Electric vehicles are becoming more and more popular as people choose vehicles that run on electricity instead of gasoline or diesel. Electric vehicles, also called EVs, have many benefits over traditional vehicles, including the ability to travel further on a single charge, reduced emissions, and lower costs. There are many different types of electric vehicles, from small cars like the Tesla Model 3 to large buses and trucks. The market for electric vehicles is growing rapidly, and there is a lot of interest in both large and small companies investing in this technology. Depending on how you pay for your EV, you may need to finance it.
An electric vehicle auto loan is a loan that allows someone to finance their purchase of an electric vehicle. The loan can be used to cover the base MSRP cost of the vehicle, as well as to pay for associated fees and taxes. The terms of the loan should be based on the borrower's credit score and down payment. After you complete the series of initial payments, you can refinance your EV loan which will often save you additional money on your monthly vehicle payments. Your actual savings depend on how structure the refinanced loan and what term you accept. Let's learn how to refinance electric vehicles.
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Introduction to Electric Vehicles
Electric vehicles have been around for a few decades now. While they are not new, they are becoming more durable with longer ranges, better batteries, and faster charging capabilities. All of these factors make electric vehicles like the Tesla Model 3 an attractive option as a daily driver and increasing its popularity among car enthusiasts. The length of time it takes to charge the battery is now faster than ever before. With a standard 120-volt outlet, it can take up to 20 hours to fully charge a battery. But with a fast charger, that time can be reduced to as little as 30 to 40 minutes.
Most EVs come with a charging cord that plugs into a standard outlet, but for faster charging, you need to buy or install a fast charger which has a higher voltage output. For example, there are three types of fast chargers: AC Level 1, AC Level 2, and AC Level 3 or DC Fast Charge. An AC Level 1 charger uses a standard household outlet (120 volts) and charges at 6-8 amps, which means it will take about 8-10 hours to fully charge an EV battery. The others are incrementally faster with DC Fast Charge taking minutes to top off the car's battery.
The electric vehicle popularity trend is also reflected in the auto loan market as more drivers look to buy EVs. The MSRP of electric vehicles is higher than conventional vehicles
You may be wondering if it is worth it to buy an electric car as opposed to a conventional one. The answer depends on a few factors. Some are related to the advantages of an EV's environmental sustainability and financial benefits, while others relate to how much you can afford as a consumer and whether or not you will be able to maintain your new EV purchase. Here's what you need to know before making your decision!
EV Perks
The Emission Benefits
The advantage of an electric vehicle is that it produces very few emissions and requires no gasoline. Electric vehicles are a great way to reduce your carbon footprint. Electric vehicles produce zero emissions, which is great for the environment. Not only do electric vehicles produce zero emissions, but they also help maintain cleaner air quality and reduce smog when compared to traditional vehicles. When more people switch to electric vehicles, it will help reduce the amount of emissions produced from gasoline and diesel powered cars and trucks.
Latent Maintenance Costs
Maintaining an electric vehicle has similar short-term maintenance costs similar to those of a non-electric one. Things like tires, brake pads, and air filters must be rotated and changed every few thousand miles. One of the biggest maintenance considerations is replacing the battery. EVs are powered by extremely large batteries which are made up of rare metals like lithium, cobalt, and manganese. These batteries must be replaced around every 8 to 10 years and can cost over $10,000. The most expensive batteries are found in Tesla models with upper reported costs being as high as $22,500 in a Model S.
Electric Vehicle Range
The range of electric vehicles is another important consideration. Most EVs can go between 200 to 400 miles. More budget vehicles like the 2022 Chevy Bolt EV can travel around 250 miles on a full charge while more premium vehicles like the 2022 Tesla Model S Long Range can travel around 400 miles. This is a factor because owners must plan stops around charging stations during their travels. If you plan on traveling to an area where EV charging stations are few or far between, you are probably better off taking a gasoline powered car.
Tax Benefits for New EVs
If you purchased a qualifying EV, there are a few tax credits that can help you offset the cost of your purchase and could also result in a lower interest rate. For example, a $7,500 tax credit is available for certain electric vehicles that are new or not more than five years old. In addition to the federal incentives, many states offer their own EV ownership incentives as well. Some states like Maryland offer up to $10,000 in state rebates for people who buy EVs and use them as their main source of transportation. In California, they offer up to $2,500 in EV rebates. Keep in mind that you may need to meet eligibility requirements in order to be eligible for these types of incentives.
About EV Car Loans
What Is a Car Loan?
A car loan is a type of secured loan that lets you borrow money to purchase a car through financing. Your lender will use your car as collateral in case you don’t make your monthly payments. That said, there are some major differences between a loan and outright vehicle purchase. Buying a car outright for cash can be a good option if you have the funds available. However, the prices of new cars are rising with the average vehicle MSRP for 2022 coming in at $47,000 as reported by Kelly Blue Book. Taking out a loan may be the only option you have if you cannot afford to spend almost fifty-thousand dollars in cash.
