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To Buy or Lease an Electric Car? What to Know

Every notable car manufacturer has an electric model on the road. These range from traditional car manufacturers like BMW to relatively new names like Rivian. There is enough demand for electric vehicles, otherwise, these manufacturers would not bother. If you want an electric vehicle, the two main options you have right now are either leasing or buying one. But which is the better option, and what should you consider before choosing either way?

Depreciation

Every car depreciates, the only difference is that some cars depreciate faster than others. Electric vehicles depreciate very fast, mainly due to advancements in technology. But shouldn’t these advancements help these cars appreciate? This should be the case unless you consider that many of these advancements are going into new models.

New models often have better range, charging and battery technology, making them much more desirable than cars that came three or even two years before. This means that if you bought these models outright you might find yourself with a car that you can only sell for a percentage of its original price.

When you lease the car, you do not have to worry about the depreciation because this is a cost that the manufacturer will have to deal with once the lease is over. Some leasing companies will factor this into the cost of leasing, but the cost is typically much lower than if you had to incur the depreciation yourself by owning the car outright.

Car Market Fluctuations

The car market is crazy right now, with cars sometimes going for as much as 1.5x their recommended price. Because of this, you might have a hard time buying a decent electric car, which means the better option would be to lease one.

Changing Cars Often

One of the best things about leasing a car is that you can drive a new car every two years depending on whether you want to renew the lease or buy the car outright. A new car translates into lower maintenance costs and chances of a breakdown, which will give you additional peace of mind.

Owning the car means you have to deal with service, repair or maintenance issues that come up yourself and have to deal with them for the duration you have the car, which is estimated to be up to 15 years for some electric car models.

Another advantage of changing cars often is that you get to enjoy the latest advancements in electric car technology. This is a growing sector and so things are changing rapidly. A car released in the last two years might be technologically behind one released this year.

Lastly, you also get the choice of numerous models. Leasing companies have plenty of cars to choose from, ranging from those suited for inner-city commuting to larger SUVs and company vehicles.  Whether you are bored with the car you are driving right now, or your needs have changed, you can switch to a different model or style once your lease is over.

Insurance

Whether you lease or buy an electric vehicle, you still need car insurance to drive on UK roads. Electric car insurance is often similar to that of traditional cars, albeit with some extras. These include insurance for the charging cables, legal liability, and the battery. You might also get coverage for recovery if your car runs out of charge.

The main difference between insurance for a leased electric car and one you have bought is that leased cars usually come with insurance included. This means you do not have to think about getting this insurance, but you have to do so when you buy an electric car.

For traditional cars, you can get car insurance quotes from reputable insurance companies. You can head to this platform to compare what these companies offer so you can choose the best option for you. With electric cars, some of the policy features will vary but you can still compare them online as well.

Tax Benefits

Buying an electric vehicle comes with tax benefits that you do not get with leasing. For example, businesses can claim tax deductions on business electric vehicles regardless of the value of the car in some countries. While this is a huge incentive to go green, it is also one for choosing to buy instead of lease.

Switching Back

Although electric vehicles are the future, some people do not feel like we are there yet. This is the reason why up to 20% of all people who bought an electric vehicle in 2020 in the US returned one and switched back to petrol and diesel. If you feel like this, you might be able to sell or trade your electric vehicle for a petrol or diesel one. With a car lease, you are stuck with the car until your lease is over.

There are clear pros and cons to buying or leasing an electric vehicle. Leasing has many more benefits but a serious tax-deductible downside while buying has the benefits of the tax incentive and full car ownership.