What are my options if I want to buy an electric car?
If you want your next car to be electric there are three ways to get hold of one: buy one outright, lease one, or lease one with the option of buying it when your contract ends.
When you buy an electric car outright you just pay whatever the price is and the car’s yours. No interest added and no ongoing payments to make. It’s very straightforward and you’ll usually find good warranties on offer from the seller, especially if you’re buying brand new.
Buying outright with a loan or finance
If you’ve taken out a loan to buy your car, you’ll probably pay interest to the lender. You’ll still pay up front and immediately be the proud owner.
Leasing is another way of saying ‘rent’ or’ hire’. You usually pay a deposit and make payments every month until your contract runs out, then you hand the car back. This is a great option if you like changing your car quite often. You can enjoy driving it without having full responsibility for it. The downside is you’ll need to look after it carefully and hand it back in good condition.
Leasing with an option to buy
PCP stands for Personal Contract Purchase and this means you lease the car in the usual way but when your contract runs out, you either hand your car back or pay a final lump sum to buy it.
This is great if you want to try an electric car to see if you like it and keep your options open. It’s also good if you know you want to buy a car but paying the full showroom price up front is a bit of a stretch. It’s a way of spreading the cost.
And the government wants us all to move towards electric so there are other incentives too.
- Through your work. Some companies offer a salary sacrifice scheme where they deduct the money for your electric car lease before they deduct your tax. So the cost of the lease is usually the same, but you save money on tax.
- In Scotland you can get an interest-free loan of up to £28k on a new electric car and £20k on a used one. You buy your car and spread the cost without paying any interest.
- If you’re running your own business the benefit in kind on electric cars is 1% in 2021-22 so they can be a cost-effective company car.