The difference between car leasing and buying an EV outright 💰
This image is sourced from Emovis Tag
It's no secret that electric cars are becoming increasingly popular, especially with over 660,000 electric cars on UK roads as of January 2023. This gets us even closer to the UK government’s goal to achieve net zero by 2050.
To help you work out the best way to get into an electric car we have compiled a list of the advantages and disadvantages of car leasing and purchasing an electric car outright.
Car leasing
There are two types of car leasing available for employees looking for an electric car. The usual car leasing where you agree to rent the car from the leasing company for a fixed period of time, typically 2-4 years, then you return the car. You pay for the car on a monthly basis using your post tax (or net) income.
Then you have electric car salary sacrifice - an employee benefit that was introduced by the UK government to support more drivers that make the switch to an electric car and get the nation close to achieving net zero by 2050.
The difference between car leasing and electric car salary sacrifice, is that with salary sacrifice car payments are taken from your salary before any income tax or National Insurance is paid. As this is an employee benefit, it is classed as a ‘company car’, so there is a company car tax payable. However, the value of this “benefit-in-kind” (BIK) is set by HMRC, and set at very low rates until at least 2028.
Learn more about the difference between salary sacrifice and car leasing here.
Advantages of car leasing
You spread the cost of your new electric car over the duration of the lease
The lease term is up to you, but most leases are between 2-4 years.
No worries about selling the car when you are finished with it - you are usually required to return the car at the end of the lease
Disadvantages of car leasing
You are not allowed to make modifications to the car you lease
A car lease will come with mileage restrictions, meaning you may incur a fee if you go over (with The Electric Car Scheme our specialists will work out your average mileage before you salary sacrifice the car)
Purchasing a car outright
Purchasing a car outright is when you pay the full price of purchase upfront to take ownership of the vehicle. This means you will be responsible for all maintenance and repairs - but you also have the freedom to sell or customise the car you choose.
Advantages of purchasing a car outright
You will own the car and have full flexibility on modifications
As you own the car, you are able to sell it at any time and with the method you choose
Disadvantages of purchasing a car outright
Wait times on some electric cars are high as production is struggling to keep up with the demand. This means that second hand electric cars can be even harder to come by at the moment.
High costs - electric cars are currently expensive to purchase due to the new and innovative technology, this means purchasing a new electric car outright may not be affordable for everyone
The owner of the car is responsible for maintenance and repair costs
Selling a car can sometimes be a hassle - however, as the owner this would be your responsibility
Overall, the method you choose to use to get yourself behind the wheel of an electric car is down to your personal circumstances.
Do you think a salary sacrifice car is the option for you?
Contact one of our specialists or check out our EV salary sacrifice calculator.
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