Leasing an EV offers lower upfront costs and protection against rapid battery depreciation, but key risks include strict mileage limitations, potential excessive wear-and-tear fees, and the lack of equity or ownership. Other risks involve high early termination penalties and the potential for the vehicle to become technologically obsolete due to fast-paced EV innovation.
Leasing an EV can lead to mileage limits that may incur additional fees if exceeded, and there may be costs associated with buying out the lease if you choose to keep the vehicle.
To be honest, leasing any EV might be the smartest thing to do right now. Reason being that the technology is advancing so quickly that there's likely to be a substantial benefit to upgrading in a couple years. A lease will more easily allow this.
The "1% lease rule" is a guideline in both real estate (rental income should be 1% of property cost) and auto leasing (monthly payment ideally under 1% of MSRP), used for quickly assessing potential deals, though it's a simplified benchmark that doesn't account for all expenses or market variations. In car leasing, a $40,000 car should ideally lease for around $400/month (before tax), while for real estate, a $200,000 home should aim for $2,000/month in rent.
The 90% rule in leasing is an accounting guideline for classifying leases, stating that if the present value (PV) of a lessee's minimum lease payments equals or exceeds 90% of the leased asset's fair market value (FMV), the lease should be treated as a finance lease (or capital lease) rather than an operating lease, reflecting essentially a purchase for accounting purposes. This rule helps determine if the lease transfers substantially all the risks and rewards of ownership, requiring balance sheet recognition of the asset and liability.
A popular workaround may be the easiest way to save $7,500 on an electric vehicle. By leasing instead of buying, many drivers have been able to claim the full $7,500 clean vehicle tax credit without meeting the strict income and manufacturing requirements that apply to most purchases.
Leasing is also the most expensive way to drive a car.
Pay off debt fast and save more money with Financial Peace University. Hear me loud and clear: Leasing is a complete rip-off. In fact, my good friend Dave Ramsey calls leasing “fleecing” because getting “fleeced” means getting taken advantage of financially.
The lease payment for a $45,000 car typically ranges from $300 to $500 per month, depending on factors like the down payment, lease term, residual value, and interest rate.
Key Takeaways. Electric car insurance offers the same coverages as standard auto insurance. However, some EVs may be more expensive to insure than gas-powered cars because they have specialized parts that can be costly to repair or replace.
The lessee is generally responsible for all repairs and maintenance on a leased vehicle. This includes things like oil changes, tire rotations, and any other necessary upkeep. However, there may be some cases where the lessor is responsible for specific repairs – such as if the vehicle is under warranty.
As EVs get older, the batteries progressively degrade. It is expected that at around 75% of the battery's original capacity, it has reached the end of its life in an EV. In reality what this means is that if the car was sold with 400 km driving range, at the end of its useful life it could be down to around 300 km.
"I personally think you should never, ever ever ever, lease a car, do you hear me?" she tells CNBC Make It. That's because when you lease, you're pouring in money each month with nothing to show for it at the end of the day. "If you rent a car, you're going to rent a car year in and year out," Orman says.
The "1% lease rule" is a guideline in both real estate (rental income should be 1% of property cost) and auto leasing (monthly payment ideally under 1% of MSRP), used for quickly assessing potential deals, though it's a simplified benchmark that doesn't account for all expenses or market variations. In car leasing, a $40,000 car should ideally lease for around $400/month (before tax), while for real estate, a $200,000 home should aim for $2,000/month in rent.
The Ramsey 25% rule is a personal finance guideline from Dave Ramsey, stating that your total monthly housing costs (mortgage principal, interest, taxes, insurance, HOA, PMI) should not exceed 25% of your monthly take-home pay, preventing you from becoming "house poor" and allowing for savings, investing, and financial freedom. It's a guideline for building a strong financial foundation, not a strict rule, though some find it difficult in high-cost areas.
Leasing an EV can be a great idea for those wanting lower monthly payments, access to the latest tech, and protection from rapid depreciation, especially due to a current tax credit "loophole" where leasing companies pass savings to consumers. However, it's not ideal if you drive many miles, want to build equity, or keep cars long-term, as you'll face mileage limits, wear-and-tear fees, and end up with no asset after the lease.
New legislation eliminated the EV tax credit for any leases made after Sept. 30, 2025. Some leased EVs may also be eligible for state and local savings or even rebates from electric companies. EVs from Hyundai, VW, and Ford.
For most of 2023–2024, leasing was often the cheapest way into a new EV because of a quirk in the tax code. Automakers and their captive finance arms could claim a $7,500 federal clean vehicle credit on leased cars classified as commercial vehicles, then pass some or all of that savings into lower monthly payments.
A "good" lease length depends on your needs: 1-year is standard for apartments (balancing stability and flexibility), while 2-3 years offers more stability, lower risk of annual rent hikes, and sometimes better deals, especially for cars where 36 months spreads fees well. For long-term property (like buying), a lease of 90+ years is ideal, as shorter leases (under 80 years) can devalue the property and make mortgages difficult.
If the lease meets any of the criteria, then it must be recorded as a finance lease. The five criteria relates to a bargain purchase option, transfer of ownership, net present value of lease payments, economic life, and whether the asset is specialized.
Low Fees and Interest Rates
If your dealer is offering competitive interest rates - often referred to as the money factor or lease factor during lease negotiations - it's a good way to go. Likewise, minimal added fees during the negotiation of the contract are a good sign.