Electric Car Loans in Canada
Electric Car Loans in Canada
Posted on March 6, 2023
It’s an exciting time to be a car fan. Not only are there some superb standard-engine cars around, the era of electric motoring is upon us. There are now more electric cars than ever before available on our roads, which may lead some to wonder how to finance car loans for electric vehicles.
If you’re looking for a car loan in for an electric car, we can help!
There is no doubt that there is a price premium to drive electric. Those prices are coming down but right now, you do pay for the privilege of going green. That means more people than usual will be looking for a car loan for their electric car. Which is where we come in!
Car Loans For Electric Vehicles
The good news is that you can finance an electric car just the same as a gas-powered car. That means a standard car loan with a down payment or trade in is more than enough to buy your new electric vehicle.
A down payment or trade in: We always recommend putting down as much as you reasonably can as a down payment. You can also use a trade in as a down payment and optionally supplement that with cash. The more you put down, the less extra you'll need to pay on interest later on.
Sufficient credit score for the loan: You will likely already know that your credit score influences the amount you can borrow and the interest rate you’ll pay. As electric vehicles are at the higher end of the scale, you may find you need to borrow more to pay for it.
Longer Loan Term or Higher Payments?
If you’re borrowing more to pay for an electric car, you will have a couple of options. You can pay more as a down payment to make up the amount, borrow over a longer term or pay more per month.
Much depends on your circumstances but there are pros and cons to both.
Longer term car loan: A longer term car loan goes further than the typical 1-5 years of a standard car loan. The longest mainstream car loan is for 84 months, 7 years. It has the advantage of letting you borrow more at a reasonable monthly cost but will cost more in interest over the term.
Higher monthly payments: You can also use a standard car loan to buy an electric car. As the loan amount may be higher, it means a higher monthly payment. That may or may not be affordable depending on your situation.
Other Financial Factors of EVs
Two things you should take into consideration when owning an electric car are lower running costs and lower maintenance costs. These may help persuade you that going electric is a good idea.
Remember, with an electric car, there is no need to buy gas. You will need to charge the car but otherwise, EVs are very cheap to run.
EVs, despite their advanced technology, are very low maintenance. There are fewer moving parts than a standard car, electric motors are proving very reliable and batteries are the same as most other devices, just on a different scale.
So while you may be paying more up front for your EV, over the long term, you should break even or even make a saving. That’s even more true if the current rate of depreciation stays so low!