More and more electric cars are on the road, maybe because there are thousands of dollars in incentives to help reduce the cost.
But cashing in on a $7,500 tax incentive can be tricky if you’re a car buyer.
- The vehicle has to be assembled in North America;
- AND its battery components and minerals must meet specific sourcing requirements;
- AND the car has to cost under a certain amount, and your income can’t be over another amount;
- AND you’ll only get that money back after your taxes.
Consumer Reports Autos Editor, Keith Barry, agrees it is complicated. “If you’re set on buying a car and you know you qualify and you’ve talked to a tax professional, you know the car’s going to qualify, you can go ahead and do that. It’s going to get a little easier next year as dealerships are going to be able to process and give the credit at the point of sale, which makes it simpler, but it is really complex right now.”
But if you’re eager to drive an EV now, Keith says a lease may get you on the road faster! The long and short of it is, all those rules go out the window if you lease a vehicle, no matter where the car was made, no matter how much it cost, you can get that full $7,500 off the total price of the vehicle. And then the leasing company processes that credit up front which lowers your monthly payments.
Of course, the usual leasing rules apply. Along with a down payment, you’ll make monthly payments for a set number of months – and for a set number of miles. And at the end of the lease, you return the car to the leasing company.
Those rules can deter some traditional car buyers, but in the case of an EV, they might work to your advantage, because electric vehicle technology is changing really rapidly. There are new cars coming on the market. Range is getting longer for battery powered vehicles, so the car that you buy today might end up being outdated in a few years, and leasing can help you avoid getting stuck with yesterday’s technology.
And as automakers continue to lower the price of electric vehicles, trying to attract more buyers – you won’t take the hit if your leased vehicle is suddenly worth less.
And while no one has a crystal ball to see the future, if demand for used EVs is still high at the end of the lease, it may make sense to purchase the car for the buyout value that’s written into the lease contract.
And did you know, you CAN negotiate the cost of a lease? Consumer Reports says it’s important to remember that local car dealers are competing amongst each other for your business – so it never hurts to ask them to waive dealer fees and other markups.