The Single Best Way to Finance Your New Electric Vehicle

Are you concerned about climate change, tired of paying for gas, and in the market for a new car that could save you money on car maintenance? You might want to consider buying an electric vehicle (EV).

Although the sticker price of electric vehicles is typically a few thousand dollars higher than comparable gas-burning cars, recent EV tax credits are making electric vehicles more affordable. And prices of electric vehicles are coming down, as battery technology gets cheaper (and better), and more auto manufacturers launch new models of EVs.

Let's look at the single best way to finance your new electric vehicle -- with a green auto loan.

Green auto loans: Special financing for EVs

When you buy an electric vehicle, you can get an auto loan to help pay for your car, just like you would with any other car. But some banks and credit unions offer special discounts on auto loans for EVs. These are often called "green auto loans," because they're designed just for "green," energy-efficient, environmentally friendly cars like EVs.

Getting a green auto loan can put more "green" dollar bills in your pocket. Not every bank or credit union offers these green auto loans. But if you can find a financial institution that does, you could save money on your car loan.

Green auto loans will typically have the same loan terms as a regular car loan, but with a small discount on the annual percentage rate (APR). For example, if a financial institution offers 7% APR on a 60-month loan for a new gas-burning car or truck, it might offer 6.75% APR on a loan for a new electric or hybrid vehicle.

Here are a few credit unions that offer green auto loans (rates effective as of Dec. 28, 2023):

• Clean Energy Credit Union: Four-year loans for new electric or plug-in hybrid vehicles, interest rates as low as 6.39% APR.
• OnPoint Community Credit Union: Provides auto loans ranging from 30-60 months for new electric or hybrid vehicles; rates as low as 6.24% APR.
• Philadelphia Federal Credit Union: Loan terms up to 84 months; rates as low as 5.74% APR, plus a discount of 0.50% APR for new electric or hybrid vehicles.

Your exact APR and loan terms will depend on your credit score, the price of your vehicle, how much money you want to borrow vs. making a down payment, and other factors. Many credit unions also offer discount EV loans for used cars, but the APR will be slightly higher, and the loan term options will be more limited.

You don't have to use a special "green auto loan" to buy an EV. You can use a regular car loan. But if you see an auto loan offer with an APR and terms that you like, you can contact a bank or credit union to get pre-approved for a car loan before you start shopping for your new electric vehicle. Understanding your options for down payment sizes and monthly payments can help you make a confident offer on an electric vehicle that fits your budget.

Other options for cheap EV car loans

If you have good credit, sometimes you can get the best deals on car loans directly from the car companies. Depending on the overall car-buying market, car companies may offer special deals and incentives, with low-APR financing for new car purchases.

Here are a few examples of good deals on new car loans for electric vehicles, as of Dec. 28, 2023 (all loan rates and terms depend on customers' credit):

• Ford: Buy a new 2023 Mustang Mach-E GT or Premium model and get a loan of 60 months at 1.99% APR. Offer ends Jan. 2, 2024.
• Toyota: Buy a new all-electric 2023 Toyota bZ4X and you could qualify for a 48-month loan at 3.99% APR (depending on your credit score). Offer ends Jan. 2, 2024.
• Volkswagen: Buy a new 2023 Volkswagen ID.4 electric vehicle and you could get 3.9% APR for 72 months. Offer ends Jan. 2, 2024.

Bottom line: Along with EV tax credits of up to $7,500, there are a few options for cheap EV car loans that can make your electric vehicle more affordable. Owning an EV still comes with some costs, like maintenance, car insurance, and charging. But with a low-APR car loan and no costs for gasoline, an electric vehicle can be cost-competitive. To get the lowest APR on a new electric vehicle loan, check with the car companies for the latest financing options and incentives. Or get pre-approved for a green car loan from a bank or credit union near you.