EV Leasing vs. Buying Outright: Complete Cost Comparison 2026
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Electric cars are now firmly part of everyday life in the UK. With over 1.2 million EVs on the road by Q4 2025 and more than 87,000 public charging points nationwide, switching to electric has never been more realistic.
Still, one key question remains: is it better to lease an electric car or buy one outright in 2026? This guide breaks down every option, cost, and trade-off, so you can choose the route that fits your lifestyle, finances, and plans!
What Are Your Options For Getting An Electric Car?
Three Main Routes: Buying, Leasing, Or Salary Sacrifice
If you’re looking to drive an electric car, you generally have three choices:
Buy outright, either with cash or finance
Lease privately, usually through a Personal Contract Hire (PCH) agreement
Lease via salary sacrifice, if your employer offers an EV scheme
Each option suits different budgets, driving habits, and priorities.
How Popular Is Each Option In The UK?
As EVs generally have a higher upfront cost than petrol cars, leasing has grown steadily in popularity. Salary sacrifice schemes now account for a significant share of new EV registrations among employed drivers, thanks to strong tax advantages.
Which Option Do Experts Recommend?
For most employees with access to salary sacrifice, salary sacrifice leasing is typically the most cost-effective and lowest-risk option. Buying outright tends to make more sense for drivers planning to keep a car well beyond five years.
What Does It Mean To Buy An Electric Car Outright?
How Does Outright Purchase Work?
Buying outright means paying the full cost of the car upfront or using personal finance to spread the cost. Once paid, the car is yours, and you’re responsible for maintenance, insurance, and eventual resale.
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Upfront Costs Vs. Finance Options
Cash purchase: No interest, but ties up a large amount of money.
Personal loan: Spreads the cost, though interest increases the total paid.
PCP: Lower monthly payments, but ownership only transfers if you pay the final balloon payment.
Typical Ownership Timeline
Most buyers who purchase an EV outright keep it for 5-8 years. The longer you keep the car, the more buying begins to make financial sense.
Advantages Of Buying An EV Outright
Complete Ownership And Control
You own the car outright, with no contracts dictating how long you keep it or how you use it. This gives you full autonomy and long-term peace of mind.
No Mileage Restrictions
There are no mileage caps or excess charges, making buying ideal if you drive 20,000+ miles per year or have unpredictable driving habits.
Modification Freedom
You’re free to personalise your EV, whether that’s cosmetic changes or practical upgrades, without worrying about end-of-contract penalties.
Long-Term Cost Advantages (If Kept 5+ Years)
Once depreciation slows and any financing is paid off, ongoing costs are relatively low. Over long ownership periods, buying can be cheaper than leasing repeatedly.
No Ongoing Monthly Obligations
After finance ends, your only regular costs are insurance, charging, and maintenance. This can feel reassuring if you prefer fewer financial commitments.
Build Equity In The Asset
Your car remains an asset with residual value, which you can sell or trade in whenever it suits you.
Disadvantages Of Buying An EV Outright
High Upfront Capital Requirement (£25k–£50k)
Paying a large sum upfront can limit financial flexibility and tie up savings that could be used elsewhere.
Depreciation Risk (40–50% Over 3 Years)
EV values can drop quickly, especially as battery and charging technology improve. Selling early can mean a significant financial loss.
Maintenance Responsibility And Costs
While EVs are reliable, maintenance costs rise as warranties expire. You’re responsible for all servicing and repairs.
Technology Becomes Outdated Quickly
Range, charging speeds, and software improve rapidly, meaning a car bought today may feel behind the curve in a few years.
Selling Hassle And Market Uncertainty
Resale values aren’t guaranteed, and selling a car can be time-consuming and unpredictable.
Miss Out On Tax Advantages
Buying outright doesn’t offer income tax or National Insurance savings.
What Is Electric Car Leasing?
How Standard Leasing Works (PCH)
With Personal Contract Hire, you pay a fixed monthly amount to use the car for an agreed period. At the end of the term, you return the vehicle.
