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Is this the right time to invest in electric vehicles? Considerations when financing an EV Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by offering you interactive tools and financial calculators that provide objective and original content, by enabling you to conduct your own research and compare data for no cost - so that you can make informed financial decisions. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this website are provided by companies that pay us. This compensation can affect the way and where products appear on this website, for example, for example, the sequence in which they appear within the listing categories and other categories, unless prohibited by law for our loans, mortgage,, and other home loan products. However, this compensation will have no impact on the information we publish, or the reviews that you read on this site. We do not contain the entire universe of businesses or financial offers that may be open to you.



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7 min read Published February 27, 2023
Authored by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the details of borrowing money to purchase an automobile.







Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to take control of their finances by providing precise, well-researched and well-researched content that dissects complex topics into manageable bites.









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Financial burdens of ownership starting from the first purchase through refilling at the gas station, has reached record levels for drivers in the last year. Although gas prices have climbed down and a gallon cost $3.38 in February. 24, according to AAA -the cost of financing a car gets more expensive . Drivers pay an average of $700 a month for new vehicle financing and $525 for vehicles used in the third quarter of 2022's fiscal year, . With high costs to fill with fuel and pay for, along with the ever-present concerns about climate change, many motorists are looking for a new option. You might be asking "Should I buy an electric vehicle?" And you wouldn't be alone. Electric vehicles (EV) market share has jumped in the past few years and TransUnion predicts that the EV market share will reach . But the expensive upfront cost of electric vehicles could not be suitable for everyone. Should I buy an electric vehicle? The decision to purchase an electric vehicle must be approached with the same vigor as selecting the model and the maker of the next vehicle. For some, the ease of paired with minimal maintenance makes the high cost worth it. "From the point of view of a pure consumer perspective, buying an electric vehicle is extremely positive," says Brian Moody the executive editor of Autotrader. "In addition to that, driving in electric vehicles can be very enjoyable. It is quicker and more efficient, and electric cars have interesting features such as the ability to heat up the vehicle's interior prior to hitting on the highway." In the event that you are there's no full electric car and a hybrid model is more efficient than conventional gas models, while saving you money than an electric vehicle. According to Moody states, they are more likely to have a lower price tag and "function like an electric car on a day-to-day basis with gas being used only for long journeys." This is why they are a good choice for those who are interested in going electric, but aren't prepared to commit to a full-time commitment. The electric car market has seen a lot of innovation in the last two years and is set to continue growing. Although upfront costs have historically been high, they're dropping as more options are made accessible and established brands move into the electric car market. It's clear that the U.S. auto market is moving towards electric vehicles. Record-high gas prices could have helped boost sales of electric cars. EVs made up 5.7 percent of new car registrations in the second quarter of 2022, according to . That may not seem big, but it's a notable improvement over the 1.5 percent share that electric vehicles accounted for in the second quarter of 2018. The increasing interest in electric vehicles has resulted in improvements in financing options as well as tax credits. This increased market is among the main reasons to consider purchasing an EV. While Tesla has a majority of the market, TransUnion predicts the luxury brand will lose its percentage of the market by 2025, due to the increasing number of innovative and more mainstream makes coming into the market. Moody has a similar view when it comes to car availability. "It used to be true that there was only a handful of very small or very expensive electric cars. Although EVs cost more as a whole, some individual models are more reasonably priced. For instance, Kia EV6 and Chevrolet Bolt. Kia EV6 and Chevrolet Bolt." The Nissan Leaf is another cost-effective alternative to EVs. EV drivers have nearly the same credit profile as those driving luxury Satyan Merchant the senior vice president and chief of business for automotive at TransUnion, has seen increasing interest in EV financing, which has a direct influence on the entire automotive finance market. The study by TransUnion for 2022 found that, from the 3 million customers between 2019 to 2021 who originated new EV and traditional vehicle loans the majority of EV-related borrowers shared almost identical high-credit profiles as those who drive high-end vehicles. The people who drove conventional EVs had an average score for credit of 775 and fell into the prime category. They also had an average APR of 2.8 percent. This is less than the average APR that was 4.9 percent for all new cars for people with credit in the prime category. The competitive average APR of electric vehicles isn't only due to the high credit scores of these drivers. They are also making . The study also showed that drivers were more likely to commence their . In actual fact nearly one third of the respondents conducted research online on car models and makes. Merchant says, "Our research clearly shows that consumers of electric vehicles have excellent credit risk profiles, but the group has different preferences, such as a higher interest in looking for financing of vehicles through electronic means." This larger appetite will likely reflect in new choices for EV financing as well as the increase in the number of vehicles available in the coming years. Alternatives for environmentally friendly financing are growing. This expanding marketplace for electric vehicles also brought about improvements in financing. Although motorists can use or borrow to their electric vehicles, lenders specifically for EVs are gaining