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Concept Car Credit’s 2023 Guide to EV Financing

Concept Car Credit’s 2023 Guide to EV Financing

14 August 2023 Concept Car

Electric cars used to be the stuff of science fiction movies. Now, they are a reality. EVs are all around us and as of 2030, they will be the only new models available to buy in the UK.

Which means that knowledge is power here. As that deadline is approaching fast, we would love to help you make a smooth transition – or at least dip your feet into the water.

That said, electric vehicles are undeniably more expensive than their combustion engine counterparts at the moment. So the big question is: Will you be able to afford one?

In this expansive guide we’ll take a close look at electric cars and how to finance them. By the end, you’ll have the knowledge required to take a sound decision – and save some money to boot.

Do you need more help or would you like a quote? We’re there for you. Call our team at 0800 247 1015. Or use our contact form.

Electric Vehicle Financing: How much government support is there still?

You will most likely be aware that the UK government have strongly supported electric vehicles for the first years of their market introduction. As an early adaptor, you were able to secure significant subsidies which brought the costs of an EV down considerably.

Unfortunately, those subsidies are no longer available. The move to cut the final remaining key subsidy hardly came as a surprise. But for many drivers, it was nonetheless a major disappointment.

Although we can appreciate the huge investment the government have already made, the current economic climate, with high inflation and low economic growth, is making itself felt. Manufacturers such as Fiat have already sounded the alarm, insisting that the cutting of subsidies has slowed the growth of the EV market down at a critical moment.

Will the subsidies make a comeback? We would not get your hopes up. And of course, if you’re looking for a used EV, there were never any government incentives anyway.

Buying an EV: Considerations

Buying an EV is essentially the same as buying a traditional car, right?

Not quite. For one, as the technology is still developing, the differences between different makes and even between different models from the same brand can be considerable.

This makes financing an EV exciting. But it also means that the risk of making a bad choice is slightly higher.

What’s more, there is far more to consider with an EV. Let’s take a look at the most important aspects first. After that, we’ll dive deeper into whether or not an EV makes sense for you.

Costs, costs, costs

When it comes to choosing a vehicle, cost considerations play a crucial role. This is especially true if your budget is limited or if your credit score is below average.

So – are EVs more expensive as most of us would suspect? Or can they actually turn out to be more affordable?

Cost Comparison Table - Concept Car Credit

Purchase costs

EVs are more expensive when it comes to the purchase costs. Until recently, the difference was enormous. Thankfully, the government have supported buyers with a subsidy on electric vehicles.

Although the purchase costs have come down considerably over the past 3 years, these subsidies are no longer available. This means that EVs continue to be more taxing on your wallet.

As with your current car, on the other hand, you can shave a lot off that initial investment by opting for a used EV instead of a brand new one. The savings may not be as huge as they can be with a combustion engine alternative. But they tend to be considerable nonetheless.

One potential cost consideration for EVs is the need for battery replacement after the warranty period. While battery technology is improving rapidly, it’s important to factor in the potential cost of battery replacement in the future. Combustion engine cars do not require battery replacements, but engine repairs can be significant.

Running costs

The upside to this is that EVs can turn out to be more economic to run.

Petrol was always a fairly inefficient and costly source of power. Accordingly, filling up your electric car will save you money with each drive.

Electric vehicles are furthermore known for their reliability and low maintenance requirements. This holds true for second-hand EVs as well. This is because EVs have fewer moving parts compared to internal combustion engine vehicles, resulting in fewer maintenance issues and lower long-term costs.

Resale value

It goes without saying that the resale value is an important consideration when it comes to gauging the costs of EVs versus conventional cars.

This is particularly pertinent since trade-ins can be an effective haggling tool, especially if your financial situation is less than perfect. Dealers are extremely keen on a steady stream of used cars to add to their showrooms. So it clearly matters how much your part exchange is worth.

The resale value of EVs is highly differentiated. EVs from the early days are practically worthless. They are simply not up to most drivers’ demands / needs and may require costly repairs. On the other hand, more recent models can be extremely in-demand.