When you take out a car loan, you borrow money from a lender to make the purchase. Lenders charge you an interest rate to borrow the funds and you pay them back through making monthly payments over the span of several months like 48 or 4 years. The interest rate is based on several things including the lending rate of the Federal Reserve, your credit score, and the vehicle's value. You may find the typical electric vehicle car loan interest rate to be around 3.75%. This may be lower than the average auto loan interest rate of around 5%. However, your search to finance an electric vehicle may also be impacted by the 2022 increases in rates from the point hike and limited EV supply and availability at dealerships.
The term length on an auto loan can differ along with interest rate depending on what type of vehicle you’re buying, like whether it is a new or used vehicle. While used vehicles can be cheaper, the interest rate is often higher, so you will pay more in interest over the life of the car loan. Refinancing can also help you take advantage of lower interest rates and help lower the total interest cost of your vehicle loan. You can use our guide to see what you should look for in a finance company, saving you time by not having to look around to find the best deal on your own.
What is an Electric Vehicle Car Loan?
Electric vehicle loans are similar to traditional car loans, however they can have additional benefits and limitations. When shopping for an EV, see if you can finance through a dealership which offers new vehicle lending incentives. You may be able to qualify for special dealer financing lending offers and interest rates like 0% APR and cashback offers. Be aware that if you are buying a used electric vehicle, used EV financing is often limited for vehicles which are older than 5 years old. This is because the technology can become outdated and battery replacement is just a few years away.
Reasons to Refinance an Electric Car Loan
There are many reasons to refinance an EV. For starters, you could save a lot of money with a lower interest rate or you could shorten your term. If you did the latter, it’s true that your monthly payment might go up, but it will be offset by the amount you save on interest payments and you will be working your way out of debt faster. You can also find a better annual percentage rate, or APR. If your current loan has a 10% APR and you refinance at a 4.5% APR, you would save a lot of money each month!
Another reason to consider refinancing is if you want to simply get rid of the old auto loan entirely. If that’s the case, then consider refinancing your vehicle. The only other way to lose the old loan is to sell the vehicle altogether, but refinancing can be more cost effective since you do not have to pay additional registration and sales taxes. Some consumers also opt to switch out their car loans and extend their terms because they like having more time to pay things off and saving money on their monthly payments.
Finally, there may be tax benefits to having an auto loan if it’s used for business or commercial purposes. You can sometimes claim a tax deduction on the interest. Check with your tax professional to see if your car loan is considered an asset for tax purposes. If you switch your current loan out for another loan through refinancing, then any money saved is not subject to taxes in most cases.
Benefits of Refinancing an Electric Car Loan
The benefits of refinancing your EV car loan can include the following things: lower monthly payments, lower interest rate, and a better deal on your vehicle loan's APR. Through refinancing, you can lock in interest rates for up to five years and have peace of mind knowing you’re not paying a higher rate than you have to.
Potential Refinance Savings
Your cost savings from refinancing your electric vehicle auto loan can be significant. Let’s say you have a $45,000 car loan with an interest rate of 4% and a term of 72 months, or 6 years. If you were able to pay down your loan to $40,000 and then refinanced it using a lower interest rate at 2.4%, you would see a savings of about $106.96 per month and $1,283.52 per year! Over the entire life of the car loan, these savings would add up to around $7,701.12. This is why refinancing can help you save money and be a good idea to put money back into your monthly budget.
As your car ages, so does your vehicle's value and your loan. What was originally a good deal on a car loan for you originally may not be as good now. You can use this fact to your advantage when refinancing since your new loan payment may be lower as well. Refinancing can be an opportunity for you to save money on your EV car payment if you are just buying your first electric vehicle while starting out in your career, heading back to school for your MBA, or trying to pay for additional CE credits to advance your career.
EV Loan Terms
The term used for the auto loan on your electric vehicle indicates how much time you have to pay back the loan. For example, common auto loan terms include 36, 48, and 72 months which equate to 3, 4, and 6 years. 72 months is often the most common term for a new car loan. Shorter terms, like 36 and 48 months, can be used if you want to pay off your car faster or can afford a higher monthly payment. These shorter terms have higher payments since there is less time to pay back the loaned amount. Your payments begin paying down the loan's principal amount over the life of the loan across the term.
The interest rate and APR are used in conjunction with the term to calculate your payments and the full value of the loan. Remember that interest rate is the fee a borrower charges you to use their money while APR is the total cost of everything involved including rates, fees, and other costs. If your term is longer, like 72 months, you have more time to pay off the loan leading to a lower monthly payment at the cost of paying a little bit more in interest.
