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EV Car Loans Guide

EV Car Loans Guide

Electric vehicles (EVs) are becoming an increasingly popular choice for eco-conscious drivers in Canada. The environmental benefits of driving an electric car are clear – producing zero direct emissions and helping reduce a driver’s carbon footprint. Electric cars also have lower operating and maintenance costs compared to gas vehicles due to not needing oil changes or gasoline. With new EV models coming out that have ranges over 300 km on a single charge, range anxiety is becoming less of an issue as well.


However, the main barrier for many Canadian drivers is still the high upfront cost of purchasing an electric vehicle. Most EVs retail for $10,000 – $15,000 more than a comparable gas model. This price premium is difficult for buyers to justify, even when factoring in the long-term fuel savings from driving an EV.


This is where financing an electric car through a green auto loan can help make these vehicles more accessible and affordable. Green auto loans are a specialized type of car loan designed specifically for electric vehicles and hybrids. They offer incentives like lower interest rates, longer repayment terms, and higher loan amounts to help people purchase eco-friendly cars that are out of their normal price range.


Financing your EV through one of these green car loans can help spread the higher sticker price over monthly payments that better fit your budget. When you combine available government rebates and manufacturer incentives, a green auto loan makes driving electric a reality for more Canadian drivers. This guide will explore the best options for financing an electric vehicle purchase in Canada.

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What is a Green Auto Loan?

A green auto loan is a special type of car loan designed specifically for clean energy vehicles like electric vehicles (EVs) and hybrids. These loans differ from conventional auto financing in that they offer buyers lower interest rates, longer repayment terms, and other beneficial incentives to help make eco-friendly cars more affordable.

While a standard auto loan may charge 5-6% APR and be repaid over 5 years, a green auto loan can feature interest rates as low as 0% with terms up to 8 years. The incentives provided by green auto lenders allow EV and hybrid buyers to reduce the higher upfront costs of these vehicles through lower monthly payments over an extended period.

So in summary, the key features that set green auto loans apart are:

 

  • Lower interest rates compared to conventional auto loans
  • Longer loan terms, often 6-8 years instead of 5
  • Larger loan amounts to cover the full EV purchase price
  • Special rebates, tax credits, and other incentives

 

With interest rates as much as 2-3% lower than standard car loans, plus longer terms and larger loan amounts, green auto financing can make buying an EV or hybrid much more affordable. The incentives also help to offset the higher sticker prices of these environmentally-friendly vehicles.

 

Benefits of Green Auto Loans

Green auto loans offer several advantages that make financing an electric vehicle more affordable compared to conventional auto loans.

 

Lower Interest Rates

The most significant benefit of a green auto loan is the lower interest rate. While standard auto loans typically have interest rates of 5-15%, green auto loans often offer rates between 0-5%. Some lenders offer 0% APR promotions for qualifying buyers. The lower interest rate saves you thousands of dollars in finance charges over the life of the loan.

 

Longer Loan Terms

Since electric vehicles have a higher upfront cost, green auto loans provide longer terms up to 8 years so you can keep your monthly payment low. A longer loan term spreads out the principal over more payments. This allows you to buy a more expensive EV for a monthly payment similar to a gas vehicle with a shorter loan.

 

Larger Loan Amounts

Green auto lenders understand EVs cost more so they offer larger loan amounts, often up to $90,000. This covers the full purchase price so you don’t have to put as much money down. Larger loan amounts combined with low rates and long terms make an EV purchase achievable.

 

Special Rebates and Incentives

Many green auto lenders offer their own manufacturer rebates, incentives, and tax credits that directly reduce the sale price of the EV. Local electric companies also provide incentives in some regions. Lenders apply these savings to your loan balance so you get the benefits.

 

Types of Green Auto Lenders in Canada

There are several options for financing electric vehicles in Canada through green auto loans. Some of the top places to look for this eco-friendly financing include:

 

Credit Unions

Many credit unions across Canada offer special green auto loans to support the purchase of electric vehicles. Credit unions are member-owned financial cooperatives with a mandate to serve their members and communities. As part of this mission, leading credit unions have introduced green financing options including:

 

  • Low interest loans for new and used electric vehicles
  • Extended loan terms up to 8 years
  • Higher loan amounts to cover the full cost of an EV
  • Special discounts, rebates or incentives for EV buyers

 

Credit unions with strong green financing programs include Coast Capital Savings, Vancity, and other major credit unions across the country.

