I haven’t needed a car for a long time, having lived in places with public transport that took me where I wanted to go, but an impending move oop north means that I’m looking at the necessity of getting one.

My Plan A was to spend about 10K to get a small car like a Polo, but MrsJ has been bugging me about an electric car so I’m looking at the options. First conclusion I came to was that for 10K you can only get an older car with a worn out and obsolete battery. A new(er) car to buy seems to be about 25K ?? So that takes me to look at various lease options, about which I know absolutely nothing. It seems like a good idea to be not tied in to a technology that is rapidly evolving, but I really don’t know what to look at or how to judge the options.

Thoughts and experience (and alternatives!) gratefully received!!

Lease costs depends on annual mileage. You can go to places like leasing.com to get quotes. I’ve currently got a seat Leon petrol on a lease. My neighbour recently got a vw id3. I compared the prices and the electric car costs about £90 a month more than the current version of my car on a 10000 mile 3 year lease. I probably spend about £100 a month on petrol so nothing in it financially.
I wouldn’t have wanted an ev when we drove the 400 miles to the Cairngorms from Sheffield for our summer holiday, but similarly my ev driving neighbour was even more smug than normal for a week when the petrol stations were empty.
I’m not convinced EV’s are actually better for the planet yet. But they are better for air quality in cities in Europe while the emissions are going on in China during manufacturing rather than sitting in traffic jams. Horses for courses I guess

How long would you keep the polo for?
How much do you think you might sell the polo for?
What do you think you’d pay to keep the polo running (tyres, servicing etc)?
What will tax (vehicle excise duty) cost for the polo?
How many miles will you do in the polo?
How much will fuel for those miles cost?
How much will electric for the equivalent miles be?
VED is £0 for all electric vehicles?
Are insurances costs the same for both?

Stick all in a spreadsheet and you should be able to compare the cost per month and or per mile and work out if the lease options are viable alternatives.

Basically, you’ll see two different types of lease:

PCH – where effectively you are just hiring the car for 2/3/4 years, with some fixed mileage limit (you can go over it but will pay more per mile).
PCP – which is a little like traditional HP finance; but instead of owning it you have the option to buy it for a lump sum “balloon” payment at the end.

they may or may not include servicing/maintenance (and check the small print if they do).

However, the best way to get an electric car – is to get one as a company car. The relative tax benefits is where the surge in uptake is coming from!

Go to autotrader.co.uk and select leasing, select any car and any model, then on the next page you can select ‘electricity’ as a fuel type.

The good deals seem to be from whoever has a car they need to shift, which could be any of them. There’s no single best value leaser, or if there is the advantage is outweighed by special offers.

Just find the one you want and click through. Leafs, Zoes and Ioniqs (not 5, just un-numbered) are usually the cheapest options, alongside superminis.

When I compared costs between my existing lease car Volvo V40 and getting an egolf on lease, I made a spreadsheet with cost per month for the lease, petrol per month, insurance & tax.
The egolf was slightly more in lease payments per month but it evened out with the petrol v electric cost.

It worked out even cheaper when I found out I can charge for free from work, Tesco and Manchester with free parking.

I got the egolf direct from a VW dealer as it was the cheapest at the time. Lease cost over 4 years is 12k with option to buy or hand it back at the end of the lease.
It would have been cheaper to lease but I upped the annual mileage to 12k. It was 8k.
The monthly price includes 3 years service as well.

Would be worth seeing if your employer offers an EV salary sacrifice scheme (or would consider setting one up, like B2W there’s various providers so I don’t think it’s much admin overhead for the employer)

The monthly price includes 3 years service as well

What exactly do they service in a electric car?

What exactly do they service in a electric car?

Is your idea of a ‘service’ new oil and a filter?

What exactly do they service in a electric car?

Pollen filter

and brake fluid when required.

Ha I thought that as well when they serviced it.
No idea what they did but presume brake checks and general wear and tear checks.
The brakes were 12% worn after 2 years driving which I was surprised at.

