Help! Only ever bought bangers for cash, now I need an EV, how does financing work?

[OooPourUsACupLove]

Title says it all really.

For 30 years my car needs have been light to zero so I've always ran bangers bought outright for cash and never paid more than £1500.

We are now moving somewhere we will need a car and for environmental and comfort reasons want a long range EV.

I've got as far as "don't want to buy a brand new one, want one new enough to have the battery still well within warranty, want to buy from a dealer", so thinking cost will be £20 to £30k

I could pay outright from savings (30 years of running bangers helped with that!) but I understand either leasing or finance is more usual these days.

Can anyone explain to a complete novice what the usual mechanics and the pros and cons are of the different ways to pay, and if I lease with an option to buy, is the final payment to keep the car typically competitive or over-a-barrel?

(I've tried chatGPT but so much of the info out there is produced by car financings companies and dealerships that I don't really trust it, would feel better with a MN warts-n-all perspective.)

Many thanks for any advice / experience.

Have a look at whatcar.com they explain buying new and used cars and all the finance options.

Leasing and finance are more usual nowadays due to the cost of cars and the old adage “you’ll own nothing and you’ll be happy”.

it’s more sensible if you want to keep the car a long time to either buy it outright or get low cost finance from a bank - a normal loan. People only get finance/pcp and the like if they want to change cars regularly and don’t want the hassle. They are profitable for the dealer and it’s the driver that pays all that profit. You buy it outright and keep that profit for yourself.

Don’t flame me, but consider a second hand Tesla, and buy outright. Theres some real bargains out there at the moment, as their prices have dropped. Good for buyers. Not for sellers.

Thank you. I tend to be a little suspicious of car industry sources - do you think they are unbiased? (even if not biased towards a particular business I would worried they are still biased towards buying more expensive cars and replacing frequently, and encouraging finance as a way to enable more people to do that).

Firstly, I don’t think you need to spend £20-30k to get what you’re looking for, unless you insist on a premium badge. Something like this might fit the bill :

https://www.autotrader.co.uk/car-details/202508065177408?sort=price-asc&twcs=true&searchId=ec9ce6e9-7721-4843-9378-03f588af8261&advertising-location=at_cars&battery-range=OVER_250&colour=Black&colour=Blue&colour=Grey&colour=White&colour=Silver&colour=Red&colour=Green&colour=Multicolour&colour=Orange&colour=Yellow&exclude-writeoff-categories=on&fuel-type=Electric&make=Hyundai&maximum-mileage=40000&min-engine-power=150&postcode=Sw1a1aa&price-to=17000&year-from=2023&fromsra

As for finance, like with any other sort of debt, it’s best not to take it unless you
have to. Dealership finance is where they make most of their money, and APR rates of 10%+ are the norm. Personal loans from banks are usually much cheaper but monthly payments may be higher as you’re borrowing more. The upside being that you own the car, so no ‘baloon’ payments are needed.

PCPs are designed to lock you in to a cycle of getting a new car every 3 to 4 years, and paying out £400 or whatever per month ad infinitum. That’s why dealers push them so hard. Fine for people who want that, and many do want a shiny new car every few years, but the cumulative cost is enormous.

Ah good point, I was hung up on "financing" but really it's just a loan so "car finance" doesn't give me any more protection/safety (and maybe less!) than a standard loan, and either way I can still sell the car on if I want to.

Last then is leasing - I was wondering if with an electric car leasing makes sense as the tech is changing fast and the battery life is a factor. OK I don't own it, but also I don't have the upfront cost (or load commitment) so if after (3? 4?) years if I want to upgrade I don't have the hassle and risk of selling it to get back to money.

Hmmm - thank you. That has helped me think through the options more clearly.

No flame at all, it's definitely an option I'm considering. I've hired a few electric cars to get a feel for them, including a Tesla for a week in the French/Italian Alps. I liked driving the Tesla but not entirely sure about everything being on screen though I guess you get used to it.

Also wondering whether a second hand Tesla in my price range will be older Tech especially the battery.

No flame at all, it's definitely an option I'm considering. I've hired a few electric cars to get a feel for them, including a Tesla for a week in the French/Italian Alps. I liked driving the Tesla but not entirely sure about everything being on screen though I guess you get used to it.

Also wondering whether a second hand Tesla in my price range will be older Tech especially the battery.

Thank you. Kona is definitely on the list as well.

Have you looked at the BYD Seal or Dolphin op? I'm no expert but heard them being reviewed on radio 4 recently and they were getting v positive comments. It would mean you could buy new for your budget . . .

First of all, your budget is way off. You will only need 15k - 20k for a second hand EV.

Tesla have suspension issues and you need a "connected" subscription to use all the features.

MG4 are pretty good, around 18k for a nearly new long range, with 10k miles.

Ioniq 5 are also good, again, 18k for a 2022 long range with low mileage, just make sure it's had the 12v charging recall done.

The reason people usually take out finance is because they don't have the money to buy the car they want outright.

If that doesn't apply to you, you don't need finance, although don't discount it, if it looks worth it - eg if you have a worthless old car that they'll give you a good scrappage discount for. Although these days, the interest charges might mean it's a non starter and your plan to buy a nearly new one is better value.