popularity and provide drivers with a tailored experience through . Alex Liegl, CEO of , comments on the company's involvement with EV financing and its aim to make climate-related investment an easy decision. The Tenet approach "gives customers the flexibility to manage upfront investment costs and save down-payment cash to use for other expenses," Liegl says. In addition you can also choose a deferment option which shifts one portion of the price to one final payment at end of the financing term. This allows for smaller monthly payments and an easier financing experience- but a large amount could be due by the end of the term. The goal, Liegl says, is to "help customers completely enhance their lives through making green home improvements less expensive, such as the installation of solar panels, battery backup as well as electric vehicles, smart appliances and much more." Other companies, like , serve as an exchange for loan prequalification, which is directly tied to EV incentives and green loans that are available in your state. According to its website, drivers can save up to $200 per month on their monthly EV loan installments. Can EVs carry a lower lifetime cost? Then what makes an electric car worth it? The good feelings that come from driving a car that is more sustainable in terms of environmental impact isn't the only reason people are turning towards electric vehicles. There's also the potential to reduce costs. While it is the case that gas costs are higher when driving, in some instances, electric vehicles can be less expensive in the long run. According to a survey conducted in 2020, drivers of electric vehicles saved an average of and repairs throughout the duration of ownership as per Consumer Reports. This is due in part to the differences in general maintenance and upkeep of EVs. These vehicles do not require oil maintenance and have an easier powertrain. Drivers of battery-electric vehicles and plug-in hybrids spent just 3 cents per mile over the life of the vehicle, compared to 6 cents per mile for conventional vehicles. But driving electric isn't completely rosy. CNET is which is a Red Ventures company, reported on a study from 2021 from We Predict that found . While it's true that drivers do not have to pay the cost associated with regular maintenance such as oil change and basic inspections, EV components are more costly when it comes to repairs. This means that more maintenance hours logged combined with the costlier replacement parts may make electric vehicles more expensive, or even less, than driving gas-powered vehicles. Moreover, electric cars can at a faster rate than gas-powered cars due to technological advancements however, the present demand for EVs has helped stabilize prices at the moment. What is the best way to finance an electric vehicle procedure of financing an electric car is quite similar to that of a traditional gasoline-powered car. It is important to follow the same steps you normally would, as well as be aware of the importance that your credit score and your history have to carry. Like we said that driving electric vehicles also carry potential state and federal benefits that you would not traditionally have access to. One of these benefits is an incentive of $7,500 for newly-built, approved plug-ins or fuel cell electric cars. If you buy a new vehicle in 2023, you might also be able to receive a government tax deduction . The car can't be bought at a price greater than $25,000. If it qualifies, you can claim credits up to 30% of the purchase cost, with a maximum of $4,000. Tax credits for federal residents come with income limitations and car requirements, so you need to make sure you and your future EV meet the requirements before you dive in. Beyond that, you might get an income tax credit for your state based the location you reside in. You should ask yourself these questions prior to purchasing an electric car or operating an electric vehicle has its own set of requirements that you might not have dealt with before. Consider these questions. 1. What is the vehicle range? It is crucial to know the distance your car will bring you -- for both your normal commute as well as your daily travel. Energy.gov reports the average range for 2021 model year vehicles that have the potential to cover as long as 405 miles. Fortunately, motorists will be able to manage lesser "range anxiety" because vehicles are catching up with available technology. However, it's important to evaluate your requirements by incorporating your typical commute and expected leisure activities. 2. Do I need to lease before I buy an electric car? "Leasing an electric car can be a good way to get a taste of ownership in an electric vehicle," Moody says. The cost is typically lower on a monthly basis and usually includes a warranty. If you are on the fence about driving electric, consider leasing one to check out the feel and experience. 3. Have I access to charging stations for my vehicle in my neighborhood? Although it is true that the Electric Vehicle Council found that about of EV drivers recharge at home, many drivers don't enjoy the convenience of having a Level 2 charger. That's okay. A lot of EVs now have the option to charge from any outlet that is electrical, but it might take all night or more to achieve a full charge. But, you might require a faster charge at certain times. Many EVs take around 45 minutes to reach 80 percent battery capacity at the fastest charging station. To find out where you might be able to get speedier charging look up this map that shows charging stations nearby. Check that the charging stations you plan to use will work with your car you're considering. You should consider an electric vehicle when looking for your next car. So, is an electric vehicle worth the investment? As with other luxury vehicles, EVs can carry higher cost upfront and require solid credit scores to take advantage of the low rates of interest. However, as the industry expands with more middle-tier choices spring up, more drivers are able to think about electric options. Are you one of those who comprise 36 percent Americans considering electric? Moody suggests aiming to find the sweet spot by purchasing used and lightly used something that falls in the three- to five-year range to enjoy a lower price and a good amount of warranty coverage.


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Authored by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ins and outs of securely borrowing money to purchase a car.



The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances with precise, well-studied information that breaks down otherwise complex subjects into digestible pieces.






Auto loans editor




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