What finance is available for hybrid cars?

Whether you’re looking for a vehicle with lower emissions or are simply hoping to save a few pennies at the pump when you’re next filling up, you might be considering making the switch to a hybrid car.
Hybrid cars can offer several of the benefits of a fully electric vehicle but may be a better choice for drivers who don’t have easy access to a charging point and need to travel a lot of long distances.
Unfortunately, these benefits do come at a cost – hybrids can be more expensive to buy, even on the used market.
That’s where hybrid car finance comes in.
Got a specific question about financing hybrid cars? Why not jump to the relevant section below:

What is a hybrid car?

Hybrid cars occupy the middle ground between standard petrol or diesel cars and electric vehicles (EVs).

If your car is fully hybrid, it will usually have a petrol or diesel combustion engine as well as an electric motor and battery.

While the engine will power the car most of the time, the electric motor can kick in when you’re travelling for short distances at low speeds like in stop/start rush hour traffic.

When you’re travelling at higher speeds and powering down the motorway, the engine and electric motor will team up and work together to improve fuel efficiency.

In most cases, a fully hybrid car will typically use regenerative braking to recharge the battery as you brake and decelerate. This means there’s no need to worry about installing a charger to plug it in at home or looking for a charging point when you’re out and about.

What types of hybrid car are there?

Hybrid cars can now be found in almost every car category. No matter whether you’re looking for a supermini that’s ideal for the tight corners and small parking spaces of the inner city, an SUV with space for all the family, or a sporty coupe to show off on your driveway, you’ll likely be able to find a hybrid model that fits the bill.
There are three main types of hybrid car:

Fully hybrid
Plug-in hybrid
Mild hybrid

Fully hybrid

Fully hybrid cars are designed to automatically switch between your combustion engine and electric motor. There’s no need to plug in the car and it’ll be charged as you drive through regenerative braking technology.

Plug-in hybrid

A plug-in hybrid car, also known as a PHEV, has a combustion engine and a battery, but will need to be plugged in to recharge. The battery usually only assists during acceleration, but you might be able to manually switch to electric mode for short journeys.

Mild hybrid

A mild hybrid car is fitted with small lithium-ion battery and can’t run on electric power alone. The battery gives the engine an extra boost during acceleration to help improve fuel economy.

What’s the difference between hybrid, plug-in hybrid, and electric cars?


Hybrid Cars

Electric Cars

Plug-in Hybrid Cars

What type of motor do they use to drive?

A petrol or diesel engine and an electric motor

Electric motor only

A petrol or diesel engine and an electric motor

Do they have an automatic or manual transmission?




Do they need to be plugged in to recharge?




Can they travel long distances using only electric power?




What finance is available for hybrid cars?

Ready to shop for a hybrid car? The good news is that there are different types of hybrid car finance available that will help you spread the cost of your new wheels over a set period.
The right finance option for you will depend on the car you want to buy, your personal priorities, and your individual financial circumstances:

Hire Purchase (HP)

With a Hire Purchase or HP loan, you’ll spread the cost of a new or used hybrid car over a period of between one and six years.

You’ll typically need to put down a deposit upfront and then make fixed monthly payments throughout the loan term.

Once all the payments are made – including the one-off Option to Purchase admin fee – the car will be all yours.

During the agreement, the loan will be secured against the car meaning the lender will be its legal owner. You won’t be able to sell or modify it during this time, but you won’t usually need to worry about any mileage restrictions

Personal Contract Purchase (PCP)

Personal Contract Purchase or PCP finance is a lot like HP but offers more options at the end of your loan agreement.
You’ll usually need to put a deposit down upfront and then make fixed monthly payments for a period of between one and four years, depending on your loan term. These payments will likely be lower than they would be with HP as you won’t need to borrow the car’s full purchase price.
Once you reach the end of the loan, you can choose to buy the car by paying the one-off balloon payment (equivalent to the car’s remaining value), hand it back to the lender and walk away, or use any available equity as a deposit in a new deal.
The loan will be secured against the car, and you’ll likely have to agree to an annual mileage limit. You may also face extra charges if the car is damaged beyond standard wear and tear.

What are the benefits of hybrid cars?

Hybrids are gaining in popularity for a reason. Here are a few of the benefits offered with this type of vehicle:

  • Hybrid cars can offer improved fuel economy and help you save money on petrol and diesel
  • There may be environmental benefits from reduced emissions
  • You won’t have to worry about the range anxiety that can come with some EVs
  • There are variety of models to choose from compare to EVs
  • You’ll be less reliant on charging points than fully electric vehicles

What are the downsides of hybrid cars?

While there are many advantages to hybrid cars, there are a few downsides to keep in mind too:

  • Hybrid cars can be more expensive to buy than a traditional petrol or diesel vehicle
  • You might not be able to get the same horsepower as a car with a standard combustion engine
  • Maintenance costs can be higher as it might be harder to find specialist mechanics
  • The battery can be more expensive to replace

FAQs about hybrid cars

Will a hybrid car save me money?

Hybrid cars can be more expensive to buy, but you might be able to save money on running costs. It all depends on how you drive the car.
If you take a lot of short journeys (less than 30 miles), have access to a charging facility at home, and don’t spend a lot of time on the motorway, a hybrid could suit your driving habits and help you save money on fuel.

Do hybrid cars lose value?

One of the benefits of hybrid cars is that they currently have a high resale value. There are a few reasons for this; not only do they have low running costs, but they are also known for their reliability.
The industry is also dominated by manufacturers like Toyota and Lexus, which are known to hold their value and have a slow rate of depreciation.
Rising fuel costs and environmental concerns have led to more drivers considering making the switch to electric vehicles and hybrids, increasing the demand for this type of vehicle on the used car market.

How much do you save on fuel with a hybrid car?

The exact amount you could save on fuel when driving a hybrid will depend on your driving habits, but the RAC says that you might be able to use 30% less fuel per mile than a petrol or diesel vehicle.
According to Suzuki, this means you could travel up to 50 miles on £10 of fuel in a petrol or diesel car but up to 67 miles in a hybrid. With these figures in mind, being a hybrid driver could save you approximately £380 a year.