How to finance the purchase of an EV in Canada

Posted by on Jun 08, 2022 - Archived under Car Loan

Canadians interested in buying an EV have some important decisions to make before they can take their new vehicle home. There are many great EVs available, but you have to narrow down the list of candidates to the vehicles that match your preferences.

What is the vehicles primary use?

Are you using the car to commute to work, putter around the home, or use it extensively as a Door Dash or Uber Eats delivery driver?

Suppose you are using the vehicle for work. In that case, you want to get the most range possible from the vehicle, especially if you are driving for Uber, where you literally get paid for every kilometer you drive.

Does your home have a modern electrical system?

If you are buying an EV, you will need to plug it in at your home; if you have an older electrical system, it may not be able to handle the load requirements of the EV plus all of your other appliances.

You could plug the EV into the standard socket, but this trickle charge is not effective if you drive a lot during the day. You may be able to get a rebate for having your electrical system upgraded to help enable EV charging.

Since we touched on your home, where you live in Canada is another important question. If you are living in an area of Canada that is remote, there may not be enough charging stations to provide an ample supply of power.

If you are living in these more remote regions, then you should opt for a hybrid until the charging infrastructure in those regions catches up.

If you are living in an area like the GTA or most metropolitan areas in Canada, you should have no issues accessing charging stations.

Qualifying for a loan to buy an EV

The qualifying criteria for an EV are pretty much the same as a conventional gas-powered car, with some slight differences. You will qualify for rebates on the car, these rebates can be applied towards the upfront cost of the car, but you need to qualify for 100% of the car loan first.

Let’s say you get a $5,000 rebate on the EV, but it costs $50,000; in theory, your loan should only be $45,000 because of the rebate, but your loan is not for $45,000; it is for $50,000, the rebate only kicks in after you make the purchase.

This is particularly important if you are at the upper end of your budget and are currently servicing a lot of debt.

If you have a car, you should consider trading it in; that will help you reduce the total amount of money needed for financing the purchase of the EV, provided your credit score is over 650.

If your credit score is under 650, the local dealership will help you secure a loan, but the interest rate will be higher.

Don’t worry; the dealership has experts who can show you how to rebuild your credit score and still get approved for a loan today.

For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!

Let’s get in touch! 

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