If you want to have heads turning to you when you go by, driving a Tesla (NASDAQ: TSLA) will certainly do that. The car company has truly taken over in terms of popularity lately. One of the biggest challenges that faced Tesla at first was the lack of charging ports in public. It was great to be able to just charge your car overnight at home. If you were out and about, you constantly had to be aware of the battery’s status. Today, there are tons of places all over every state where you can charge your Tesla if you find yourself out and about. One of the most popular models Tesla has put out there is the Model 3. This car has people fighting over who gets to drive it first. If you’re looking into getting into one, does it make more sense to buy or lease the Model 3?
Leasing a Tesla Model 3
Before we dive into what’s better, it’s important to truly understand what it means to lease a car. When you lease one, you’re essentially agreeing to borrow it from the car dealership. You’ll pay a monthly rate, get the car for a certain timeframe, and have to return it within a certain amount of miles. On average, you get these cars for three years and you can’t drive an average of more than 10,000 miles per year. If you drive more, the dealership will charge you a fee per mile over you go. These are usually around 50 cents per mile, which can add up quickly if you’re not careful. The other thing to know about leasing a car is you can’t put the money you’ve spent each month during the lease towards purchasing the car. Instead, you’d have to start over if you wanted to purchase it. Let’s talk about the finances behind leasing a Model 3, now.
To start, you’re going to have to put down $4,500. After that, you’ll agree to terms that average out to be $349 payments per month for the 36 months. Once all is said and done, you will have paid $18,154. There are also additional fees and taxes you’ll have to pay, but those vary based on the state you’re leasing the car from. You’ll then have to return the car and decide what your next plan of attack is for driving. What about buying a Model 3, though?
Buying a Tesla Model 3
We think of Teslas as being these expensive cars that only the rich can afford and drive. That’s how it used to be, but not really anymore. Today, you can get a Model 3 for $38,900. Compared to what some electric cars are going for and the ease of charging them, this is a pretty solid deal. Let’s break down the finances of what it costs to drive a Model 3. For this article, we are going to assume the interest rate is 9%, which is the national average. We are also going to assume you put down $4,500, the same as for leasing the car. Another variable will be the loan is paid back over 60 months since that’s the typical loan duration. The last variable thing we will assume is using California’s tax laws since it’s the most populated state.
All of these variables are subject to change based on where you live, the amount of money you put down, how long you want the loan for, and the interest rate your credit gets you. With all of these variables, you’ll end up paying $714.09 over the five years of the loan. This will total out to be $53,805.07 paid for your Model 3. So, which one of these is a better option for you? Let’s talk about it.
Is it Better to Buy or Lease a Model 3?
Based on the numbers, it’s better to lease the car. The only reason it doesn’t make sense to lease is if you plan on driving long distances all the time. Another problem is you won’t see any money back, but when it comes to cars, it’s rare to have this happen. Other than that, you’re going to save around $35,000 compared to buying the car. You’ll be able to test it out before you purchase it to truly see if you like it and would drive it for a long time. There are some pros to buying a car. You get to drive the car for however long you want, wherever you want, and don’t have to constantly be mindful of what you’re doing. One of the popular things to do with Teslas is to drive Uber and Lyft since you don’t have to pay for gas. The smartest plan of action is to lease the car to make sure you like it, then buy it. Doing this allows you to make sure you’re making smart choices. You also will be able to save up and put more down on the Model 3, lowering the total amount you’d be paying for it.
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