Asset finance

Electric car business finance: hire purchase, contract hire and salary sacrifice

How businesses fund electric company cars with hire purchase, contract hire, finance lease or salary sacrifice, plus battery and charging points to weigh up.

Get Instant Quotes Discuss Your Requirement

Explore funding options Prefer a quick call back? Leave your number

No obligation discussion
Access to 300+ lenders
Free to enquire

“A very professional and results-oriented approach to funding.”
Business owner

Amount: From £10,000 to £20 millionLarger amounts through secured, property and asset-based finance
Security: Secured or unsecuredOptions compared for your case
Suitable businesses: Sole traders to limited companiesPartnerships and LLPs too
Lender panel: 300+ lendersWhole-of-market search

In short

For most businesses the choice comes down to who carries the resale and battery risk.

Contract hire leaves it with the lender and fixes monthly costs, which suits firms that change cars every few years. Hire purchase gives ownership and possible capital allowances, but you carry the risk of used EV values. Compare whole-life cost, including charging and any chargepoint installation, not just the monthly payment.

About electric car business finance

Electric car business finance helps companies, partnerships and sole traders acquire electric cars without paying the full price upfront.

It is for businesses replacing company cars or pool cars with EVs, and for employers looking at an electric car scheme for staff. Electric cars raise questions that petrol and diesel ones do not, such as battery health, uncertain resale values and charging, and those questions shape which finance type fits. Smart Funding Solutions searches its lender panel, including vehicle finance specialists, for terms that reflect them.

For a side-by-side comparison of vehicle finance agreements in general, see our guide to business vehicle finance.

Quick enquiry

Prefer a quick call back?

Not ready for the full application? Leave a few details and a broker will call you to talk it through. It is free, with no obligation.

One short conversation, no paperwork yet
Whole-of-market search across 300+ lenders
Or call us on 01244 267694

Electric car finance options

Hire purchase

You pay a deposit and fixed monthly instalments, and own the car after the final payment. Some agreements include a larger final payment to reduce monthly costs. The car sits on your balance sheet and capital allowances may be available. Because you carry the resale risk, check the length and terms of the battery warranty against how long you plan to keep the car.

Contract hire

You pay a fixed monthly rental for an agreed term and mileage, then hand the car back. The lender takes the resale risk, which is a real advantage with EVs because used values and battery technology are still changing. Maintenance packages are often available. Set the mileage allowance with the car's real-world range and your drivers' routes in mind.

Finance lease

You lease the car for most of its life and can usually share in the sale proceeds or continue renting at the end. It keeps upfront costs low without contract hire's mileage limits, but you share more of the resale risk.

Salary sacrifice schemes

Some employers offer EVs to staff through salary sacrifice, where an employee gives up part of their salary in exchange for the car, usually on a contract hire basis. The low benefit-in-kind rate on zero-emission cars is what makes these schemes attractive. Get specialist tax and HR advice before launching one, including what happens if an employee leaves.

Why businesses choose electric cars

Running costs: electricity usually costs less per mile than petrol or diesel, particularly when charging at your premises, and EVs have fewer moving parts to service.
Company car tax: benefit-in-kind rates for zero-emission cars are lower than for most petrol and diesel cars, which can reduce costs for employees and employers.
Emissions: no tailpipe emissions, helping with sustainability targets and clean air zones.
Customers and tenders: a cleaner fleet can support tender scoring and customer expectations.

Chargepoints and installation

Workplace charging often needs to be planned alongside the cars. Some lenders will fund chargepoints and installation with the vehicles, particularly for fleets; others treat them as a separate asset finance agreement. Check whether your premises need an electrical supply upgrade before you order.

Tax and grants

Hire purchase and outright purchase may qualify for capital allowances, while lease rentals are generally a business expense. Benefit-in-kind applies where employees have private use. Rules change, so check with your accountant and see GOV.UK guidance on company car tax. Government grants for vehicles and chargepoints also change over time; check GOV.UK for what is currently available.

