How Can I Afford an Electric Car?

If you’re interested in driving an electric car (EV), you want to know that you can afford one. EVs are currently very expensive, so buying an electric car outright may not be the best option for you. If your budget is tight, you might not be able to afford the repayments.

 

Fortunately, there are other options available to help you afford an electric car in 2024.

 

Read on to find out how you can afford an EV, why they are so expensive to buy and how you can still reduce your exhaust emissions if you can't afford a brand-new EV.

 

Electric Car Finance Options

 

Scrappage Schemes

These help to remove polluting petrol and diesel cars from the road and encourage drivers to buy a brand-new EV instead.

 

Many manufacturers now offer these schemes, and each one sets the discount themselves. With that in mind, you can save up to £5,000 on a new electric car if you choose the right scrappage scheme.

 

Lease Deals

You don't have to buy an electric car to drive it. With electric car leasing, you pay an agreed number of months' rent upfront and then a set monthly amount over a fixed term. At the end of the contract, you return the vehicle, and you can start another lease deal on a newer EV. 

 

Leasing a car may work out cheaper than buying it outright. The monthly payments are smaller than with PCP Finance (Personal Contract Purchase) and you rarely end up paying the total value of the vehicle.

 

You also don’t have to worry about depreciation, but you won’t own the car at the end of the lease term.

 

Electric Car Subscription Service

For even more flexibility, consider a subscription plan. An EV Subscription works like Amazon Prime or Netflix - you pay a set monthly amount until you cancel and you get access to a range of brand-new or used EVs, depending on the provider.

 

If you choose a used car, it becomes an even more affordable option than leasing. It is a relatively new car finance option, but its popularity is quickly growing. 

 

Your monthly payments usually include insurance, maintenance and other costs and you can cancel at any time (although some companies may charge you for doing so).

 

What's more, you get to hire electric cars on very short contracts. This gives the option to change your vehicle regularly and drive a range of the latest EVs. There are no large upfront costs either.

 

Salary Sacrifice Scheme 

Have a look and see if your employer offers electric vehicles as a part of a salary sacrifice scheme. This is where the employee gives up a portion of their salary in return for a non-cash item.

 

The employee saves on income tax and national insurance contributions, deducting the cost from their salary before tax is deducted.

 

Speak to your employer to see if your company offers this - it is another affordable way of driving an electric car. You can read more about salary sacrifice schemes here.

 

If you’re looking for an electric car, but aren’t sure that you can afford to buy one outright or using PCP Finance, we recommend researching these options and seeing if any are suitable for your budget.

 

Government Grant

Until June 2022, the UK government offered a grant to help drivers buy a new electric car. When it was first introduced, they paid up to £2,500 or 35% of the price when you buy an approved model that cost less than £35,000.

 

In December 2021, this was reduced to £1,500 on approved models which cost up to £32,000. The grant also applied to many electric motorcycles and vehicles for people with limited mobility.

 

The UK government had previously said it would only fund the grant until 2022/23 and, as stated in a press release on June 14th, pointed to the fact that sales of EVs had not slowed up even with the changes in the grant.

 

The statement also confirmed that they will now refocus £300 million of funding to improve public charging and extend grants to boost sales of plug-in taxis, motorcycles, vans, trucks, and wheelchair accessible vehicles.

 

However, scrapping the grant was still met with discontent by many carmakers and prominent industry figures.

 

It was seen as a backwards step in the development of EVs, especially as it meant the UK gained the unwanted title of being the only major European market not to offer an incentive for buying an electric car.

 

Why are Electric Cars So Expensive?

Electric cars are expensive because the technology is still developing. Battery capacity is rapidly expanding, but at great cost to manufacturers.

 

Combined with the limited number of companies that make electric car batteries (just 6 manufactured 87% of all EV batteries in the second half of 2020), it’s no surprise that the expense is passed on to the consumer.

 

The market is likely to become more competitive in years to come. Sales of new petrol and diesel cars are to be banned in the UK from 2035, so manufacturers will have to turn away from these fuel sources soon. As such, EVs should start to become more affordable, which will encourage more sales.

 

So, while ⅓ of drivers currently struggle to afford an electric car, that is likely to become less of a problem by the end of the decade.

 

I Still Can’t Afford a New Electric Car - What Do I Do?

If you have exhausted all these options and still don’t think a brand-new EV is affordable right now, there are still ways you can reduce your emissions. You should consider:

 

• Buying a second-hand electric car

• Buying a second-hand hybrid car

• Buying an electric car through a scrappage scheme

• Contributing to a salary sacrifice scheme

 

Second-hand electric and hybrid cars are a great option. Most manufacturers guarantee 70% battery capacity after 7 years and experts predict that EV batteries have a lifespan between 10 and 20 years.

 

This means a second-hand electric car is both an affordable and reliable option to reduce your emissions, especially if a brand-new EV is unaffordable.

 

Read More

What are the Best UK Electric Car Lease Deals? (2024)

Electric car leasing is a great way to afford an EV and there are plenty of good deals available. This guide includes some of the best UK electric car lease deals of 2024.

 

What is an Electric Car Subscription?

If you're looking for an easier way to afford an electric car, a subscription service might be right for you. For a single monthly payment, you get to drive one of the latest EVs and get the running costs included. Plus, there's no long-term contract to worry about. Learn more about subscription services in this guide.

 

6 Things to Know About Electric Car Leasing

Car leasing can be an attractive option for drivers that don’t want to purchase an electric car outright. This could be for financial reasons, or because you’re not sure you’re ready to commit to a car for the foreseeable future. Either way, this article covers six vital things you should know before you decide to lease an electric car.

 

Is There an Electric Car Grant in Scotland? (And How Does It Differ From England?)

If you are based in Scotland and are interested in owning an electric car, there may be more financial help available to you. Read this article to find out how you can drive an EV.

 

What Vehicles are Still Eligible for an Electric Car Grant?

Since the introduction of the electric vehicle grant in 2011, things have changed drastically. All you need to know about which vehicles are eligible for the grant are in this article.