Should You Lease an EV and Buy It Outright for a Steal?

Reader David in Los Angeles writes:

A lot of car companies are offering substantial rebates if you lease an electric vehicle. I’ve never leased a car before and would probably want to buy it out as soon as possible after signing the lease. Which lease terms should I focus on in order to get me the best and quickest buyout?

The classic car-buying wisdom from personal finance pros is to buy a used car and then drive it into the ground. But the COVID pandemic upended the used-car market, and those prices have only just begun to stabilize . Many dealerships are offering appealing deals on EV leases right now, so it makes sense to compare and see whether the math works out in your favor.

It seems like you’re trying to get the best of both worlds: a substantial discount on a lease and then a quick buyout so you own the vehicle outright. But I spoke to some experts who say you might be thinking about this the wrong way.

• Keith Barry, senior autos reporter for Consumer Reports

• Michael Sin, co-founder of car leasing forum Leasehackr

• Brian Moody, executive editor for Kelley Blue Book

There are a few reasons you can get such a good deal leasing an EV right now, Barry said. The first one is the tax credits. An EV lease tax credit “loophole” was written into the Inflation Reduction Act that allowed automakers to claim the $7,500 federal credit for leased cars that wouldn’t qualify for it otherwise, including some plug-in hybrids. With leases, the dealer will typically claim it on the buyer’s behalf and take it off the price of the car. If you want to take advantage of that rebate, you should hurry: It’s on the chopping block in Trump’s “Big Beautiful Bill.”

Another reason for the attractive offers: In general, Barry said, dealerships like leases because so-called off-lease cars — those returned after the lease period expires — give them a stable supply of well-maintained low-mileage used cars to offer for sale. Electric cars can be expensive to buy outright, so good lease deals move metal and take the edge off the sticker shock for a new car. And some people who’ve bought or leased EVs in the past few years as the market has grown have decided they don’t like driving them for one reason or another, which means more used models are on the market, leading dealers to offer better lease incentives to make new models more attractive.

• Read more: How much money do you really save by owning an electric car in California?

So, yes, you should try and get a good deal on your lease, and there are plenty out there. But there’s no need to buy it out right away.

When you are negotiating a car lease, there are a few terms you can haggle over. There’s the down payment, the monthly cost, your allotted yearly miles, maintenance and residual value — the price you’ll pay to buy out the car.

Of these things, residual value will have the least wiggle room, Moody said. Those prices are often set by the manufacturer or the dealership’s financing department. If you are getting a car with a three-year lease term, look at identical models from 2022 and see what they’re selling for now to get a ballpark idea of what your car might be worth when your lease is up.

Put as little money down as possible, Barry recommended, and find a monthly number that fits your budget. Moody said negotiating additional miles upfront will make them a lot cheaper than having to pay after you’ve driven them. Your lease will spell out the overage penalty, which usually falls in the ballpark of 15-50 cents per mile over the average annual allowance of around 12,000 miles. That works out to $750-$2,500 in fees if you went over by 5,000 miles. Some dealerships will throw in things like oil changes and even car washes, which are nice perks.

Some ways to learn more: Leasehackr’s Rate Findr tool , available with a monthly subscription, lets you look up crowdsourced data on residual values, financing rates and other terms to make sure the deal you’re getting is competitive. Kelley Blue Book offers a free lease calculator to see what cars are in your price range and compare monthly prices to buying.

• Read more: Finding an EV charging station in S.F. is a challenge. Here’s when that could change

All three experts recommended negotiating a deal you’re happy with, and then riding out the length of the lease and deciding at the end whether it’s a car you really want to keep forever.

If you buy out the car, it’s entirely possible the technology will advance further, Barry said, and you could be hypothetically stuck with a 3-year-old car you can’t sell because every newer car has a better range.

You might also learn you don’t like driving an electric vehicle. Some people don’t enjoy the way the acceleration and braking feel. And some people think they’ll have enough access to a charger, and then they have to move or change jobs, and suddenly they don’t. Let the car dealership take on those risks while you do an extended test drive before committing for the life of the car. If you’ve got the principal to buy it burning a hole in your pocket, stick it in a high-yield savings account .

When your lease is up, if you decide you like the car, compare the buyout cost with what identical models are going for on the used market. You might have a great deal sitting in your driveway, or you might be able to offload it back to the dealership and get the same car for a lot cheaper somewhere else. Leasing gives you that flexibility.

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