Roughly 80 percent of all electric vehicles are rented rather than bought completely, according to published reports. It makes a lot of sense because the money owing for signing and monthly payments is smaller than for funding. As the federal one-time tax credit of up to $7,500 (according to the auto manufacturer), has been included in the payments, a leasuree must not wait for a year to claim or risks losing some of the tax credit unless his/her tax bill is high enough.

Best of all, leasing an EV for two or three years can assist guarantee that a lessee keeps up with the recent technology and avoids being saddled with what might turn out to be a hard-to-sell vehicle a few years down the highway. The lessee can simply switch it back to the dealership when the lease closes and maybe receive a "disposition premium" of a few hundred bucks to cover the resale price.

Most new-vehicle leases, however, include a clause that allows a lessee to buy the vehicle for a pre-set price at the end of the term (the exception being the Tesla Model 3), and there are situations where this option may be advantageous.

When Residual Value Was Set Too Low

Typically, the purchase price as set out in the lease is based on the so-called residual value of the vehicle at the end of the term. This is what the rental business predicts when the agreement expires that a car will be worth. Lease payments are based on the purchase cost of a vehicle, minus its residual value, funded at the current interest rate.

credit: Chips Away UK

Determining the residual value of any car is nothing but a guessing match. Projections are mainly focused on how well or poorly a specified model has maintained its importance in the past along with the vehicle's anticipated down the street supply. Few two and three-year-old electric vehicles have to go on with much of a past performance record for valuation professionals, so determining the residual value of an EV can be a true crapshoot.

Electric cars used, with the exception of Tesla designs, usually suffer below average resale prices. Thanks to the following federal tax credit, they take a big immediate strike in depreciation. Moreover, due to their relatively restricted working ranges, demand for some elderly EVs arises. Assuming that rental firms are conservative in setting their remaining values on electric cars is sensible.

When Penalties Need Avoiding

The penalties for surpassing the specified mileage threshold and for restoring a damaged car are two onerous components of a rental contract. If you're going to face either of these fees, which may be quite heavy based on the conditions, you might get ahead by buying the car to prevent charging them.

All car leases include a mileage limit, normally expressed as an annual quantity. Over a three-year term, low-cost advertising leases are generally set at 10,000 miles per year, reaching 30,000. (If you expect to put extra miles on the vehicle, you can always negotiate a higher limit when you rent a car, but this will increase your monthly payments).

Since your dealerships generally offer the highest service prices, it would be much easier to shop around for a local body store before turning the vehicle in. Or you could purchase the car, fix it and sell it on your own.