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Should You Buy Or Lease Your Electric Car?

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Photo from flickr user Photos8.com

Photo from flickr user Photos8.com

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If you're reading this website, chances are you're already someone giving some consideration to owning an electric car.

If so, great! You're one step further than the next guy to an oil-free future. However, for some the next hurdle could be a bigger one - should you lease the electric car of your choice, or should you pull out all the stops and splash out your hard-earned green on actually buying one? Luckily, AllCarsElectric is here to offer you the "pros" and "cons" of both.

You're on your own choosing a paintwork color though...

2011 Nissan Leaf

2011 Nissan Leaf

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Leasing: Pros and Cons

Leasing is a very tempting proposition and probably the easiest method for getting a new electric car in your garage.

Why? Because if you're leasing you're much less likely to need a large down-payment before you take the keys, meaning you can sign your name on the dotted line and pay the monthly installments with very little hassle and no great initial expense. The same applies at the end of the lease period. Final payments can often be a bit hefty, so leasing takes away the worry of needing a large cash sum lying about.

Since you never actually own the car, you don't suffer the usual ownership pitfall of depreciation either, making it easy to drive away in a new vehicle at the end of the contract. Planning to lease a 2011 Coda Sedan? Well if they update it for the 2015 model year offering more range and greater performance you can swap the lease over to that one and reap the benefits straight away. On the other hand, if you don't like it, you can simply walk away when the lease period ends rather than being stuck with a car that's worth a fraction of its new value.

Not to mention that you'll always be driving around in a car under warranty, and benefitting from being able to change to newer vehicles that might have some of the initial bugs ironed out. With EV technology advancing at such a rate, leasing is a very good way of making sure you're always on the cutting edge.

Finally, although lease policies often have a milage limit, you're unlikely to get near to breaking it in EVs with their limited range unless you take the car to its full range every time you go for a drive.

It's not all rainbows and butterflies with leasing though.

Leasing is likely to cost more in the long term than buying as finance charges are often higher. You'll also be penalized heavily if you want to break the lease contract early. With leasing, it pays to stick in there until the end of the contract. Even then, like renting an apartment, you're paying large amounts of money for something you'll never actually get to keep.

You also have a bit less freedom with a lease car. If for some reason you plan on hot-rodding your 2011 Nissan Leaf, then leasing won't suit you as companies won't take kindly to something they can't sell or lease on after your ownership. Likewise, if you have a dog you'd better hope they don't like to chew interior trim if you don't want to pay heavy charges for wear and tear at the end of the leasing period.

2011 Coda Sedan, final production version

2011 Coda Sedan, final production version

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Buying: Pros and Cons

In contrast, your dog can eat the seats to his heart's content if you're buying the car, since you only have yourself to please. You could even remove the interior altogether and hit the import tuner scene because when buying, the car is yours to keep. If you get attached to your cars, then buying is the only option.

Since it'll be your own car (provided you keep up with repayments, of course), you get to keep it as long as you want and drive it as many miles as you want with no extra penalty. Of course, if and when you do get around to selling you have to suffer the depreciation hit, but since buyers are likely to keep their car for a longer period it may not bother you. The longer you keep your EV, the better value for money you get out of it.

And let's face it - with an EV there are fewer consumables to consume so five years or more down the line it might not need as much attention as a conventional car. Having your EV go out of warranty might not bother you as much knowing it doesn't have any of those internal combustion components waiting to expire.

You'll likely have to contend with large initial and final payments which might put some people off, unless you've taken out a low-interest loan to ease the financial burden.

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Comments (10)
  1. This article like almost every article on electric cars makes the same mistake. Most buyers will not get $7,500 from the federal government toward the cost. To get it you must pay at least $7,500 in income tax in the year that you buy the car. Despite all the political noise very few people pay this much in income tax. The big tax burden for most people consist of payroll taxes, sales tax, property taxes, etc., none of which counts toward the electric car credit.
    I intend to lease rather than buy solely because the $7,500 is means tested if you buy but given to everybody if you lease.
     
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  2. Also consideration is that not all leases are the same.
    The LEAF has a 15,000 mile per year lease, which should cover most people for the anticipated use of the car.
    The Volt has a 12,000 mile lease, which will be consumed by most commutes, would not work well for most single-car households, and will severely limit the ability to take it on additional trips.
     
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  3. @ Desertstraw - Apologies for the confusion. We've mentioned on previous occasions that the $7,500 is a maximum rather than the norm, but omitted it from this article.
     
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  4. if you belong to a credit union, you can probably get a very low interest rate loan.
     
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  5. "A large part of the electric car projects are just a scam to get a certain group of VC's to control the lithium fields in Afghanistan! He who controls the electric cars controls the trillions of dollars of lithium revenues. It is just like oil all over again. The U.S. Department of Energy had one guy, who George Bush appointed running $25B worth of taxpayer money. He was working with 3 other guys in this small group who gave the money only to hooked n car companies who they could control the battery orders for and thus control the Lithium profits.
    Dmitry Medvedev Came to Silicon Valley on June 22, 2010 and met with some of the venture capital companies that helped lobby the leverage for the electric car companies that just got funded. Only the car companies got funded that would play in this scheme.
     
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  6. Having a warrantee isn't that much of a benefit to a pure electric car. I mean, what's there to do really? The motor's likely gonna last longer than the rest of the car, the battery is good for 5 to 10 years, about all a warantee can cover are the brakes, the lights, and the paintwork.
    Oh and for Mr. Litium conspiracy up there, did you know that Lithium is recyclable? Can you say the same about used oil? Don't forget Lithium is also available locally from your average mine.
     
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  7. Yep, I was supposed to get something like $2300 when I purchased my Prius. Only got $800. :( It was limited.
     
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  8. Since we all seem to agree that very few people will get the $7,500 income tax credit widely mentioned in stories about and advertisements for electric cars, why is there not more of a movement to change this to a rebate? If the government is serious about providing a stimulus for the sale of electric cars, it makes no sense to give money to those who would buy the car without it. There are apparently some members of Congress like Senator Levin who already favor this change. If in all the articles now being written about electric cars, it became common to point this out, Congress might be pushed to change things.
    An illustration that I have used elsewhere of what is wrong now is the difference in cost of a Nissan Leaf. If you live in Arizona and do not qualify for any income tax credit, the Leaf will cost MSRP of $32,780. If you live in California and qualify for the full income credit and buy from one othe dealers who are giving $1,000 discounts (none in Arizona are discounting), you can buy it for $32,780-$7,500-$1,000-$5,000 (California credit)=$19,280. At this price for everyone, they would sell like hotcakes.
     
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  9. We are buying the Leaf and leasing the Volt. We will get all the credits so that takes the Leaf purchase down to around $22k but the Volt without the California $5k credit and even with the Fed $7.5K...would still be around $38K after Ca. sales tax as a purchase. Leasing is so much more reasonable for the Volt, and it WILL be out "second car" so we will rack up regular miles on the Leaf and use the Volt mostly for those few longer drives and my limited "work" commute.
     
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  10. I had thought I found a good loophole in cost of ownership, but now understanding that the $7500 is probably not going to happen, it ruins my numbers. Aside from that, if you run some numbers; if fuel goes to 5 or 6 dollars a gallon; it’s sort of a win, win proposition at that point. On the lease I’m saying.
    I know someone in the Lit-ion Battery business. I understand two things. Cold weather with severely reduce your distance, hot weather will shorten battery life. Batteries are expensive and you don’t want to own the car when that time comes around.
     
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