Electric car leasing comparison
Electric car leasing is an exciting and practical alternative to traditional car ownership. Let's discuss how it works and the alternatives.
Monthly EV subscriptions are a flexible alternative to leasing
What is an electric car lease and is it different?
An electric car lease, or 'EV leasing', is a long-term rental agreement allowing you to drive a brand-new, top-spec electric vehicle (EV) for a fixed period, typically between two to four years. It works like a long-term car rental.
In an electric car lease, you pay an initial upfront payment and then fixed monthly payments for the duration of the lease. These payments are calculated based on the car's value, the length of the lease, and the expected mileage. You return the vehicle to the leasing company at the end of the lease term.
Electric car leasing is growing in popularity, particularly in the UK, as it provides a cost-effective and flexible way to drive an EV without the high upfront costs of buying one outright. This is particularly beneficial given the rapid pace of EV technology development and the high depreciation rates of these vehicles.
How does EV leasing compare to subscribing?
Electric car subscriptions in the UK offer a flexible alternative to traditional leasing contracts. It's especially popular among those who want to try owning an EV for a few months without a long-term commitment.
With a subscription, drivers can enjoy the benefits of driving an electric car without the long-term commitment of a lease. Subscribers pay a monthly fee to access an electric vehicle and related services, such as maintenance and insurance, in one fixed monthly payment.
An electric vehicle subscription service is a more flexible arrangement typically operates monthly. Subscriptions often include additional services like insurance, maintenance, and roadside assistance as part of the monthly fee. Some subscription services even allow you to switch between different types of vehicles within their fleet.
Subscriptions can be more expensive than leasing on a monthly basis, but they offer greater flexibility. You can usually cancel a subscription at any time without penalty, which isn't typically the case with a lease.
This makes subscriptions a good option if you need a vehicle for a short period or if your vehicle needs to change frequently.
Here we have compared some of the key aspects of leasing vs subscription:
Subscription
Long-term lease
If you want to read more about the key differences, you can check out:
- Car subscription vs buying a car: What's best for you?
- Car subscription, leasing or renting: What's best for you?
The process of leasing an electric car
Here are the usual steps to lease an electric car:
Step 1: Research and Choose
Research various electric car models and determine which suits your needs and budget. Consider factors such as range, charging infrastructure, and features. Once you have chosen the car, find a reliable leasing company that offers electric car leasing options.
Step 2: Application process
Contact the leasing company and inquire about their application process. They will provide the necessary forms and details to complete the application. Make sure to fill in all the required information accurately.
Step 3: Eligibility
Check if you meet the eligibility criteria set by the leasing company. This may include having a valid driving license for a certain number of years, a good credit score, and meeting specific income requirements.
Step 4: Documentation
Gather the necessary documentation required for the leasing application. This may include proof of identity, proof of address, and proof of income.
Step 5: Approval and agreement
Once you have submitted your application and documents, the leasing company will review them. If your application is approved, they will provide a leasing agreement detailing the terms and conditions, monthly payments, and lease duration. Review the agreement carefully and ensure you understand all the terms before signing the lease.
Step 6: Delivery and inspection
Once the lease agreement is signed, the leasing company will arrange to deliver the electric car to your desired location. Before accepting the car, thoroughly inspect it for any damages or issues. If you notice any discrepancies, inform the leasing company immediately.
What are the different types of EV leasing?
When it comes to electric car leasing, there are several options available for consumers. Here are three common types:
Personal Contract Purchase (PCP)
Personal Contract Purchase (PCP) is a popular choice for many people looking to lease an electric car. With PCP, you make monthly payments over an agreed period of time, typically between 2-4 years. At the end of the term, you can either purchase the car, return it, or trade it in for a new lease. PCP offers flexibility and the possibility of owning the vehicle if you decide to buy it.
Personal Contract Hire (PCH)
Personal Contract Hire (PCH) is an alternative leasing option where you only pay for the use of the vehicle. With PCH, you cannot buy the car at the end of the lease period. Instead, you return it to the leasing company. This type of lease typically includes maintenance and servicing costs, making it a convenient option for those who prefer to have no ownership responsibilities.
