Could You Drive An Older Used Tesla Model 3 For Half The Cost Of A Newer Used Honda Civic?

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Tesla has been quickly expanding the states you can lease a used vehicle in. It was only a few a month ago, and now it is up to 17 states. I’m always looking for ways where people who can’t afford the price of a new Tesla could still get most of the advantages. Here are some of the issues I’ve seen with buying a used Tesla.

• At first, Tesla didn’t even sell used vehicles (here is the my article when they first started selling them 6 and half years ago).
• Frequently, the interest rate on the loan is a lot higher on the used Tesla, so the payment is only a little lower than on a new one that costs ~$20,000 more!
• Until recently, the prices on the used Tesla vehicles were only about $5,000 cheaper than on a new Tesla (after the $7,500 EV Tax Credit) — something like $35,000 for the new ones and $30,000 for the used ones. That isn’t worth giving up warranty coverage and not having the latest hardware. Today, the new ones are about $40,000 and the used ones can be as little as $20,000. The $20,000 difference is worth giving up a few things, especially if you pay cash or get credit union financing at a good rate.
• There were no Tesla warranty plans, and although Teslas are quite reliable, if you get one with some issues, they can be expensive to repair. I have purchased a 10 year warranty (takes my bumper-to-bumper warranty on my Model Y to 14 years from when I purchased it in 2021) for about $4,000 from Xcelerate.com. But many will prefer a warranty from Tesla, and now they offer an affordable option at just $50 a month for the Model 3 and $60 a month for the Model Y!
• Maintenance costs have dropped dramatically as Tesla has reduced the suggested maintenance on their vehicles, and I’ve discovered there is no reason to go to Tesla for certain things.
  • They used to suggest that you replace the desiccant in your car every 4 years (at a cost of $474 at my service center).  They no longer recommend that.
  • In this article I wrote 7 years ago, I thought you needed the battery coolant replaced for $125 every 4 years. They no longer recommend that.
  • There are now many more affordable tire options at about $150 a tire instead of $300 a tire if you don’t require sports car level performance.
  • I used to think I needed to have a special shop with the “hockey pucks” to rotate my tires for $75. Now I get it done for free at Costco or Discount Tire.
  • I used to think I needed to spend $100 every 2 years to replace my brake fluid. Now I just test it myself for contamination (I have both the test strips and an electronic tester).
  • I could save money by replacing my own wipers and air filters, but I have gotten lazy and have the service center do both.
• Until 2 months ago, you couldn’t lease a used Tesla. When they did roll out that ability 2 months ago, it was only available in two states (California and Texas).
• As of yesterday, that has been expanded to 17 states and it will probably expand to more states!

I found the car Branden highlighted and took a screenshot of the details (I increased the miles to 15,000 a year and added taxes and fees, so the price went up from $127 a month to $171 a month.)

Used Model 3 Lease

Term: 24 months   |   Miles per Year: 15,000

This is an incredible deal. $5,000 a year total cost of ownership is what I would expect on a 20-year-old beater.

• Insurance might be $500 a year, since it isn’t worth much and you can just get liability
• You pay little in financing. If it is a $5,000 car, the interest would be $500 a year.
• Depreciation might be $500 a year.
• Maintenance would be $1,000 a year.
• Repairs would be about $1,000 a year, with the risk that spending any more probably totals the car.
• Fuel might be $1,500 a year.
• That totals $5,000 a year!

Comparison To A Used 2021 or 2025 Honda Civic

I’ll be the first to admit this is NOT an apples to apples comparison. The Honda Civics in this comparison are much newer than the 2018 Model 3. But I would argue that the miles of life left in a Model 3 with 97,000 miles on it are similar to a Civic with 4,000 miles. Electric cars just last longer!

I called several Honda, Toyota, and Hyundai dealers to get comparable prices for leasing their Certified Pre-Owned cars. Their websites said you could lease them, but the dealers said you either couldn’t or you could only lease the 2025 or 2026 models, even though the website showed many 2022 models eligible. I was able to get the lease details on this 2025 Civic with 3,855 miles. Kind of amazing that the price of the 2021 Civic is only about $1,000 less than the 2025 Civic. You might think that means that if you buy one and keep it 4 years, you only lose $1,000 in depreciation. The problem is the trade-in value likely goes down $9,000 and the dealer marks up the car $8,000. That is why I don’t like to trade my cars very often. I’m not picking on Honda — all the dealers do this and you suffer the same fate with Tesla too (even if it doesn’t have dealers). Tesla’s trade-in offers are about $8,000 less than they will resell the car for after they have put a couple thousand dollars into giving it new tires and some reconditioning (new wipers & air filter, detailing the car, and fixing any issues).

Used Honda Civic Lease

Term: 24 months   |    Miles per Year: 15,000

So, you can see if you buy an older Civic and keep it 5 years, it costs you about $7,000 a year, while a 2-year lease of a nearly new Civic will cost you about $9,600 a year.

Advantages & Disadvantages Of Leasing

I’m not a fan of leasing cars for a few reasons that I’ll list below, but this certainly is an interesting development for the right person.

Advantages of Leasing

• You only pay sales taxes on your lease payments, not on the entire value of the car.
• If you want or need to change vehicles often (your family grows or shrinks in size), ending a lease and starting a new lease has some fees, but not the big $8,000 penalty you take when you trade in a car.
• You have the option of buying out the car at the end of the lease if that ends up being a good deal (like in the pandemic when all prices went way up — if you had a lease ending, buying that out would have been a good choice).
• You have the option of turning the car back in if prices tank (like when I had a 2012 Nissan LEAF — I should have leased it since it had high depreciation).
• There are some tax advantages that I don’t really understand.

Disadvantages of Leasing

• If you like to customize your car, you have to return the car to original condition before turning it back in. That could be expensive.
• If you get a lot a small dents and scratches, you need to have those fixed or you will be charged when you turn the car in. If you keep the car, you might not bother to fix them if they don’t bother you.
• If you own a car, you could decide to drop collision coverage and self-insure that risk, but the leasing company won’t let you make that choice.
• You don’t build any equity, so at the end of the lease, you have nothing.
• Costs are typically higher since you are paying extra fees.
• If you drive a lot of miles, you could see big fees for going over the limit.
• If you want to sell early, you have to find someone to take over your lease or pay big fees to leave early.

Conclusion

If you can’t afford a new Tesla, but want the performance, safety, environmental benefits, fuel savings, and ability to experience Tesla’s Full Self Driving (older models won’t have the hardware to try the latest FSD, but even V12 is pretty good), check out the leasing offers on Tesla.com! You can see they can cost a lot less to own, even compared to a Honda Civic, a smaller, slower, less premium car, with many fewer features. Most people have no idea that a Tesla can cost a lot less to own than an entry level subcompact!

If you want to take advantage of my Tesla referral link to get up to $1000 off a new Tesla vehicle (or 3 months Full Self Driving on most models), here’s the link: https://ts.la/paul92237 — but if another owner helped you more, please use their link instead of mine. 

Disclosure: I am a shareholder in Tesla [TSLA], BYD [BYDDY] and XPeng [XPEV]. But I offer no investment advice of any sort here.