Going electric: and paying for it

Going electric: and paying for it

Latest: although electric vehicles still make a tiny percentage of all new cars sold, electric vehicles, there are now definite signs that drivers are warming to them.
One of the biggest put-offs for them have been high prices. Even after the £5000 grant the Government allows on each new ‘zero emission’ vehicle, prices have still been a fair jot steeper than for comparable petrol- or diesel-powered models.

Most buyers will go for some kind of loan plan, payable monthly, rather than stump up the entire asking price. And car makers are pitching in to make such deals attractive. Renault, for instance, is putting £2750 of its own money into a deal that allows you to drive off in its Zoe electric supermini for £199 a month, including the cost of leasing its batteries.

Nissan will put you into a Leaf for even less – £169 monthly, putting £3200 of its own money into the deal. For this, though, you must also pay £2844 upfront and this is for the base-spec Visia, which you can’t hook up to rapid charge points.
You’ve decided that you wish to drive an electric car. Choosing how to finance your wishes then becomes the biggest decision you’ll face.

Let’s cover a few basics, first. Whatever you buy – diesel, petrol, hybrid or electric, cash will always be cheapest. A monthly payment may be affordable. But tot them all up; add the deposit and final payment (to own), plus sundry admin charges for the loan.

Even in these times of low interest rates, you may be shocked at how much extra you’ll pay whenever finance forms part of the equation. The cheapest way to own pretty much any car is to buy it outright (new or nearly new) and then run it for a good few years before trading it on

If you’re the type, though, that likes a new car and wants to change it every two to three years, then a Personal Contract Purchase or a Personal Contract Lease will probably be the wisest use of your cash.

PCP

With a Personal Contract Purchase (known as a PCP), you pay a deposit. Typically this is 10-15% of the car’s total price, so £2000-£3000. But the lender may reduce this to as little as a couple of hundred pounds.

You then pay a regular amount monthly over two, three or four years: typically this will be £100-£300, depending on the list price of the vehicle and also how the finance is worked out. You always pay the same amount, and the number of payments is agreed and fixed from the start. Throughout this time, the vehicle belongs to the lender, who allows you to drive it so long as you keep up the payments.

An annual mileage limit is set when the agreement starts. You must also agree to service the car on time and keep it in reasonable condition.

Once you’ve made the last payment, you choose what to do next. You can hand the keys back. Provided that the car is within the agreed mileage and is good shape, you’ll owe nothing.

Alternatively, you can buy the car outright, paying off a balance that is set at the start of the agreement. The third option is to surrender the car and buy another, again using a PCP. If you do this, the dealer you are with will compare what’s still owed on the ‘old’ car with its current market value. If its market value is greater, you’ll be given the difference as a down-payment on your new car. If it is less, there’ll be no down-payment, but you won’t have to make good any shortfall.

PCL

It’s pretty simple, actually. You pay an upfront charge. This may be as little as a single monthly payment, or as much as three payments. You then pay a regular amount each month for an agreed time. This will be between one and five years; although two or three years are more common.

At the end of the agreed time, you hand the car back and start another lease with another new car. So long as you’ve kept within the agreed mileage limits and the car is in fair condition for its age and the distance’s it’s been driven, you have nothing extra to pay.

Some leases provide just the car, leaving you to tax, insure and service it at your own expense; others include everything apart from fuel. Car dealers offer PCLs but you can also obtain them from independent companies specialising in leases. There are dozens of such firms, but a favourite of ours is Ling’s Cars. Not only because her prices are keen and include VAT (not all those quoted for leases do) but also because her site is utterly, utterly mad. Take a look.

Something a little different

With electric cars, there’s an extra decision or two. Because, with some models, such as Nissan’s Leaf, you can lease the whole car, or just its batteries. And with Renault’s vehicles, such as the Zoe, you must lease the batteries, whether you opt for a PCL, PCP or outright ownership from the start.

Separating the two in this way promises that you dodge future worries over batteries failing to keep their charge. Because electric car are still new to most of us and long-term ownership costs (notably the future resale value of the car) uncertain, we think a PCP or a PCL may be the way to go. There is a, but…’ however, and it’s this: choose either and you’re in it for the term – end either early is expensive.

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