Hire Purchase (HP)
Hire Purchase (HP) allows you to lease an electric car with the intention of owning it at the end of the agreement. With HP, you pay an initial deposit followed by fixed monthly payments until the total cost of the car is covered. Once all payments are made, ownership of the vehicle is transferred to you. This option is suitable for those who are certain they want to own an electric car in the long term.
When deciding which type of electric car leasing is right for you, consider your personal preferences, budget, and plans. Each option has its advantages, and choosing the one that aligns with your needs is important.
Is it a good idea to lease an electric car?
When considering whether leasing an electric car is a good idea, there are several factors to weigh. Let's objectively discuss the benefits and downsides to help you make an informed decision.
Leasing an electric car typically requires a lower upfront payment than buying one outright. This can make it more affordable for those who don't have a large sum of money to invest initially.
You can also drive a new electric car every few years, keeping you up-to-date with the latest technology and advancements in electric vehicles. It also lets you easily switch to a different model once your lease ends.
In terms of maintenance, electric cars generally have fewer moving parts compared to traditional ICE (internal combustion engine) vehicles, which can lead to lower maintenance and repair expenses.
Most leasing agreements come with mileage limits. If you frequently drive long distances or have a lengthy commute, you may face additional charges for exceeding the allocated mileage.
Additional fees can be a pain as leasing agreements often have certain fees, such as early termination fees or charges for excessive wear and tear on the vehicle.
You'll need to source comprehensive motor insurance separately and maintain it for the length of your contract. On the flip side, a monthly EV subscription includes the cost of insurance!
While leasing can save you from potential depreciation costs, you won't benefit from any vehicle value increase over time.
How much does it cost to lease an electric car?
The cost of leasing an EV can vary greatly depending on the model, the length of the lease, the mileage limit, and other factors. However, as of 2023, you can usually find a suitable leasing deal for an electric car in the UK in the range of £250-£500 per month
Let's take the most popular EV currently on the market - Tesla Model 3. Leasing for a Long Range 2020 model generally starts at about £450 per month for a 36-month lease with a deposit payment of £3,000. This includes an annual mileage allowance of 10,000 miles. Additional fees may apply depending on your location and lease terms.
Another favourite model among British drivers is the Renault Zoe which starts at £299 per month for a 36-month lease with a down payment of £3,000 (for a used model). The mileage allowance for this lease is also 10,000 miles per year. Similar to the Tesla Model 3, additional fees may be incurred based on location and leasing terms.
Can I lease an EV for 6 months?
Not exactly, as most car leases, including those for electric vehicles, typically last for at least two years. You may want to consider a monthly car subscription. The usual minimum commitment is a month; you can cancel with a month's notice too.
FAQs about EV leasing
Yes, when you lease a car, including an electric vehicle, you typically need to pay an initial deposit or upfront payment. This is often referred to as the initial rental. The amount can vary, but it's usually equivalent to a few months' worth of the lease payments.
The initial rental is not a deposit in the traditional sense, as it's not refundable at the end of the lease. Instead, it's a payment that forms part of the total cost of the lease. It's usually paid at the start of the lease and helps to reduce the size of the monthly payments.
Yes, driving an electric vehicle (EV) can potentially save you money in two main ways:
1. Lower fuel costs: Charging an EV can be much cheaper than filling a conventional car with petrol or diesel. The cost of electricity is generally lower and more stable than the cost of gasoline. If you have the ability to charge your car at home, especially during off-peak hours, the cost savings can be significant.
2. Lower maintenance costs: EVs have fewer moving parts than conventional cars, which can result in lower maintenance costs. For example, electric cars don't require oil changes, and because they use regenerative braking, brake systems often last longer.
Yes, as this will bring down your running cost significantly. Some charging tariffs (overnight) are 70% cheaper than the usual variable day peak rate.
To take advantage of a home charging EV tariff, you should firstly contact your energy supplier to inquire about their EV tariffs. If they don't offer one, consider switching to a supplier that does.
Once on an EV tariff, schedule your charging during off-peak hours when rates are lower. This is typically overnight.
You can learn more about EV home tariffs here.
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