Regardless of what you might think of Elon Musk, you have to admit the way Tesla (NASDAQ: TSLA) has taken over the car industry has been impressive. The slick design and amazing interior have become a status symbol to show off. One of the biggest problems Tesla first faced was charging stations. It’s easy to charge a Tesla from home. If you’re out and about, you want to make sure there are ways for you to give your car a charge if it needs it. Today, there are plenty of places in each state you can charge your Tesla to ensure you can always get where you need to. The Tesla Model Y has become a trendy option to drive around. The real question is if you should buy or lease it. Let’s break it down and see what the better option truly is.
Leasing A Tesla Model Y
First, let’s discuss what it means to lease a car. When you lease a car, you’re making a deal with the dealership to return that car after a given amount of time, typically three years, and within a certain amount of miles, typically not averaging more than 10,000 per year. The reason people like to lease cars is they usually have a lower monthly payment than a normal car payment. The only catch is returning it, so you’re essentially going to always have a car payment if you decide to lease. This works for some people, like those who serve in the military who frequently have to move, and those who are unsure of what they want their next car to be.
If you’re in the market for a Tesla Model Y, you’re going to have to first put down $4,500 cash. After that, you’ll agree to a payment of $399 per month for 36 months. This adds up to you paying a total of $19,954 over the three years, plus additional taxes and fees. These vary based on what the state laws are where you lease the car from. Compared to some of the options out there for cars that aren’t deemed as nice, this is a solid deal.
Buying A Tesla Model Y
Unlike the Tesla Model X, the Model Y will only run you $43,990. This is one of the more reasonably priced new cars, let alone for a Tesla. For our calculations, we are going to use the state of California’s tax laws. We are also going to assume average credit and an average interest rate. Let’s also assume you put down the same $4,500 you would if you leased it. This way, we are keeping as many variables the same as we can. As of right now, the average interest rate for getting into a new car is 9%. If you were to live in California, get the average 9% interest rate, have average credit, and put down $4,500, your monthly payment would be $819.75.
This is spread out over the average loan period of 60 months. After the 60 months are over, you will have spent a total of 60,571.21 for your $43,990 car. That’s almost an extra $20,000. One of the most important things to do is find an auto loan calculator so you can put in the exact data that works for you. If you put more money down up-front, that will lower your monthly payment. Should you spread it out over 72 months instead of 60, that will also lower your payment. If you can get a lower interest rate based on your credit, that will also help.
Should You Buy or Lease the Tesla Model Y?
You should do what feels right to you. However, looking at the math, it doesn’t make a whole lot of sense to buy a Tesla Model Y unless you plan on driving it for the next 15 years. Tesla cars hold their value a lot better than most cars do, but even so, spending an extra $20,000 in five years doesn’t seem like a smart move. Who knows also if you’re going to still be driving the car in five years? The average American household only keeps their longest-owned car for eight years, meaning you’ll probably have to come back and do this process all over again.
The benefits of buying the car are it’s yours and you can do what you want with it. Because of the restrictions that come along with leasing a car, it can feel like you’re in a box with what you can do and where you can go. You can also get rid of it at any time you want to. It’s also important to note you can’t buy the Tesla after you lease it, or put any money from the lease towards purchasing it. Odds are, you’re going to end up taking a hit if you do sell it. The Model Y is an excellent car, but oddly enough, it might be smarter to lease it if you don’t plan on driving a lot.
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