Tesla Model S buying vs loaning
Armen Hareyan's picture

Tesla Model S Lease vs Loan - Buying vs Leasing

Some potential Tesla Model S buyers not seeing a big difference between leasing vs loaning to buy one, get confused as to which option to take. Let's take a look at pros and cons of leasing vs buying a Model S.

First of all, leasing vs buying any car is like comparing oranges an apples and this is true in the case of Tesla too. Simply, many variables go into lease payment. This includes your Tesla Model S depreciation, the preset residual value, the money factor and the market condition.

For example, your Tesla's depreciation will vary based on how many miles you drive. The residual value of the Model S is linked to depreciation. Similarly, the lease interest depends on Tesla's banking partners.

On the other hand, taking a loan for a Tesla Model S is much more straightforward. You have a down payment and your financing is balanced over a fixed period of time with a fixed interest loan payment.

Choose the annual mileage allowance best suitable for your needs during the 3-year lease period, also watch out for normal tear & wear items (e.g. tires) that need to be in acceptable condition when you return the car to Tesla for final inspection, there is also a small fee (I think $350 or $375) for returning the car at the end of lease. Details should all be in the lease agreement, suggests one user in Tesla's Model S forum.

There are various reasons people buy vs. lease a car.

"If you are trying to get the lowest payment on your car, leasing is probably still the best option, but with Tesla, the fact that you get a 7500$ tax credit if you qualify for the credit, make the difference between lease vs. loan payments less appreciable. Also if you look at what Tesla website estimated loan payments, it is showing a 78 month loan which is pretty long. You should decide to buy or lease depending on your needs and circumstances," suggests TesMD in the same forum.

What about you? Do you prefer leasing or loaning for your Tesla Model S? Or how do you plan to pay for your Model 3?


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