Leasing an electric car: a full guide

Are you thinking about leasing an electric car? You're in the right place. Our guide here covers every step, from helping you decide whether an EV is right for you, to explaining exactly what leasing is and how it works. We'll also help you with some tips on caring for your new electric car throughout the time of your lease. Let's get started.
• What is car leasing? • What's included in a lease ... and what isn't • Pros and cons of electric car leasing • Are electric car leases expensive? • Do I still have to lease a battery separately? • How to lease an electric car • Choosing electric and hybrid car lease deals • Insuring, maintaining and charging an electric lease car • Survey: try an EV before you buy

Leasing is a way of paying for a brand-new car. It aims to be as simple and cost-effective as possible, by giving you a fixed monthly payment for an agreed length of time, usually two to four years. You'll sometimes hear it called "Personal Contract Hire" (PCH). As that name suggests, it's essentially a way of 'renting' the car for as long as you want it, without some of the hassles of owning a depreciating asset. It’s also a way of keeping as many of your motoring costs as possible in one place.
A lease contract is usually structured with an upfront payment, sometimes called the "initial rental", then a fixed monthly amount for the length of the contact. That amount is calculated based on various factors including the list price of the car, how big an initial payment you want (usually between three and six times the monthly payment), the mileage you think you’ll do every year, and whether you want a maintenance package – more on which shortly. The difference between a PCH lease contract and the other main way of financing a new car, a Personal Contract Purchase (PCP), is that with a lease there’s no option to buy the car at the end of the initial term - no big ‘balloon payment’ to think about like there is with a PCP. You simply hand the car back at the end of the contract. If you like to have a new car and change it fairly regularly, leasing could be for you. You can learn much more about the difference between PCH and PCP deals in our guide here. Back to top

Leasing with Auto Trader includes:

• Your brand-new car • Free delivery to mainland UK • Full manufacturer's warranty • Vehicle Excise Duty (Road Tax) • Free collection at the end of your contract

Leasing doesn’t include:

• Fuel (or electricity if you’re leasing an EV) • Insurance. You’ll still have to sort out your own insurance policy. • Servicing, replacement tyres and maintenance… but it can do. See below.

Leasing with a maintenance package

Maintenance will cost extra every month and can be added if you wish. It’s designed to cover lots of the additional motoring costs that you might incur during your time with the car. Things like servicing, repairs, tyres, replacement exhausts, breakdown recovery and MOT testing are usually included with a maintenance package. Some of these things will be covered by the car’s manufacturer warranty, but ‘consumables’ like tyres and wiper blades are not, and nor are servicing costs. Maintenance can bring peace of mind by keeping your monthly outgoings predictable. Find electric car lease deals on Auto Trader. Back to top

Part of the thrill of getting an electric car, especially in this blossoming market, is that you get to be an early adopter of the latest tech.
Car leasing helps make this new technology more readily available to a wider range of budgets, with low deposits often available and reasonable monthly payments. And because car leasing contracts tend to last two to four years, you’re free to upgrade your electric car regularly and make sure you’re driving the latest model with the newest tech. That said, electric car leasing isn’t for everyone. Electric cars can be more expensive to lease and insure than petrol or diesel equivalents. This can often be offset by cheap charging and tax benefits. See below for more details on that.

Pros of leasing an electric car:

There’s a wide range of brand-new electric cars available to lease, with more electric cars set to enter the market over the next few years. Electric cars are growing in popularity due to their eco-friendly credentials, but they also offer reduced running costs and, potentially, huge tax advantages compared to petrol and diesel cars. Monthly payments for an electric car are fixed, which can help protect you from depreciation or slumps in demand when you hand the car back. For those who have doubts about switching to electric, leasing is a perfect opportunity to try it out for a set period. Leasing an electric car gives you the option of living with the latest battery and in-car technology, without tying your money up in a model that might become outdated soon. You don’t have to worry about depreciation in the value of your car, because you won’t be selling it. This is especially important at the moment because electric car technology is advancing so quickly, so used EV values are more difficult to predict. Lower maintenance costs. As electric cars have fewer moving parts than standard petrol and diesel motors, they tend to require less maintenance. This means they’re usually cheaper to service and repair. If you choose a maintenance deal with your lease, it will cover repairs and replacements caused by fair wear and tear, so you have less to worry about throughout your time with the car. Some also include servicing and parts so there are very few unexpected expenses. Lower (or zero) tax. If you’re buying a brand-new car, then the first year of VED (road tax) you pay is based on the vehicle’s carbon emissions. Fully electric cars, which don’t produce any carbon emissions on the move, won’t have to pay VED. Click here for a full explanation of VED charges.