Generally speaking, buying an EV now, both second-hand or new, will yield a higher resale value than you could get with a comparable combustion model.

So what does this all mean for you?

Most experts these days believe that total costs for an EV tend to be lower.

Here are two (US) studies to support these claims:

So, in terms of long-term considerations, EVs are a great choice. When it comes to financing, however, the purchase price of course is the deciding factor. We’ll get into that later in this article.

Technological progress

Traditional cars have pretty much reached a very high level of technological maturity. The devil’s really in the detail here.

But EVs are different. Similar to computer technology in the 80s or storage capacity in the 90s, progress is so fast that a brand new car today may feel old in just a year from now.

Does this mean you should hold off until the market has progressed? Absolutely not.

Even second-hand models these days are usually excellent. Especially second hand models can often come equipped with advanced features and technology that may have been optional or only available on higher trim levels when new. Buying pre-owned can provide an opportunity to experience cutting-edge technology at a more affordable price.

Yes, technology is moving fast. But that should not keep you from enjoying an EV and its many undeniable benefits.

Battery Health and Range

For years, this was the main stumbling block when it came to electric automobiles. The common concern when buying an EV was the battery health and range.

Still today, we definitely recommend you research and consider the battery condition and remaining capacity of the used EV you are interested in. Generally speaking, however, differences between manufacturers have levelled out. With advancements in battery technology and improved durability, most EV batteries retain a significant portion of their original capacity even after several years of use. Additionally, some used EVs may come with warranties or extended battery warranties to offer further protection.

The days when a 100+ miles trip was something of an adventure are long gone. Almost all models, new or second-hand, are easily able to cover these distances. And even if you do run into problems on the road, there is now a tight net of charging stations.

Besides, technology isn’t everything and it never was. Factors such as driving habits, charging patterns, and temperature conditions can impact the battery’s longevity even more than the battery itself.

Driving Experience

Driving an EV is not the same experience as driving a regular car. But although some purists will certainly have objections, most people actually prefer the EV feeling.

Here’s an overview of what sets an electric car apart from a combustion engine when it comes to the driving experience:

  • Instant Torque: Electric motors provide instant torque, delivering swift acceleration from a standstill. EVs can often offer impressive acceleration and a responsive driving experience, making them feel more spirited and dynamic compared to some combustion engine cars.
  • Smooth and Quiet Operation: EVs operate quietly due to the absence of an internal combustion engine. This results in a serene and peaceful driving environment, with minimal noise and vibrations.
  • Lower Centre of Gravity: Electric vehicle batteries are typically located at the bottom of the car, giving them a lower centre of gravity compared to combustion engine cars. This design element contributes to improved stability and handling, making EVs feel more planted and agile on the road, particularly during cornering.
  • Regenerative Braking: Electric vehicles often utilise regenerative braking, which provides a smoother deceleration experience.

So, how do I determine whether or not an EV is right for me?

When it comes to new cars, as of 2030, dealers will only be allowed to sell electric vehicles. But that does not mean that you won’t be allowed to drive your current car anymore. And you can still buy a used traditional car.

With this in mind, combustion engines won’t disappear from UK roads anytime soon.

So if you’re looking to buy a car, you can simply decide which option is best for you. We’ve already given you a few of the main points to consider in the previous section of this article.

Now, let’s piece everything together and investigate for whom EVs are best.

Are you environmentally conscious?

Are EVs really more environmentally friendly than traditional cars? This question has proved to be fairly divisive. Why is it so hard to arrive at a definitive answer? Aren’t EVs obviously better in this regard?

Here are the main reasons why it is so hard to give an exact number to the green impact of EVs:

  • The long-term impact of a technology is ultimately what matters. With EVs, we simply don’t have these long-term numbers yet.
  • Modern combustion engines are the end result of a one-hundred year long cycle of continuous improvements. When it comes to their ecological footprint, in fact, they are still getting better. Which means that the differences are rather subtle in some respects.
  • On the other hand, EV technology hasn’t reached maturity yet. Which means that it may currently still have deficits compared to combustion engines.

