The best way to finance an electric car
Learn more about car finance for electric cars, including the best way to finance an electric car and what term length is best
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If you’re wondering, ‘can I get car finance for an electric car?’ - the answer is yes, as long as you’re eligible.
While electric cars are available on PCP, HP and PCH finance deals, not everyone will be accepted. You need to meet the lender criteria through soft and hard credit checks.
Financing an electric car can be a helpful way to spread the cost, with the freedom to decide which finance type suits you most.
Read our guide to learn more about the best way to finance an electric car.
In summary:
Yes, you can get an electric car on finance if you meet the lender’s criteria
Personal Contract Purchase (PCP), Hire Purchase (HP) and Personal Contract Hire (PCH)/Leasing are all ways you can finance an electric car and are all slightly different
You can finance both used and new electric cars
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Can I get car finance on an electric car?
You might be able to get an electric car on finance if you match the lender’s eligibility criteria.
They’ll carry out credit checks, looking at factors like your credit history, employment and outgoings, to decide whether you can comfortably make electric car finance payments.
If you meet the lender’s criteria, you’ll be able to choose the terms of your finance (e.g. deposit and term length).
What happens at the end of your contract will depend on the type of car finance you choose.
What types of car finance can I get on an EV?
There are three main types of car finance you might choose for your electric car.
Personal Contract Purchase (PCP)
Hire Purchase (HP)
Leasing/Personal Contract Hire (PCH)
What’s the best electric car finance option?
The best type of electric car finance option is always going to be the one that suits your needs.
They all have their positives and drawbacks, so it’s important you know what you’re getting into before you commit.
Personal Contract Purchase (PCP)
PCP car finance is a good midway between HP and leasing. It gives you the option to finance a car over an agreed period, then decide at the end if you want to make the balloon payment and keep the car.
Here’s how electric car PCP works:
Pay a deposit
Make your pre-agreed monthly payments
Once you’ve reached the end of your contract, you can pay the balloon payment to own the car, or
You can simply give the car back to your lender for free (as long as it’s in fair condition)
Electric car PCP pros and cons
Benefits:
You can choose whether to keep your car or give it back at the end of your contract
Ideal if your motoring needs change often
Can be helpful if you want to try out an electric car for the first time
Things to consider:
You might have to pay damage charges if you return the car in poor condition
The car won’t officially be yours until you pay the balloon payment
You’ll have to settle the finance or surrender your car if you want to end the contract early (read more on ending PCP early)
Is PCP right for me?
PCP for an electric car might suit you if:
You want to try an electric car for the first time
You know you might want a different car by the time your contract ends
You enjoy trying different cars often
You want a new car and don’t enjoy the buying and selling/part-exchanging process and just want your next car
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Hire Purchase (HP)
HP car finance can feel slightly more straightforward than PCP, as you simply pay a deposit and then make monthly payments until the end of your contract.
There’s no final balloon payment or option to hand your car back – once all of the payments have been made, you own the car.
Electric car HP pros and cons
Benefits:
There’s no balloon payment at the end of your contract
You’ll be the official owner of the car as soon as you make the final payment
It’s ideal if you know you want keep your car once the finance ends
Things to consider:
As you’re spreading the full cost of the car, monthly payments can be higher than with PCP
You own the car, so you might need to sell or part-exchange it before swapping to something new
You’d have to surrender your car or settle the outstanding balance to end your contract early
Is HP right for me?
HP for an electric car might suit you if:
You’re committed to your car and think you’ll keep it after the finance contract ends
You don’t mind selling or part-exchanging when the time comes
You don’t want to pay a balloon payment at the end of your contract
Learn more about HP car finance
Leasing or Personal Contract Hire (PCH)
PCH, more commonly known as leasing, is sort of like a long-term car rental where you pay for the use of a (often brand-new) car and hand it back when the contract ends.
You’ll agree an annual mileage limit at the start of your contract and will be charged a pence-per-mile fee for any excess miles. You’ll also be charged for any damage to the car beyond ‘fair wear and tear’.
Electric car leasing pros and cons
Benefits:
You can try an electric car without the long-term commitment
As the cars are usually brand-new, you won’t need to get an MOT for the first three years of the car’s life
Tax will be included in your monthly payments, and you can also choose to add maintenance packages to your agreement
Things to consider:
You’ll have to pay a fee for each mile that exceeds your annual mileage limit
You’ll be charged for damage that falls outside of fair wear and tear
You’ll never be able to purchase the car or become the official owner
Is leasing right for me?
Leasing an electric car might be right for you if:
You like swapping cars often
You want to drive an electric car for a while before buying one
You like getting a new car without paying the cash price upfront
Can anyone finance an electric car?
Anybody can apply for finance on an electric car, as long as you’re over the age of 18 (though some lenders have higher age limits).
Whether you’ll be approved for the finance depends on the personal factors that reassure a lender you’ll be able to make payments.
Your credit history
Your credit history shows the lender how you’ve handled borrowing in the past. It can be a good sign if you’ve had finance previously (and that you’ve paid in full and on time), but excessive lending can be a red flag.
Your ‘credit age’
While your biological age doesn’t directly impact your credit rating in most cases, the age of your credit history might make an impact.
If you’re new to finance and haven’t used any lending options in the past, you don’t have a record of how reliable you are at making repayments.
It can help to start building your credit report ahead of time with smaller loans, credit cards or even with utility bills.
The full amount of the finance
Choosing a high-priced electric car on finance can mean lenders are stricter on borrowing criteria, as they’ll want to make sure you can make the repayments.
You can offer a larger deposit to take the edge off and reduce overall lending, which may improve your chances of getting approved.
Your affordability
Lenders will also check your affordability through credit checks to ensure you’re able to make the payments.
They’ll look at things like your incomings and outgoings, as well as any current borrowing and your repayment history.
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What term length is best for electric car finance?
The term length of your electric car finance will impact your monthly payments, so it’s a good idea to weigh this up before committing.
Term length can also change interest rates depending on the lender. Some short-term finance agreements might have higher interest, so the lender can still make a profit.
What are the cheapest electric cars to finance?
The cheapest electric cars are the cheapest to finance. Putting down a big deposit can also make your monthly payments smaller
PCP can be a good option to keep finance costs low as you’re not paying for the full value of the car and can choose to give the car back rather than pay that final balloon payment.
Will electric car finance affect my credit score?
Financing an electric car can have an impact on your credit score, but the type of impact it has will depend on you as an individual.
If you take out a car finance deal and make all of your payments on time – this can actually help build a positive credit report.
If you fail to make payments, surrender your car or make late payments, this can show up negatively on your credit report.
Applying for lots of car finance and getting declined can also look bad on your credit report.
Using soft searches and finance calculators before you start an actual application can help keep this to a minimum.
Finance an electric car with cinch
Choosing to finance an electric car can be a useful way to spread the cost. It can also give you the freedom to try a car for a longer period without committing.
PCP, HP and PCH/leasing are all worth exploring if you’re interested in an electric vehicle – as long as you’ve done your research on what to expect.
Browse our full range of electric cars now.
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