Electric car finance

Every year, manufacturers add more electric car models (also called electric vehicles, or EVs) to their product line-ups, as part of a big push ahead of 2030 when you’ll no longer be able to buy a brand-new petrol or diesel car in the UK. Electric car registrations are more than doubling every year, with Zuto’s partner AutoTrader predicting we’ll be buying more EVs than diesel and petrol by 2025.

The huge growth in new models means we’re now also seeing an increase in used electric cars, meaning more choice for different budgets.

Zuto can help you find electric and hybrid car finance deals that are right for you. As a broker, we work with a panel of lenders who understand the ins and outs of electric car ownership.

While electric cars cost more on average than traditional models, this doesn’t mean that you won’t be able to get this type of vehicle on finance. Electric car financing can be a more affordable way of getting a more expensive car, and it’s available to a wide range of people. 

Whether or not you qualify for electric car financing is dependent on the same factors that affect accessing finance in general. In other words, your credit rating, your income and how stable it is, plus certain age requirements. But even people with low credit scores may be able to get finance for an electric or hybrid car depending o n their individual circumstances. 

That opens up the possibility of driving a car that offers both environmental and economic benefits. It’s cheaper to run an electric car than its diesel or petrol equivalent in terms of fuel cost, while the reliability of electric models also offers the very real possibility of lower maintenance costs. 

You can pay for an electric car on finance, just as you can a traditional car, with three main types – Zuto HP finance, Personal Contract Purchase finance and personal loans. However, there are some ways that EV finance differs to standard petrol, diesel, or hybrid:

• While uncommon, some lenders will only finance the vehicle. In these instances, the deal doesn’t include the battery and you would have to lease it separately.
• Electric cars are usually more expensive to buy than petrol and diesel. Additionally, you might also want to have a charging point fitted at your home.

In the long term, you’re likely to save money financing an electric vehicle, with less to pay than petrol or diesel on vehicle tax and running costs – even with the extra spend on electricity.

An electric car’s battery might not be included in its price, so you might have to lease it separately. The difference in the prices of cars with and without batteries can be large, so it’s best to be sure before you commit.

Although this is different to what we’re generally used to with car ownership, it can be useful – if the battery’s efficiency drops below a set level, it’ll be replaced.

The basics are still the same for buying an electric car on finance as they are for a petrol or diesel vehicle. However, it’s worth thinking about the following for an EV:

• Find the right car for you – an electric car needs to meet your requirements, so think about the size, whether you like the brand, and what owners of the same or similar vehicles are saying.
• Battery range – this is the number of miles an electric car can travel on a single charge. Range has improved in recent years so a newer model might be preferable if you regularly make long journeys. Before committing to finance on an electric car, confirm the range of your chosen vehicle and whether it suits your lifestyle.
• Charging cables – you’ll need these to connect your car to charging points. Make sure the cables are included and in good working order.
• Charging points – it’s worth looking into installing a charger at home. If you can’t install one or aren’t ready, check where your nearest charging points are and ask your workplace if they either have any or might be planning to add them in the future.
• Compatibility – if you are going to be using public charging, ensure you buy an EV compatible with rapid charging (which can top up batteries to 80% capacity within 30 minutes). EV compatibility depends on its maximum charging capacity and whether it accepts a Type 2 connector.
• Service history – a complete service history of a used EV should show you whether the car’s had its software updates. Battery life and its deterioration rate will also be examined.
• Component costs – in addition to the usual maintenance checks on brakes and tyres etc, there are new considerations with EVs. High-voltage relay banks and power-steering pumps also need checking.

It’s a great time to go electric; EVs are becoming more affordable and there’s an ever-increasing selection to choose from. And of course, there are the obvious reasons – they’re good for the environment and fun to drive.

Here are the key benefits to be aware of.