DrJ if you are a medical doctor working in an NHS Trust you may well be able to lease through work on salary sacrifice. Cost of lease is deducted from salary before tax so big savings. You do need to think about impact on pension of it’s defined benefit (so based on earnings, but I’m sure someone at work can do the sums)

If you are not a medical Dr lots of employers have signed up so you or Mrs J may still be able to lease this way

Servicing EVs – you have to have things checked like suspension, brakes etc. EVs still have cooling for the batteries sometimes I which might need a check but the systems aren’t as complex as an ICE car. EVs are heavier so the suspension can take a pounding.
The brakes can actually fail due to non use – if your car is good at one pedal driving then the brakes can seize up due to lack of use.

Obviously no oil change, spark plugs, gearbox issues, turbos, exhausts etc etc.

Autotrader are doing a series on 2nd hand EV’s, Rory buys a 4k Nissan Leaf https://www.youtube.com/watch?v=QSqMbuPh8PY

Salary sacrifice schemes make a big difference – I’m just about to get an EV through mine,

For an EV you can basically pay for it from your pre-tax income.

My scheme is “all inclusive “ so tax, servicing, tyres, insurance, breakdown is all covered – plus they install a home charge point for free.

My monthly payments will be the same as my current A6 lease.

Then I will save 2/3 of my petrol costs, no insurance/servicing to pay either.

What do we think about changes to BIK beyond 2025? I guess it could ruin the salary sacrifice schemes?

A pal has just bought a used Honda CRV hybrid. Sold his perfectly functional 4 year old Prius (still on original battery). Maybe a used hybrid is worth looking at. Although he did say a hybrid is rarely on just e power. Even in town.
We could argue about the real value of electric vehicles – given the massive ecological hit of battery manufacture and disposal and observe the opinion that when buying new it takes 12 years of use before an e car beats a small efficient internal combustion model in terms of ecological damage.
A pal recently bought a big e-Jag and visited us in Brighton. It’s nice BUT given that there was nowhere to charge it here he had to drive miles to Newhaven and sit on the charger to top it up. Hardly practical.

AND the Telegraph thinks it may become compulsory to only charge off peak due to limitations of the grid.
https://www.telegraph.co.uk/news/2021/07/28/blackout-warning-drivers-must-charge-electric-cars-off-peak/

More on that (it may apply to home chargers only) https://www.google.com/amp/s/www.driving.co.uk/news/environment/ev-chargers-switch-off-peak-times-blackouts/amp/

The govt has a hard cut off in 2030 when ICE cars will stop being produced. I think incentives to buy EV will continue to help us get there, but who knows!!

What exactly do they service in a electric car?

A number of EVs have (transmission) oil pumps and filters.

The govt has a hard cut off in 2030 when ICE cars will stop being produced.

This is why I laugh when I hear that “the legacy auto manufacturers are going to be caught short!” or “EV manufacturers need to step up their game and add all the nice features I think they should have”.

There will be no choice but to buy an EV, so manufacturers won’t need to make them enticing at all. Also, there is no way that VW, et al, at the heart of German manufacturing, will be “surprised” when ICE cars are mandated out of existence. I am 100% sure they will continue to make fat profits.

I must admit, I don’t understand lease schemes. They seem to be all the rage, but I can’t work out why. For a bit of fun I ran the numbers on an ID3. Factoring in the deposit, a 4 year lease and the final payment it looked as though I’d end up paying around £6k more than if I just bought it outright. That’s assuming I have to pay RRP if I buy cash. I’ve never had to before and usually manage to save 10-20% off RRP buy buying cash, but these are strange times. Even assuming I did have to pay RRP for the car, why would I want to pay £6k on top of that to lease it (and be limited in how many miles I could drive in “my” car)? There must be something I’m missing.

Most people don’t seem to buy the car at the end of the term, they just give it back and get another brand spanker and just keep on making the payments. It boils down to whether £300-£400 a month to rent a car is acceptable to you.

The “Balloon payment” to keep the car after X years, is often inflated as a way of making monthly payments cheaper.

My salary sacrifice scheme is all inclusive, so no other car related costs except electricity. The 40% tax saving brings EVs down to ICE prices.

The 40% tax saving brings EVs down to ICE prices.

Fine if you’re in the 40% tax bracket – most aren’t.

100% capital allowance is a nice little help too, when buying as a company car for your limited company 😉

What exactly do they service in a electric car?

All the bits that aren’t the actual engine on every other car – which has almost always been where I’ve had costs with ICE vehicles not usually the engine itself – so tyres, suspension, brakes, etc. Presumably there are bits that need lubed or checked that they aren’t loose/wearing. Last time I had a car serviced on a lease they replaced a dodgy rear wiper blade and fixed a blown bulb.

