Why Buy? Your Electric Car Leasing Options Explained
Did you know that you can save a lot of money by taking the electric car leasing route?
Sure, you won’t own the vehicle outright, but EVs can be pretty expensive at the moment, depending on your current budget and the vehicles you have your eye on.
Besides, leasing an electric car comes with its own set of benefits. The most notably is your ability to switch between cars on a somewhat regular basis.
Can’t do that if you buy a vehicle straight out of the shop now, can you?
That’s obviously one of many benefits that come with leasing an electric car if you’re a current resident of the UK.
Luckily for you, we’re covering it all today to give money-conscious buyers the chance to experience the thrill of electric driving without paying a hefty premium.
We’ll also cover road tax and car insurance and how that works in terms of electric car leasing.
So stay tuned.
You can lease a Tesla for a reasonable price
How Does Leasing An Electric Car Work?
Below is electric car leasing 101.
Leasing an electric car is fundamentally the same as hiring any other vehicle. The only difference is the agreement can last years at a time.
Like with leasing any old combustion type, you’ll need to pay an upfront fee and decide then and there how long you want to drive the car for and the number of miles you’ll accumulate each year.
It sounds strenuous, but this is how finance providers pick out the right package for you.
Once you reach the end of your deal, you simply hand over the keys and give the car back — or you can take out what is known as a ‘Contract Purchase’ and buy the vehicle outright once the lease is up (more on that in a moment).
Word of warning: expect to pay if you’ve exceeded your mileage.
Remember, how much you pay is determined by how many miles you’ve cleared compared to what was initially agreed.
When leasing, drivers have the option of taking out a personal contract or taking advantage of a business lease (if applicable).
Business Lease: A business lease cuts down your monthly repayments as you reclaim some or all of the VAT. However, you will need to work for a VAT registered company for this to apply.
Personal Lease: Taking out a personal lease on an EV in the UK is the direct opposite of a business lease in that you receive no financial aid to meet payments.
Well, there’s more to it than that, but that’s the gist of it.
Electric car leasing 101, as we said.
Still, we’ve not touched on the differences between a ‘Contract Hire’ and a ‘Contract Purchase’ yet…
A contract hire is essentially what we’ve just summarised above. It is the most common form of leasing an electric car.
The hint is in the name; it’s a hire.
You’ll never own the vehicle that you’re driving around in, and should be considered a form of long-term car rental.
Drivers pay an initial fee and then begin to follow a set payment plan each month until they reach the end of the agreement.
Going with a Business Contract Hire lets you reclaim the VAT on the car, thus saving you a fair amount of cash that could go towards your payments.
Moreover, the leasing company can also get in on the action, in that they can reclaim the VAT on the car too, which means you pay less as a result (this applies to Personal Contract Hires too).
Again, the hint is in the name.
A contract purchase gives you the opportunity to buy the electric car you’ve been driving once you come to the end of your lease.
In other words, it’s a way to get finance on a car if you’re lacking the funds to pay for it in the beginning.
How much you pay to own the vehicle at the end of the lease is determined before you sign the contract.
There are clear advantages/disadvantages to leasing an electric car this way.
Think about it.
If you’ve leased the same car for up to three years, why would you then want to buy it when you have the opportunity to switch to another ride?
It really depends on the person/the EV, but if it were up to us, we’d use it as a chance to try something new.
Like a Contract Hire, interest is set as soon as you take the lease out.
However, if you choose to take out a Business Contract Purchase, you won’t pay any VAT at all.
You can reclaim all of the vehicle’s cost against corporation tax in the first year. Still, if you ever want to sell the car, you’ll first need to repay the tax on its sale price.
How Do I Lease An Electric Car?
To lease an eco-friendly car, you’ll need to seek the help of a finance company. Or, you can lease through a manufacturer directly, either at the showroom or online.
We’d recommend you avoid the latter as you might end up paying more than you expected.
Our advice would be to begin by scanning the right comparison sites to ensure you aren’t missing out on any electric car leasing deals.
Having a good idea of the electric car you want to lease should be the first thing you identify.
That and how long you’d like to keep it for and how many miles you’d accumulate on a regular basis.
You should be visiting sites like Cars2Buy and Auto Lease Compare to get the complete lowdown on the best EV leasing deals before you even think about signing on the dotted line.
Both have proven themselves more than helpful in the past and have helped thousands drive away with a lease that works for them.
It goes without saying, but if you’re thinking about leasing, then you need to ask yourself the right questions before you approach brokers/finance providers/car brands:
- Will I need to install a charging point at home to fill my ride up with energy, or will I only visit public charging stations?
- Alternatively, does my place of work offer EV charging?
- Does the electric car I’m looking at have enough range that fits in with my daily driving pattern?
- What electric car leasing deals are out there? Can I save some money by taking advantage of the right one?
Having answers to the above questions will ensure that you find the right lease at the right time.
The Cost Of Leasing An Electric Car
How much does leasing an electric car cost if you live in the UK?
As you can imagine, the answer to this question varies.
That being said, how much you pay does work out cheaper if you take out a longer lease covering more miles compared to a shorter one with the same annual mileage.
Understand that sites work on a quote-based basis.
It can be somewhat deflating when you see a decent price listed on a site like DriveElectric only to realise it’s an estimate (despite including VAT).
Remember, to lease an electric car there are two payments you need to be aware of:
- The Initial Payment
- Monthly Fees That Follow
We should note that drivers can lower how much they pay monthly by increasing the initial payment cost.
It won’t change how much you owe in total, but it will take a decent chunk off of how much you’re willing to spread out.
Leasing a life of luxury can come at a cost.
