months have seen an incredibly sharp rise in prices. This has been especially true for electric vehicles. As gas prices have increased sharply, demand for these vehicles, which was already inflated thanks to the end of the pandemic, has soared. In fact, the asking price for a new electric vehicle has grown well beyond the limits of many household budgets.
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Because of this, a lot of households have started looking into the possibility of leasing an electric vehicle.
Advantages of Leasing
The primary advantage of leasing a vehicle is that it can help a person save money. Whether a purchase is too expensive or if a person simply doesn’t want to tie up a lot of cash into a vehicle purchase, a lease can help a customer to save hundreds of dollars a month. Lease payments are typically less costly than loan payments.
Leasing a vehicle usually means that you’ll have the option of replacing it before maintenance becomes much of an issue. For many people, that means that it can become a lot easier to budget for their transportation expenses. This can help some people to save money, but many do it simply for the convince of being able to trade in a vehicle when they become bored with it.
With an electric car, this can be a bigger advantage than it is typically for a traditional vehicle. As technology changes, it is possible to trade in an electric vehicle for one that could potentially be more efficient, have a longer range, or have a shorter charge time. As batteries continue to improve, leasing an electric vehicle gives the customer the option to upgrade if they want.
Disadvantages of Leasing
OF course, if you are the type of customer who prefers to hold on to his or her vehicle for more than five years at a time, leasing might not be such a great deal. While it may save money on cash flow from month to month, it likely will cost more in the long term. Instead of paying off a vehicle, a lease means that a customer is locked into a monthly payment.
With vehicle prices increasing so sharply, the truth is that lease payments have risen as well. And at the end of the lease, the customer has paid a lot of money, yet he or she still has to return the vehicle. In some cases, it may seem as if this is wasteful. For other people who are used to buying and selling vehicles frequently, this might not be such a big deal.
Of course, if the customer really likes the vehicle, there are usually options to purchase the car. Typically, however, the deals offered at the end of lease agreements tend to overvalue the car, and the financing terms are rarely the best rates available.
How do I Know if Leasing is Right for Me?
If you are someone who frequently buys and sells vehicles, then a lease option might be a better choice. This is usually the case if a person sells their vehicles while they still owe more money on them than they are worth (otherwise known as being “underwater”). Leasing can also be a good option if someone needs or wants to change vehicles frequently.
Can I Buy the Vehicle When the Lease is Done?
The majority of car companies will offer their customers an option to purchase a vehicle at the end of their lease. Be aware, however, that these offers are rarely considered to be good deals by a financial advisor. Offers to purchase vehicles at the end of their lease tend to overvalue the vehicle, particularly in the case of electric vehicles where the value of the car is closely tied to the longevity and health of the battery. For this reason, many people choose to turn in the vehicle and purchase or lease a new one.
What Happens if I End the Lease Early?
Ending a lease early is legally permissible, but it usually comes with a lot of fees that have to be paid. Unless there is a good reason for a person to need to end the lease early, it’s usually recommended that they wait it out before looking for a new vehicle.