One thing’s for sure, though: Electric cars produce zero tailpipe emissions, which helps reduce air pollution and combat climate change.

If you’re concerned about minimising your carbon footprint and promoting sustainable transportation, electric cars are certainly a great option.

Are you an urban dweller?

Chances are high that you’re using your car to take you to a job in the city. If so, then EVs are an excellent choice.

Electric cars are well-suited for city driving because they excel in stop-and-go traffic, where their instant torque and regenerative braking can increase efficiency. Additionally, their quiet operation contributes to a more peaceful urban environment.

They are also perfect for precisely the short to medium commutes that are typical for urban commutes. If your daily driving distances fall within the typical range of an electric vehicle (usually between 100-300 miles or more depending on the model), you can enjoy the convenience of not needing frequent refueling.

Do you have access to a good charging infrastructure?

As we mentioned before, the charging infrastructure is getting better with each passing day. That’s not to say, however, that it can compare to the network of petrol stations yet.

Clearly, charging is a major consideration.

If you have access to a dedicated parking space with the ability to install a home charging station, this gives you the convenience of charging your vehicle overnight, ensuring a full battery each morning. It eliminates the need for regular visits to public charging stations.

Even a nearby public charging station can be perfectly fine. So do investigate your options – the better the charging infrastructure, the easier the transition to electric vehicle technology will be.

Do you need a particularly powerful car?

Electric vehicles are perfectly fine for most day to day challenges. We should mention, however, that combustion engines still pack a lot more power. If you’re in need of heavy towing, you may end up disappointed with a current electric automobile.

The same goes for long distance travellers. Yes, EVs have caught up a lot over the past decade. They’ve gone from barely making 100 miles to 300-500 miles.

Still, if you’re on the road every single day for many hours on end, a traditional car may still be your best choice at the moment.

With improvements in battery energy density, charging speed, and longevity, EVs are becoming more efficient and practical. Moreover, research is underway to develop more sustainable and recyclable battery materials, minimising the environmental footprint of battery production and disposal.

Finance for a pre-owned EV: A detailed plan

Let’s now turn towards creating a detailed plan for buying your used EV.

Broadly speaking, this isn’t rocket science. If you’re read through the previous sections, you should have gathered a deeper understanding of what to note when buying an EV. You should also have formed a pretty clear picture of whether or not it makes sense for you or not.

Let’s now go through all the steps to take if you’re committed to buying a used electric vehicle with bad credit.

Step #1: Exploring Financing Opportunities

Having a less-than-ideal credit score may limit your financing options, but it does not eliminate them entirely.

At Concept Car Credit, we have extensive experience with both financially challenged drivers and electric vehicles alike. Our blog has articles dating back many years into the past on the topic – we’re firmly committed to the green revolution so we’ll do everything in our power to make it work for you.

Persistence is key when seeking financing for a pre-owned electric vehicle. Start by reaching out to specialised financing programs designed for eco-conscious consumers or those with credit challenges. Be prepared to provide documentation that demonstrates your financial stability and ability to make timely payments.

Step #2: Establish Realistic Budgetary Limits

Before embarking on your search for a second-hand electric vehicle, it is crucial to establish a realistic budget. We can’t emphasise this point enough – it really is at the heart of any successful finance strategy!

Take a comprehensive look at your monthly income and expenses to determine how much you can comfortably allocate towards your EV purchase and ownership costs. Remember to consider not only the purchase price but also ongoing expenses such as insurance, maintenance, and charging infrastructure. Setting a practical budget will help guide your search and prevent you from overextending your financial capabilities.

Step #3: Stick to Real Experts

It is easy to succumb to the illusion that we can all be experts in today’s age of google and Chat GPT.

