Finding a Loan as Eco-friendly as Your Car
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Buying or leasing a new car is always an expensive proposition. However, drivers who choose an electric vehicle or other eco-friendly model that offers lower emissions may be able to save some money with a green auto loan.
What are green auto loans?
Let’s explore the answer and some of the best options for anyone looking to buy a green or eco-friendly car in 2022.
What Is a Green Auto Loan?
The world is collectively looking for ways to reduce global carbon emissions to prevent a looming climate crisis. According to climate change experts, we need to reduce CO2 emissions by 50% by 2030, with the ultimate goal being net-zero emissions by 2050. The United States did not officially join the Paris Climate Agreement until President Biden took office in 2021, but he is making changes to try and curb the country’s CO2 emissions.
In August 2021, President Biden signed an executive order stating that half of all new cars sold in the country need to be electric by 2030. Car dealerships and financial institutions are ready to support that goal with green auto loans.
What Makes a Green Auto Loan Different?
Green auto loans share many features with traditional borrowing options, such as a fixed interest rate and the repayment period. You’ll have to seek one of these more environmentally-friendly loans from a participating financial institution, just like a regular loan or lease. That is where the similarities end.
Green auto loans often have a lower interest rate as an additional incentive to purchase an electric, hybrid or another green vehicle. Additionally, repayment periods are usually longer because of the higher costs of these eco-friendly cars. If owning the vehicle instead of trading it in at the end of your lease is your plan, these more extended repayment periods can make it easier to buy out the lease when you’re nearing the end of the repayment period. Another alternative is to trade in lease early.
Unlike standard car loans, you can’t generally shop for these loans online. Credit unions offer most green auto loans, though as the demand for electric and eco-friendly vehicles starts to climb, the number of financial institutions that offer these loans will likely change.
What Makes a Car Green?
As of this writing, there are no standardized criteria for what makes a car green. The cars, trucks or SUVs that qualify for a green auto loan will depend entirely on the lender. It will likely include electric vehicles, which are becoming more affordable and accessible every year, but it could potentially have hybrid cars and low-emission vehicles. As eco-friendly vehicles powered by hydrogen fuel cells become commercially available, they will likely qualify for a green auto loan.
It will still be some time before electric cars become mandatory, though moves in that direction have already started in California and elsewhere. These green auto loan lenders can help turn that dream into reality for anyone looking to swap their gas-powered daily driver for an electric model.
Story by Martin Banks. Photos from Clean Fleet Report files and public sources.