How Do I Finance My New or Used EV?

October 19, 2021

How Do I Finance My New or Used EV?

Look­ing to pur­chase an elec­tric vehi­cle but not sure about your financ­ing options?  We’ve put togeth­er a roadmap to not only help with financ­ing, but also to help ori­ent you to the valu­able incen­tives avail­able to EV buyers.

Don’t Miss Out

Elec­tric vehi­cle rebates and incen­tives are ubiq­ui­tous. We’ve gath­ered details for many of them below, but be sure to research what’s avail­able local­ly as well.

Fed­er­al Tax Credits: 

New elec­tric vehi­cles may be eli­gi­ble for a fed­er­al income tax cred­it of up to $7,500. Cred­it amounts usu­al­ly vary based on a vehicle’s bat­tery capac­i­ty. See tax cred­it by EV to get an idea of vehi­cle costs after cred­its are applied—both busi­ness and per­son­al vehi­cles qualify.

To get the EV tax cred­it, buy­ers need to:

  • Fill out Form 8936 , Qual­i­fied Plug-in Elec­tric Dri­ve Motor Vehi­cle Credit
  • For per­son­al vehi­cles, report the cred­it from Form 8936  on the appro­pri­ate line of your Form 1040, U.S. Indi­vid­ual Income Tax Return .
  • For vehi­cles pur­chased in 2010 or lat­er, this cred­it can be used toward the alter­na­tive min­i­mum tax (AMT).
  • If the qual­i­fy­ing vehi­cle is pur­chased for busi­ness use, the cred­it for busi­ness use of an elec­tric vehi­cle is report­ed on Form 3800 , Gen­er­al Busi­ness Credit.

State Tax Credits: 

  • Col­orado offers a $2,500 state income tax cred­it. Some deal­ers may enable this cred­it at the point of sale.
  • The Charge ahead Col­orado pro­gram can help fund elec­tric vehi­cle sup­ply equip­ment (EVSE) in mul­ti-fam­i­ly hous­ing developments.
  • Liv­ing out­side Col­orado? See what your state offers.

Home Charg­ing Rebates: 

In addi­tion to the cred­its avail­able when pur­chas­ing your EV, you could also qual­i­fy for addi­tion­al rebates for home charging.

Fed­er­al Home Charg­ing Credit:

The fed­er­al gov­ern­ment offers a tax cred­it for EV charg­er hard­ware and relat­ed instal­la­tion costs. 30% of the costs are cov­ered with max­i­mum cred­its of $1,000 for res­i­den­tial and $30,000 for com­mer­cial installations.

Res­i­den­tial Util­i­ty Rebates:

That’s not all. You may also qual­i­fy for res­i­den­tial rebates through your local util­i­ty for the pur­chase of a new EV or instal­la­tion of a Lev­el 2 res­i­den­tial charg­er. Check for rebates avail­able in your area.

Home Charging Considerations

There are a lot of fac­tors to con­sid­er when decid­ing the best way to charge your EV. Think about the amount of pow­er your home has, if a vehi­cle has fea­tures for ener­gy stor­age, how quick­ly and fre­quent­ly you’ll need to recharge. Once you assess what works for your home, lifestyle, and bud­get, you can make an informed deci­sion about your best charg­ing solution.

Here’s what you should know about the dif­fer­ent charg­ing levels:

Lev­el One Charg­ing  —  The cheap­est and most wide­ly avail­able option. While you may be able to plug your EV direct­ly into any wall out­let, charg­ing is usu­al­ly slow. On aver­age, most bat­ter­ies cap­ture just 3–5 miles of range per hour of lev­el one charg­ing, so con­sid­er how fre­quent­ly you’ll charge and the dis­tance of your aver­age trip.

Where you live can also be a fac­tor with lev­el one charg­ing. Lev­el one charg­ing is usu­al­ly most ide­al for peo­ple with easy access to a 120V out­let to plug into.

Lev­el Two Charg­ing  —   The quick­est form of home charg­ing for EVs. This option involves pur­chas­ing a car charg­er or using a high­er-volt­age out­let, which may require home wiring. Local reg­u­la­tions may require per­mit­ting and equip­ment costs can be high. Alter­na­tive­ly, you may be able to repur­pose a high­er volt­age out­let (such as a 240V dry­er out­let) to pro­vide lev­el two EV charg­ing, but there are safe­ty issues to con­sid­er. It’s rec­om­mend­ed that you have a licensed elec­tri­cian upgrade your wiring and/or install a suit­able 240V outlet.

If you’re look­ing for a “green­er” home charg­ing set up, solar-elec­tric­i­ty is ide­al, but many res­i­den­tial-scale solar sys­tems are under­sized for reg­u­lar EV charg­ing. Alter­na­tive­ly, elec­tric util­i­ties fre­quent­ly offer res­i­den­tial green pow­er at an addi­tion­al cost. (E.G. Xcel Energy’s Wind­sourceRenewable*Connect, and Com­mu­ni­ty Solar pro­grams)

Financing your Electric Vehicle

Some pros and cons to con­sid­er with the most com­mon types of EV financing.

  • Deal­er­ship:
    • Most deal­ers offer on-site financ­ing through their lend­ing partners. 
        • Pros:
          • Con­ve­nience – One stop shopping
          • Speed – Fre­quent­ly avail­able day-of-purchase
          • Usu­al­ly have options for low cred­it, high-risk borrowers
        • Cons:
          • Options may be limited
          • Few­er oppor­tu­ni­ties to shop for com­pet­i­tive loan terms and rates
          • Deal­er usu­al­ly makes mon­ey on your financ­ing (con­flict of interest)
          • Reluc­tance to sell EVs due to low rel­a­tive commissions
  • Man­u­fac­tur­er:
    • Man­u­fac­tur­ers offer direct con­sumer financ­ing on their website. 
        • Pros:
          • Con­ve­nient online appli­ca­tion process
          • Apply for the loan at the same time as order­ing your vehicle
          • May offer addi­tion­al incentives
        • Cons:
          • Financ­ing may not be offered for all mod­el vehicles
          • Nar­row range of loan terms
          • Not avail­able in every state
          • Typ­i­cal­ly, not avail­able for used car purchases
  • Cred­it Union / Bank: 
    • Banks and cred­it unions offer com­pet­i­tive EV loans to account holders/members through their branch­es or websites. 
        • Pros:
          • Com­pet­i­tive rates and the abil­i­ty to shop around
          • High lev­el of cus­tomer service
          • Con­ve­nience of hav­ing both your loan and bank­ing ser­vices with a sin­gle institution
          • Typ­i­cal­ly, you can apply online
          • Some offer loan pre-approved
        • Cons:
          • Usu­al­ly not avail­able at/through the dealership
          • Requires work­ing with mul­ti­ple ven­dors (I.E. a finan­cial insti­tu­tion as well as a deal­er or manufacturer)
          • Cred­it union’s require eli­gi­bil­i­ty based on their spe­cif­ic field of membership

Remem­ber to com­pare rates from the options above to ensure you are get­ting the best rate on your pur­chase! Now it’s time to cruise.

Thanks to Clean Ener­gy Cred­it Union for writ­ing this blog post.

Ques­tions? Clean Ener­gy Cred­it Union’s loan offi­cers are always hap­py to help. Check out cleanenergycu.org and/or get in touch at 720–479-7900 or .

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