Cons of leasing an electric car:

Leasing an electric car can be a great way to drive a brand-new car for less, but there are some points to consider before you sign a lease contract. If you don’t keep up with your monthly payments, the car could be taken away. If you wish to cancel your lease before the end of the contract, you may still need to pay the cost of some or all of the leasing agreement – you won’t be able to simply end it and walk away. A lease contract will include extra charges for excess mileage and wear and tear, so you'll have to make sure you know how many miles you're going to do each year; it's a false economy to get a cheaper deal with lower mileage than you'll do, because excess mileage will cost more in the end. "Fair wear and tear" is expected at the end of your time with the car, but you can't hand the car back with significant damage. Your contract will spell out exactly what this means. The lease provider will expect a few light scratches and for the steering wheel leather to look a little shiny at the end of your lease, but if you've kerbed your alloy wheels, for instance, you'll probably need to get those fixed before handing the car back. You’ll never own the car, so won’t have any equity from selling it. Before signing up for a car lease, take your time to research.You can learn much more about the advantages and disadvantages of leasing in our general guide to PCH here. It’s important to check your leasing contract before you sign, and ask if you have any questions or need anything clarifying, so you know how much you’re paying and what it’s all for. Back to top

Generally, electric car leases cost a little more than petrol or diesel car leases. This is mainly because they still have relatively high list prices due to higher development costs and the expense of the batteries that power them. As more electric cars are made, and the infrastructure to support them improves, expect to see prices change to reflect their popularity and availability.
Electric cars tend to use newer, more expensive technology, which is also reflected in the price. Check the features of an electric car (we’re talking hi-res displays, park-assist cameras, that sort of thing) and see if they’re worth paying a little for extra each month. Again, though, as this technology becomes more common, it’ll get cheaper. There are great, affordable lease deals on all sorts of cars and the most important thing is making sure you can meet the monthly repayments. Back to top

In short, no. There was a time during the very early days of electric cars that the battery would be rented separately to the car itself. It was a way of bringing the cost of leasing an EV down, and of reassuring early adopters of electric cars who might have been worried about the battery degrading more quickly than the car itself. A battery lease gave the driver a separate guarantee.
Early Nissan Leafs and Renault Zoes used this scheme, but it’s no longer the case. For a start it was quite confusing, but mainly, the millions of miles that electric cars have driven over the last decade have shown that battery reliability is excellent, and heavy battery degradation is a myth. Renault, for instance, guarantees that any leased battery will hold at least 75 per cent of its charge for four years or 100,000 miles. If it doesn’t hold its charge, then they’ll repair or replace it for free. The Ora 03 electric car comes with an eight-year, 100,000-mile warranty specific to the battery, too, this quickly becoming the norm across the vast majority of manufacturers. Basically, electric cars now come with the sort of battery guarantee that will long outlast your EV lease contract. Back to top

Applying for an electric lease car is the same as applying for a petrol or diesel one. You find a car you like and confirm your order with the lease provider, then:
• You’ll send of proof income, address and ID, plus a finance form • They’ll perform a credit check to make sure you can afford the monthly repayments • You’ll pay the deposit (normally equivalent to three, six or nine monthly rental payments) upfront • You may also pay an arrangement fee • You’ll set up a monthly direct debit • They’ll contact you to arrange delivery We cover all the steps, including what paperwork you’ll need and how to fill it in, in our guide to starting a car lease. Make sure you read the small print of any contract to understand exactly how much mileage you can do each month, plus any other stipulations such as servicing the vehicle, terminating the contract early, and what will happen if you miss payments.

What happens if I miss my monthly payments?

If you’re at risk of falling behind with payments, contact the lease provider to discuss your options. They may be able to amend your contract – for example extending it so you have smaller monthly payments to make. Should you continuously miss payments, the lender may repossess the car and this could negatively affect your credit report with a default. You can visit sites like the Money Advice Service for free, impartial advice on what to do.

