Should I buy or lease an electric vehicle?
21 October 2019
For as long as car leasing has been around, consumers have had one more existential question to ask themselves; should they buy or lease a vehicle?
If you search the web, you’ll find plenty of articles on the subject. Some will tell you to take the first route, others the second. With the advent of the electric car, the question still arises, but it brings different questions.
Buying or leasing an electric vehicle: the first consideration
The first thing to consider is of course the financial question. In fact, we should be talking about the interest rate and the length of the monthly payments. If you’re offered two similar vehicles at a price of $45,000, what could tip the scales is the manufacturer’s offer at that particular point in time.
For example, if vehicle A is offered at 0% lease interest and 4.9% purchase interest, and then vehicle B is offered at 4.9% lease interest and 0% purchase interest, the calculations will be different. It might be more interesting to consider leasing for the first vehicle and buying for the second.
And the monthly payments will vary according to the residual value of the vehicle. Remember that what you pay during the term of the monthly payment is the difference between the purchase price and the appraised value of the vehicle after the end of the contract. The better the vehicle is appraised, the better the monthly payment.
In short, calculations and more calculations.
The question of electricity and technology
With electric vehicles, another factor must be added to these considerations, namely autonomy and the speed at which the technology evolves.
For example, five years ago, when affordable electric vehicles were claiming ranges of 150 to 200 kilometers, it would have been more risky to proceed with a purchase, because today, the value of these vehicles on the market is less attractive due to their more limited range.
In these cases, leasing was the right choice, because after a term of four or five years, the buyer can then change the vehicle to take advantage of more modern technology and, above all, a more dignified freedom of approximately 400 kilometers.
What can we expect in five years? An evolution, certainly, but perhaps not as important as in the last five years. Buying an electric car today should not penalize you as much in five years. And if at that time the average range of new vehicles is 600 kilometers, you still won’t be left out with 400 kilometers.
So is it better to buy or lease an electric vehicle? So, in 2020, you may have to rely on financial considerations. Go with the calculation that is most advantageous to you. With 400 kilometers of range, your vehicle will still be relevant in 8 or 10 years.
