Electric Car Finance Calculator

How does electric car finance work?

Electric car finance spreads the cost of an EV over monthly payments through PCP, HP or a personal loan, the same as any other car. PCP is popular because strong EV residual values can mean a higher balloon and a lower monthly payment.

Because many EVs hold their value well, the balloon on a PCP can be larger, which keeps the monthly down. You still need to weigh that against the total cost to own, and the PCP calculator shows the trade-off.

The mechanics are identical to petrol or diesel finance. You set the price, deposit, term and APR; the lender works out the monthly and the total amount payable. The only EV-specific differences are the balloon size, the charging costs and the tax treatment. Each one shifts the true total, not the maths.

PCP, HP or a loan on an electric car?

PCP suits drivers who want a low monthly and to change EV as the tech moves on; HP and a loan suit those who want to keep the car. Fast-moving battery technology makes flexibility worth more on EVs.

PCP lets you hand the car back at the end, useful while EV technology improves quickly. HP and a personal loan have a lower total amount payable and end with you owning the car, which is better if you plan to keep it for years.

Battery chemistry, range and charging speed are still improving fast. A PCP that ends in three or four years lets you walk away from a model that has been overtaken, rather than holding an older battery you cannot easily resell. The price of that flexibility is the higher total to own.

A worked example on an electric car

A £35,000 electric car on PCP with £3,500 down, an £18,000 balloon, over 48 months at 7.9% APR costs about £442 a month, and around £42,698 in total to own. The same EV on HP costs more each month but has a lower total amount payable.

The PCP monthly is roughly £322 lower than the HP monthly, which is why PCP feels cheaper. But the total to own is about £2,550 higher, because the £18,000 balloon is financed for the full 48 months. On an EV, that gap can be partly recovered through lower running costs over the term.

Electric car finance and running costs

An EV usually costs less to run because charging and servicing are cheaper, and that can offset a higher purchase price. Look at the finance and the running costs together to see the real total.

The running-cost gap is real but narrowing. Cheaper charging and simpler servicing can save £800 to £1,000 a year, though EV insurance is often higher. Add the finance and the running costs together on the total cost of ownership calculator to compare an EV fairly against a petrol car across the full term.

EV company car tax and Benefit-in-Kind

EV company car tax is far lower than petrol or diesel, because the Benefit-in-Kind rate on a pure electric car is 4% in 2026/27 against up to 37% for a high-emission car. That is the single biggest running-cost lever for company-car drivers.

Benefit-in-Kind (BiK) is the tax you pay on a company car as a benefit. The rate is a percentage of the car's list price, set by its CO2 emissions. A pure EV sits at 4% for 2026/27, rising to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. A petrol or diesel car can sit anywhere up to 37%.

On a £35,000 list-price car for a 20% taxpayer, that is roughly £280 of BiK tax a year on an EV in 2026/27 versus over £2,500 on a high-emission equivalent. The gap closes as EV rates rise through to 2030, but EVs stay cheaper throughout. HMRC sets the official figure, so confirm the current rate before you commit.

This is separate from the finance monthly and the true cost, but for company-car drivers it often tips the total in the EV's favour. Work out the taxable value with HMRC's company car tax calculator.

Salary sacrifice — leasing an EV from gross pay

Salary sacrifice lets you lease an EV from your gross pay through your employer, cutting income tax and National Insurance on the monthly. With a 4% EV BiK rate in 2026/27, the net cost is often far below a private lease or finance deal.

In a salary-sacrifice scheme your employer leases the car on your behalf and deducts the monthly from your pay before tax. Because the deduction comes off gross pay, you save income tax and NI on every pound, and the only benefit tax is the low EV BiK rate (4% in 2026/27). Many schemes bundle insurance, servicing, breakdown and a home charger into the single monthly.

The trade-off is ownership: under salary sacrifice you lease the car, so you never own it and there is no balloon to pay or equity to keep. It suits drivers who want a fixed all-in monthly and to change EV regularly. It does not suit anyone who wants to own the car outright at the end.