 

Banks

Major banks are also getting into green finance for vehicles. As part of their corporate sustainability initiatives, banks are rolling out special auto loans for customers purchasing electric cars and hybrids. Bank green auto loans offer:

 

  • Reduced interest rates compared to standard auto loans
  • Potential loyalty discounts for existing bank customers
  • Online applications and pre-approvals for fast processing
  • Extended loan terms up to 8 years

 

Top national banks with green auto lending include RBC, TD, Scotiabank, CIBC, and BMO.

 

Government Programs

Federal and provincial governments offer incentives and financing support to make electric vehicles more affordable. Key programs include:

 

  • Federal EV incentive providing rebates up to $5,000
  • Provincial EV rebates up to $8,000 in Quebec, BC, and other provinces
  • Special provincial EV financing incentives and loans
  • Municipal EV incentives in cities like Toronto and Vancouver

 

Government lending programs are administered through authorized lenders and dealerships when purchasing a new electric vehicle.

 

Automaker Financing

Purchasing or leasing an EV directly from an automaker also opens up access to financing offers. Most major electric vehicle makers like Tesla, GM, Nissan, Kia, and more offer:

 

  • Low-rate manufacturer financing through dealers
  • Leasing options for lower monthly payments
  • Special purchase incentives when factory ordering
  • Bundled offers when installing a home charger

 

Shopping directly through an EV brand can provide buyers with exclusive financing terms and perks.

 

Qualifying for a Green Auto Loan

Getting approved for the best green auto loan rates requires meeting some key qualifications. Lenders will assess your credit score, income, existing debts and down payment amount when deciding whether to approve your application.

Here are tips for qualifying for a competitive green auto loan:

 

  • Good credit score – Most lenders require a minimum credit score between 650-700. The higher your score, the lower the interest rate you can qualify for. Maintaining a score above 700 will unlock the best green auto loan rates.
  • Low debt-to-income ratio – Your total monthly debt payments, including the potential new car loan, should not exceed 40% of your gross monthly income. Keeping debts low relative to earnings reassures lenders.
  • Reasonable down payment – Putting down at least 10-20% of the EV’s price tells lenders you’re financially committed. Bigger down payments can lead to faster loan approval.
  • Take advantage of incentives – Federal EV rebates, manufacturer discounts and provincial incentives can lower the sale price. This reduces the amount you need to finance. Leveraging these perks makes approval easier.

 

By maintaining good credit, keeping debts low, saving up for a decent down payment and utilizing EV incentives, you can meet the qualifications for the most competitive green auto loan rates. Getting pre-approved before visiting dealerships can help you lock in top financing terms in advance.

 

Maximizing EV Incentives in Canada

There are a number of incentives available in Canada to help make electric vehicles more affordable. Taking advantage of these can significantly reduce the upfront cost of an EV purchase.

 

Federal EV Incentive

The federal government offers an incentive of up to $5,000 for new electric vehicle purchases. This applies to new battery electric, hydrogen fuel cell, and longer range plug-in hybrid vehicles. The amount of the incentive will vary based on the EV’s battery capacity and starting manufacturer’s suggested retail price. Consumers can receive the incentive directly when purchasing from a dealer.

 

Provincial Rebates

Many provinces also offer additional rebates up to $8,000 when purchasing an electric vehicle. For example, Quebec, British Columbia, and Nova Scotia have programs that offer between $2,500 to $8,000 back. The rebate amounts differ by province and vehicle type. Be sure to check what incentives may be available where you live.

 

Manufacturer Rebates

Some automakers also offer additional rebates or discounts when purchasing an EV from select dealerships. For example, Ford, GM, Nissan, and BMW have offered rebates around $1,000-$3,500 off specific models. These offers can make buying directly from a manufacturer more affordable.

 

Electricity Provider Incentives

Many electricity providers in Canada offer special rate plans and incentives for EV drivers. This includes lower off-peak charging rates and sign-up bonuses. For example, BC Hydro and Ontario Power offer special plans that can save hundreds per year in charging costs. Check with your local utility company to see if any EV owner incentives are available.

With federal, provincial, manufacturer, and electricity provider incentives, Canadians can save up to $13,000 off the purchase of a new electric vehicle. It pays to do your research and take advantage of any EV rebates or discounts available.

