Used Electric Car Finance: What to Know in 2024

Why This Guide Matters

The appeal of electric cars is undeniable: cleaner emissions, lower running costs, and a glimpse into a sustainable future. Yet, as more used electric vehicles (EVs) arrive on the UK market, financing options can seem complex. The choices you make now can affect your monthly outgoings, eligibility for incentives, and even the long-term value of your purchase.

Navigating used electric car finance isn’t just about finding a good deal—it’s about understanding new variables unique to EVs, such as battery life, depreciation, and eligibility for government schemes. This guide is designed to demystify the process, giving you clarity whether you’re a first-time buyer or considering switching to an EV for your next vehicle. With robust information, you can make decisions that suit your needs, budget, and sustainability goals.

The Basics Explained

When it comes to financing a used electric car, the landscape is evolving fast. The core options mirror those of traditional vehicles—personal contract purchase (PCP), hire purchase (HP), and personal loans. Yet, a few extra considerations come into play:

• Depreciation: EVs traditionally depreciate faster, but the gap is closing as more models reach the second-hand market and battery technology improves.

• Battery Health: The cost and longevity of the battery pack are critical factors. Some finance providers assess battery warranties and health before approving finance.

• Interest Rates: Rates for used EVs can be slightly higher than for petrol or diesel cars, reflecting perceived uncertainty about long-term values.

• Eligibility for Incentives: While most government grants target new EVs, some local authorities offer incentives that can offset finance costs on used models.

Understanding the fundamental similarities and differences will help you compare offers and avoid surprises later in the process.

How It Affects You

Financing a used electric car changes the ownership equation. Here’s how:

• Monthly Payments: Because of rapid early depreciation, used EVs may offer lower upfront costs but sometimes slightly higher APRs. Check total repayable amounts, not just monthly figures.

• Running Costs: Electricity is cheaper than petrol, and maintenance is generally less frequent—helping offset finance costs.

• Battery Guarantees: Many manufacturers provide separate battery warranties, which can impact your finance terms and peace of mind. Ask lenders if battery replacement or repair costs are covered.

• Resale Value: As the market matures, used EVs are holding their value better. Still, be realistic about potential depreciation, particularly as newer models enter the market.

• Insurance: Some insurers still charge more for EVs, though this is improving. Factor insurance costs into your overall finance calculations.

The bottom line: a used electric car can be a cost-effective, sustainable choice, but the devil is in the detail. Doing your homework now will ensure you enjoy the benefits without unwelcome surprises.

Our Approach

At Kandoo, our role as a retail finance broker is to offer choice, transparency, and tailored guidance. Here’s how we help you navigate used electric car finance:

• Whole-of-Market Access: We work with a wide panel of lenders, including those with specialist EV expertise, to find finance deals suited to the unique characteristics of used electric vehicles.

• Transparent Comparisons: Our tools allow you to compare different finance products—PCP, HP, and personal loans—side by side, highlighting not just monthly costs but total repayable amounts and any early repayment penalties.

• Battery-Specific Advice: We understand how crucial battery health and warranties are. We’ll help you ask the right questions of dealers and lenders, and clarify what’s included in any finance agreement.

• Tailored Support: Every customer’s needs are unique. Whether you’re seeking a low deposit, flexible terms, or want to factor in the cost of installing a home charger, we listen first and advise accordingly.

• Regulatory Compliance: As a UK-regulated broker, we adhere to strict standards, ensuring your interests are at the centre of every recommendation.

• Ongoing Guidance: The used EV market is changing rapidly. We stay on top of new incentives, evolving lender criteria, and best practices—so you’re always equipped with the latest information.

Our commitment is to provide clarity, so you can make an informed, future-proof decision on your next car purchase.

Before You Decide

Before signing a finance agreement for a used electric car, take these practical steps:

1. Check Battery Health: Request a battery health certificate or report. This is as important as a regular MOT for an EV.

2. Review Warranties: Understand which warranties apply—vehicle, battery, and even electric motor. Clarify whether they transfer with ownership.

3. Assess Total Costs: Look beyond monthly payments. Calculate total repayable amounts, factoring in interest, expected running costs, and potential insurance premiums.

4. Evaluate Your Driving Needs: If you regularly travel long distances, check the car’s real-world range and local charging infrastructure.

5. Consider Home Charging: If you can’t charge at home, research public charging availability and costs in your area.

6. Ask About Incentives: Some local authorities offer parking or charging discounts for EV owners—even on used models.

Preparation now will pay dividends throughout your ownership experience.

What’s Real, What’s Hype

The used electric car market is surrounded by both optimism and misconceptions. Here’s the reality:

• Batteries Don’t Always Need Replacing: Most modern EV batteries retain over 70% of their original capacity after 8-10 years, and replacement is rare within the first decade.

• Used EVs Are Becoming More Affordable: As supply increases, prices are stabilising, making them accessible to a wider audience.

• Charging Is Improving: UK charging infrastructure is expanding, but regional variation exists. Urban drivers may find it easier than those in rural areas.

• Grants Are Limited: Most government incentives apply to new cars, but local perks are worth investigating.

Cut through the noise: focus on verified facts, not speculation.

Pros & Cons

Weigh each carefully against your priorities and lifestyle.

Other Options to Consider

If traditional finance doesn’t appeal, consider:

• Leasing: Short-term leases on used EVs are emerging, offering flexibility without the risk of ownership. Ideal if you want to upgrade frequently.

• Bank Loans: Unsecured personal loans can sometimes offer lower rates, especially if you have excellent credit. Compare total costs carefully.

• Credit Unions: Some local credit unions offer green car loans with favourable terms for electric vehicles.

• Salary Sacrifice Schemes: If your employer offers a salary sacrifice car scheme, you may be able to access a used EV with tax advantages—though these are more common for new cars.

• Dealer Incentives: Some dealerships offer their own finance deals, sometimes bundled with servicing or charging perks.

Each route comes with its own eligibility criteria, benefits, and trade-offs.

FAQs

1. Are used electric cars cheaper to finance than petrol cars? Not always. While list prices are falling, lenders may still view used EVs as higher risk, leading to slightly higher interest rates. However, lower running costs can offset this over time.

2. What happens if the battery fails during my finance agreement? Most modern EVs have separate battery warranties, often transferable to new owners. Check the terms with both the seller and your finance provider.

3. Can I get finance for any used electric car? Most mainstream models are eligible, but some lenders restrict finance on very old or high-mileage vehicles. Battery health and warranty may also influence approval.

4. Does buying used mean I miss out on government grants? The main government Plug-in Car Grant is only for new vehicles, but check for local authority schemes or perks (like discounted parking or charging).

5. Will I struggle to sell the car later? Resale values for used EVs are improving, particularly for models with good battery health and service histories. As demand grows, liquidity is expected to rise.

6. Is insurance higher for used EVs? Historically yes, but the gap is narrowing as insurers gain more data on repair costs and risks. Always compare quotes before committing.

Next Steps

Ready to explore your options? Start by researching used electric car models that fit your needs and budget. Gather battery health reports, check for transferable warranties, and compare finance offers from multiple providers. For tailored advice and the most competitive deals, consider speaking to an independent finance broker—so you can drive away with confidence as well as value.