Can I end my leasing contract early?

Most lease contracts include an early termination clause. The details vary, so always check your contract before you sign. Back to top

When looking at electric car lease deals, consider the following factors:
• The monthly price offered by lenders (just remember, your final quote is subject to your credit rating) • The spec and tech of the car • The electric car’s range – newer EVs may be more expensive to lease, but have better range and need less charging Always make sure you can make the monthly repayments and check the contract thoroughly before you sign. Leasing an electric car can dramatically reduce your impact on the environment and your annual outgoings. Here are some of the best electric and hybrid car lease deals available on Auto Trader. Back to top

Electric car lease insurance

As electric cars use newer and more sophisticated technology, they may cost more to insure than petrol or diesel models. You should shop around and compare car insurance quotes to find the best deals. As the lease car is the property of the lease company (you’re classed as the car’s keeper, not the owner) they may require you take out a comprehensive insurance policy. Learn more about car insurance policies.

Electric car lease maintenance

Electric cars tend to be cheaper to service if you keep them in good condition. As they have fewer moving parts and more streamlined operations, they don’t need as much work doing. A standard EV service will include an annual transmission oil change and checks for the tyres, brakes, suspension, drivetrain and battery health. If there is anything wrong, EV motor parts are easier to replace, and don’t usually deteriorate as fast.

Charging an electric lease car

You have two main options for charging your electric lease car: charging at home and charging using the public network.

Charging a lease car from home

A dedicated home charging point makes it much cheaper to charge your car, and you can leave the car to charge overnight in a lot of instances. To get one, you’ll need to be able to park your car somewhere private off-road, like in a garage or on a driveway. Learn more about charging from home.

Charging a lease car in public

If you can’t install a charging point, or need to charge when you’re out and about, you’ll need to use public charging points. As of December 2023, there were around 54,000 charging points at 31,000 locations across the UK - and it's expanding at pace. Prices and charging times vary depending on the type of charger (there are slow, fast and rapid) and the charging network. Back to top

Our recent survey found that 70 per cent of the 2,025 UK drivers asked would be interested in leasing an electric vehicle for two or three years before they committed to buying one outright. This ‘prolonged test-drive’ would give them opportunity to get to grips with the features and technology, and dispel any lingering doubts they have about EV technology.
For more on leasing download the full ‘Long-Term Test Drive’ report here.

Tackling EV uncertainty

Of those asked, 73 per cent said they’d consider buying an electric car in the next four years, though 40 per cent had doubts about whether an electric car would suit them or that electric cars were all they claim to be. • 51 per cent said range anxiety put them off buying an electric vehicle, even though the average electric vehicle today can travel more than 200 miles on a single charge. • Similarly, a lack of available charging points across the UK (49 per cent) and in local areas (48 per cent) was cited as an issue, despite there now being more than 50,000 charging points in the UK. • Other common concerns were the cost of the electric car itself (44 per cent of respondents) and how long it would take for the batteries to recharge (42 per cent). That said, our market research has found a whopping nine out of 10 consumers are worried about the impact of petrol and diesel cars on the environment and support schemes to help motorists to go green.

Leasing could help you make the right EV decision

A try-before-you-buy approach, where leasing essentially acts as a prolonged test drive, would give most drivers enough time to thoroughly trial an EV model and get answers to their concerns. As most leases last two to three years, this gives drivers the time they need to fully get to know the vehicle and understand their feelings about it. In the case of EVs, this would provide plenty of time to help drivers dispel any worries, become accustomed to the technology and see how accessible and easy charging can be. It’s also a fraction of the price of purchasing outright, so if after two years you’re not sold, you can simply return the vehicle. Leasing is an increasingly popular choice among those considering traditionally fuelled cars, too. Of those asked, 38 per cent said they had previously been nervous to buy a new car outright, and 66 per cent thought think leasing a car before purchasing it outright was a sensible idea as it would help them to be sure the car is right for them. Our research also covers the most important factors UK drivers consider when purchasing a new car, including good fuel economy (65 per cent), low maintenance costs (56 per cent), and how enjoyable it is to drive (55 per cent). Download the full report for free. Back to top