Typical Lease Terms
Length: 2–4 years
Mileage: 10,000–15,000 miles per year
End of term: Return the car with no resale concerns
What’s Included In Lease Payments?
Leases usually run within the manufacturer's warranty period. Maintenance packages are often available for predictable costs.
Advantages Of Leasing An EV
Lower Monthly Costs Vs. Buying
Leasing avoids a large upfront payment, making EVs more accessible and easier on cash flow.
Predictable Expenses
Fixed monthly payments make budgeting simple, especially if maintenance is included.
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No Depreciation Risk
You’re insulated from changes in resale values. At the end of the lease, you simply hand the car back.
Drive The Latest Models Every 3–4 Years
Leasing lets you benefit from improving range, efficiency, and technology without a long-term commitment.
No Selling Hassle
There’s no need to find a buyer or negotiate a trade-in value.
Warranty Coverage Throughout
Most leases remain fully covered by manufacturer warranties, reducing unexpected repair costs.
Disadvantages Of Leasing An EV
Mileage Restrictions And Charges
Exceeding your agreed mileage can result in excess charges, which may be costly.
No Modifications Allowed
The car must be returned in its standard condition, with minimal personalisation.
Higher Long-Term Costs If Kept 5+ Years
Over the long term, repeated leasing can be more expensive than buying outright.
Early Termination Fees
Ending a lease early can be expensive and can result in early termination fees, so commitment is important.
No Equity Build-Up
Monthly payments don’t contribute toward ownership or resale value.
Credit Checks Required
Standard private leases usually involve a personal credit check.
What Is Electric Car Salary Sacrifice?
How Salary Sacrifice Differs From Standard Leasing
Salary sacrifice leasing is arranged through your employer. Payments come from your gross salary, reducing income tax and National Insurance.
Why It’s More Tax-Efficient
EVs benefit from a very low BiK tax. Even with rates rising to 4% from April 2026, salary sacrifice remains highly cost-effective.
What’s Typically Included?
Most salary sacrifice packages include:
Insurance
Maintenance
Breakdown cover
All wrapped into one simple monthly deduction.
Advantages Of Salary Sacrifice
Save 20–50% Through Tax Efficiencies
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Tax and NI savings significantly reduce your effective monthly cost.
No Personal Credit Checks
The agreement is between your employer and the provider.
Fully Inclusive And Hassle-Free
Everything is bundled into one payment, reducing admin and uncertainty.
Access To Higher-Spec EVs
Salary sacrifice can make premium EVs affordable at surprisingly low monthly costs.
Disadvantages Of Salary Sacrifice
Requires Employer Participation
If your employer doesn’t offer a scheme, this option isn’t available.
Salary Reduction Considerations
Reducing gross salary can affect pension contributions or borrowing assessments.
Commitment For The Full Term
Agreements usually run for 3–4 years, though good schemes include protection options.
Total Cost Of Ownership: 3-Year Comparison
Example Comparison (Mid-Range £45,000 EV)
| Option | Typical Monthly Cost | 3-Year Total Cost | Key Notes |
|---|---|---|---|
| Buy Outright | N/A (upfront) | ~£21,500 | Depreciation + maintenance |
| Standard Lease | £550 | ~£19,800 | No ownership |
| Salary Sacrifice (40% taxpayer) | £380 | ~£13,700 | Includes insurance & servicing |
Over three years, salary sacrifice delivers the lowest overall cost for most employees.
5-Year & 10-Year Cost Comparison Overview
| Ownership Length | Cheapest Option | Why |
|---|---|---|
| 0–3 years | Salary sacrifice | Tax savings + no depreciation |
| 3–5 years | Leasing / salary sacrifice | Predictable costs |
| 6–10 years | Buying outright | Depreciation levels off |
Buying generally overtakes leasing after year 6 or 7, once depreciation slows and finance costs end.
Which Option Is Right For You?
