Lease an electric car

Lease an electric car and you'll have low monthly payments without any worries about its future value

Mar 23, 2018

If you want one of the latest electric cars for an affordable price, and without any worries about its future value, then electric car leasing could be your best bet.

It’s a long-term car rental agreement, where you make an initial payment and then a series of fixed monthly instalments until the end, when you hand your car back.

You don’t need to worry about the car’s value, or a reduction in battery capacity. Once the agreement comes to an end, that’s not your problem.

There’s a similar option available for cheaper used and nearly-new cars too: Personal Contract Purchase finance (PCP) operates in a similar way, with low monthly payments and the ability to hand your car back at the end. PCP also offers the option to buy the car. If it’s worth more than forecast then you’ll also be able to out the difference towards a new finance deal.

 

 

Why lease an electric car?

Leasing could have been invented for electric cars because - like mobile phones - they are developing so fast that new and improved versions are arriving regularly. Leasing helps to avoid tying up your money owning last year’s electric car.

For example, battery range is growing all the time. When it was launched in 2011, the Nissan Leaf had an official range of 99 miles. This year’s all-new version has an official range of 235 miles, although you’re unlikely to come close to that in real-world driving.

If demand slumps for older electric cars, then you’ll be protected by leasing, as your payments are fixed. If the car’s worth less than anticipated, then that’s a problem for the leasing company when you return the car.

Taking out PCP finance also makes sense for the same reasons. It’s available for used or new cars and gives you the flexibility of returning it or choosing to buy it at the end of the agreement. The price of that flexibility can be monthly payments that are slightly higher than leasing, though.

  

Leasing an electric car for business use

Electric cars make a lot of sense for business users because they qualify for the lowest rate of company car tax.

From April 2018, a lower-rate taxpayer would pay £747 a year in company car tax for a Nissan Leaf Acenta; that rises to £1,116 for a petrol-powered Nissan Qashqai Acenta.

Leasing an electric car makes financial sense for companies too because payments are fully tax-deductible, as they are with all cars that emit less than 110g of carbon dioxide per kilometre.

  

Leasing an electric car battery


iStock.com/extreme-photographer

With some lease deals, leasing the car is only part of the story. You may also to have lease the battery as a separate item, whether you get a new or used car.

The previous version of the Nissan Leaf was available as a cheaper Flex model because the battery wasn’t included. The same is true for the Renault Zoe, which only comes with a battery if you upgrade to a model badged ‘i’ - a premium of £5,600 when new.

Lease costs aren’t cheap, with prices for the Zoe starting at £49 per month for earlier cars, or £59 for the latest model with a larger battery, badged as Z.E. 40. Both of these prices limit you to 4,500 miles per year; you’ll need to pay more if you travel further.

Regardless of who you lease the car from, a leased battery is guaranteed to hold at least 75% of its charge over four years or 100,000 miles. If it doesn’t, Renault will repair or replace it free of charge.

That’s better than the guarantee offered if you buy the battery with the car: Renault guarantee that it will hold at least 66% of its charge or the battery will be repaired or replaced.

Other manufacturers, including BMW, Tesla, Jaguar and Volkswagen include the battery in the price of every car.

 

Cost of leasing an electric car

Uncertainty over the future value of electric cars has made leasing them expensive; leasing companies haven’t wanted to be left out of pocket by getting a car back that’s worth very little

The situation is changing, as electric car sales rise and the vehicles become more familiar, but recent Nissan Leaf deals still started at just under £300 a month.

Used electric cars are much more affordable, with representative finance repayments on a Renault Zoe starting at less than £130 - although you’ll have to factor in the battery lease costs.

Second-hand Nissan Leafs cost from around £150 a month with representative finance, while the BMW i3 starts at just over £250 per month.

 

Best electric cars to lease

VW e-up, above

Look beyond the Yorkshire expression and here’s the perfect city car: nippy, compact and practical, and able to enter clean-air zones free of charge. The battery is included in the price and guaranteed for up to eight years. The car’s high purchase price means that it’s much more economical to lease.

Renault Zoe

This is an ideal electric hatchback thanks to its roomy interior, conventionally attractive looks and Z.E. 40 high-capacity battery, which provides more than 150 miles of range in real-world driving.
You’ll need to add battery leasing costs to most cars, which increases the cost of running them.

Nissan Leaf

A good example of how quickly electric car technology progresses, the new Nissan Leaf has a much longer range than its predecessor, as well as more advanced technology and a contemporary design.
It’s still not cheap to lease when new, but you won’t face expensive fuel bills, and deals typically include a generous 10,000 mile allowance.

 

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