I must admit, I don’t understand lease schemes. They seem to be all the rage, but I can’t work out why. For a bit of fun I ran the numbers on an ID3. Factoring in the deposit, a 4 year lease and the final payment it looked as though I’d end up paying around £6k more than if I just bought it outright.

Final payment is optional though. So you can just hand the car back – or often with PCP its worth slightly more than the balloon payment so people trade it in as the deposit on the next one. Nobody knows what the value of 4 yr old EVs will be in 4 yrs time so the lease company is offering you certainty rather than buying outright and carrying that risk. I’ve not crunched the numbers for an EV but last time I compared leases there wasn’t much in it compared to ownership. What was clear though was 4 yrs wasn’t always an optimal period – different vehicles were better with 2/3/4 yrs.

That’s assuming I have to pay RRP if I buy cash. I’ve never had to before and usually manage to save 10-20% off RRP buy buying cash, but these are strange times.

These are strange times indeed – but you will almost certainly have to pay RRP. Neighbour has been trying to get an ID3 and the dealer says not 1p off RRP – he’s got people offering him extra to jump the queue so why would he do anything special! The only concession he got was a 3 pin 13A charging cable. He tried online and 2 other dealers and nobody else was interested in negotiating either. May be different if you are willing to take a model nobody else is interested in.

Autotrader just has a lease search, here, I’ve done the hard work –
Electric lease cars in price order

So happy I can ride a bike for most things. Spending that much a month on a car would be the last thing I’d want in life.

There must be something I’m missing.

Perhaps it’s that YOU might have £40k to drop on a new, heavily depreciating asset, but others can’t/won’t do that.

heavily depreciating asset

Haven’t you heard..? 🙂

I have an electric car via salary sacrifice. It costs around £250 per pay day and that includes servicing, insurance, tyres, etc. When you take in to account the fuel (and other) savings I really couldn’t justify getting a car via any other method. Helped that the BIK tax was zero, not sure if that is still the case.

Perhaps it’s that YOU might have £40k to drop on a new, heavily depreciating asset, but others can’t/won’t do that.

That doesn’t make sense though, unless I’m missing something. If you don’t have £40k to drop on a car then you don’t have £40k to drop on a car. Spreading the payments out doesn’t mean you have any more money. In fact you have less if it costs more overall.

Not paying the final payment was something I hadn’t considered though. I guess you can just look at £xx per month as the cost of owning a car and see if that’s something you want to pay. It still looks as though you end up paying more than you would if you just bought whatever you could afford outright though.

Pcps have ended up being cheaper than buying outright for me. This is for ICE cars. This is due to low interest rates and dealer and company contributions. So last time I got a 15% reduction on list price plus a contribution that resulted in the effective interest rate being less than my mortgage rate. Ended up selling the car for 1500 more than the balloon payment, so got another bonus then. Add in the free servicing and pads/discs and it was a good deal. Not as cheap as buying a good 3-4 year old car a running it, but not far off it.

That was 4 years ago, this time I could get nothing decent and the EV there was no negotiating or the like. So i brought a secondhand car outright.

Will look into the salary sacrifice on EV cars though.

That doesn’t make sense though, unless I’m missing something. If you don’t have £40k to drop on a car then you don’t have £40k to drop on a car. Spreading the payments out doesn’t mean you have any more money. In fact you have less if it costs more overall.

Wait until you find out how most people buy houses.

I must admit, I don’t understand lease schemes.

Easy way to get s brand new car without splashing too much. We needed a car quickly, we didn’t have much spare cash, and we wanted an EV. Borrowing money to buy would have only got us an old unfavi6car, but leasing wasn’t much more per month.

Things will change as the current crop.of cars is pretty decent and sorted. So in 5 years time these same cars will be good options second hand, whereas the current lot of 5 year old cars isn’t so much. Yes, there may well be more range, but current cars are at the point where they have enough to be practical. You don’t always need more range.

Wait until you find out how most people buy houses.

True, but is it a good thing that car ownership is heading in the same direction (especially as they don’t last as long as houses)?

I’ll take an argument that it is, as an incentive to reduce dependence on cars and the number of miles driven. But it then follows that EVs being more expensive is a good thing…

Wait until you find out how most people buy houses.