How much does it cost to lease an electric car from Tesla? We hear you cry.
Not a lot compared to the other EVs mentioned. You can lease the Model 3 for around £400 (£350 if you’re coming at it from a Business Contact Hire position).
Finding the right EV lease deal at the right time could change everything, and we’ve spotted a number of Tesla deals in the past.
So they are out there; it’s just finding them.
EV Leasing, What Is/Isn’t Included?
An electric car lease includes payments for the vehicle itself alongside road tax. On the other hand, your insurance will need to be sorted out separately.
To confirm, motor insurance is not included should you choose to lease an electric car in the United Kingdom.
Again, comparison sites will be your best friend here, giving you the tools to find the right deal that runs in parallel with your monthly lease payments.
Entry-level electric cars will be the cheapest to insure. So if you’re looking at leasing a Tesla, be prepared to pay a little extra as far as insurance is concerned.
To recap, here is what is/isn’t included when you lease an electric car in the UK:
- Road Tax
- Maintenance Package (If Paid For)
- Car Insurance
- A Home Charging Point
You can lease any EV from any major car brand
Why Lease An Electric Car In The UK To Begin With?
Electric cars are easily the most talked about topic, as far as practical technology goes, in the modern-day.
The only thing that comes close is AI, which kinda applies to EVs too…
It’s no wonder everyone is chomping at the bit to own one, despite lacking the funds most of the time.
Rarely do buyers consider electric car leasing as a viable option, perhaps due to the lack of real ownership?
We’re here to tell you that there’s nothing wrong with electric car leasing if you’re from the UK — or anywhere in the world, to be completely honest.
The benefits of leasing should not be understated.
Lease And Buy Later
Let us say this: there is nothing wrong with buying an electric car if you have the money to do so.
But leasing gives you the chance to get the best of both worlds in that you can try before you buy for real, more so if you choose to take out a contract that lets you buy the EV at the end.
Nothing is stopping you from simply hiring an electric car for a year or two and then leasing another model from another brand, either.
Flitting between multiple vehicles within a shorter time frame is entirely possible when you choose to rent in the UK (as we’ve said numerous times already, and will probably say a few more times before we’re done just to hammer it home).
You can lease from now to the end of time and still enjoy all the perks of riding around in the latest cars.
It’s a clever way of staying ahead of the curve if you’re into the latest tech/features.
Leasing hybrid vehicles is a great option for those wanting a reliable EV.
EV Leasing Means No Reselling Woes
Electric cars are moving at such a rapid pace. We’re at a point now where the second-hand EV market is filling up fast with vehicles that pale in comparison to those that are coming out.
Residual values are constantly shifting, making it somewhat of a minefield to navigate if you ever want to sell your car.
Leasing an electric car in the UK and not owning the vehicle allows you to bypass this all together.
Higher resale values only add to the viability of electric car leasing. However, we expect this to change as time goes on, as we creep closer to 2030.
Not to mention, as electric cars begin to record better range/performance from the top down.
It’s Cheaper Than Buying An Electric Car
It’s probably the reason you’re reading this, but yes. We can confirm that it’s a hell of a lot cheaper to lease an electric car in the UK compared to paying thousands upfront.
There are financial benefits that apply to businesses in terms of VAT too.
Furthermore, did we mention that road tax is included within the lease?
Oh, and you’re exempt from paying congestion charges in select zones also.
Sure, you’ll still need to sort out car insurance, but it doesn’t add a lot to how much you owe (depending on the car you’re leasing and the insurance you take out).
Running costs tend to be a lot cheaper than standard combustion types too. The best way to drive down the price of charging is to install a home unit.
If you want to install a charger at home, take advantage of the Electric Vehicle Homecharge Scheme (EVHS) grant available from the UK government. The grant will knock up to 75% off of the installation price.
Some leasing companies actually work in tandem with charging companies to give you a much better deal on a home unit.
We’d recommend you shop around if you’re looking for a home unit, as some are far better than others.
There’s also charging grants that will help break up the costs of purchasing/installing these units.
Leasing has an endless supply of benefits that get better in time
Why Buy? Your Electric Car Leasing Options Explained
As you can see, you have many options at your disposal when it comes to electric car leasing — especially if you’re taking advantage of a business-related lease.
Business Contract Hires are a great way of encouraging a workforce to take an eco-friendly turn; having EV charging at the workplace should only encourage more people to consider leasing as a potential option.
In short, drivers have two leasing options to consider: Contract Hires and Contract Purchases.
Both have an appeal, but your choice is entirely up to you, influenced by your current situation/what you want to drive/what you can afford.
The fact that road tax is included with payments will no doubt appeal to money-conscious drivers, despite still having to pay for car insurance alongside other costs related to servicing (unless you take out a maintenance package).
If you’ve ever wanted to drive around in a Tesla without paying Tesla prices, then electric car leasing is how you do it.
So what are you waiting for? There’s dozens of EVs out there just waiting to be leased.
EV Leasing FAQs
What is the cheapest electric car to lease in the UK?
We’ve done some digging, and the cheapest electric car to lease at the moment is the Renault Zoe which should come as no surprise given its age/price. With the right provider, you can lease this family-friendly supermini from £160 a month.
Do I need to pay road tax with an electric car lease?
One of the perks of leasing an eco-friendly car is the fact that you don’t pay road tax. This is obviously a good thing. However, you will be expected to sort out car insurance alongside standard running costs.
Is it worth leasing an electric car?
Many benefits come when you take the leased electric car route. Leasing allows you to switch between cars on a somewhat frequent basis and save you money in the long run. Furthermore, you won’t ever have to worry about selling the car when you’re done with it.