A green auto loan could make purchasing a Tesla or other electric vehicle more affordable.

• The demand for electric vehicles is increasing as car manufacturers introduce new models and reduce their prices.
• As EVs become more accessible and financial incentives and tax breaks become harder to obtain, buyers should explore green auto loans.
• A green auto loan may provide better rates or a longer term if you purchase an environmentally-friendly car.

There may be no better time to buy an electric vehicle than now.

Car manufacturers are increasingly introducing vehicles with enhanced range and superior performance.

The White House is pushing for stricter tailpipe emissions rules and aims to increase the number of electric vehicles to two-thirds of new sales by 2032. The administration is also focusing on building a network of charging stations.

The market leader has reduced EV prices multiple times this year, and other manufacturers are now following suit, as prices of EVs begin to decline.

The race to the $25,000 mass market EV is on.

To take advantage of financial incentives for EV buyers, many potential buyers may look to federal, state, and utility-run programs, such as the $7,500 federal tax credit. However, increasing standards for these rebates and savings are making it harder for buyers to qualify, though there are some workarounds.

Consumers may not be aware that they can obtain a better deal on a car loan for an electric vehicle, in addition to financial credits and rebates. Green auto loans are not widely advertised, so it is essential for car shoppers to research them.

Edward Lyons, director of financial services for AAA Northeast Bank, stated that green auto loans are essentially auto loans with a lower rate, and lenders may offer a discount for purchasing an electric vehicle.

Electric, hybrid, or flexible fuel vehicles can be purchased with these loans, and there are no manufacturer restrictions, according to Lyons.

It's important to inquire about discounts with the lender, especially for hybrid cars, as they may be eligible for lower rates, according to Lyons.

Auto loan professionals predict that consumers may anticipate savings of 25 to 100 basis points when compared to the rates offered for regular vehicles. However, the discount amount will differ among lenders, so it's advisable to compare rates from various lenders, Lyons advised.

Green auto loans may offer borrowers the option to repay their loans over a longer period of time at favorable rates, potentially saving them a significant amount of money in interest payments. However, borrowers should carefully consider the terms and conditions of these loans before committing to one.

Similar to green mortgages, vehicle financing may allow borrowers to roll in the cost of a charging station.

Green auto loans may not be widely advertised, so consumers will need to do some research to find them. Credit unions and banks may offer these loans, but credit unions tend to have better deals. To take advantage of these offers, borrowers who are not already members of a credit union can search online for a local or national credit union that offers green auto loans. They may need to become a member or open a savings account to qualify for these deals, Peterson said.

Dealership finance departments may not inform potential buyers about loan discounts offered by EV manufacturers, so consumers must inquire about them, according to Peterson.

Comparing auto loan rates and terms requires consideration of factors such as loan size, borrower credit score, and other conditions. To ensure accurate comparisons, borrowers should obtain at least three quotes. For a broader understanding of available options, borrowers can first visit a marketplace like Bankrate.com.

Before embarking on something, it's crucial to do your research and understand the consequences, as Lyons advised.

During the pandemic, when car values increased and there was a lot of pressure to buy, people may have taken out a bad loan on an EV. It might be worth exploring refinancing options, Peterson advised. "The worst that can happen is a few phone calls," he said.

Peterson stated that while there is usually a small fee for transferring a vehicle's title, upfront fees for refinancing are almost non-existent. Typically, consumers won't want to extend their term if they are offered the same interest rate, but if a borrower is paying 12.9% and gets a new offer for 5%, extending the term a bit and accepting a significantly better rate could be beneficial, Peterson said.