The Right Choice Depends on Your Situation
Leasing a Model 3 costs around $499/month with $4,500 down, while buying costs $899/month with $6,000 down. Over 3 years, leasing is cheaper, but buying saves money if you keep the car longer than 5 years.
Quick Comparison
Leasing
Monthly Payment
$499
Model 3, 36 months
Down Payment
$4,500
3-Year Total Cost
$22,464
Buying
Monthly Payment
$899
Model 3, 60 months
Down Payment
$6,000
5-Year Total Cost
$59,940
Then you own it
Real-World Example
Sarah drives 12,000 miles per year and upgrades her car every 3 years. She leased a Model 3 for $499/month with $4,500 down, paying $22,464 total over 3 years. At lease end, she returned the car and leased a new model with the latest features.
Mike bought the same Model 3 for $899/month with $6,000 down. After 5 years and $59,940 in payments, he owns the car outright. He plans to keep it for 10+ years, making his cost per year much lower than leasing.
When to Lease
You Drive Less Than 12,000 Miles/Year
Most leases include 10,000-12,000 mile annual limits. Excess mileage fees range from $0.25-$0.30 per mile.
You Want a New Car Every 3 Years
Leasing lets you upgrade to the latest technology and features without selling your old car.
You Want Lower Monthly Payments
Lease payments are typically 30-40% lower than loan payments for the same vehicle.
You Use It for Business
Lease payments may be tax-deductible if you use the vehicle for business purposes.
When to Buy
You Drive More Than 15,000 Miles/Year
High mileage makes leasing expensive due to excess mileage fees. Buying gives you unlimited miles.
You Keep Cars for 7+ Years
After your loan is paid off, you have no monthly payments. This makes buying much cheaper long-term.
You Want to Build Equity
When you buy, you own an asset that has resale value. Leasing builds no equity.
You Qualify for Tax Credits
Federal EV tax credits (up to $7,500) are available when buying, though lease tax benefits expire September 2025.
Cost Breakdown Over Time
| Timeframe | Leasing Cost | Buying Cost | Better Option |
|---|---|---|---|
| 3 Years | $22,464 | $38,364 | Lease |
| 5 Years | $37,440 | $59,940 | Lease |
| 7 Years | $52,416 | $59,940 | Buy |
| 10 Years | $74,880 | $59,940 | Buy |
Assumes consecutive 3-year leases at $499/month. Buying assumes 5-year loan paid off, then no payments.
Pro Tips
Negotiate Lease Terms
The "money factor" (lease interest rate) and residual value are negotiable. A lower money factor or higher residual reduces your monthly payment.
Consider Gap Insurance
If you buy with a loan, gap insurance covers the difference between what you owe and the car's value if it's totaled. Often included in leases.
Check End-of-Lease Options
Some Tesla leases don't allow purchase at lease end. Verify your options before signing if you might want to buy later.
Factor in Maintenance
Leases often include warranty coverage for the entire term. When buying, you'll pay for maintenance after the warranty expires (typically 4 years/50,000 miles).
Calculate Total Cost
Include insurance, registration, and charging costs in your comparison. These costs are the same whether you lease or buy.
Time Your Decision
End-of-quarter deals (March, June, September, December) often have better lease and financing rates as Tesla pushes to meet delivery targets.
Common Mistakes
Underestimating Mileage
Choosing a 10,000-mile lease when you drive 15,000 miles costs $1,500+ in excess fees. Always overestimate your annual mileage.
Ignoring Wear and Tear Fees
Leases charge for excessive wear. Budget $500-$1,500 for minor damage at lease end, or consider wear-and-tear protection.
Putting Too Much Down
If your leased car is totaled, you lose your down payment. Keep down payments under $2,000 on leases.
Not Reading the Fine Print
Lease agreements have specific terms about modifications, early termination fees, and end-of-lease options. Read everything carefully.
Focusing Only on Monthly Payment
A low monthly payment might hide high fees, excessive down payment, or unfavorable terms. Always calculate total cost.