 

Comparing Top Green Auto Loans

When shopping for a green auto loan, it’s important to compare offers from multiple lenders to find the best rate and terms for your budget. Here’s an overview of some of the top green auto loan options in Canada based on interest rates, loan terms, and available incentives.

 

Desjardins

Desjardins offers green auto loans on new electric and hybrid vehicles with rates as low as 3.99% APR on approved credit. Loan terms up to 8 years are available, allowing you to stretch out payments over a longer period. Desjardins also offers members cash rebates of up to $1,000 on select electric vehicles as an additional incentive.

 

Coast Capital Savings

Coast Capital has green loans starting at 4.99% APR for new EVs and hybrids. You can finance up to 100% of the vehicle purchase price with flexible terms from 2 to 7 years. Coast Capital also provides members with discounts on home EV charging equipment to help maximize long-term savings.

 

TD Auto Finance

TD offers highly competitive green car loan rates as low as 3.49% APR on select vehicles. TD allows loan terms up to 8 years and has flexible prepayment options. They also offer an EV Rebate Program providing up to $1,000 cash back on purchasing or leasing an eligible electric vehicle.

 

Recommended Picks

Based on interest rates, loan terms, and available incentives, Desjardins and TD Auto Finance currently offer some of the best green auto loans in Canada. Their low rates and long terms can help maximize lifetime savings on EV ownership. However, make sure to compare personalized rate quotes to find the best loan for your specific budget and needs.

 

Estimating EV Ownership Costs

One of the most important factors when considering an electric vehicle purchase is estimating the total cost of ownership. This includes both the upfront and ongoing costs associated with EV ownership.

The first cost is the purchase price of the electric vehicle itself. EVs still tend to cost more upfront compared to similar gas-powered models. However, various incentives and rebates can help reduce this initial price tag.

In Canada, buyers can qualify for federal and provincial electric vehicle incentives up to $13,000 combined. There are also manufacturer rebates, dealership discounts, and special pricing for leasing an EV. Factoring in all available incentives is key to lowering the starting price.

Next is the auto loan itself. Green loans designed for EVs often have lower interest rates, allowing buyers to reduce the total financing costs. Extended loan terms up to 8 years are also common, keeping monthly payments affordable on pricier electric cars.

While the upfront costs may be higher, EVs save significantly on gas and maintenance over the life of the vehicle. Electricity is a cheaper ‘fuel’ than gasoline, and electric motors require far less routine maintenance like oil changes. These fuel and maintenance savings represent a big advantage for EV ownership costs.

Estimating both the starting price and ongoing savings is important for determining if an electric vehicle purchase makes sense financially. Online cost calculators can help compare EV and gas car ownership costs side-by-side over time. Looking at the total lifecycle cost rather than just the initial price provides a better financial picture.

 

Choosing the Right Green Auto Loan

When shopping for a green auto loan, it’s important to compare all the key factors to find the right financing for your budget and needs. Here are some tips for choosing the best loan for your electric vehicle purchase:

 

Compare Total Cost of Different Loans

Look beyond just the interest rate when comparing green auto loans. Be sure to calculate the total cost of financing based on the loan amount, APR, and term length. Some loans have lower rates but require you to give up valuable EV tax credits. Run the numbers to see the overall cost difference between lenders.

 

Match Loan Terms to Your Budget

Green auto loans often offer extended terms up to 8 years. While a longer term reduces your monthly payment, it also increases the total interest paid over the life of the loan. Make sure to choose a term length that aligns with your budget and financial plan. Don’t overextend yourself with too much vehicle debt.

 

Maximize Available Incentives

Some green auto lenders provide special discounts and incentives on top of the standard government rebates. Ask each lender what perks they offer for EV buyers. This could include discounted interest rates, cash bonuses, or complimentary charging stations. Finding a loan with extra perks can save you thousands over the long run.

By comparing total cost, loan terms, and available incentives, you can zero in on the perfect green auto loan for financing your new electric vehicle. The right financing can help make your EV purchase more affordable while also maximizing long-term savings.

 

Going Green and Saving Money

Purchasing an electric vehicle can seem expensive due to the higher upfront costs compared to gas-powered cars. However, green auto loans make it possible to enjoy the benefits of EV ownership for much less. With extended loan terms, lower interest rates, and available rebates, you can reduce your monthly payments and overall costs significantly.