How to Refinance an Electric Car Loan
Refinancing your EV loan is a fairly simple process. The first thing you need to do is find out if your current auto loan has an interest rate that can be lowered or is positioned to help you save. This could be done by using tools like our auto loan refinance calculator to help you compare and understand monthly savings. If your loan already has a lower interest rate, like under 3% or 4%, then you can try to save additional money with an extended term. Then, the first step is finding a lender.
Choose a Lender
The lender you refinance your electric vehicle with matters a lot! They are the financial institution you are borrowing money from after all. The two best ways you can find the right lender to use are checking with your local bank and using an auto refinance marketplace. If going with a traditional bank is more your style, then start by checking the rates on bank refi offers in your area. Start by calling or contacting local bank loan officers or finance managers to see what they can offer you as far as interest rate and APR. You may even consider going with a bank outside of where you live if they offer competitive rates and terms. Marketplaces are often better than a single bank since they have more options and often provide access to a large number of lending network banks, credit unions, and partners. Most of these entities are nationally recognized and Member FDIC. We have listed the best marketplaces to help you get started.
Check for New Loans
Applying for loans and checking for savings is the next step. For this part, remember why you want to refinance your loan in the first place and see if you can find a new loan option to help you reach that goal. The options below represent just a few of the possibilities available to you through auto refinancing.
- Want to save money? Choose a loan with a lower interest rate or longer term — both can help you save.
- Want to pay off your car sooner? Choose a loan with a shorter term — you will pay more in the short term but work towards being debt free.
- Want to make use of your vehicle equity? See if you can leverage your vehicle's value in your favor with a new lender.
Lock-in and Finalize
When you have found the loan you want for your electric vehicle, lock-in your rate and finalize the details. You will be well on your way towards your financial goals by working with the right lender that offers a competitive rate and term, choosing the right EV loan, and planning for the future.
Dig Deeper into Auto Refi
The three steps above cover the basic idea of refinancing. Want to learn more? Visit our guide to competitive auto refinancing.
More About Refi Marketplaces
There are several types of online auto refinance marketplaces available for you to use to refinance your electric vehicle. Some marketplaces network with banks directly while others use services like peer-to-peer lending to secure funds. If you are looking for a high-value marketplace with great reviews that provides direct access to banks and credit unions, Caribou Auto Refinance is a good option to consider along with Auto Approve and RateGenius. These marketplaces also offer cash-out refinancing to help you use your car's equity to cover other bills or expenses.
If you’re looking for a low cost option, you may want to consider refinancing through peer-to-peer lending platforms like Lending Club and Prosper. These companies allow borrowers to easily compare rates before making a decision on who to go with. They also offer borrowers the ability to cash out their loans, which means you can use them to get money funds for your savings account if necessary.
Then, there are other comparison websites which are not really marketplaces. Sites like Bankrate, Credit Karma, and Nerdwallet are examples. You may think they are marketplaces at first glance, but later on, you will find out they just sell your lead information to another marketplace. They sometimes provide useful information, but you can skip the whole secondary marketplace of marketplaces step and go straight to the real ones above.
Caring for Your EV
Electric vehicles are becoming more and more popular each year. With the increase in popularity, comes an increase in need for knowledge on how to properly maintain them. Proper electric vehicle maintenance is key to keeping your battery healthy and your car running smoothly.
Electric vehicle maintenance is important, and your EV car loan will require you to care for your electric vehicle to upkeep its equity. This means that you need to make sure that the battery is properly maintained, charged, and preventative maintenance performed on schedule. Always make sure the battery pack keeps the minimum charge and level of power. EVs do make this easy, since you can keep them plugged into a charging station when not in use.
These stations are becoming more popular and more readily available around the nation. The accompanying smartphone apps make it easy to check the charge state of your car. Additionally, some EVs come with apps that allow you to remotely start up or shut down the car as well as monitor its temperature and other factors. You can also program a specific driving schedule for your EV so it doesn’t just sit idle all the time and drain its battery.
A few other basic things you can do to keep your electric vehicle in good running order include checking the tire pressure to make sure they are inflated to the correct PSI. For example, a Tesla Model 3 should have its tires inflated to about 42 PSI. Low tire pressure can decrease your car's range by lowering motor efficiency.

EV Loan FAQs
Have questions about financing or refinancing your electric vehicle? Get answers, and find information.
An electric vehicle is an automobile which is powered by electricity.
A hybrid vehicle is powered by both electricity and gasoline making it a hybrid since it has two sources of power.
Sometimes — it depends on the lender. You may be able to refinance an older EV if it is in good condition with positive vehicle equity.
Long range models can travel as far as 300 to 400 miles on one charge. An example is the Tesla Model Y.
Most EVs can fast-charge in around 40 to 60 minutes using 350kW power sources. These sources use a multi-prong plug with 350kW DC fast chargers.