With the release of the awesome Ford Mustang Mach-E, electric cars are more on the radar now than at any time before. The success of Tesla and the increase in electric cars from mainstream manufacturers means now is a great time to embrace green motoring.
But can you use an auto loan to buy an electric vehicle?
Yes you can!
An auto loan isn’t about what powers your car. It’s about the value of that car, the potential for depreciation and the numbers. The loan doesn’t care whether you’re using gas or electricity to get around.
Buying an EV with an auto loan
The same rules apply when using an auto loan to finance an electric car as they do when buying a gas powered car.
Prepare your application
Before you begin looking around for your new car, it’s a good idea to check your financial health, pay off any debt you have outstanding and prepare your paperwork.
If you have other loans or credit cards, pay them off to lower your credit utilization ratio. It also simplifies life a little if you have only one loan to pay off each month.
You will also need to make sure you have sufficient paperwork to prove your income, your salary and identity.
Check your credit score
Your credit score has a huge influence over what lenders will want to work with you and the interest rate you’ll pay. It will also influence how much you can borrow but that’s more down to your income and debt ratio.
You get one free credit check per year so now would be a good time to use it. Make sure your score looks right and that all entries on your report are correct. It’s easier to correct mistakes before an application than during!
Save your down payment
A down payment isn’t mandatory for an auto loan but it is helpful. It increases your chances of being accepted for a loan, increases the budget you have for the car and lowers your monthly payments.
You can use cash for a down payment, your old car as a trade-in or both. The more you can put down as a payment, the better your chances of getting the loan.
Pre-approval is like a test of an auto loan application without the hard inquiry. It’s a great way to see if the loan calculators you probably used are accurate and whether you’re being realistic about the amount you want to borrow.
You can get pre-approved online or we can help you get pre-approved. It’s entirely up to you.
Once you’re ready for a loan, contact our team and we can walk you through the process and find you a great deal!