The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
Electric vehicles have many benefits, including a smaller environmental impact than gas-powered vehicles, less maintenance and rapidly developing technology. Leasing an electric vehicle can be a great option for those who want to take advantage of these benefits without being tied down to a car for too long.
Why lease an EV?
From carmaker incentives to access to the latest technology, there are a number of reasons you might want to lease an EV.
You can get tech upgrades faster
Leased vehicles don’t tie you down as long as purchasing a car does. With how fast EV technology is improving, it may be worth getting into a vehicle that you can trade up for a better model in a few years.
You don’t have to worry about certain maintenance issues
Battery degradation is a concern among those considering an electric vehicle. Range loss and premature death of the battery can be costly, but it’s less of a worry if you won’t have the vehicle for more than two to four years.
Incentives from carmakers
Carmakers offer lease specials that can offset the cost of monthly payments. These often go to customers with very good to excellent credit, so be sure you qualify.
You likely won’t have to pay upfront
Leased vehicles rarely require a large down payment — if any. This means you won’t need to worry about bringing 10 or 20 percent of the car’s value like you might when purchasing.
How to lease an electric vehicle
Choosing the right electric vehicle is the most important step in the leasing process. Before you head to the leasing office you’ll want to consider the range you need and determine the car size that’s best for your needs. Next you’ll want to test out the electric vehicle. Once you’re settled on a car, you can negotiate the lease.
1. Know your range
When shopping for an electric car, the most important consideration is the driving range of the car. You can determine your average driving range based on your charging infrastructure, how often you drive and how far your commute is.
If your commute to work or around town is a daily one, you’ll want to make sure you can make the whole trip with a full battery. Since driving range can vary based on speed, weather and charge capacity, it’s best to err on the side of caution.
Car And Driver tested several electric cars with driving ranges that varied quite a bit, from the shortest — 70 miles — to the longest — 320 miles. The median range for 2021 model year EVs is 234 miles, according to the U.S. Department of Energy.
2. Consider the car size
The next step is determining the size of car you need. Most car manufacturers offer electric cars in a variety of sizes, so you should be able to find something that fits your lifestyle and your budget.
If you’re mostly commuting to and from work, a subcompact may serve you. But for those who have a family to haul, you may want to look into the top electric SUVs.
3. Test out the EV
Once you’ve found the right electric vehicle, it’s time to test drive the car to make sure it’s a good fit. Note how it handles and how the electronics work. Ask yourself if you’re comfortable in the driver’s seat, and if you have clear lines of sight to all mirrors.
4. Negotiate and take out the lease
Be prepared to negotiate before you sign the lease. You can potentially improve the limits around miles you’re allowed to drive and even the monthly cost with a bit of bargaining.
Once you’ve signed the lease, you’re locked into the term and can’t back out without paying a penalty. At the end of the lease, check the condition of the car for any damage. You can then buy it, turn it in or trade up to a newer EV.
Should I lease or buy an EV?
If you’re shopping around for an EV, you may have wondered if leasing or buying is a better option. There’s no one right answer to this question, as there are pros and cons to both. The cost of electric vehicles has been steadily declining, so it is a more affordable purchase than it has been in the past.
Additionally, the range and charging infrastructure of electric vehicles are constantly improving, so leasing may give you access to better technology a few years down the line. Ultimately, the best time to buy an electric vehicle is when it fits your budget and meets your needs.
Keep in mind that buying an EV puts you in complete control of the vehicle. You don’t have to worry about fees for going over allotted miles or wear-and-tear costs that come with leasing. Instead you’ll know the total cost of the car and your financing from the get go.
The benefits of owning an electric vehicle also include potentially getting money back from federal, state and local incentives. The Inflation Reduction Act has revived some of the tax credits for manufacturers that had reached their limits. You might also have a lower cost to own over the life of the car than a gas vehicle. And you will likely have more options to choose from than you would if leasing.
Insuring an electric vehicle
No matter the type of vehicle, insurance is a must. Electric vehicles typically have higher insurance costs than their gas-powered counterparts. Higher repair costs and expensive tech are part of what fuels the difference in premiums.
The cost of insuring electric vehicles varies based on brand, model and year — and the driver’s driving history. Compare car insurance quotes from different insurers, shop around and ask about discounts to save money. You may be able to score discounts if you’re a safe driver, good student or need to bundle other insurance.
Another way to save on electric car insurance is to get a pay-per-mile plan. These policies charge less than traditional car insurance policies because vehicle usage is limited. But pay-per-mile plans typically only work well for drivers who only make occasional short trips.
If your insurer has a usage-based insurance program, you may be able to save money. But it will only work out if you’re a safe driver. Usage-based programs track your driving habits, and you’ll need to consistently drive safely and mind speed limits.