Granted, there are various online platforms and resources that can facilitate your search for a pre-owned electric vehicle. The thing is that you will not be able to verify this information and as always, the web is not a place without incorrect information. Especially when it comes to a trending topic like electric vehicles, the temptation to get information out there quickly in search of a quick Pound is strong.

This is why we recommend you seek professional guidance. At CCC, for example, we submit all our showroom cars to in-depth pre-purchase inspections to assess the vehicle’s condition, including its battery health, electrical systems, and overall performance. We do this to offer you the greatest possible safety and to avoid potentially expensive repairs or hidden issues that could negatively impact your ownership experience.

Exploring private seller options, meanwhile, can be tempting but it feels very risky for a new technology like EVs. You really need to exercise caution and due diligence when dealing with private sellers. This includes ensuring that all necessary documentation, including the vehicle’s title and service records, are properly transferred and verified. With CCC, all of this naturally part of our service.

Step #4: Focus on what you can afford

This may seem like a trivial piece of advice. But allow us to explain why it’s really different from what we’ve said before.

Most experts will tell you to set your sight on the loan with the lowest interest rate, the shortest term and the lowest overall repayment. That’s certainly a natural recommendation. But it ignores the fact that for many people, this type of loan is actually neither accessible nor particularly safe.

This is because the cheaper the loan is, the higher your monthly payments will be. Which, in turn, places more risk on your shoulders. (Of course, that’s precisely the reason this loan has better conditions).

Instead, we believe you should concentrate on setting the monthly repayment at an amount that you can securely afford.

Why is a lower monthly repayment better than a cheaper overall loan?

For many people, managing monthly expenses is crucial. By focusing on the monthly repayment, you can better align your car loan payment with your budget. A lower monthly repayment can free up more funds for other essential expenses or savings goals, providing greater financial flexibility.

It is also better in terms of cash flow management. Lowering the monthly repayment amount can help improve your cash flow, particularly if you have other financial obligations or variable income. A more manageable monthly payment can alleviate financial stress and ensure that you can comfortably meet your financial obligations each month.

Step #5: Demonstrate Financial Commitment

EVs are more expensive than regular cars. That’s why demonstrating a tangible commitment to the transaction is even more important.

How can you do this? The best option by far is to make a down payment. We know, this isn’t a very attractive option, especially if your budget is already low. That said, you can compensate for a higher down payment by reducing your monthly repayments. We’ve addressed this option before but it’s worth reiterating: It is in the interest of both lender and borrower that the monthly instalments do not exceed your financial capacities.

When it comes to car finance, a reasonable down payment typically ranges from 10% to 20% of the vehicle’s purchase price. However, the specific down payment amount can vary depending on several factors, including individual financial circumstances, creditworthiness, and the lender’s requirements. Here are a few considerations to help determine a reasonable down payment.

You should never be afraid to discuss this point with your dealer. In fact, most, including us at CCC, welcome this!

Step #6: Stick to what you really need

Even the cheapest EV will probably be a significant investment for most drivers in the UK. The costs are determined mostly by the battery, the key component of any electric vehicle. Investment in battery life and battery range are significant, which drives costs up.

What this means is that battery life and the mileage your EV can cover as well as reliability and maintenance costs should be your top priority.

Nice extras, such as an expansive infotainment system should not.

When financing a used EV, look for the lowest possible trim level and stick to what you really need. To this end, a list with minimum requirements can be extremely useful – just be sure not to expand it later.

Which are the best used EVs for those with bad credit in the UK?

We’ve now spent a lot of time discussing the most important points for those looking for a second-hand EV. Now, let’s make use of that information to find the best car for you.

In the final part of this guide to EV financing, we will dive deeper into the options available to UK buyers right now. Obviously, there are more. But the following models are probably best when it comes to striking a balance between affordability and quality.

Over time, manufacturers will gradually introduce even more affordable options to the market. But if you’re looking to buy now, there are already several compelling choices available.

