When you're looking to buy a new electric car, you might be wondering which car finance option is best. To determine which type of agreement is right for you, you must gather some key information. This includes what monthly payments you can afford, how much deposit you can put down, and whether your situation is likely to change over time.
Two of the most popular ways to finance a car are by Personal Contract Purchase (PCP) and Personal Contract Hire (PCH). These are not the only car financing options available, but they are often compared with one another when car buyers decide which to proceed with.
There is one major difference between these two types of car finance agreements. With a PCP, customers have the option to buy the car at the end of the contract whereas you do not own the car at the end of a PCH agreement, but it can offer attractive monthly payments.
Leasing an EV works out cheaper than buying it on finance
According to the latest research, leasing a battery electric vehicle (BEV) is more cost-effective during the term of finance when compared with a Personal Contract Purchase (PCP) agreement.
Leasing.com found out that 13 out of the 15 most popular BEVs were the most cost-effective on lease. The Renault Zoe and Jaguar I-Pace were the only cars cheaper when financed with PCP.
The Audi E-Tron had the largest difference in cost of 31%, while the average difference was 18%.
One of the biggest challenges for the industry with the shift to EVs is making them affordable, according to David Timmis, managing director of Leasing.com. “Without this, the market simply won’t shift quick enough,” he explained. “Thankfully, leasing provides consumers an alternative route to driving an EV that won’t break the bank and, in fact, will save them money compared to PCP – the current most popular new car finance product in the UK.”
In the 12-months leading up to January 2021, the value of new car personal leasing increased by 27%, according to the Finance and Leasing Association (FLA).
Toby Poston, director of corporate affairs at the British Vehicle Rental and Leasing Association (BVRLA), said in his statement: “Leasing is the perfect way to finance a new BEV". “With so much economic uncertainty and technology changing so fast, it is not surprising that more and more people are using this fixed cost, affordable and hassle-free method to fund their leap to electric motoring.”
In their analysis, Leasing.com found that the Tesla Model 3's list price is £42,935, but that the total cost, when leased over four years, is £25,445.77. A PCP Tesla 3 contract would cost £30,384, so leasing would save drivers 19%, it says.
On PCP, the Audi E-Tron has a total cost of £43,420.14 at the end of a 48-month contract. This same make and model would cost £34,311.50 on a lease, saving £9,108.64 in total. This is the largest overall savings.
The website Lease.com compares personal and business car lease deals from lenders, brokers, dealers, manufacturers, and independent funders.
Cost Comparisons of Battery Electric Vehicles: Lease (PCH) vs Finance (PCP)
Total Lease Cost
|Total PCP Cost (excluding balloon)
|Tesla Model 3
|Hyundai Ioniq Electric
|Hyundai Ioniq 5 Electric
|Hyundai Kona Electric
|Mini Hatchback EV
|MG Motor UK ZS EV
What is a mainstream car finance option in the UK?
Over the past decade, personal contract purchase (PCP) has been the most popular form of car financing. However, the moves from vehicle leasing companies in recent years indicate that the market for personal vehicles has shifted towards Personal Contract Hire (PCH), which is now becoming as popular as Business Contract Hire (BCH) among businesses leasing a van. Most customers appreciate how affordable Personal Contract Hire is, as well as having the opportunity to drive a brand new car every couple of years.
Interested in leasing an electric car? Our EV experts are here to help you find the best EV deal and finance product to suit your needs. Take a look at our electric car lease deals below or contact us if you have any questions.
Top UK Electric Car Leasing Deals