Should You Lease or Buy an Electric Car?
14/05/2022
Electric cars have been gaining in popularity in recent years. Drivers are more aware of their reduced environmental impact and the benefits of alternatives to petrol and diesel cars. But when it comes to getting an electric vehicle, there is some debate about whether leasing or buying is the best option.
The number of electric cars on the road has skyrocketed in the last ten years. It's difficult to imagine there were less than 1500 Battery Electric Vehicles (BEV) in the UK in 2011. Now there are nearly 400,000, and that doesn’t include plug-in hybrids. Recent data shows that more electric cars now sell in a week than in the entirety of 2012. And, there's been a nearly 30% increase in interest in electric car leases in the two years.
If you're considering switching to an electric car, you probably wonder whether to lease or buy. There are pros and cons to both options, and it ultimately comes down to what makes the most sense for your lifestyle and budget. Perhaps you're not entirely sold on electric cars and are considering a traditional petrol or diesel vehicle. To help you make a decision, we've put together a quick rundown of everything you need to know about buying and leasing an electric car.
What Are the Benefits of Driving an Electric Vehicle?
Fully electric cars are the future. In 2030, the UK government will ban the sale of new internal combustion engine (ICE) vehicles. The ban means anyone wanting to drive a new car will have to go electric.
But 2030 is still a way off, and at the moment you can still choose to get a new petrol or diesel car. There is still a lot of trepidation from many drivers about electric vehicles, and much of it stems from the reputation of the first electric and hybrid cars. They were unreliable, needed charging constantly, and there was very little choice available.
But things have changed, and pure electric cars now easily compete with their petrol and diesel counterparts. The push towards net-zero has meant that almost every car manufacturer is currently producing an electric range. Ford recently announced it will add seven new models to its electric range by 2024.
But beyond the impending ban on ICE vehicles, what other reasons are there to choose a pure electric car over petrol or diesel models? Regardless of whether you buy or lease an electric vehicle, there are a tonne of benefits, including:
- Lower running costs
- Better for the environment
- No congestion charges or road tax
- Government grants
- Free parking (in some places).
Almost all of the early issues with electric cars are no longer a problem, including car battery issues. Most new electric vehicles can go around 200 miles before needing to charge. Some of the longest range electric cars can go nearly 500 miles before recharging. Plus, there are over 40,000 charging points in the UK. The biggest question left around electric vehicles is whether to buy an EV outright or lease one?
Buying an Electric Car
If you're considering buying a brand new electric car, you have options available: buying outright, a personal contract purchase (PCP) or a hire purchase (HP). For most people buying an electric car outright is not an option, and more than 90% of new cars are bought on finance. So for most people, a personal contract purchase or hire purchase are the only options. If you're unfamiliar with the terms, here's a quick rundown:
- Personal contract purchase — A PCP deal where you only pay for the car's predicted depreciation costs in monthly payments throughout your contract. At the end of your contract, you can choose to pay the remaining cost of the vehicle or return it.
- Hire purchase — HP deals are less popular than PCPs and are more straightforward. Essentially, an HP agreement splits the cost of a new car over a fixed period.
But regardless of how you buy an electric car, there are benefits and downsides to consider before signing the dotted line.
Benefits of Buying an Electric Car
- Lower maintenance costs — Electric vehicles have far fewer parts than traditional cars, so there is less to go wrong.
- Reduced running costs — The cost of charging an electric car is far less than the cost of fuel for traditional vehicles.
- Tax benefits — At the moment, all pure electric vehicles are exempt from road tax in the UK.
- Zero emissions — Electric cars are a far more environmentally friendly option than petrol and diesel vehicles.
Downsides of Buying an Electric Car
- Depreciation cost — Over time, your electric car will lose value. If you own the vehicle, you won't be able to sell the car for the same price that you paid.
- Advancing battery technology — Electric car batteries are improving every year. By buying a car, you may be missing out on better technology in the coming years.
- Maintenance and servicing — As the car owner, you're responsible for the cost of maintenance and servicing. While it is usually cheaper than a traditional car, a replacement battery for an electric car can cost up to £10,000.
- More financial restrictions on choice — When you buy a car, you may be limited to certain models depending on your finances due to higher initial and monthly payments.
Leasing an Electric Car
The best alternative to buying an electric car is to lease an electric car. Leasing is one of the most popular ways to finance an electric vehicle, and for good reason. As electric cars are still developing and emerging in the global and UK market, they tend to cost more than their petrol or diesel counterparts.
As more and more electric vehicles hit the road, the price will probably drop, but leasing is an excellent option for now. When you choose to lease a car from a leasing company, you will be given a personal contract hire (PCH)— not to be confused with a personal contract purchase.
A personal contract hire agreement is relatively straightforward and means that you can drive the car for an agreed period of time. The duration of your contract is known as the "lease period". You return the car to the leasing company at the end of the lease period. At no point in the process do you own the vehicle.
Benefits of Leasing an Electric Car
- Lower monthly payments — Leasing an electric car is usually cheaper than payments for PCH or HP agreements.
- No battery degradation concerns — As you don't own the car, you don't have to worry about the condition of your battery.
- Maintenance packages — Most leasing companies offer maintenance packages for a small monthly charge, so you never need to worry about maintenance costs.
- More choice of models — As monthly payments are usually lower, you'll have a wider selection of electric cars to choose from.
Downsides of Leasing an Electric Car
- You don't own the car — Not usually an issue for most drivers, but if you plan on making modifications to your vehicle, you cannot do this with a lease.
- Mileage restrictions — All lease agreements come with a yearly mileage limit and charges if you go over that limit. It's vital to assess your annual mileage before signing a lease.
- Damage excess charges — While you're usually not responsible for maintenance, you will be charged for any damage that was directly your fault.
- Battery rental — Some leasing companies do not include the electric car's battery rental and will add this as an extra cost.
Ready to Lease a Brand New Car?
Explore our complete range of electric cars today and find the perfect lease for you and your budget. At Tilsun Leasing, we have a wide variety of leases available for business and personal use. If you have any questions about leasing an electric car, please get in touch with us, and we’ll do everything we can to help.
