How To Finance An Electric Car Or Van

How To Finance An Electric Car Or Van

How To Finance An Electric Car Or Van

Whether you're a personal buyer or a multi-vehicle fleet operator, getting the right finance for a vehicle is a key factor in operating it efficiently.

So how do you go about making sure you've taken the right approach to financing an electric car or van?

Our guide will help you work out which approach to funding your next electric vehicle will be most effective for you or your business, both in terms of cost and protecting your money.

(While your here, why not check out our guides to how EVs work and charging your EV too!)

Where Do You Start With Electric Car and Van Finance?

If you've previously bought a new car or van you'll be familiar with the array of options open to you for funding, but electric cars and vans introduce a new parameter that weighs heavily on your vehicle finance decision - Risk.

Electric vehicles are relatively new to the car and van markets and, as such, their price performance in the used car and van markets is yet to stabilise.

Current second-hand values for electric cars and vans are reasonably strong compared to ICE powered vehicles, but this may not last as manufacturers overcome a combination of shortages of battery supplies and high demand for the product.

In addition, improvements in battery technology (longer range/faster recharge times) and other factors such as autonomous driving capabilities may make early electric vehicles less desirable than newer models in years to come.

Against this background, how do you minimise your financial risk from getting an EV, or at least contain the risk to a level you find acceptable?

The answer lies in understanding how each of the different finance options for EVs works and how you can use it to your advantage.

So, to get you up to speed on what's available to fund an electric car or van we've put together a summary of how the main finance options work.



Buying outright is the simplest way to fund a new electric car or van.

Keep the vehicle as long as you want and run it up to any mileage.

Technically you can 'profit' from looking after the vehicle well and achieving a better resale price than the normal market value.

Vehicles can be sold at any time without a specific financial penalty (leasing companies usually charge a penalty for ending a lease contract early).

Businesses can get 100% tax relief on an EV in the tax year of purchase.


You are exposed to changes in market values and maintenance costs, in particular if used vehicle prices drop.

Money tied up in the car or van can't be accessed without either selling it or pledging it as security for a loan.

Businesses lose the use of money that could be invested elsewhere in the business to generate profits e.g. new manufacturing machinery.

The vehicle will appear as a depreciating asset on the balance sheet of a business purchaser.

Read more about buying outright in our finance library.



You only repay interest charges and depreciation costs during the term of the finance agreement.

The vehicle's expected future value at the end of the agreement is fixed so you know the minimum you will get for it when you finish the repayments.

If the car or van is worth more at the end of the agreement than the forecast value you can keep the difference or use it as a deposit towards a new vehicle.

You are protected from unexpected drops in second hand values.

Businesses can get a tax deduction on the interest charges on the finance, plus depreciation.


You can't sell the car before the end of the contract without incurring a financial penalty.

If you exceed the agreed contract mileage or hand back the vehicle with excessive wear and tear you will incur financial penalties.

You repay less of the purchase price so interest charges are higher than bank loans or hire purchase.

The vehicle will appear as a depreciating asset on the balance sheet of a business purchaser.

Read more about contract purchase in our finance library.



The leasing company recovers VAT on the price of the vehicle so the lease rentals for cars are lower than comparable business or personal contract purchase.

You avoid some of the normal responsibilities of ownership, such as sourcing the best deal and haggling for the best resale (or 'residual') value.

You can swap to a new car every 2-4 years to keep pace with developments in battery and other in-car technology.

As long as the leasing company looks after the residual value smaller businesses don't currently need to declare the lease as a liability on the balance sheet.


Deposits can be as high as 9 x the monthly lease rentals.

If you terminate the lease early you will have to pay a penalty (usually a number of months rentals).

If the vehicle is returned with more than the agreed mileage or with excessive wear and tear then 'end of contract' charges may be made by the leasing company.

The leasing company gets any surplus residual value on the vehicle at the end of the lease (there are some exceptions called 'finance leases').

Read more about leasing in our finance library.



You pay a monthly rental to cover all your costs of using a car or van.

You can cancel the subscription and just hand back the vehicle.

Monthly subscription covers depreciation, servicing and repairs, tyres, insurance and breakdown recovery and, sometimes, recharging.

You can swap to a new car whenever you want to keep pace with developments in battery and other in-car technology.

You get a fixed monthly 'allowance' of inclusive mileage and can top-up or 'roll-over' mileage if necessary.


Monthly payments are a lot more expensive than traditional car or van finance or leasing.

If the vehicle is damaged outside the insurance terms you are liable for the repair costs.

Recharging points may be limited to those operated by the subscription company or its affiliates.

Usage restrictions may apply to limit how you drive the vehicle and 'black-box' telematics may report on your driving behaviour.

Read more about finance options for electric cars and vans in our finance library.

Getting The Right Finance For An Electric Car Or Van

To help you decide on the best finance method for you or your fleet of electric cars or vans, our 'Lease or Buy' analyser will work out in seconds which finance approach is best for you.

Just click on the links below below to get started.

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(+44 1792 224319 outside UK)