VED and road tax on EVs from April 2025

From April 2025, electric cars pay standard road tax (about £10 in the first year, then £200 a year in 2026/27), which ended free VED for EVs. EVs with a list price over £50,000 also pay the £440 supplement.

Until March 2025, pure EVs paid zero VED. From April 2025 the zero-rate ended: a new EV pays a £10 first-year rate, then the standard rate, £200 a year in 2026/27. Electric cars with a list price over £50,000 pay an extra £440 Expensive Car Supplement for years two to six, on top of the standard rate, so an EV above that price costs about £640 in VED for each of those years.

The supplement catches pricier new EVs, so factor it into the total cost of ownership. It is a flat car-level charge, not finance, but it adds to what the car truly costs you over the term. The rates are set by the government and can change each tax year, so verify the current figure on GOV.UK before you commit.

Charging costs — home, public and rapid

Home charging is the cheapest way to run an EV at roughly £600 a year, while public and rapid charging cost progressively more per mile. Where and how you charge drives the running-cost total more than any other factor.

Charging overnight on a domestic tariff is far cheaper per mile than petrol: around £600 a year for a typical 10,000 miles, against about £1,500 for an equivalent petrol car. Public charging (on-street or destination) costs more, and rapid or ultra-rapid charging on a motorway can approach or match petrol per mile once you include the connection fee.

To charge at home you need a dedicated charger, which costs about £800 to £1,000 fitted, less any grant. Drivers without off-street parking rely on public charging and lose much of the saving. Add the charger cost to your first-year running figures, and check the total cost of ownership calculator for the full picture.

EV residual values and the balloon

EV values were volatile from 2023 to 2025, so PCP balloons on EVs tend to be set conservatively to protect the lender, which raises your monthly payment. A cautious balloon means a higher monthly but makes equity at the end more likely.

The balloon is the lender's prediction of the car's value at the end of the term. After sharp EV price cuts and falling used values in 2023 and 2024, lenders set many EV balloons cautiously, lower than buyers might hope. A lower balloon means a higher monthly and a smaller share of the car paid off through the term.

If the car turns out to be worth more than the conservative balloon, you have equity to put towards your next car, and the part-exchange calculator works out how much. If it is worth less, you are in negative equity and the safe move is to hand the car back. That flexibility is the main argument for PCP over HP on an EV with an uncertain future value.

EV vs petrol vs diesel — the true cost over four years

Over four years an EV often costs more to finance but less to run, so the true total can be close to a petrol car, depending on charging and tax. Compare the finance and the running costs together, never the monthly alone.

The figures are indicative: your mileage, tariff and BiK position move them. The point is that a higher finance total can be offset by lower running costs, so the four-year true totals can land within a couple of thousand pounds of each other. Run your own numbers on the total cost of ownership calculator before you choose.

Watch the residual value and the balloon

An EV's value depends on its battery health and how fast the technology moves, which affects the balloon and your equity. A high balloon keeps the monthly low but raises the risk of negative equity if values fall.

If you plan to keep the car, check you would not be caught by negative equity at the end. If values hold up, you may have equity to roll into your next car, and the part-exchange calculator works it out.

Battery health is the single biggest driver of a used EV's value. A documented service history, an intact battery warranty and a conservative mileage all help. Before you finance, ask for the battery state-of-health report if one exists, because it shapes both the balloon the lender will offer and what the car is worth later.

Was your electric car finance mis-sold?

EV finance from 2007–2024 can carry the same hidden-commission claims as any other car finance. If your APR was raised for a bigger commission, you may be owed redress.

The FCA's redress scheme follows the Supreme Court ruling of 1 August 2025. Parts of that scheme are suspended pending a legal challenge due to be heard 16 February to 3 March 2027, and payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed. Estimate your position with the compensation estimator. It gives an estimate, not a promise, and you can claim free yourself.

Hidden commission is finance-specific, not fuel-specific. It affected EV and petrol deals alike through the same period. The redress relates to the interest you paid on the amount financed, whatever the car under the agreement.