Financing an EV or Hybrid in NZ: Residual Values, Balloon Risk and Running-Cost Maths

Financing a hybrid or EV in NZ works like any car loan, but resale value matters more. EVs have lost value faster than petrol cars, so a large balloon payment can leave you owing more than the car is worth. Keep any balloon modest, match the term to how long you'll keep the car, and budget for RUC: $76 per 1,000 km for EVs and $38 for plug-in hybrids.

Fuel prices have pushed a lot of New Zealanders to take a second look at hybrids and EVs this year.

The car is only half the decision, though. How you finance an EV or hybrid matters more than it does for a petrol car, because the numbers that drive the finance structure, especially what the vehicle will be worth in three to five years, are less predictable.

This guide explains three things to get right: residual values, balloon risk, and the running-cost maths that should sit next to your repayment.

Why resale value matters more for EVs

Every vehicle loses value. The question is how fast and how predictably.

When Driven looked at New Zealand EV trade-in values in 2024, the pattern was clear: EVs were losing around 40% of their value in each of the first two years, compared with roughly 30 to 35% in year one for a typical petrol car. One popular EV that cost about $75,000 new was worth about $40,000 on trade a year later.

A few things drove that:

• The Clean Car Discount ended on 31 December 2023, which lowered what buyers would pay for a new EV and pulled used values down with it.
• EVs started paying road user charges from 1 April 2024, removing one of their running-cost advantages.
• Battery technology and range keep improving, so older models age faster in buyers' eyes.

Hybrids have generally held value more like conventional cars, because they don't depend on charging infrastructure and the technology is well proven. Plug-in hybrids sit somewhere in between.

None of this means an EV is a bad buy. It means the finance structure should allow for the fact that nobody can promise what it will be worth at the end of the term.

How a balloon payment works, and where it can bite

A balloon (sometimes called a residual) sets aside part of the loan as a lump sum due at the end. That lowers your regular repayments.

Here's an example on a $50,000 EV over five years, at our representative rate of 12.95% p.a. with no deposit or fees:

The balloon saves about $41 a week. The catch is the $15,000 due at the end, and the extra interest paid on it across the term.

The plan most people have is to sell or trade the car at the end and use that money to clear the balloon. That works if the car is worth more than $15,000. If faster-than-expected depreciation leaves it worth $12,000, you still owe $15,000, and you need to find the $3,000 gap from somewhere.

That's balloon risk. It applies to any vehicle, but it's sharper for EVs because their resale values have moved more.

Four ways to reduce balloon risk on an EV or hybrid

1. Keep the balloon modest. A 10 to 20% balloon gives you some weekly relief without betting heavily on the future value.
2. Shorten the term. A four-year term with a balloon means the car is younger and usually worth more when the lump sum falls due.
3. Put down a deposit. A deposit creates a buffer between what you owe and what the car is worth from day one.
4. Plan for the end before you start. Decide now whether you'll pay the balloon in cash, refinance it, or trade the car, and have a fallback if the trade-in comes in low.

If you plan to keep the vehicle for eight or more years, a balloon may not suit you at all. A standard loan with no balloon means you own it outright at the end.

The running-cost maths

A finance decision should include what the vehicle costs to run, not just what it costs to buy. The gap between petrol, hybrid and EV running costs has narrowed since EVs started paying RUC.

Road user charges (per 1,000 km):

At 15,000 km a year, an EV pays about $1,140 in RUC, roughly $22 a week. A plug-in hybrid pays about $570. A conventional hybrid pays no RUC but uses fuel, which is where its savings over a petrol car come from.

Electricity versus fuel. An EV's energy cost depends heavily on when and where you charge. Charging at home overnight on an off-peak plan is usually far cheaper than public fast charging. Check your power plan before you assume the savings.

Servicing. EVs have fewer moving parts and typically need less routine servicing. Hybrids are close to a conventional car.

The point: add RUC, energy and servicing to your weekly repayment, and compare the total, not just the sticker price or the fuel bill.

The business lens: EVs and hybrids as company vehicles

For SME owners, two more factors come into play.

FBT. A tax bill introduced on 10 September 2026 proposes new fringe benefit tax valuation rates from 1 April 2027: 20% for petrol and diesel vehicles, 19.6% for hybrids (including plug-in hybrids) and 17% for EVs. If passed in its current form, an EV provided to staff for private use would attract slightly less FBT than an equivalent petrol car. It's still a proposal, so check with your accountant before relying on it.

Asset life. A business that replaces vehicles every three to four years is more exposed to resale value movements than one that runs vehicles into the ground. That should shape whether a balloon makes sense.

What to ask before you sign

• What balloon percentage, if any, am I comfortable with if the car is worth less than expected?
• Does the term match how long I'll actually keep the vehicle?
• Can I make extra repayments without large fees?
• Have I compared total cost (repayments plus running costs), not just the weekly number?

Get a structure built around the car and your plans

Every lender on our panel sets its own criteria for EVs and hybrids, and the right structure depends on the vehicle, how long you'll keep it and how you'll use it. Use the LDM Finance calculator to compare balloon and no-balloon options, or read more about balloon and PCP-style finance.

Common questions

Is it harder to get finance for an EV in NZ?

Not necessarily. Lenders assess EVs like other cars, but some may be more cautious about balloon size because EV resale values have been less predictable. Lending criteria apply.

Do hybrid cars in NZ pay road user charges?

Conventional hybrids don't. They pay fuel excise at the pump. Plug-in petrol hybrids pay a reduced RUC rate of $38 per 1,000 km, and EVs pay $76 per 1,000 km.

Should I use a balloon payment on an electric car?

It can lower your weekly repayments, but you take on the risk that the car is worth less than the balloon at the end. A smaller balloon, shorter term or deposit reduces that risk.

Do EVs lose value faster than petrol cars in NZ?

They have in recent years. A 2024 Driven analysis found EVs losing around 40% a year in the first two years, compared with about 30 to 35% in year one for a typical petrol car.

What does an EV cost per week in RUC?

At 15,000 km a year and $76 per 1,000 km, about $1,140 a year, or roughly $22 a week.

Request a tailored finance structure

Tell us which EV or hybrid you're looking at and how long you plan to keep it. The LDM Finance team will help you compare structures across lenders on our panel, including UDC Finance, Marac and Avanti Finance.