Going green with an electric vehicle also reduces your environmental impact. EVs produce zero direct emissions, meaning you’ll no longer be contributing to air pollution and carbon emissions from driving a gas-powered car. The eco-friendly benefits start right away and continue throughout the lifetime of owning your EV.

Green auto loans allow Canadian drivers to take full advantage of the many incentives and rebates offered for purchasing electric vehicles. With financing that covers the full purchase price, you can maximize savings from federal EV incentives up to $5,000, additional provincial rebates up to $8,000, manufacturer discounts, and special electricity rate plans.

By securing green financing for your electric vehicle, you can enjoy driving green while saving money through low rates, extended terms, and rebates. Going electric is now more affordable than ever thanks to green auto loans aimed at making these eco-friendly cars more accessible.

 

Case Studies

John, age 35, Toronto

John had been interested in purchasing an electric vehicle for years but always found the upfront costs prohibitive. When it came time to replace his aging gas-powered sedan, John decided it was time to finally go electric. He did his research and decided on a new Nissan Leaf. The MSRP was $45,000, more than John wanted to spend. He checked with his bank for auto loan rates and was quoted an APR of 6.5% over 5 years. The monthly payments would be over $800 per month, stretching his budget.

John then looked into green auto loans and found much better financing through his local credit union. They offered a special 7-year loan for EVs at only 2.99% APR. This brought John’s monthly payment down to a much more manageable $560. Between the low APR and rebates for purchasing an EV, John was able to afford the Nissan Leaf. He’s been driving his Leaf for 2 years now and is very happy with the lower maintenance costs and not having to pay for gas anymore. The green auto loan made his EV purchase possible.

 

Mary, age 28, Montreal

When Mary graduated from university, she knew she wanted to reduce her carbon footprint but wasn’t sure she could afford an electric vehicle. She had a modest income and didn’t have much savings yet. Mary did her research and test drove several used EVs in her price range. She decided on a 3-year old Chevy Bolt for $22,000. The dealership offered her 8% APR financing over 5 years, which would have meant payments of $450 per month.

Mary applied with her credit union for pre-approval and was offered a special used EV loan at 5.5% over 6 years, bringing her payment down to just $340 per month. Between the longer term and lower interest rate, the green auto loan allowed Mary to comfortably fit the Chevy Bolt into her budget. She’s been enjoying low operating costs and a lighter environmental impact with her pre-owned EV for a year now.

 

Conclusion

Financing your electric vehicle through a green auto loan can make driving green much more affordable. This guide has covered the key options for EV financing in Canada so you can find the right loan for your needs and budget.

We discussed the benefits of special green auto loans, like their lower interest rates, longer terms, and extra incentives. There are several types of lenders to consider, from credit unions and banks to government programs and automaker financing.

While you’ll need a good credit score to qualify, taking advantage of available federal and provincial EV rebates can maximize your savings. Comparing top picks for green auto loans in Canada is important to get the best rate and loan terms.

Estimating the total cost of EV ownership, including gas and maintenance savings, helps you see the big picture. Ultimately, the right green auto loan can put your dream electric vehicle within reach while allowing you to reduce your environmental impact.

By going green with your vehicle financing, you can start enjoying the perks of driving electric while saving money through low rates and incentives. Green auto loans take the hassle out of buying an EV in Canada.

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Questions About Electric Cars & Car Loans

Electric car loans in Canada are financing options offered by lenders to help buyers purchase electric vehicles (EVs). These loans may feature lower interest rates, longer repayment terms, no down payment, or other incentives to make EVs more affordable. Most major banks and credit unions in Canada offer electric car loans, and manufacturers like Tesla also provide financing.

Interest rates on electric car loans in Canada typically range from 0% for promotional offers up to around 8%, depending on your credit. Rates tend to be 1-2% lower than comparable gas vehicle loans. For example, Desjardins offers rates as low as 0.99% on select EVs for qualified buyers. Most other major banks advertise rates around 3-5% for electric cars.

The repayment term is the length of time you have to pay off the loan. Terms for electric car loans in Canada usually range from 2 years up to 8 years, which is longer than typical gas vehicle loans. This allows buyers to spread out the payments over time to ease the higher upfront costs of EVs. For example, Coast Capital offers terms up to 84 months for their Clean Energy Auto Financing.

Most electric car loans in Canada do not require a down payment, unlike typical auto loans. For example, CIBC offers $0 down financing up to 96 months on new Tesla models. However, putting some money down upfront can help lower your interest rate. Ask potential lenders if they offer incentives for a down payment on an EV.

