Interest Rates on Electric Cars in Canada: What Are They Like?
Interest Rates on Electric Cars in Canada: What Are They Like?
Posted on July 13, 2023
Electric cars are gaining a lot of popularity in Canada. Due to its incentives, charging fees, and rebates, it is clear why a lot of people would like to go for one.
However, as a result of its initial cost, going for a car loan can seem like the best option for getting an electric car. If you are planning on getting a loan, you must the interest rate of loans on electric cars are?
According to SBI green car loans, the rate of interest on electric cars lies between 7.15 percent to 7.50 percent per annum which is calculated based on the quantum.
Where to Finance an Electric Car Loan
In Canada, there are three places to apply for a loan to finance your electric vehicle. But, it is advisable to know the pros and cons of each before applying for any of them.
Dealership: Most auto dealers offer in-house financing. This credit facility is convenient as it gives you a higher chance of receiving extra perks provided that a down payment is made.
It also provides an opportunity to trade in your used cars. However, this form of credit facility comes with a higher rate of interest and a shorter repayment term of 1 to 5 years.
Bank And Credit Union: Financial institutions still remain one of the best and most popular ways to apply for any sort of financing. This is because loans will be larger while interest rate may be lower.
Also, its repayment duration is longer than any other form of credit facility in most cases. However, it will seem difficult to get a loan from this financial institution if you are not a long time member, earn a big income, or have a low credit score.
Alternative Lenders: This seems to be the best option for low-income earners or a low credit record to seek loans for their electric vehicles as their approval requirements are more flexible compared to other financial institutions.
If the vehicle loan is not granted, you can opt for a personal loan however, some alternative lenders request a higher rate of interest compared to others.
Cost of Financing an Electric Car
Down Payment: This is the initial amount paid especially in dealerships for the loan to be approved which is at least 10% to 20% of the original car sales price which not everyone can afford to pay at once.
Fees: When seeking a loan for electric cars, some additional fees will be added for things like document processing and loan origination.
Furthermore, fees for some services the car has undergone like pre-delivery inspection and maintenance will also be added.
Interest Rate: Some car loans have fixed interest rates while some are flexible depending on the negotiation made, but there is no doubt that interest rate increases the cost of your loan. The cost of interest rate tends to be higher if you have a bad credit record.