For your convenience, we have restricted our choice to five popular models by trustworthy brands and will focus on important criteria such as range, price range, charging time, and notable features to help buyers make an informed decision.

EV Comparison Table - Concept Car Credit

Renault Zoe: Hugely Popular EV – for a reason

The Renault Zoe stands out as an affordable and practical EV option. It is still the best-selling electric car and, as Top Gear rightly put it, pretty much had the market to itself for a long time.

With an impressive range of up to 239 miles (WLTP), the Zoe offers ample driving distance on a single charge. Additionally, the Zoe benefits from a relatively quick charging time of approximately 1 hour and 10 minutes (using a 50 kW DC charger).

Apart from its qualities as an EV, the Zoe is also renowned for its ease of Use. Renault has certainly reached its goal of making the Zoe as user-friendly as possible. It offers intuitive controls, accessible features, and a well-designed interior layout. The vehicle incorporates technology to enhance the driving experience, including a user-friendly infotainment system and smartphone integration.

Is there a downside, too? Yes, the Zoe’s interior isn’t ideal for those with long legs and may feel a bit small. In its review, Top Gear awarded the latest iteration of the Zoe 7/10 points, concluding: The Zoe’s “hugely popular – and with good reason.”

Nissan Leaf: Impressive and Impressively Affordable

Renowned for its reliability and well-established presence in the EV market, the Nissan Leaf offers a range of 168 to 239 miles (WLTP). Charging time is approximately 1 hour using a 50 kW DC charger.

It delivers particularly good value for money. The Leaf’s advanced features and proven track record make it a popular choice among budget EV buyers.

This is what Whatcar had to say about it:

“The entry-level 39kWh Leaf still makes sense if you’re on a budget because it is a fairly large EV that’s reasonable to drive, well equipped, and easy to live with.”

Auto Express was even more impressed:

“The Nissan Leaf impresses in pretty much every area. It’s easy to drive and comfortable, especially around town, and it has a decent range that should make it appealing to a wide range of buyers. Given how much it costs, there’s an impressive amount of tech on offer, too, and it has enough space for all the family.”

Hyundai Kona Electric: Fun to Drive

The Hyundai Kona Electric is a spacious and long-range EV option suitable for buyers seeking versatility.

With a range of 245 to 300 miles (WLTP), it offers impressive driving distance. Its charging time is approximately 1 hour using a 50 kW DC charger. Extensive safety features further enhance the appeal of this model.

One of the aspects that really make it stand out is its driving experience. Even though EVs tend to drive more smoothly than its combustion engine counterparts, they can sometimes feel just alittle anemic. Not so with the Kona Electric which is, as Carwow put it, “good fun to drive,” further singling out its “good range, a raised driving position and lots of equipment.”

MG ZS EV: Incredibly Good Value

The MG ZS EV offers an affordable entry into the electric vehicle market.

With a range of 163 miles, it is well-suited for urban driving and shorter commutes. Its charging time is approximately 40 minutes using a 50 kW DC charger. The ZS EV is equipped with various features and benefits from comprehensive warranty coverage.

Heycar were genuinely thrilled with this car, writing:

“The MG ZS EV isn’t without its quirks, but it’s hard to deny how incredibly good value it looks alongside much smaller competitors like the Vauxhall Corsa-e and Renault Zoe.”

Peugeot e-208: What’s not to like?

Combining style and advanced technology, the Peugeot e-208 is a compact EV with a range of 217 to 242 miles (WLTP). The e-208 offers a fast charging time of approximately 30 minutes (using a 100 kW DC charger), adding convenience for busy urban lifestyles.

The sleek design and cutting-edge features make the e-208 an attractive choice for budget-conscious buyers.

We’re sure some particularly critical commentators will find something to nitpick here. But they’ll have to dig deep. Even the RAC asked:

What’s not to like? The Peugeot e-208 looks snappy, now has 15% more power and does 248 miles between charges, has no practicality downsides over the combustion-engined version and comes with monthly payment finance you could justify.”

14 August 2023 Concept Car