Budget-conscious drivers: Salary sacrifice
Tech-focused drivers: Leasing or salary sacrifice
Long-term owners (5+ years): Buying
Company car drivers: Salary sacrifice
How To Decide: Step-By-Step
How long will you keep the car?
How many miles do you drive each year?
Does your employer offer salary sacrifice?
Can you comfortably afford £25k–£50k upfront?
Do you prefer the latest tech or long-term ownership?
Frequently Asked Questions: Leasing Vs Buying EVs (2026)
Image source: Shutterstock
Is It Cheaper To Lease Or Buy An Electric Car In 2026?
For most drivers, leasing is cheaper in the short to medium term. This is particularly true with salary sacrifice, where tax and National Insurance savings can significantly reduce your effective monthly cost.
Is Salary Sacrifice Still Worth It With BiK At 4%?
Yes. Even with EV Benefit-in-Kind rising to 4% from April 2026, it remains far lower than petrol or diesel company car tax, keeping salary sacrifice highly tax-efficient.
How Much Can I Save With An Electric Car Salary Sacrifice?
Most employees save between 20% and 50% compared to a standard lease. Your exact saving depends on your tax band, National Insurance rate, and the electric car you choose.
Do I Own The Car At The End Of A Lease?
No. With both standard leasing and salary sacrifice, the car is returned at the end of the agreement. Ownership is not included.
Can I Buy The Car At The End Of A Lease?
In most cases, no. Lease agreements are structured around returning the vehicle rather than purchasing it.
Is Insurance Included With Salary Sacrifice?
Yes. Most salary sacrifice schemes include fully comprehensive insurance as part of the monthly cost, alongside maintenance and breakdown cover.
Are Maintenance And Servicing Included In Leasing?
Often, yes. Many standard leases offer optional maintenance packages, while salary sacrifice schemes typically include servicing, tyres, and repairs as standard.
What Happens If I Leave My Job During A Salary Sacrifice Lease?
Most reputable schemes offer protection options, such as early termination cover or the ability to transfer the lease. It’s always important to check the specific terms.
Does Leasing An EV Affect My Credit Score?
Standard private leasing usually involves a personal credit check. Salary sacrifice leasing generally does not impact your personal credit file.
Can I Lease An Electric Car With Poor Credit?
Salary sacrifice leasing is often accessible even if you have poor credit, as the agreement is between your employer and the provider rather than you personally.
Are There Mileage Limits On Leased Electric Cars?
Yes. Most leases include annual mileage limits of 10,000–15,000 miles, though higher allowances can usually be arranged.
What Happens If I Exceed My Mileage Allowance?
If you exceed your agreed mileage, you’ll pay an excess mileage charge set at the start of the lease. This is charged per mile over the limit.
Can I Modify A Leased Electric Car?
No. Leased vehicles must be returned in standard condition, allowing only for fair wear and tear. Modifications are not permitted.
Is Buying An EV Better For High-Mileage Drivers?
Yes. If you regularly drive 20,000 miles or more per year, buying outright can often be more cost-effective, as there are no mileage restrictions.
How Long Do Electric Car Batteries Last?
Most manufacturers offer battery warranties of up to eight years. Real-world data shows that EV batteries degrade slowly and remain usable well beyond this period.
Are EV Delivery Times Still Long In 2026?
Delivery times have improved significantly. Many popular electric cars are now available within a few months, depending on model and specification.
What Is The Biggest Financial Risk Of Buying An EV Outright?
Depreciation is the main risk. Electric cars can lose 40–50% of their value within the first three years, particularly as technology advances.
Which Option Is Best For Most UK Drivers In 2026?
For employees with access to a scheme, salary sacrifice leasing is the best-value option for the majority of UK drivers, combining low monthly costs with minimal hassle.
Ready To See What You Could Save?
If you’re considering salary sacrifice, our specialists are here to help. Or use our EV salary sacrifice calculator to see your potential savings in minutes.
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Last updated: 07/01/2026
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme's terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
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