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Charging Ahead: A Guide to Auto Financing for Electric Vehicles
By Jessica Llanes / 07/18/2024 / Electric Vehicles
With the increasing popularity of electric vehicles (EVs), potential buyers need to fully understand the cost of ownership.
This Q&A guide will cover:
- Ways to lease or finance a General Motors EV.
- Incentives that can make ownership more affordable.
- How to add home charging to your EV budget.
- Auto finance tips tailored to EVs.
Is it better to lease or finance an electric vehicle?
Your decision to lease or finance an EV depends on your budget, lifestyle, driving habits and long-term plans.
GM Financial offers competitive leases for new EVs. The terms are typically 24 to 36 months with customizable mileage options. Lease payments may be lower compared to financing your vehicle, and many lease terms coincide with the length of the manufacturer’s warranty. You can enjoy the latest technology and features, but there are mileage limits and lease-end fees. At the end of your contract, you can purchase your EV, turn it in or lease (or buy) a new vehicle.
If you choose to buy a new or certified pre-owned EV instead of leasing, you may be able to finance for terms up to 84 months. With a purchase, there are no mileage limits. You own your vehicle after completing your contract, so you can customize it however you wish. Keep in mind that monthly payments may be higher than with a leased vehicle. This is because you are paying for the entire cost of the EV during the finance term.
It may be helpful to evaluate the total cost of owning an EV to make a smart choice that fits your needs. This cost includes down payment, monthly installments, insurance, maintenance and tax incentives. The U.S. Department of Energy has created a calculator to help determine the lifetime cost of owning an EV.
What incentives are available when purchasing an EV?
One of the most enticing aspects of buying an electric vehicle is the incentives that may be available. These can include federal tax credits, state rebates and utility company incentives. By taking advantage of these programs, you can reduce the cost of your EV and make it more affordable.
The Clean Vehicle Tax Credit offers a one-time credit for up to $7,500 on qualifying EV purchases. Your eligibility to claim the credit depends on the vehicle and individual circumstances, including adjusted gross income. (The IRS provides important information on its website.) You should consult with your tax, legal or accounting professional to determine eligibility.
In addition to the Clean Vehicle Tax Credit, it’s worth exploring state and local incentives that may be available in your area. For example, California residents may qualify for extra rebates under the Clean Vehicle Assistance Program. You may also qualify for tax credits and rebates for the purchase and installation of an EV charger and for off-hours electricity usage. But this depends on where you are located. You can search for incentives by ZIP code.
Do I need a home charging station, and can I finance it?
To help accelerate EV adoption, General Motors is deploying Level 2 chargers (offering 150 miles of range in four to eight hours of charging) and EVgo fast-charging stations at key destinations across the U.S. and Canada. To see how GM is helping to electrify charging deserts in rural communities, visit gmenergy.gm.com. You can also learn about public charging options and maximizing range.
Many EV owners also choose to add an EV charging solution to their home. You can get a professional evaluation of your situation, as well as installation and support with GM Energy. You can apply to prequalify in under five minutes to see how much financing you qualify for. The prequalification won’t impact your credit. You can then choose your charging products and services and receive a quote. Finally, you can apply for financing online with GM Financial.
Many EV owners also choose to add an EV charging solution to their home. Talk to your dealership about options to include a home charger in your vehicle contract. In select states,2 you can apply with GM Financial to finance home energy products and installation purchased through GM Energy. You can apply to prequalify in under five minutes to see how much financing you qualify for. The prequalification won’t impact your credit. You can then choose your charging products and services and receive a quote.
What other considerations do I need to think about unique to EVs?
Many auto finance tips apply to both traditional and electric vehicles, but EV buyers have a few extra things to consider. First, it's crucial to factor in the cost of electricity and potential savings on fuel expenses when calculating your budget. Second, knowing the warranty and maintenance costs of EVs will help you plan for future expenses.
Speak to your dealer about extras available for your electric vehicle. These include EV-specific protection plans and prepaid maintenance offerings. You can add them when you purchase your vehicle.
Are you ready to go electric?
No matter what EV you’re interested in, take financial steps to prepare before you head to the dealership. You can apply to prequalify with no impact to your credit score now that you understand how to navigate EV auto financing. If you’re ready to start shopping, visit our current offers page to see the latest deals.
By Jessica Llanes, Cadillac Financial
Jessica Llanes is an off-road adventurer, EV enthusiast and bon vivant raised in New Orleans. When she’s not traveling, she enjoys sharing a homecooked meal with friends, curling up with an Agatha Christie novel, or binge-watching classic episodes of Top Gear (or Top Chef).
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