Houses are (generally) an appreciating asset. And I’d rather pay for something that will, by and large, be worth what I bought it for if not more in a few years’ time if I need to sell it. And I’m lucky that I can afford a mortgage and deposit and all that stuff – lots of people aren’t.

We tend to buy a ~2 year old car at a significant discount on new price and run it into the ground – or in one case, until we don’t need it any more and sell it privately or part ex. We’ve done that for our last four cars. Before that, it was bangernomics all the way, baby. Neither of those approaches will work for EVs unless something significant happens, so we’ll probably be looking at PCH or similar next time. We’re well off, relatively speaking, but £300 a month is a big consideration. But YMMV; there are a lot of £40k cars around, so someone is buying or leasing them.

I can see why some like the lease method, if you need a reliable car with no hassle for a fixed sum per month it’s a good idea. A lot of busy families don’t want the potential hassle of a £5k car breaking down on them – and when they do with modern cars it can be expensive.

I don’t think I would do it as we don’t do enough miles or earn enough money – I am fortunate that I do (or will) have a company car but will pay a lot less for it than most leases as I need it for my job so my employer pays for a lot of it (when it eventually arrives!!).

Unfortunately a lot of people use it to get one up on their neighbours and end up spending more and more to get the latest Audi, when something cheaper will work fine, but that’s a separate matter and up to them.

@bentudder beat me to it, but borrowing to buy something that appreciates in value faster than the interest rates makes perfect sense. Borrowing to buy a depreciating asset doesn’t in most cases, although, thanks to people explaining their own situations, I do understand it a bit more now and can see why it works in some cases.

lease prices are worked out on your mileage (changes the residual value, so you are financing a smaller amount)

PCH is generally always going to be more expensive than getting a low interest rate loan, purchasing the car out right and then flogging it at the end but the latter is more hassle and has some variability to your lifetime costs (mostly the sale price you get at the end).

I’ve not leased before but will next time as the company I work for offers the salary sacrifice scheme (waiting until they have Model Y’s on there though…). I’d probably still lease even if not via salary sacrifice, mostly as I’m prepared to pay a bit of a premium to reduce hassle and also with the pace of EV development (technology and new model availability) there’s probably a bit more risk than usual of relying on sale price after 3 years (existing stuff’s not really going to go obsolete in that time though). The main downsides for me I see of leasing are you pay the full whack (over your lease period) for any options and scratches/dings are probably more of a day-to-day worry

It’s an interesting note people have made about insurance cover via the salary sacrifice schemes though, hadn’t realised that was an option. Although just doing a quick quote it adds £320/month for me on a Tesla M3 Performance lease, I can’t be bothered ringing up the company at this stage but either that’s wrong or I’m missing something? I know they’re expensive to insure but I think it was around £1k/year for me when I last checked with my current insurer?

Borrowing to buy a depreciating asset

In most cases (high end exotica aside) a car isn’t an asset- it’s a commuting/family taxi tool. What people pay to acquire it, whether saving/borrow/lease is just a cost of mobility. Some people may be prepared to try bangernomics whereas others like the comfort of a new car under warranty.

Given the UK has/had a culture of company cars, a lot of companies have moved to an allowance instead so people are using this to fund leases especially if the company stipulates a maximum age

PCH is generally always going to be more expensive than getting a low interest rate loan, purchasing the car out right and then flogging it at the end but the latter is more hassle and has some variability to your lifetime costs (mostly the sale price you get at the end).

Yep – this is the bit I’m struggling with. I don’t know if a two year old EV is going to be as decent value a proposition as a two year old ICE, since battery wear and condition comes into play. The cost of ownership for our last family estate over its lifetime worked our at about £1200 per year excluding fuel, so PCH is going to be a big step up in terms of spending, and it’d probably have to come at the expense of things like pension contributions and mortgage overpayment – both of which are far better value for money.

I can completely understand why people love buying / renting / driving really nice /expensive cars. We’re all doing the same on a smaller scale with pushbikes, after all. I do wonder what the impact will be on people who can afford a banger rather than a newish car, though. I had a great old Pug 306 that cost me £650 and lasted an improbable amount of time with minor servicing costs. After the last old ICE banger dies off, what options do people have?