Electric Car Leasing Explained
Many drivers are looking for affordable ways to make the switch from petrol and diesel vehicles to electric cars. A government plug-in grant for new electric vehicle (EV) purchases is one way this is being done, but you can now lease most EVs for affordable, fixed monthly payments.
From choosing the right model of electric car for your needs, to deciding on a charging option which will keep you running smoothly throughout your agreement. Discover how leasing a zero-emission motor works in this guide.
What is electric car leasing?
Leasing an electric car is an agreement between you and a finance provider whereby you pay a monthly set fee to essentially rent a brand-new EV on a long-term basis. This will usually be anywhere from 2-4 years, after which you will hand the car back.
Afterwards, you can either choose a new model on a separate contract, or if you’ve kept it in good condition and stuck to your agreed annual mileage cap, simply walk away with nothing more to pay.
Just like if you leased a standard vehicle with a combustion engine, with an electric lease you’ll be required to pay an initial rental upfront for the car and decide how long you want it for and how many miles you want to drive each year.
Remember: The initial rental isn’t repayable but works against the total cost of the car, while higher annual mileages and shorter contracts will tend to result in more expensive monthly payments.
There are some questions you should ask before deciding to lease an electric car.
- Which model has enough range to cater for your weekly driving pattern?
- Do you need to install a charging point at home in order to maximise the capacity of an electric car? If so, will any off-road parking support the installation?
- Does your place of work or journey allow for a top-up charge? Or can you afford a more advanced EV with a higher range to avoid the need?
- If you’re an employee or director at a company, should you consider business electric leasing for one or more vehicles to benefit from low benefit in kind (BIK) tax?
Benefits of leasing an electric car
- Predictable payments each month to suit your budget.
- The latest models available from all major manufacturers of electric vehicles – so you get a brand-new vehicle equipped with the latest technology.
- A three-pin-to-Type two adapter charging cable included as standard for the capacity to charge at home.
- Cheaper running costs thanks to electric charges being less than diesel and petrol fuels.
- Road tax and the full manufacturer’s warranty included for the entire duration of your agreement.
How to lease an electric car
The leasing process for electric vehicles is more or less identical to the one for any other car or van. Where it differs is in relation to what running costs you pay each day and, for business customers, the amount of BIK tax which needs to be paid if employees are driving it.
Here’s a simple breakdown of how to lease an electric car.
1. Decide on a suitable model
The market for EVs is becoming more competitive as the months go by, even more so now that the government has announced a ban on manufacturers producing new petrol, diesel and hybrid models by 2035.
As such, it’s now cheaper than ever to find a competitively priced deal on an electric lease. From the mass-market and family-friendly Nissan Leaf, to the performance-based Tesla Model 3, there’s zero-emission options suitable for most types of drivers.
Use the decision tree below to help you decide what electric car would suit your needs.
2. Decide whether you need a wallpoint charger installed
Many leasing providers are now partnering with charging point installation companies in order to make the process of getting an electric car all the more easier.
All new EVs come with a standard charging cable which allows you to charge the car anywhere you can find a mains. Simply locate the car’s port (usually this will be integrated into the bonnet or around the side where the fuel cap would be), insert the cable into the car and then into your domestic socket.
Here’s an example of what domestic charging* looks like from a standard socket to a faster, more powerful dedicated point in terms of cost, time taken and how much range you receive using a standard Renault Zoe.
*Figures courtesy of Zap Map, with home charging costs based on the national average cost of 14.4p per kWh.
If you’re considering using strictly public charging points for topping up your new EV, check out the Zap Map locator for finding your nearest access area for charging.
3. Configure your deal
Once you know which electric car you want and how you wish to charge it, you can then start to think about four key factors for configuring your lease deal.
- How long you want the car for – Moneyshake offers allow you to choose between 24-, 36- or 48-month contracts when deciding online. However, should you wish to lease the car for just 12 months, we can put you in contact with a suitable provider who may offer you these terms.
- Initial rental – you can decide to put down one, three, six or nine months’ worth of the monthly rental price of your chosen vehicle. The more you pay upfront, the cheaper your monthly payments will be, but remember that it isn’t deducted from your overall term (e.g. a nine-month initial rental doesn’t mean you only start paying until month 10).
- Annual mileage – this starts from 8,000 miles per year but can be as high as 30,000 miles, depending on the model you choose.
- Maintenance package – for an additional cost (either on top of your monthly payments for the car or separate) you can include maintenance for general wear and tear items, excluding any damage caused by driver error.
Remember: Electric cars have fewer moving parts and therefore are less likely to require maintenance compared to a regular car, so consider whether it’s cost-effective for you to take out a maintenance package at the time of order.
4. Arrange insurance
All lease cars, just like every other car on the road, require you to insure it. Specifically, finance providers who fund each agreement will specify that this needs to be a fully comprehensive insurance policy too, in order to protect their vehicle in the event of an accident.
Remember: Unless your deal is specified as a ‘Total Care’ agreement and states that insurance is included with the monthly payments, it’s your responsibility to arrange for your EV to be insured from the day it’s delivered.
In recent years there’s been a stigma surrounding insurance for EVs, more specifically that it’s always pricier than similar models which run on regular fuel. However, a lot of this comes down to the individual profile of the person looking for a quote, along with other factors such as address, where the car will be parked overnight and what the make and model of the vehicle is.
Insurers are now waking up to the fact that more electric cars are being produced and that there’s a greater number of mechanics developing the skills needed to repair them. However, we still recommend you practice these three things to get the best deal possible for insurance cover.
- If power and performance isn’t important to you in your new car, consider models which have less powerful motors – the chances are that these EVs will fall under a lower insurance group, meaning it’s more likely that insurers will come back with cheaper rates. Even better is if the vehicle has good safety equipment onboard and has a five-star Euro NCAP rating.
- Entry-level electric cars which are the cheapest will cost less to insure due to replacement parts not costing as much as more premium vehicles. For example, insurance comparison site Compare The Market showed that the average annual premium for a Renault Zoe was £393, compared to £1,406 for the higher-spec Tesla Model X.
- Compare prices from multiple providers using a specialist comparison website such as MoneySuperMarket, Confused.com or Compare The Market in order to get the best price and terms which suit your requirements.
Remember: After ordering your electric lease car, ask your provider for the registration number of your car so that you can get the most accurate price for the vehicle.
Looking to find your ideal electric car? Start your search now to discover the latest hot deals on EVs from our BVRLA-regulated providers.
Still have questions about leasing? Then check out our handy guides page for answers to your FAQs.