The minimum credit score for an electric car loan in Canada is around 650 at most lenders, similar to standard auto loans. However, you’ll get better interest rates with a score over 700. TD Bank advertises EV rates as low as 3.99% for qualified buyers with excellent credit. Check your score beforehand and shop rates from multiple lenders.

Some of the best options for electric car loans from major banks in Canada include:

 

– TD Auto Finance: Offers the TD Green Auto Loan with rates as low as 3.99%

– CIBC: Features a CIBC Electric Vehicle Incentive Loan with $0 down

– Scotiabank: Green Vehicle Program offers financing terms up to 96 months

– RBC: Advertises the RBC Electric Vehicle Rebate and Incentive Loan

Yes, getting pre-approved before visiting the dealership can be beneficial. Pre-approval provides you with a rate and loan amount you qualify for ahead of time, which helps you negotiate confidently and potentially secure a better deal. Canada Drives allows you to easily compare personalized pre-approved rates from multiple top lenders through their website.

Most major electric car makers offer their own attractive financing promotions in Canada, including:

 

– Tesla: Offers financing as low as 2.99% up to 72 months

– Nissan: Advertises 0% financing for up to 84 months on the Leaf

– Chevrolet: Features discounted rates on models like the Bolt EV and Bolt EUV

– Hyundai: Provides incentives of up to $2,000 off select EV loans

Yes, many federal and provincial electric vehicle incentives in Canada can directly reduce the purchase price, which lowers the amount you need to finance. For example, Transport Canada offers rebates up to $5,000 off new EVs. There are also incentives available in Quebec, British Columbia, Nova Scotia, and other regions.

Typical fees for Canadian EV loans include an administration or documentation fee of $0-$500, lien registration of around $20-$60 to register the security interest, and applicable provincial sales taxes. There also may be early repayment fees if you pay off your loan sooner than the full term. Ask lenders to clearly explain all fees.

Yes, many banks and credit unions offer electric car loans in Canada for both new and used EVs. For example, Coast Capital advertises used EV rates as low as 4.79%. However, interest rates tend to be higher for used electric vehicles, and qualified models may be restricted to vehicles 5 years old or less.

Some of the best places to get electric car lease deals in Canada include:

 

– Directly from manufacturers like Tesla or Chevrolet

– Third-party leasing companies like Canada Drives

– Programs from auto dealerships featuring discounted rates

– Getting pre-qualified for top leasing rates from multiple lenders at once

If you plan to keep your EV for a long time, financing tends to be the better option since you eventually own the vehicle outright. Leasing allows lower monthly payments but requires you to return the car after your term is up. Do the math on total costs over time and consider what’s best for your budget. Leasing can also allow you to easily switch into a new EV later.

Many federal and provincial electric vehicle incentives in Canada include discounts on home, workplace, or public charging station installations to help reduce associated costs:

 

– Federal EV Charger Incentive: Up to $1,000 off home charging

– Ontario Charging Incentive Program: Rebate on home and workplace chargers

– BC CleanBC Program: Offers rebates on EV charger purchases and installations

– Nova Scotia eVX Program: Covers 50% of Level 2 charger hardware/installation costs

Some of top-ranked electric vehicles available for lease in Canada based on incentives, mileage allowance and value include:

 

– Tesla Model 3

– Nissan Leaf and Leaf Plus

– Hyundai Kona Electric and Ioniq 5

– Kia Niro EV

– Polestar 2

– Volkswagen ID.4

Currently, the cheapest electric vehicles to lease in Canada are the base 2023 Nissan Leaf S starting from $319 per month, and the 2023 Chevrolet Bolt EV at $349 per month. Actual lease pricing also depends on your province, the length of your term, mileage needs, and eligibility for federal or provincial EV incentives.

Electric car insurance in Canada costs 15-20% less on average compared to gas-powered vehicles. EVs tend to have lower collision repair costs due to simpler mechanics. When shopping, ask about discounts for smart features like advanced driver assistance. Tesla Insurance in Ontario offers unique EV coverage. Premiums also partly depend on your charging habits.

The high upfront sticker price of EVs makes financing often essential for most buyers. With generous government incentives lowering principal costs, attractive manufacturer rates as low as 0%, no down payment required on most loans, and far lower fueling and maintenance expenses, electric car financing in Canada can pay off in the long run.

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