Electric Car: Lease vs Buy – Which is Best?

EVs gaining popularity across the UK

The uptake of EVs is on the rise in the UK, with the latest statistics from the Department for Transport (DfT) confirming sales of battery-powered cars hit record highs in 2021. In the North, EV registration numbers jumped to almost 75,000 last year. This represents a leap of more than 50% compared to the previous year. Nationwide, the DfT estimates there are more than a quarter of a million EVs driven by British motorists.

To cope with demand, the government has pledged to install 300,000 public EV charge points across the country. This is almost five times more than the number of fuel pumps currently available to motorists. Transport Secretary Grant Shapps says it’s part of a plan to establish the UK as a global leader in EV uptake. He says supporting EVs will not only help motorists save money on fuel but will play a critical role in helping the country meet its net-zero targets.

Now we know more about how much momentum EVs have gained in the UK, let’s take a closer look at some different ways to get behind the wheel of these eco-friendly vehicles. Which is best – an electric car lease vs buying an EV? Or is there another option that combines the best of both?

The pros of leasing an EV

• Maintenance and servicing costs are included in your monthly repayments.
• Depreciation isn’t a concern, as you never take on ownership of the vehicle.
• Similarly, you won’t need to worry about selling the car when you’re ready to upgrade.
• At the end of the lease, you’re free to upgrade to a newer model. This makes leasing an appealing option for many motorists. If you love the butter-soft feel of new leather seats or enjoy the latest tech, sound systems and driver assist features, leasing can be a great solution.
• If you use your EV for business, leasing can offer some tax write-offs.

The cons of leasing an EV

• Mileage is generally restricted, which means you’ll need to keep tabs on how far you drive. If you’re planning to use your EV for road trips, long daily commutes or as a full-time business car, leasing can be restrictive.
• Leasing agreements can also be restrictive when it comes to wear and tear. If you use your car to transport kids, pets or anything else that can make a mess, leasing may not be the best option.
• You may still be liable to cover serious damage to the vehicle, which means leasing isn’t a 100% risk-free option.
• You never acquire ownership of the EV, which restricts how you can use the vehicle. For example, you may not be allowed to take the car out of the country, which rules out a weekend away in France or a ferry to Ireland.
• Charges may be applicable if you want to end the lease before the agreed term. This can make leasing a more expensive option in the long run.

The pros of buying an EV outright

• You acquire full ownership of the vehicle the moment the transaction is approved. This gives you complete freedom over mileage, wear and tear, international destinations and other factors that can be restricted with leasing.
• Buying an EV outright is the cheapest option as you don’t take on debt. This eliminates extra costs like interest, as well as fees and charges.

The cons of buying an EV outright

• You’ll need to cover the total cost of the vehicle outright. In the UK, the cheapest electric cars like the Smart EQ Fortwo Coupe will set you back at least £17,000. Bestsellers like the Kia Niro EV are priced at almost £35,000 for new models, while the wildly popular Tesla Model 3 will set you back almost £45,000. Most Brits simply don’t have the cash to purchase a new EV outright.

EV Finance – The Best of Both Worlds

As we’ve explored, there are pros and cons to both leasing an EV and purchasing outright. This is where financing can be a clever option. Purchasing an EV on finance balances the two options and offers the best of both worlds – you take on full ownership of the car, with the freedom to spread the payment over a longer period.

Depending on the type of financing agreement you choose, there may still be limits and restrictions. However, in general you’ll enjoy far more freedom than on a lease contract. EV technology has improved in leaps and bounds over the past few years, with models like the Tesla Model S offering incredible range of more than 400 miles on a single charge. For family-friendly EV models like the Hyundai IONIQ 5, expect a top driving range of 315 miles.

These are impressive stats and have reimagined the functionality of EVs. Want to skip the forecourt, slash your carbon footprint and cover serious distance? Use our quick and easy calculator to get a car finance quote and unlock a budget for your EV purchase. 

Finance for Second-Hand EVs

If you’re thinking about purchasing a second-hand EV, financing can help stretch your budget further and minimise the financial stress of buying a car. Unlike leasing agreements, which are generally reserved for only the newest models, car finance can be used to purchase a pre-loved EV. This can be a great way to get behind the wheel of an EV while keeping your monthly repayments as low as possible.

Join the EV revolution

Thinking of financing an EV? You’re not alone. The latest data from the Finance & Leasing Association confirms more than 90% of new vehicles are financed. In the UK, a personal contract purchase (PCP) is the most popular car finance option. Contracts generally span for three to five years and come with attractive interest rates when you shop around for the right provider.

PCP usually starts with an initial deposit, with the remaining cost spread over monthly repayments. At the end of the loan, you’ll have the option to purchase the car outright with a balloon payment. This payment tops up the total amount you’ve already paid to match the Guaranteed Minimum Future Value (GMFV) of the EV, which was agreed on at the start of the loan.

Give us a call today on 01246 458 810 or email us at enquiries@mycarcredit.co.uk to find out more about PCP loans and other car finance options.