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A green auto loan is similar to a regular car loan but it’s a type of financing meant solely for purchasing a clean-energy car. Green auto loans typically come with lower interest rates, more favorable loan term options, and other benefits to provide the best possible auto loans for electric cars. The loan process works the same as financing other vehicle types. Individuals apply through a lender, who will make a loan offer based on criteria which typically include the applicant’s credit score and proof of employment, and then, if the applicant is approved, they choose a repayment plan which determines their electric car’s monthly payment.
Clean-energy cars, which are often referred to as green-energy cars, are powered by alternative fuels or technology that is different from vehicles that require fueling at the pump. Clean-energy cars, often electric cars, can also be run on hydrogen fuel cells, biofuels, and more
According to Kelly Blue Book, the average price of an electric car purchased in the United States runs about $10,000 higher than standard vehicles with internal combustion engines. As a result, many credit unions, banks and car dealers offer green auto loans to help offset the higher sticker price for these clean-energy cars.
The federal government provides additional incentives for electric car purchasers, offering tax credits of up to $7,500 for electric cars and plug-in hybrid vehicles (PHEVs) produced by certain auto manufacturers. Some states include other financial incentives, so if you decide to buy a clean-energy car, it can pay to do your homework ahead of time so that you can find the right vehicle to match your needs while ensuring you can cash in on more incentives than good financing terms with a green auto loan.
It may seem obvious, but the best auto loan for an electric car is one that meets your financial needs. If you have a good credit score, a sizable down payment or trade-in, discretionary income, and other financial flexibility, you should look into a green auto loan for a shorter loan term that comes with a lower interest rate. On the flipside, if you want to purchase a clean-energy car but don’t have the financial assets to get a low-interest short term loan, you may be better off financing your vehicle for a longer period so that you can benefit from making lower monthly payments. This way, you won’t have so much of your income tied into your vehicle. This decision will leave you with money to help make your rent or mortgage payment, buy groceries, and other monthly expenses.
One of the perks of green auto loans, which are always the best type of auto loan for electric cars, is you can get more time to pay back what you borrow. In turn, this means lower monthly payments. Most standard car loans require paying back what you borrow within 60 or 72 months. With loans for clean-energy cars, it’s common to have up to 84 months to pay back what you borrow. However, it’s good to keep in mind that the shorter your loan term, the better your interest rate may be and the less interest you will pay overtime. And, of course, your credit score will also impact loan terms and the options made available to you.
At DCU, we offer our members discounts on auto loans, which includes an additional 0.25% discount for fully electric vehicles. Want to know how much your electric car monthly payment would be with our credit union? Use the loan calculator to estimate your monthly payments.
Whether you shop for clean-energy cars that are new or used, or want to refinance a green auto loan you already have, Digital Federal Credit Union’s auto loans make it easy to enjoy the open road. With low interest rates, flexible terms, and an easy, no-hassle prequalification process, we make it simple for you to get your dream car. Our not-for-profit financial co-op is owned and operated by our members, meaning serving you is our only priority.
Follow our three-step application process to start your auto loan application. Please note that you may submit your application without being a member of our credit union, but in order to qualify for a loan with DCU you must finalize your membership upon receiving a loan decision.
Please note, membership is required to accept a DCU auto loan. Visit our membership eligibility page for more information.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.