How to apply

Tell us which cars you want, how many, who will drive them and roughly what mileage, and share recent accounts and bank statements. We approach lenders suited to your business and the vehicles, and go through the quotes with you. Decisions can come within a few working days once a lender has everything it needs. It is free to enquire, and any broker fee is disclosed separately before you proceed. For commercial vehicles, see our guide to electric van finance, or explore funding options online.

Underwriting

What lenders look at

A UK business with a business bank account.

Trading history, accounts and bank statements showing you can meet repayments.

Business and director credit history; newer businesses may need a larger deposit or a guarantee.

The car: make, model, value and the lender's view of its future resale value.

Pros and cons

Pros	Cons
Spread the cost of higher-priced EVs	Purchase prices can be higher than equivalent petrol or diesel cars
Lower running costs and company car tax	Charging infrastructure may be needed
Leasing removes resale-value risk	Mileage limits and end-of-lease charges on contract hire

Side by side

Compare your options

How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.

Option	How you repay	Security	Often used for
Unsecured business loan	Fixed instalments, usually monthly	No charge over assets; a personal guarantee is usually required	Growth, stock, tax bills and cash flow
Secured business loan	Fixed instalments, often over a longer term	A charge over property or other assets	Larger sums, property and refinancing
Revolving credit facility	Interest on what you draw; repay and redraw	Varies by lender and case	Recurring or uneven cash flow gaps
Merchant cash advance	A share of future card takings	No charge over assets	Card-taking businesses with uneven months
Asset finance	Regular payments over the life of the asset	The asset being financed	Equipment, vehicles and machinery
Invoice finance	Settled as customers pay their invoices	Your unpaid invoices	Businesses waiting on customer payment

General information only. Every lender has its own criteria, and all finance is subject to status.

Leasing or buying an electric car

	Hire purchase	Contract hire
Upfront cost	Deposit, usually larger	Initial rental, usually smaller
Resale and battery risk	Yours	Lender's
Ownership	At the end	Never
Upgrading to newer models	Sell or part-exchange	Hand back and start a new agreement

FAQs

Questions clients ask

Can a sole trader get electric car business finance?

Yes, sole traders and partnerships can finance electric cars, as well as companies. Lenders look at trading history, bank statements and credit history, and newer businesses may need a larger deposit or a guarantee. Finance of £25,000 or less to a sole trader or a partnership of two or three partners can be regulated consumer credit, which brings additional protections. If the car is also used privately, only the business share of costs is usually allowable, so check with your accountant. See sole trader loans for more.

Can I finance a used electric car for my business?

Yes, many lenders fund used electric cars, though they look closely at age, mileage and their own view of the car's future resale value. Battery health matters more than with petrol or diesel cars, so ask for a battery health report and check how much of the battery warranty remains against how long you plan to keep the car. Some lenders set a maximum age at the end of the agreement. Our used equipment finance page explains how lenders treat second-hand assets.

What happens if I want to end an electric car finance agreement early?

Ending contract hire early usually means paying an early termination charge, so check those terms before you sign. With hire purchase you can normally settle early by paying the outstanding balance, then keep or sell the car. Because used electric car values are still changing, settling early can leave you owing more than the car is worth, which is one reason some businesses prefer contract hire. Compare early settlement terms alongside the monthly payment when you look at quotes.

How long should an electric car business finance agreement run?

Terms vary by lender and agreement type, and the right length depends on how long you plan to keep the car and who carries the resale and battery risk. On contract hire the term is set with an agreed mileage and the lender takes the resale risk at the end. On hire purchase, compare the term with the battery warranty so the car stays covered for most of the time you own it. Longer terms lower the monthly payment but raise the total cost. Our asset finance calculator helps compare terms.

Keep exploring

Related funding options

All guides

Asset finance

DiscussTell us what the funding is for.
Explore the marketWe search 300+ lenders and compare offers.
Compare offersWe explain the options clearly.
Move forwardChoose the right facility for your business.

Get Instant Quotes 01244 267694

What our clients say

“Simon was fast, kept us updated at all stages and was a real pleasure to work with on our asset finance. I highly recommend this company: excellent service all round.”

Business owner|Asset finance

Why businesses choose Smart Funding Solutions

Access to 300+ lenders
Personal broker support
No obligation discussion
Free to enquire

Speak To A Broker