Electric vs Hybrid Cars: Which One Should You Choose?
Electric and hybrid cars both offer lower running costs than a petrol or diesel equivalent, but they suit different situations and the gap in running costs feeds directly into whether the higher purchase price makes sense on finance. This guide looks at how the two compare for someone financing a used car, what to think about with charging and range, and how it affects the overall cost of ownership over a typical agreement.
A fully electric car runs entirely on a battery and electric motor, with no petrol engine at all. It needs to be charged from an external source and has no exhaust emissions.
A hybrid combines a petrol or diesel engine with an electric motor and a smaller battery. There are a few types: a standard hybrid charges its battery through braking and the engine, and cannot be plugged in. A plug-in hybrid (PHEV) has a larger battery that can be charged from an external source and typically offers a short electric-only range, often 20 to 40 miles, before the petrol engine takes over.
The right choice depends largely on how you drive day to day and whether you have somewhere to charge.
AutoMoney Trust finances used cars, including electric and hybrid models, from £4,000 to £25,000 over 36 to 84 months with no deposit required. The loan range and terms are the same regardless of whether the car is petrol, diesel, hybrid, or electric. What matters is the price of the vehicle falling within that range and the agreement being affordable based on your income and outgoings.
We consider applications from people with poor credit. The initial check is a soft search that will not affect your credit file. For a full breakdown of how the application process works, see our guide on how to apply for car finance.
| Factor | Electric (EV) | Hybrid / PHEV |
| Running costs | Lowest, electricity costs less per mile than fuel | Lower than petrol but higher than full EV |
| Charging needed? | Yes, regularly | PHEV yes for full benefit, standard hybrid no |
| Range anxiety | A consideration on longer trips | Petrol engine removes this concern |
| Purchase price (used) | Often higher for similar age and spec | Generally lower than equivalent EV |
| Depreciation | Can be steeper on early models | Tends to be more stable |
| Servicing costs | Often lower, fewer moving parts | Similar to petrol, plus battery checks |
| Best suited to | Regular short to medium journeys with home charging | Mixed driving, longer trips, no home charging |
This is often the deciding factor more than anything else. If you can charge at home, ideally with off-street parking and a home charger, an electric car becomes much more practical and the running cost savings are significant, since home electricity is generally cheaper than public charging.
If you rely on public charging, the cost advantage of an EV narrows considerably, and the time spent charging becomes a bigger practical consideration. In this situation, a hybrid or plug-in hybrid that can run on petrol when needed often suits better, removing the dependency on charging infrastructure for longer journeys.
When you finance a car, the monthly payment is based on the amount borrowed, the interest rate, and the term. A higher purchase price means a higher loan amount and therefore higher monthly payments, all else being equal. Electric cars, particularly newer used models, often command a higher purchase price than an equivalent hybrid or petrol car of the same age.
Lower running costs from an EV can offset some of that higher monthly payment over time, but it is worth doing the maths properly rather than assuming the savings automatically balance out. Add up the difference in monthly finance payment between an EV and a comparable hybrid, then compare that to the realistic difference in fuel or electricity costs for your typical mileage.
Use our car finance calculator to compare monthly payments at different loan amounts and terms, so you can weigh the finance cost against the running cost difference for your situation.
Depreciation is one of the most important factors when financing any car, because it affects what the car is worth relative to what you still owe at any point during the agreement. Some early electric models have depreciated faster than expected, partly due to rapid improvements in battery technology and range making older models less desirable more quickly than a comparable petrol or hybrid car.
Hybrids, having been on the market longer with a more established second-hand market, tend to have more predictable depreciation. This does not mean an EV is automatically a worse choice, but it is a factor worth considering, particularly if you might want to part-exchange or sell before the agreement ends.
For more on how depreciation interacts with finance agreements, see the FAQ: The car could lose value. If you are thinking about changing the car partway through an agreement, our guide on how to part exchange a car on finance covers how equity and negative equity work in that situation.
Insurance groups for electric cars have historically been higher than for equivalent petrol models, partly due to the cost of repairing battery packs and the specialist parts and labour involved. This gap has been narrowing as EVs become more common, but it is still worth getting an insurance quote before committing, as it affects your overall monthly cost alongside the finance payment.
Servicing costs for electric cars are often lower, since there is no engine oil, fewer fluids, and fewer moving parts to wear out. Hybrids have both a petrol engine and electric components, so servicing can be similar to or slightly more than a petrol car, depending on the model.
Comprehensive insurance is required under any hire purchase agreement. See: You'll need comprehensive insurance for more on what is required.
There is no single right answer, but a few questions help narrow it down:
Once you have an idea of the type of car that suits you, check your eligibility on our apply for car finance page to see what monthly payment you would be working with before you start looking at specific vehicles.
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?.
