Can you finance a hybrid car?

The short answer is: absolutely, yes! Whether you're planning on going green for the environment or just hoping to make some savings on fuel costs, hybrid cars come with lots of bonuses. Plus, financing one is just like financing any other car, and you can do it through options like Personal Contract Purchase (PCP), Hire Purchase (HP), or even a personal loan. There are still some eco-friendly perks, such as green loans, though increasingly, these are harder to find as more people make the switch. We’ll help you figure out the best option for you.

How does Hybrid car finance work?

Financing a hybrid car works much the same way as financing a regular car. The key difference is that some lenders might offer special “green” finance deals to encourage eco-friendly choices. When you apply for finance, lenders will look at things like your credit score, income, affordability, how much deposit you can put down, and the value of the car you're looking to finance. It’s all about making sure the loan fits your budget and financial situation.

Finance options for hybrid cars

There are different types of car finance available that will help you spread the cost of a hybrid car.

Hire Purchase (HP)

With this option, you’ll pay a deposit and then monthly payments for one to six years. Once the term is up, you'll just pay a small "option to purchase" fee, and the car’s all yours. You won’t have much flexibility in terms of modifying or selling the car, but there usually aren't mileage limits to worry about.

Personal Contract Purchase (PCP)

If you’re looking for lower monthly payments and more flexibility at the end of your finance term, PCP might be your best bet. You’ll pay a deposit and then monthly payments based on the difference between the car’s current value and the estimated future value (GMFV). At the end of the contract, you can either pay a larger final payment to keep the car, use the equity in a new agreement for something snazzier, or return the car and walk away.

Personal loan

 If you prefer to avoid finance agreements, you can take out a personal loan. This way, you can buy the car outright. It's a great choice if you like the flexibility of owning the car from the start.

Green car loans

Some lenders offer “green” loans specifically for hybrid and electric vehicles, often with special rates to encourage more eco-friendly car choices. It's worth asking about these deals to see if you can snag a better rate!

Are hybrid cars more expensive to finance?

While hybrid cars tend to cost a bit more upfront, leading to higher monthly payments, they often come with lower running costs. Savings on fuel and potential tax benefits could help offset the higher initial finance costs. For example, the RAC suggests you could use 30% less fuel per mile in a hybrid than in a petrol or diesel vehicle.

Adding these savings in could give you more to spend on the car at the outset. Plus, some lenders might offer better rates for eco-friendly vehicles, which could help lower your overall costs compared to financing a petrol or diesel car.