Electric
car finance

What is electric car finance

Electric car finance allows you to spread the cost of an electric vehicle (EV) with fixed monthly payments instead of paying the full amount upfront.

Just like traditional car finance, you usually start with a deposit, then pay the rest over 24 to 60 months. This way, you don’t have to worry about making one large payment, and you can budget more easily.

There are different finance options available, such as Personal Contract Purchase (PCP) and Hire Purchase (HP). Each option works differently, giving you the flexibility to choose how you want to finance your EV.

How does electric car financing work?

The two most common options are Personal Contract Purchase (PCP) and Hire Purchase (HP). Both options help make electric cars more affordable by spreading the cost into manageable payments.

Personal Contract Purchase (PCP): This is a flexible way to finance an electric car. You pay a deposit, followed by fixed monthly payments that cover part of the car’s value. At the end of the agreement, you can:

• Return the car if you no longer want it (as long as you stay within mileage limits).
• Trade it in for another car finance deal using any remaining value.
• Make a final balloon payment to buy the car outright.

Hire Purchase (HP): This is a straightforward way to buy an electric car on finance. You pay a deposit, then cover the total cost through fixed monthly payments. There’s no balloon payment at the end—once you’ve made the final payment, the car is yours. HP payments are usually higher than PCP, but there are no mileage limits or return conditions.

Types of electric vehicles that can be financed

There are three main types of electric vehicles you can finance: fully electric cars (BEVs), plug-in hybrids (PHEVs), and self-charging hybrids (FHEVs). Understanding the differences between these EV types can help you decide which one fits your driving needs and charging availability.

Let’s go through how each one works so you can decide which is best for you.

• Fully Electric Cars (BEVs): These cars run entirely on electricity, meaning they don’t use petrol or diesel at all. To keep them powered, you’ll need to charge them at home using a wall charger or at public charging stations. They have lower running costs than petrol or diesel cars but depend on a good charging infrastructure.
• Plug-in Hybrid Electric Vehicles (PHEVs): These cars use both an electric motor and a petrol or diesel engine. You can drive short distances using just electricity, but for longer trips, the car will switch to fuel. Since PHEVs need regular charging, they work best if you have access to a charging point at home or work.
• Self-Charging Hybrid Electric Vehicles (FHEVs): Unlike PHEVs, these cars don’t need to be plugged in. Instead, they charge themselves while you drive using energy from braking and the engine. They help reduce fuel use, but since they rely more on petrol or diesel than PHEVs or fully electric cars, they aren’t as fuel-efficient in electric mode.

Can I get car finance on electric cars?

Yes, you can get car finance for an electric car, both new and used. Many lenders offer flexible options to help you spread the cost with fixed monthly payments.

The process is simple. Start by getting a quick quote to check your finance options without affecting your credit score. If you choose to apply, you’ll need to provide some basic documents, such as proof of income, address, and ID. The lender will then review your details and decide on your approval.

Once approved, you can choose your electric car, and the lender will handle all the paperwork, making the process quick and hassle-free. If you’re looking at a used EV, finance makes it easier to afford by breaking the cost into manageable monthly payments.

Can I apply for electric car finance with bad credit?

Yes, you can still get electric car finance even if you have bad credit. Many lenders consider more than just your credit score, so having a lower rating doesn’t always mean you’ll be refused. Some lenders also offer 0 deposit finance, meaning you won’t need to make a large upfront payment to finance an electric car.

If your credit score is low, you may be offered a higher interest rate, but there are still affordable finance options available. Spreading the total cost over fixed monthly payments can make it easier to manage. Comparing different car finance deals can help you find the best rate for your budget.

At Carboom, we work with a panel of lenders to help you find the best finance deal, even if you have bad credit. Get started today and explore your options in minutes!

Can I apply for electric car finance with no deposit?

Yes, you can get electric car finance with no deposit. Some lenders offer 0 deposit finance, which means you don’t need to pay anything upfront. This makes it easier to get an electric car without waiting to save for a large deposit.

With no deposit finance, the full cost of the car is spread across your monthly payments. Since you’re borrowing more, your monthly payments may be slightly higher, but you can get the car sooner without upfront costs.

Lenders will look at your credit score and financial situation to decide if you qualify. They check if you can afford the repayments, so having a stable income can improve your chances of approval.

At Carboom, we work with a panel of lenders to help you find the right finance deal. Get a quick quote today and explore your 0 deposit options without affecting your credit score.

Does electric car finance affect my credit score?

Applying for electric car finance can affect your credit score, but it depends on how the check is done. At Carboom, we use a soft credit search, which means checking your eligibility won’t impact your credit rating or appear on your credit file.

If you go ahead with a full application, lenders may perform a hard credit search, which could slightly lower your credit score. If your application is declined, repeated rejections could have a bigger impact. To avoid this, it’s best to compare finance options carefully before applying.

Once approved, making fixed monthly payments on time can help improve your credit score. However, missed payments may negatively affect your credit history, making future borrowing more difficult. If you decide to end your finance agreement early, your score might drop temporarily, depending on the lender’s terms and conditions.

Benefits of electric vehicles

EVs have many advantages, from lower running costs to a smoother driving experience. They are also better for the environment and more reliable than petrol or diesel cars. Let’s go through the key benefits in a simple way.

1. Better for the Environment

EVs produce zero local emissions, meaning they don’t release harmful gases like petrol or diesel cars. This helps keep the air cleaner, especially in busy cities. If you charge an EV using renewable energy, it also reduces your carbon footprint, making it a more environmentally friendly choice.

2. Lower Running Costs

Electric cars are often cheaper to run than petrol or diesel cars. Charging costs less than filling up with fuel, and some public charging points are free or discounted. EVs also need less maintenance because they have fewer moving parts. There’s no need for oil changes, exhaust repairs, or timing belt replacements, which can save you money over time. Many EVs are also exempt from road tax and congestion charges, further reducing costs.

3. Smoother and Easier to Drive

Electric cars provide a quiet and smooth drive with instant acceleration. Unlike petrol or diesel cars, they don’t have gears, making them easier to handle, especially in traffic. Many EVs also use regenerative braking, which helps recharge the battery while slowing down, making driving more efficient.

4. Reliable and Stable

EVs have fewer parts that can break down, making them more reliable than traditional cars. They also have a high MOT pass rate, with over 84% passing their first test. Since they don’t have a traditional engine, you won’t have to worry about costly repairs like clutch replacements or exhaust issues.

What are the prices of electric vehicles?

If you’re thinking about getting an electric car on finance, the cost will depend on the model, age, and whether you choose a new or used vehicle. Buying a used electric car can be a more affordable way to make the switch, and finance helps you spread the cost with fixed monthly payments.

Here’s what you could pay for a used electric car on finance, based on a 7.9% APR and a good credit score:

• Renault Zoe (2019) – Around £10,000

• PCP: Pay around £150 per month, with a final balloon payment if you want to keep the car
• HP: Pay around £200 per month, and the car is yours once all payments are made

• Smart EQ ForTwo (2020) – Around £12,000

• PCP: Pay around £170 per month, with a final payment if you want to keep the car
• HP: Pay around £220 per month, and you own the car after the last payment

With Personal Contract Purchase (PCP), you’ll have lower monthly payments, but you’ll need to make a final balloon payment to own the car. With Hire Purchase (HP), your payments are higher, but once you’ve finished paying, the car is yours.

At Carboom, we help you find the right finance deal for your budget. Get a quick quote today and see what you could pay for your electric car on finance.