Electric car finance: can you finance an EV and is it worth it?
Electric cars can be financed the same way as petrol or diesel cars, and with used EV prices falling steadily, the monthly payments are more manageable than many people expect. This guide covers how hire purchase works for electric vehicles, what to check before you commit to a specific car, and whether the switch makes financial sense given the running cost differences.
Yes. Hire purchase works for electric vehicles in exactly the same way as it does for petrol or diesel cars. You spread the cost over fixed monthly payments, the lender holds an interest in the car until the final payment is made, and ownership transfers to you at the end of the agreement with a small option to purchase fee. There are no EV-specific restrictions on the finance itself.
AutoMoney Trust offers hire purchase from £4,000 to £25,000 over 36 to 84 months with no deposit required. We work with a network of dealers across the UK, and the range of cars available through that network includes used electric vehicles. For a full explanation of how the product works, see our guide on how does hire purchase car finance work?.
Most electric cars financed through a specialist hire purchase lender will be used rather than brand new. This is not a drawback. Used EVs have come down significantly in price over the last few years as more models have entered the second-hand market, and a two or three year old electric car from a reliable manufacturer can represent strong value compared to a new one at full list price.
The things worth paying attention to with a used EV are slightly different to a used petrol car. Battery condition and remaining warranty are the most important factors, since the battery is the most expensive component to replace and its condition directly affects the car's range. A car with a documented service history and a manufacturer battery warranty still in effect is a much safer choice than one where neither can be confirmed.
For guidance on choosing a used car that holds its value and suits your budget, see our guide on the best second-hand cars to buy on finance.
The monthly payment on an electric car finance deal depends on the price of the car, your deposit (if any), the term, and the interest rate, exactly the same factors as any other car. A used EV at £12,000 will have similar monthly payments to a petrol car at £12,000.
Where EVs have historically been more expensive is the purchase price of newer models. As used EV prices have fallen, this gap has narrowed. Some used electric cars are now priced comparably to equivalent petrol or diesel models of similar age, which means the finance cost does not have to be higher just because the car is electric.
Use the car finance calculator to see what monthly payments would look like for a specific loan amount and term before you start looking at cars.
Yes, provided you meet the lender's affordability requirements. poor credit does not prevent you from financing an EV. Hire purchase lenders assess applications based on your income, outgoings, and overall affordability alongside your credit history, and the type of car you are financing does not change that assessment. An electric car and a petrol car are treated the same way from an application perspective.
For more on how lenders assess applications when credit history is not straightforward, see our guide on car finance with poor credit or a CCJ.
The battery is the most significant variable when buying a used electric car. Unlike a petrol engine, where age and mileage are reasonable proxies for condition, a battery's health depends on how it has been charged and used over its lifetime. A car with moderate mileage that has been regularly fast-charged to 100% and left fully charged for long periods may have degraded more than a higher-mileage car charged more carefully.
Before agreeing to a specific car, it is worth checking:
Your dealer should be able to provide or confirm this information before you commit. If they cannot, it is worth treating that as a signal to look elsewhere.
For most drivers, yes, though the saving depends heavily on how and where you charge. Charging at home overnight on an off-peak tariff is significantly cheaper per mile than petrol or diesel. Charging on the public network, particularly rapid chargers at motorway services, can cost considerably more and in some cases rivals petrol costs per mile.
Beyond fuel, EVs generally cost less to maintain because they have fewer moving parts. No oil changes, no clutch wear, regenerative braking reduces brake pad wear, and there is no exhaust system to maintain. The main running cost variable specific to EVs is tyre wear, which can be higher due to the additional weight of the battery.
To get a fuller picture of what a car costs to own beyond the finance payment, see our guide on MOT and service costs and what it really costs to run a car.
EV residual values have been more volatile than petrol equivalents over the last few years, partly because the used market is newer and pricing has been finding its level, and partly because rapid improvements in battery range have made older models depreciate faster than expected. This picture has stabilised as the market has matured.
For a hire purchase customer, depreciation matters most if you plan to sell the car before the end of the agreement. Since HP means you do not own the car until the final payment, selling early requires settling the finance first. If the car has depreciated more than expected, you may find you owe more than the car is worth at that point. Choosing a well-regarded model from a mainstream manufacturer with a strong dealer network gives you the best protection against this.
For drivers who do most of their mileage locally and can charge at home or at work, an electric car on finance makes strong financial sense. The monthly payment is predictable, the fuel savings are real, and the lower servicing costs mean the total cost of ownership over the agreement term can be competitive with a petrol equivalent even if the purchase price is similar.
Where it makes less sense is for drivers who do a high proportion of longer journeys without easy access to rapid charging, or who are relying entirely on public charging where costs are less predictable. In those situations, a hybrid may suit the pattern of use better, though the finance cost would be similar.
For a direct comparison of electric and hybrid options, see our guide on electric or hybrid: which should you buy on finance?. To check your eligibility for hire purchase on an electric car with a soft search that will not affect your credit file, visit our apply for car finance page.
All cars depreciate over time, with most used vehicles losing value steadily across a finance agreement. This matters because by the end of your term, the total amount paid, including interest, may be more than the car's market value. Depreciation also affects negative equity risk: if you want to sell or settle early, the car's value may not cover the outstanding finance balance. Mileage, condition, service history, and demand all influence how quickly a car depreciates. GAP insurance can help cover the gap between a write-off payout and your outstanding finance.
Fully comprehensive insurance is required throughout your finance agreement with AutoMoney Trust, because the vehicle legally belongs to us until your final payment is made. Comprehensive cover protects both you and the lender against damage, theft, fire, and accidents, ensuring the asset is protected for the full term. It is typically more expensive than third party or third party fire and theft cover, so factor this into your monthly running costs when budgeting. Many drivers also consider GAP insurance, which covers the difference between an insurance write-off payout and the outstanding finance balance.
Your loan term directly affects both your monthly payments and the total cost of borrowing. A longer term, such as 60 or 84 months, spreads the cost over more payments, lowering the monthly amount but increasing the total interest you pay across the agreement. A shorter term, such as 24 or 36 months, means higher monthly payments but a lower overall cost. AutoMoney Trust offers terms from 24 to 84 months, so you can balance monthly affordability against total cost. Use our finance calculator to compare different term lengths before applying.
A fixed rate keeps your interest rate and monthly payments the same throughout your agreement, giving you predictable costs from start to finish. A variable rate can rise or fall during the term, usually tracking the Bank of England base rate or the lender's standard variable rate, which means your payments can go up or down. AutoMoney Trust offers fixed interest rates only, so you know exactly what you will pay each month. Fixed rates provide certainty but may start slightly higher than introductory variable rates; the trade-off is protection from future rate rises. For more detail, read our guide to What Is Car Finance APR?.