• Environmental benefits – fully electric cars emit no greenhouse gasses, cutting local emissions. The source of electricity remains a challenge, as it isn’t completely green in the UK – but more than half does come from carbon-neutral sources (nuclear, wind, solar, hydro and other renewables).
• Economic benefits – the cost of running an electric car is much less than it is for petrol and diesel cars, even though the latter might be cheaper to buy at first. Tax incentives, government grants and cheaper per-mile-energy means you could pay less in the long-term.
• Driving experience – one of the first things you’ll notice if you take an EV for a test drive is how quiet and smooth it is. They can also be surprisingly quick; even modest hatchbacks can do 0-62mph comfortably under 10 seconds.
• Reliability – The team at Zuto conducted some research on how electric and hybrid cars hold up in their MOTs, and the answer was pretty well. Our team crunched official UK Government data from more than 1.7million MOT tests between January 2016 and May 2021, with the top 30 vehicles all achieving a pass rate of 84% or higher. Read more in our electric and hybrid MOT pass rate study.

Buying an EV comes with plenty of environmental and economic benefits, but there are a few areas you should be aware of before committing to electric car finance:

• For EVs with lower range, you’ll need to plan longer journeys around charging port locations (making sure ports are compatible).
• EVs might be cheaper in the short term, but they generally cost more than petrol or diesel cars to buy.
• Because all in-car features (entertainment, air con, and heating) are battery powered, you’ll have to be conscious of additional power usage as you drive.

If you’re keen to help the environment but don’t think an EV fits your lifestyle, you could consider hybrid car finance. Hybrid cars combine normal petrol/diesel engines with electric. There are two different types of hybrid cars to finance:

• Conventional hybrid – a conventional hybrid uses the electric motor when travelling at low speeds, but makes use of the traditional engine when accelerating or working at full power. During operation, any excess power is used to recharge the battery.
• Plug-in hybrid – as well as charging on the move, a plug-in hybrid offers the option to stop and recharge your car at a station. This gives you a longer running time on the electric than a conventional hybrid.

Used electric cars are getting more and more affordable, with more manufacturers involved in the sector than ever before. Here are some examples of what’s available, although the estimated price quotes can vary depending on condition, mileage and other factors. 

Finance costs are just an estimate, based on a four-year Hire Purchase agreement.

2020 Vauxhall Corsa-e

Estimated price = £16,000

Approximate monthly finance cost = £483

2018 Nissan Leaf

Estimated price = £9,500

Approximate monthly finance cost = £287

2019 Tesla Model 3

Estimated price = £24,000

Approximate monthly finance cost = £725

Zuto is a credit broker, not a lender. Our rates start from 9.9% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £7,500 over 48 months with a representative APR of 21.4% the amount payable would be £226 a month, with a total cost of credit of £3,369 and a total amount payable of £10,869.

Running an electric car comes with different costs to those we’re used to with petrol- or diesel-engine vehicles.

We’ve compared how much a used electric car can cost compared to a diesel-engine vehicle - the Nissan Leaf is one of the most popular EVs on AutoTrader at the moment and the Golf remains one of the UK’s top-selling cars.

Rather than choosing the cheapest cars on the market, we’ve selected ones in a really competitive area – almost £8,000 to buy outright. We’ve excluded MOT, tyres and consumables.

Estimated costs from real-world examples: a 2015 VW Golf 1.6 TDI BlueMotion Tech (s/s) 5dr with 74,500 miles, on the market at £7,795 and a 2015 Nissan Leaf Tekna with 42,559 miles, on the market at £7,950. Prices correct as of July 2021.

Insurance estimates based on a 42-year-old male driver with 9 years' no claims and living in a low-risk area.

The Leaf works out at an estimated £76.41 cheaper per month than the Golf.

Of course, cheaper versions of both cars are available, and money can be saved through servicing and insurance – but for day-to-day driving? Electric is simply much cheaper.

Fully electric cars are currently exempt from car tax (Vehicle Excise Duty, VED) and the benefit-in-kind (BiK) tax rate for vehicles is also 0%.

It’s also worth noting that cars registered between 1 March 2001 and 31 March 2017 have different tax rates to those built before or after, which is why the Golf in our example (emitting 99g/km CO2) pays no tax – but the identical car registered today would pay £160 a year.

Now you know more about electric cars and the differences between EVs and traditional vehicles. If you’d like to buy a used one on finance, it’s easy with Zuto.