Tesla Leasing vs Buying: Hidden Costs and Best Deals Revealed

Hey everyone, DennisCW here! Today, I want to dive into a topic that many of you have been asking about: should you lease or buy a Tesla? There are hidden costs and key factors to consider when making this decision, and I’m going to break it all down for you. We’ll even do some quick math to see which option might be the better deal for your specific situation. Whether you're eyeing a Model 3, Model Y, or another Tesla, this guide will help you make an informed choice. Let’s get started!

Understanding Tesla Leasing and Financing

First things first, I’ve put together a deal spreadsheet that tracks the best Tesla offers out there, including lease interest rates and financing deals. You can find the link to this spreadsheet in the description below. Just like financing a vehicle comes with an interest rate (e.g., 0% on a Model 3 or 1.99% on a Model Y), leasing also involves an interest rate, often referred to as the "money factor." I’ve been in touch with Tesla reps to get the latest figures, and right now, the Model 3 Long Range Rear-Wheel Drive has one of the best lease rates at 2.76%. That’s pretty competitive, and we’ve rarely seen rates lower than this!

When leasing, there are several factors at play, such as the initial capitalized cost, residual value, and interest rate. On the other hand, financing involves paying for the entire vehicle over time, which means you’re also taking on the depreciation risk. So, let’s explore the pros, cons, and hidden costs of both options.

Quick Tip: Before we dive deeper, don’t forget to use a Tesla referral code (linked below) to get 3 months of Full Self-Driving with your purchase or lease. It’s a sweet perk you don’t want to miss!

Current Tesla Lease Deals: Model 3 Steals the Show

Let’s talk numbers. Right now, the Model 3 Long Range Rear-Wheel Drive offers one of the lowest lease payments I’ve seen in a while: $0 down and $299/month for 24 months. Last month, it was $3,000 down at the same monthly rate, so this new structure is essentially equivalent but with no upfront cost. Honestly, at this level, leasing a Model 3 is almost a no-brainer for many people, especially with that low 2.76% interest rate.

However, not all Tesla leases are created equal. For instance, the Model Y lease tends to have higher out-of-pocket costs over a 3-year term, often making financing a better option if you’re looking to save in the long run. If you’re someone who upgrades vehicles every few years to stay on top of the latest tech, leasing might be your go-to. But if you plan to keep the car longer, buying could make more sense.

Hidden Costs of Leasing a Tesla

Leasing might seem like the cheaper option upfront, but there are some hidden fees you need to be aware of:

• Acquisition Fee: $695 at the start of the lease (this doesn’t apply when financing).
• Disposition Fee: $395 when you return the vehicle at the end of the lease. However, this fee is waived if you buy the car or lease another Tesla.

These extra costs can add up, and they’re something you won’t encounter if you finance or pay cash. On the flip side, leasing often has a lower barrier to entry. If this is your first Tesla, you might find it easier to get approved for a lease since you’re only financing the portion of the vehicle’s value you use during the 2-3 year term, rather than the full price.

The $7,500 Federal Tax Credit: A Game-Changer

One of the biggest factors in deciding between leasing and buying is whether you qualify for the $7,500 federal tax credit for electric vehicles. Here’s the breakdown:

• If you qualify for the credit: You can get the $7,500 whether you lease, finance, or pay cash. In this case, choose the option with the lowest monthly payment or the term that fits your budget.
• If you don’t qualify: Leasing is your only way to access the $7,500 credit, as Tesla can apply it to the lease terms. You could even do a lease buyout shortly after to own the car, but it must be done through Tesla Trust or Chase Leasing.

This tax credit can significantly tilt the scales in favor of leasing if you’re ineligible for it otherwise.

Crunching the Numbers: Lease vs Buy

Let’s do some quick math to compare the costs. For a typical Tesla lease (e.g., Model Y), you might pay $500/month for 36 months with a $3,000 down payment. Add in taxes (which vary by state and whether they’re applied upfront or monthly), and you’re looking at roughly $21,000 out of pocket over the lease term. At the end, you have the option to buy the car for a residual value (often around $34,000). If you choose to buy it, your total cost could climb even higher.

When financing or buying outright, you’re taking on the depreciation risk yourself. Tesla vehicles, like most luxury and electric cars, depreciate heavily. For example, a 2019 Model 3 might only be worth $15,000 retail today. If you’re okay with handling the resale value (or loss) after 5 years, financing might be the better route. But if you don’t want to deal with depreciation or potential resale headaches, leasing offers a set monthly payment and a predictable loss.

Who Should Lease? Who Should Buy?

Here’s a quick guide to help you decide:

• Leasing Makes Sense If:
  • You don’t qualify for the $7,500 tax credit and want to access it.
  • You like upgrading to the latest tech every 2-3 years.
  • You’re not great at maintaining vehicles or want to avoid the hassle of selling a depreciated car (though you still need to keep the leased car in good condition to avoid penalties).
• Buying Makes Sense If:
  • You plan to keep the car for a long time and are okay with taking on depreciation.
  • You want to avoid extra fees like acquisition and disposition costs.
  • You qualify for the tax credit and can get a low or 0% interest rate on financing.

One thing is certain: whether you lease or buy, owning a Tesla (or any vehicle) will likely result in some financial loss due to depreciation. The goal is to minimize how much you lose in the long run.

Bonus Tips and Recommendations

Before I wrap up, a couple of quick tips:

• Use a Tesla Referral Code: Don’t forget to use the referral code linked below to snag 3 months of Full Self-Driving with your Tesla. It’s a great added bonus!
• Protect Your Investment: Tesla vehicles don’t come with all-weather floor mats, so I recommend checking out 3W Liners. I’ve tested tons of floor mats (3D Maxpider, Tesmanian, and Amazon brands), and 3W Liners are by far my favorite for our Model X, Model 3, Model Y, and even Cybertruck. Use the promo code below to save 25% (bringing the set under $100) and support the channel at the same time.

Final Thoughts

Deciding between leasing and buying a Tesla comes down to your personal financial situation, how long you plan to keep the car, and whether you qualify for the federal tax credit. Leasing offers lower upfront costs and access to the credit for those who don’t qualify, but it comes with hidden fees and potentially higher out-of-pocket costs over time. Buying, on the other hand, means taking on depreciation but avoiding extra fees and potentially saving more if you keep the car long-term.

I hope this breakdown helps you make the best decision for your needs. Let me know in the comments if you’re leaning toward leasing or buying, and why! Don’t forget to check out the deal spreadsheet, referral code, and 3W Liners promo in the description below. Thanks for reading, and I’ll catch you in the next post!

-DennisCW