Electric Car Finance

Lots of people are switching to an electric car. Not only are these cars more environmentally friendly but you can also save on running costs. But these vehicles don’t tend to come cheap. Electric car finance is one way to make the price tag more affordable. Read our guide to learn how electric car finance works and how to find the best deal.

Can you buy an electric car on finance?

Yes. Electric car finance can help you spread the cost of the vehicle. Some types of electric car finance (such as electric car leasing and PCP) let you return the car at the end of the agreement.

How does electric car financing work?

Electric car finance typically works like any other type of car finance. There are several options including:

• Personal contract purchase (PCP) – split the price of the electric car into three chunks: a deposit, monthly payments and an optional final payment if you want to own the car.
• Hire purchase (HP) – put down a deposit and make monthly payments to own the car at the end of the agreement. There’s no option to return the car.
• Car leasing – you won’t ever own the car with an electric car leasing agreement. Instead, you make monthly payments to use the car before returning it at the end of the deal.
• Car loan - this lets you borrow a lump sum of money to buy an electric car outright. You make monthly payments to repay the amount you borrowed plus interest and any fees.

How much is an electric car?

Electric cars are more expensive than their standard fuel counterparts. The average price of a new electric car in the UK in July 2023 was around £50,000. You may find cheaper models if you don’t need all the bells and whistles. Another option is to buy second hand.

How do I choose the best electric car finance deal?

It’s always worth shopping around for the best deal. It only takes a few minutes to compare electric car finance offers from leading providers with Experian. Searching is free and never affects your credit score.

Is it financially better to buy an electric car?

Electric cars tend to be more expensive to buy, but cheaper to run. You pay less road tax and won’t be charged for driving in emissions-based zones. Electric cars also get free or cheaper parking in some areas.

Due to the recent energy crisis, it’s not as cheap to recharge your electric car as it once was. But it may still cost less than petrol or diesel – especially if you recharge at home. Public chargers are pricier because they’re subject to 15% more VAT than home chargers.

Here’s a comparison of some of the running costs.

What are the pros and cons of electric cars?

Electric car sales have gone up in recent years, even overtaking diesel car sales in 2022. So why are they gaining popularity and what are the potential downsides? Here’s a look at some of the pros and cons of getting an electric car.

Advantages of electric cars

• Zero emissions. Electric cars are powered by an electric battery instead of burning petrol or diesel. This means they don’t produce any exhaust emissions that harm the environment when you drive them.
• Cheaper charges. As we mentioned above, electric cars benefit from cheaper road tax, free parking in some areas, and no emissions-based zone charges.
• Less maintenance. Electric cars have fewer moving parts than cars with an engine, so they typically don’t need repairs as often. Also, you never need to change the engine oil as there isn’t any in an electric car.

Disadvantages of electric cars

• Bigger price tag. Electric cars tend to be more expensive to buy. If you’re keen to get one anyway, electric car finance is one way to spread the cost.
• Number of recharging points. You’ll come across petrol and diesel stations more often than public recharging points. But the number of charging stations has increased in recent years – there are over 40,000 in the UK.
• Charging time. Charging isn’t as fast as filling up. The time depends on the type of car and charger. The average new electric car takes around an hour at a standard charging point. A rapid charger can get you to around 80% in only 10-15 minutes.
• Emissions from manufacturing. Although electric cars don’t produce exhaust emissions, they’re manufactured in a way that can damage the environment.

What government help is available when financing an electric car?

The government offers some assistance to lower the cost of buying and running an electric vehicle. Alongside electric car finance, this can make it more affordable to switch to electric.

• Price discounts. The government lowers the cost of certain low-emissions vehicles such as vans, trucks and wheelchair accessible vehicles. You don’t need to apply for the discount as the seller will include it in the price.
• EV chargepoint grant. This grant funds up to 75% of the cost of installing an electric car smart charging point at your home. You may be able to get additional discounts through the Energy Saving Trust if you live in Scotland.
• Road tax savings. You pay a lot less road tax with an electric car. See the cost comparison table above.
• Electric vehicle loan. If you live in Scotland, you may be able to get up to £30,000 to cover the cost of a used electric car or van, or up to £5,000 for a used electric motorcycle or moped.

Unfortunately, the Plug-in Car Grant ended in June 2022. This means you can no longer apply to get £3,500 towards the cost of a plug-in hybrid or electric car. The grant has been extended for 18 months for existing car orders only.

Is electric car salary sacrifice worth it?

Some employers offer a scheme that lets you lease an electric car using a portion of your pre-tax earnings. It often includes servicing, insurance and breakdown cover. You usually need to pay for recharging and company car tax. If you’re keen to try out an electric car, a salary sacrifice scheme may make it more affordable.