Tesla 0% vs. Lease: Which Saves you More?

Discover the hidden costs behind both options using ChatGPT.

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Update: I am now a Tesla customer, and I can refer others using my referral link. If you use my referral link you get up to $1,000 off your purchase price in addition to any offers directly from the manufacturer. If you use my link, we both win because you get up to $1,000 off and I get $500 towards upgrades or Supercharger credit.

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Hey AI Productivity Explorer,

I cautioned readers to think twice when Tesla rolled out its 1.99% financing on the Model Y.

The numbers looked shiny on the surface but stacked against the long-term cost of my Lexus, the gloss started to fade.

Now, Tesla’s doubling down with an eye-popping 0% interest offer is a tactic designed to make potential owners feel like they’re sidestepping the burden of interest altogether.

But before jumping at what seems like a no-brainer, we need to get under the hood.

Is this 0% interest deal truly the Tesla dream without the financial nightmare?

Or does leasing, with its upfront savings and flexibility, offer a smarter route for those wanting the Tesla experience without the long-term baggage?

This follow-up to my last analysis will dive deep into the numbers and trade-offs, peeling back the hidden costs to help you make the call. Because when it comes to offers that look this good, the devil is often in the details.

Unpacking 0% Financing Offer

Last few posts, I have compared my 2015 Lexus CT200h with Model Y.

Continuing to own a Lexus came out to be $29,562 cheaper than Tesla Y over the next 10 years.

However, my requirements have evolved a bit. I was not thinking of my upcoming life changes. One of my kids will be in college soon and will need a car.

What this means is the trade-in is no longer a viable option. I prefer to give my kids an older but reliable car so they can practice before putting their hands behind a shiny new vehicle.

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Let’s start by looking at the various financing options available on Tesla’s website today for Modey Y.

Cost Saving Hint: There are two sections for new cars on the Tesla.com website i.e. Order Now or Inventory. Here’s why I always head straight for Inventory: you can score a nearly identical car for less.

Why?

Simple. Inventory cars are often those that were built, canceled, or slightly adjusted post-production.

Tesla wants them off the lot fast.

You may argue you can design a car with a much longer range for small price increase.

Some people call it a “custom” order.

Honestly, there is no customization for mass-produced vehicles. It’s a gimmick that car manufacturers use to trick buyers into paying a few thousand more for the same vehicle with minor changes.

Looking at the inventory, I can get a 2024 Model Y for $29,730 in my state for cash. This was originally priced at $43,230.

Really?

Not quite.

Tesla automatically checks the box for "Include Est. 5-Year Gas Savings of $6,000."

I always uncheck this box and it’s a little trick that’s more realistic, considering factors like your local electricity rates, personal driving habits, and a few other costs we’ll dive into below.

Once you uncheck it, the price increases to $35,730.

And let’s be real: who’s paying cash when there’s free money on the table with 0% interest?

I will head to the financing tab.

0% financing is now available for 60 months for qualified buyers.

What’s the catch?

Although they claim it’s a 0 down offer, you still need to qualify for the $7,500 Federal Tax credit for this to work. (Note: my newsletter is read in many countries, so this offer may not be available to you. Please check your country-specific EV incentives).

So technically speaking you could own a Tesla for 0 down and 0% financing as of the writing of this post.

That’s great but I always look at the Total Cost of Ownership.

TCO is the best way to truly compare wear & tear, major repairs, insurance, state fees, and other costs over time.

Here are rough numbers.

• New Model Y price = $43,230

• Federal Tax Instant Credit = $7,500

• Financing Cost Discount at 0% = 0 (Compared to the average rate of 5-7%)

• Sales Tax and registration = $3,219

• Delivery and order fees = $1,390

• Order Fees = $250

• Final Price Model Y Price = $43,230 - $7,500 + $3,219 + $1,390 + $250 = $40,589

If I were to purchase the Model Y today, I would need a loan of $40,589 (if I factor in the tax, registration, and delivery fees in the loan).

Let’s use ChatGPT to build our TCO table for 10 years of Model Y ownership using the above data.