Is it Easier -- or Better -- to Get a Car Loan for an EV?

Now may be the time to buy an electric vehicle.

It's no secret that electric vehicles (EVs) are becoming more popular. In fact, EV sales have increased by over 75% compared to the first three months of 2021, according to the International Energy Agency. But even with this increase in popularity, many people are still hesitant to make the switch from a gas-powered car to an electric one. But here's why now may be a perfect time to buy an EV.

The cost of running an EV is lower

A big reason for the hesitancy to buy an EV is their purchase cost. Though the initial price tag of an EV may be higher than that of a traditional gas-powered car, there are a number of factors that make EVs a better investment in the long run. For one, EVs on average cost less than $1,000 per year for electricity for the car. Gas-powered vehicles, however, can cost $2,000 to $7,000 per year to run.

In addition, EVs are much cheaper to maintain than gas-powered cars. Electric cars don't require oil changes or related tune-ups, and their brakes last longer because they regenerate power when you brake. EVs also have a much longer lifespan than gas-powered cars. The average EV battery pack is designed to last for at least 10 years or 150,000 miles, and many EV are expected to last for up to 300,000 miles. In contrast, the average gas-powered car is expected to keep running up to 200,000 miles.

The newly passed Inflation Reduction Act of 2022 is a game changer, offering an electric vehicle tax credit that can be worth up to $7,500. One big change under the new EV laws is that you can receive the credit upfront at the dealership, essentially reducing the cost of the EV by up to $7,500. You will have to wait until 2024 before this kicks in.

When you factor in the lower cost of ownership, the longer lifespan of EVs, and the EV tax credits, it's clear that electric cars are a wise investment. And when it comes to financing an EV purchase, there are a number of options available that can make the process even easier.

How to finance an EV

Many automakers and financial institutions offer special financing deals or green auto loans on EVs. A green auto loan is a type of auto loan that offers borrowers special financing terms and rates to encourage the purchase of fuel-efficient or alternative fuel vehicles. Green auto loans are becoming increasingly popular as more and more borrowers are looking for ways to save money on fuel costs and reduce their environmental impact.

These deals typically offer lower interest rates and longer loan terms than traditional auto loans, making it easier to afford the initial cost of an EV. And many banks, credit unions, and car manufacturers now offer auto loans specifically for EVs, which can also help to make the purchase more affordable.

If you're thinking of making the switch to an electric car, don't let the upfront cost deter you. There are a number of ways to finance an EV purchase that can make it more affordable. And in the long run, you'll save money on fuel and maintenance costs while owning a car that lasts longer than a traditional gas-powered vehicle. To qualify for a green auto loan, you'll typically need good to excellent credit. However, it's still worth checking with multiple lenders before you start shopping for a car so that you can compare your options and choose the best loan for your needs.