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Tesla Model 3 vs. Model Y: True Cost to Lease One

Gerelyn Terzo

Published: June 10, 2024 1:49 pm

If you are the non-committal type, auto leasing might be for you. By leasing a vehicle, you receive all the perks that a car of your choice has to offer without having to invest tens of thousands of dollars. You’re only on the hook for approximately 36 months, depending on the contract, and afterward, you can upgrade to a newer model.

One of the most in-demand brands is electric vehicle (EV) maker Tesla (Nasdaq: TSLA). Last year, Tesla delivered 1.81 million EVs, 1.74 million of which were Model 3 and Model Y cars (the balance fell into the “other” grouping).  However, given the general price range of $30,000-$40,000, consumers might experience sticker shock, especially in light of the current economic headwinds including lofty interest rates and high inflation.

If Tesla is the EV of your dreams, you might want to consider leasing one, which comes with many of the same benefits as owning one with a lower investment. Both the Tesla Model 3 and Model Y are available for leasing in most U.S. states.  Considering that Tesla deals directly with customers and has no third-party franchises, the company advises customers to select the “leasing” option when choosing a payment method. Upon approval, Tesla becomes your financier once you accept their offer.

There are mixed results on whether or not lessees receive the lucrative $7,500 tax credit when leasing a Tesla. The bottom line appears to be that the lease does include the $7,500 EV lease incentive, but it’s “distributed across the lease term.”

Whichever version you choose, Model 3 or Model Y, it’s important to go in with your eyes wide open, knowing the true cost of leasing a Tesla so there are no surprises down the road. Below is a breakdown of what you can expect when leasing either model, though the specific terms may vary from month to month and depending on the lessee’s credit profile.

Tesla Model 3 Deal

Source: shaunl / iStock Unreleased via Getty Images

• Model: 2024 Tesla Model 3 RWD
• Monthly Payment: $299
• Term: 36 months
• Down Payment: $2,999
• EPA Estimated Range: 341 miles

You can lease a 2024 Tesla Model 3 RWD for as low as $299 per month and by plunking down $2,999 at signing. Reports suggest you might be able to lease a Tesla Model 3 Highland for a monthly payment of $329. However, you can take these deals with a grain of salt. After applying, other customers have been presented with different details, including higher monthly payments and due-at-signing amounts that left them scratching their heads.

Be prepared to pay what other lessees have described as a $250 non-refundable booking fee, not to mention taxes on the lease as well as the cost of the tags. You should also factor in your insurance costs, even though this is not limited to leasing. Insurance payments on a Tesla tend to be higher than usual. Insurance coverage on a Tesla Model 3 could run you over $3,200 per year, or $267 each month, as of 2022. You’ll be paying a 60% premium to ensure a Tesla Model 3 compared with the average vehicle, according to MarketWatch data.

Another factor to consider before leasing a Tesla Model 3 is that the company doesn’t tend to allow buyouts once the term is over. So if you were hoping to profit from selling the vehicle later, you’ll want to think again. Tesla will allow you to terminate your lease early, but the company admits this is a costly option.

Tesla Model Y Deal

Source: Brendon Thorne / Getty Images News via Getty Images

• Model: Tesla Model Y  Long-Range RWD 2024
• Monthly Payment:  $399
• Term:  36 months
• Down Payment:  $2,999
• EPA Estimated Range: 320 miles

If the Tesla Model Y is more your style, we found a deal in which you can lease one for a $399 monthly payment and $2,999 down for a three-year term. On top of that, you’ll be expected to pay any taxes and layers of fees. Also, watch out for any cost savings Tesla might advertise, like gas savings, which could make the vehicle look less price than it actually is. While it’s true you won’t have to fill up at the pump with a Tesla Model Y, that does not affect the size of the monthly payment.

Keep in mind that similar to the Model 3, Tesla’s Model Y is not eligible for purchase at the end of the lease term, a policy the company has held since 2017. If that is a deal breaker, you might want to consider buying your Tesla outright or leasing a different vehicle altogether, as most other EV makers including Ford (NYSE: F) permit buyouts.

Car insurance for a Tesla Model Y is also higher than average. Insuring a Tesla Model Y will set you back approximately $2,800 annually for one year, which works out to approximately $234 per month, as of 2022.

EV innovation is happening at a brisk pace. Whichever Tesla model you choose to lease will likely look a lot different once the term is up.