How Can I Afford An Electric Car?
You may be thinking about making the switch from combustion to EVs.
But electric vehicles are not cheap!
We often get asked, how can I afford an electric car?
This guide will show you precisely that, from buying outright to leasing and more.
The True Cost of Owning an Electric Car
When owning an EV, you have to think about the total cost of ownership rather than just the initial price. Think about the long-term costs, what you could save on fuel and tax, for example, these are vital aspects people overlook when looking at the prices of an EV.
Electricity tends to be cheaper than petrol and diesel and is often sourced sustainably. In terms of maintenance, electric vehicles have less moving parts, which usually results in fewer problems and less trips to the garage.
People may not always think it, but electric cars can undoubtedly be a more attractive option for your finances than a combustion vehicle.
Financial Incentives for Electric Cars
It’s no secret that there has been a real push by the government to encourage people to switch to electric cars, and this has been evident in some of the financial incentive packages on offer. For example, company drivers benefit from lower Benefit in Kind tax rates, you don’t have to pay vehicle excess duty, and the Plug-In Car Grant can knock off up to £2500 from your next EV purchase.
There are also incentives for those having home charging units installed and these will be critical moving forward as they allow a broader scope of people to access EVs rather than just those who can afford them.
Financing Options for EVs
There are a few different options for financing an EV, below, we break them down along with their pros and cons.
Leasing an electric car is basically renting one, you pay a monthly fee up until the contract has finished and then you hand it back and either upgrade and do the same again or finish there and look at alternative solutions.
The benefits of this option are that you usually have lower monthly payments than a car on finance, and you can upgrade when your contract finishes, which is normally 2-3 years. The disadvantages are obviously you don’t own the vehicle, you can be charged for wear and tear at the end of the contract and you sometimes have a limit on how many miles you can do a year.
This involves borrowing money and paying it back in monthly instalments over a set period until you own the car outright. The plus side of this is that you have potential equity in the car if the value stays high, no mileage limit and you have ownership of the vehicle.
However, the drawbacks include higher monthly fees, and you may be required to pay a balloon payment at the end, which might be an outstanding balance left before you own the vehicle.
This is usually achieved through savings or selling a previous car and is quite self-explanatory. It just means you purchase the EV outright without taking out a loan or signing a lease agreement.
The major benefit is that you own the vehicle immediately and aren’t tied down to monthly payments. The disadvantage is that you will have used some of the money that could be used elsewhere and the value of the vehicle decreases, so it’s unlikely you’ll make money when you sell it on.
Reducing the Costs of Electric Car Ownership
It’s important that when you own an EV, you make the most out of it, and there are plenty of ways you can save money. Firstly, charging at home during off-peak hours will save considerable money compared to charging at supermarkets and motorway services.
You can also maintain your EV through regular care and don’t drain the battery or charge it to its maximum, keep it between 20-80%, which will help with its longevity.
Next, invest in solar panels if you can, this will mean you no longer have to use the Grid, which means you can charge your EV through green energy generated by the Sun. This will save a lot of money over months and years.
Finally, certain insurance companies offer discounts for electric cars due to their safety features. So by shopping around and knowing what coverage you need, you could save hundreds of pounds.
Affordable Car Models on the Market
Below is a list of some reasonably priced electric cars:
- Nissan Leaf – One of the most common cars you see on the roads due to its excellent price tag and selection of trims to choose from.
- MG ZS EV – This brand’s first SUV, with its decent range and spacious size, is ideal for a family.
- Hyundai Kona Electric – A very solid electric vehicle choice with a host of superb features.
- Chevrolet Bolt EV – A fantastic family vehicle with its compact design and lower price than most competitors, makes it a popular pick.
As you can see, it’s not always about the first price you see, you have to look deeper into it and learn about the maintenance costs, fuel savings and what it could cost long term compared to a combustion engine car.
There are many ways to afford an electric vehicle, you just have to see what option suits your lifestyle and finances. Whether buying outright, leasing or taking out a loan, ensure you understand them before deciding.
If you want to learn more about EVs, head to our main category page with all our guides.