Leasing a Tesla is a great way to drive one of these electric cars with a lower monthly payment, but a car loan offers a better investment opportunity and dodges leasing inconveniences like annual mileage limits.
QUICK LOOK
- Tesla leasing is only available in 26 states and is limited to 36-month lease terms for the cheaper models.
- It’s cheaper to lease a Tesla, but buying your new vehicle with a car loan allows you more driving freedom and a better opportunity to return on your investment.
- Whether you decide to lease or buy, you’ll need to order your preferred model online since Tesla doesn’t sell vehicles out of standard dealerships.
Qualifying for Tesla financing
First, you’ll need to find out if you qualify for financing of any kind. Tesla doesn’t publish its minimum credit score requirements for financing, so the best way to determine if you qualify for a lease or loan is simply to apply.
Keep in mind: Tesla Financing only offers leasing and loans in the following states:
- Arizona
- California
- Colorado
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Massachusetts
- Maryland
- Minnesota
- Missouri
- Nevada
- New Jersey
- New York
- North Carolina
- Ohio
- Oregon
- Pennsylvania
- Rhode Island
- Tennessee
- Texas
- Utah
- Virginia
- Washington
But, don’t worry! You can always apply for a third-party car loan if Tesla Lending doesn’t operate in your state.
Tesla cost to lease vs. cost to finance
Leasing a Tesla will cost less but you’ll have paid half the car’s purchase price by the end of your lease. Meanwhile, buying your Tesla with a car loan allows you to enjoy your Tesla for as long as it lasts—so long as you can justify the higher total cost.
To get an idea of how the costs of these financing options compare, use the table below to see how pricing breaks down for each trim of a brand-new Tesla Model 3.
| Model 3 w/ $4,500 down payment | RWD standard range (36-month, 10,000-mile lease) | RWD (loan) | Long Range (36-month, 10,000-mile lease) | Long Range (loan) | Performance (36-month, 10,000-mile lease) | Performance (loan) |
|---|---|---|---|---|---|---|
| Vehicle subtotal | $48,490 | $48,490 | $59,490 | $59,490 | $62,990 | $62,990 |
| Upfront payment | $5,714 | $4,500 | $5,884 | $4,500 | $5,974 | $4,500 |
| Monthly payment | $691 | $713 | $689 | $887 | $779 | $942 |
| Total payments | $24,876 | $51,336 | $24,804 | $63,864 | $28,044 | $67,824 |
Key Takeaway:While a lease will allow you to save money on costs paid into a Tesla, buying a Tesla with a car loan is more worth it when it comes to potential return on your long-term investment.
Tesla lease and loan terms
The table below details the lease and loan term lengths available for different Tesla models:
| Tesla model | Available lease lengths | Available loan lengths |
|---|---|---|
| Tesla Model 3 | 36-month lease | 36-, 48-, 60-, and 72-month terms |
| Tesla Model Y | 36-month lease | 36-, 48-, 60-, and 72-month terms |
| Tesla Model X | 24- and 36-month lease | 36-, 48-, 60-, and 72-month terms |
| Tesla model S | 24- and 36-month lease | 36-, 48-, 60-, and 72-month terms |
Shorter loan or lease terms will result in:
- Higher monthly payments, but
- Lower total payments
For example: If you chose a 36-month loan for a base Tesla Model X, your monthly loan payment would increase from $1,897 to $3,568, but your total payments would decrease by almost $8,200 since you’re paying for a shorter time.
Similarly, if you decrease your lease term on the same Model X from 36 to 24 months, your monthly payment will increase from $1,817 to $2,209, but your total payments will decrease by over $12,000.
Tesla depreciation rates are low
Tesla is a safe car brand to buy rather than lease because they depreciate more slowly than other electric vehicles. A Tesla Model 3, for example, averages only about 10% depreciation over three years.
Key Takeaway:While other new EVs tend to depreciate more quickly than standard-combustion cars, a financed Tesla is more likely to return a good amount of your investment if you ever want to trade-in or sell.
Financing could earn you an electric car tax credit
You’re more likely to qualify for electric vehicle incentives at the state level when you purchase or finance your Tesla EV as opposed to leasing it.
- Teslas are no longer eligible for federal electric vehicle tax credits, but you could still be eligible for perks at the state level depending on where you live
- To make things easy, Tesla has compiled a list of all states offering EV incentives and the associated values
Leasing comes with annual mileage restrictions
If you plan to put a lot of miles on your new Tesla, buying is certainly the better option:
- When you purchase your Tesla: You get to decide when, where, and how often to drive it
- When you lease a Tesla: You choose whether you get 10,000, 12,000, or 15,000 miles per year
Choosing a higher-mileage lease option will increase your monthly lease payment. If you go over the annual mileage limit, you’ll be charged an excess mileage fee at the end of the lease.
The bottom line: buying a Tesla is better than leasing
Buying a Tesla with a loan is better than leasing:
- Tesla owners have more autonomy over their vehicle than those who lease.
- A Tesla is likely to return a high percentage of investment if you ever choose to trade in or sell.
Leasing can be a good idea for some people in certain situations:
- If you own a small business and use your car for that business, you can often deduct the cost of the car on your taxes—and keeping yourself in a lease ensures you’ll always have that deduction
- If you value always having a new car and you’re comfortable knowing that your payments are not an investment—just an expenditure
Where to lease or buy a Tesla
Tesla doesn’t sell new vehicle models out of any dealership. Instead, you’ll need to head to Tesla’s website to build and price your vehicle.
What to expect: Once you place your order, you can pick up your new Tesla at a delivery center, or it can be delivered to your door for a $1,200 fee. If you’d like to test drive a Tesla, you can schedule a touchless test drive at a Tesla showroom.
Learn more: How much does Tesla car insurance cost?
Sarah Gray is an insurance writer with nearly a decade of experience in publishing and writing. Sarah specializes in writing articles that educate car owners and buyers on the full scope of car ownership—from shopping for and buying a new car to scrapping one that’s breathed its last and everything in between. Sarah has authored over 1,500 articles for Jerry on topics ranging from first-time buyer programs to how to get a salvage title for a totaled car. Prior to joining Jerry, Sarah was a full-time professor of English literature and composition with multiple academic writing publications.
Pat Roache is an insurance writer with over two years of experience in the automotive industry. With a focus on car insurance, maintenance, and brand reviews, Pat’s mission is to create engaging and accessible content that empowers readers to take autonomy over their car ownership. As a writer and editor with Jerry, Pat has penned over 600 original articles and edited over 1,000. Pat’s 8+ years of experience in the performing arts as a writer, director, producer, and performer lend to their keen eye for research and presentation. Most recently, Pat’s new English translation of Donizetti’s Italian opera “D[x]n Pasquale” had its world premiere in 2022 with Opera MODO (Detroit, MI). Pat also writes grants for an LGBTQ arts non-profit in Chicago, IL.
