How to Get Finance for an Electric Car in 2025

Why This Guide Matters

The shift to electric vehicles is accelerating across the UK, with 2025 shaping up to be a pivotal year. As traditional petrol and diesel models are phased out, more motorists are considering electric cars. Yet, many find the finance process daunting. New technology, government incentives, and changing regulations add layers of complexity. This guide aims to demystify the process of securing finance for an electric car, giving you the clarity and confidence to make informed decisions. Whether you’re a first-time buyer or upgrading to the latest model, the right finance can make electric motoring accessible and affordable.

The Basics Explained

Electric car finance in 2025 broadly mirrors traditional vehicle finance but with a few notable distinctions. Here are the primary options UK consumers encounter:

• Personal Contract Purchase (PCP): Make a deposit, monthly payments, and an optional balloon payment if you wish to own the car at term’s end. PCP is popular for new EVs due to flexible terms and lower monthly payments.

• Hire Purchase (HP): Spread the cost over fixed monthly payments. Ownership transfers after the last payment, making HP straightforward and predictable.

• Personal Loans: Borrow a lump sum from a lender and buy the car outright. You own the vehicle immediately, free to sell or modify as you please.

• Leasing (PCH): Pay a monthly fee to use the car for a set period with no option to own. Leasing suits those who want the latest technology without long-term commitment.

Interest rates, government grants, and lender incentives can all affect your total cost, so understanding the basics is crucial.

How It Affects You

Choosing the right finance plan impacts far more than just your monthly outgoings. Electric cars often have higher upfront prices than their petrol counterparts, but lower running costs and incentives can balance the equation. Here’s what you need to consider:

• Monthly Payments: PCP and leasing typically offer lower monthly costs, but you may not own the car at the end.

• Total Cost of Ownership: Factor in savings from fuel, maintenance, and tax. Electric vehicles, while pricier initially, can be more cost-effective over several years.

• Deposit Requirements: Expect to pay 10–30% upfront for most finance products.

• Mileage Limits: PCP and leasing agreements impose mileage caps; exceeding them can incur charges.

• Government Grants: The Plug-In Car Grant has changed over recent years. In 2025, some incentives remain for select models or charging equipment. Check eligibility before committing.

• Residual Values: Electric cars can depreciate differently. A large balloon payment on a PCP may or may not reflect the car’s true worth at contract end.

Understanding these factors ensures you select a finance product that matches your budget and driving habits.

Our Approach

At Kandoo, we believe finance should empower, not overwhelm. Our role as a UK-based retail finance broker is to connect consumers with tailored solutions, grounded in transparency and trust.

How we help:

• Whole-of-market Access: We work with a wide panel of regulated lenders, increasing your chances of approval and finding competitive rates.

• EV-specific Knowledge: Our team stays abreast of evolving electric vehicle incentives, tax breaks, and lender criteria. This ensures you benefit from schemes that might otherwise be missed.

• Personalised Support: We take time to understand your needs—be it low monthly payments, early settlement flexibility, or the desire to upgrade frequently. Our recommendations reflect your circumstances, not just what’s popular.

• Clear Explanations: From APR to balloon payments, our team explains every term in plain English, so you’re never left guessing about costs or commitments.

• End-to-end Guidance: From the initial application to finalising your agreement, we guide you through each step, liaising with dealers and lenders to keep the process smooth and stress-free.

We recognise that electric car finance is not one-size-fits-all. Our approach is rooted in impartiality, ensuring you can make decisions with confidence and clarity.

Before You Decide

Before signing any finance agreement, consider the following checklist:

• Budget realistically: Factor in insurance, home charging installation, and running costs alongside finance payments.

• Understand your driving habits: High mileage may affect your choice between PCP, HP, and leasing.

• Check credit status: Your credit score will influence available rates and products. Obtain your report in advance and address any errors.

• Read the fine print: Pay special attention to mileage limits, charges for excessive wear, and early termination fees.

• Assess future needs: Will your job, family, or daily mileage change soon? The flexibility of your agreement should reflect this.

• Compare the whole package: Don’t focus solely on monthly payments—look at APR, total repayable, and end-of-term obligations.

Taking time to review these aspects will help you avoid surprises and secure the right deal for your circumstances.

What’s Real, What’s Hype

Electric car finance is a rapidly changing field. It’s easy to get swept up in marketing promises and viral headlines. Here’s what stands up to scrutiny:

• Real: Electric cars can be cheaper to run long-term, especially with home charging and lower maintenance needs. Government incentives do exist but are narrower than in the past.

• Hype: Not every EV is immediately cheaper than a petrol car. Not all finance deals are ‘green’ or cheaper. Beware of offers that promise zero deposit or ‘guaranteed approvals’—always read the terms.

A measured approach helps you sort genuine benefits from overblown claims.

Pros & Cons

Understanding both sides will help you weigh if electric car finance is right for you.

Other Options to Consider

If traditional finance products aren’t the right fit, consider these alternatives:

• Salary Sacrifice Schemes: Some employers offer EVs through salary sacrifice, taking payments from your gross salary and offering tax savings.

• Manufacturer Offers: Car makers may provide 0% finance or deposit contributions on specific models.

• Used Electric Cars: The used EV market is growing. Financing a pre-owned model can lower costs and increase choice.

• Green Loans: Some lenders offer preferential rates for eco-friendly vehicles.

• Subscription Services: Pay a monthly fee for an EV package including insurance, servicing, and breakdown—ideal for short-term or flexible arrangements.

Comparing all options ensures you don’t miss out on a deal that better suits your needs.

FAQs

Q: Will my credit score affect my chance of getting EV finance? A: Yes. Lenders assess your credit history when deciding rates and approval. A better score usually means lower interest and more options.

Q: Are there still government grants for electric cars in 2025? A: Some grants remain, especially for charging infrastructure and select models. However, the main Plug-In Car Grant has been reduced. Always confirm current eligibility before applying.

Q: Can I get finance on a used electric car? A: Yes. Many lenders now offer finance products for approved used EVs, often with similar terms to new vehicles.

Q: What happens if I exceed the mileage limit on PCP or leasing? A: Exceeding agreed mileage usually incurs additional charges, so estimate your annual usage carefully.

Q: Is leasing or PCP better for electric cars? A: It depends. Leasing suits those who want low commitment and regular upgrades, while PCP offers the option to purchase at the end. Consider your long-term plans and flexibility needs.

Q: Do I need a home charger to finance an EV? A: Not necessarily, but many find it more convenient and cost-effective. Some finance deals include home charger installation or discounts.

Q: How do running costs compare to petrol cars? A: Electric cars are generally cheaper to run, thanks to lower fuel, maintenance, and road tax expenses. Calculate your likely savings before deciding.

Next Steps

If you’re considering financing an electric car in 2025, start by assessing your budget and requirements. Compare offers from multiple providers, check eligibility for any government incentives, and don’t hesitate to seek professional advice. At Kandoo, we’re ready to help you navigate your options with clarity and confidence—so you can drive electric with peace of mind.