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If you're considering switching to an electric or hybrid vehicle, it might be to save on your monthly gas expenses. Before you drive a new hybrid or electric car off the lot, however, make sure you're getting the best deal on the car itself.
With some electric vehicles, the monthly payment may be much higher than you're used to, but some are relatively affordable compared with gas-powered vehicles. Hybrid models tend to be about on par with gas-powered vehicles, giving you options if you're not a big spender.
Going electric or hybrid can be a great way to do your part for the environment and potentially save you money over time. Comparing prices upfront is an important step to determining which car is right for you and your budget.
The Top Electric and Hybrid Models and Their Costs
There are several factors to consider when deciding which type of vehicle to purchase. For some drivers, cost is the most important factor to consider; for others, it's safety. But if you're thinking about buying an electric or hybrid car, you may also be considering your impact on the environment.
"It's been a bit more challenging as a consumer to include environmental impact because financial impact is something that we can feel, we can touch it, it impacts our wallet and our daily life," says Melinda Zabritski, Experian's senior director of automotive financial solutions.
"Environmental impact can feel more vague. It's more of that long-term future, more of a future view of life and of society."
While it's difficult to quantify how buying an electric or hybrid car will impact the environment, you can compare and analyze vehicle prices to help aid in your decision. According to recent data from Experian Automotive, here are the top 10 electric and hybrid models and how much you can expect to pay each month to buy one.
|Monthly Payment for the 10 Most Popular Hybrid/Electric Vehicles
|Make and Model
|Average Monthly Payment
|Chevrolet Bolt EV
|Tesla Model 3
|Tesla Model Y
Source: Experian State of the Automotive Finance Market Report, Q4 2020
As you can see, the majority of the most affordable options available come from Toyota, which has the greatest market share of electric and hybrid vehicles at 38.57%. While Tesla has the second-highest market share at 25.82%, its models are the most expensive on the list.
Of course, it's important to keep in mind that these are average monthly payments. The average credit score for new purchases of nine out of the top 10 hybrid and electric models is above 750, and if your credit score is in that ballpark, you can assume excellent financing terms. If your credit score is lower than that, however, you may end up with a higher-than-average monthly payment. Also, the lower your down payment, the higher your monthly bill will be.
What to Consider When Buying an Electric or Hybrid Vehicle
The decision to buy an electric or hybrid vehicle can depend on a few different factors.
Most electric vehicles are more expensive than their gasoline-powered counterparts, and it can be difficult for some drivers to justify the added expense. If budget is your priority, the Chevrolet Bolt EV might have caught your eye with the second-most affordable monthly payment on the list at $410. That's lower than the average overall new car loan payment of $576, but it's important to put that cost in context.
Until March 30, 2020, car buyers qualified for a federal tax credit that brought down the total cost of the car. That federal benefit is no longer available for the Bolt, but Chevrolet has announced that it's dropping the price of the model by $5,500 in 2022 to make up for the lost tax break. When buying electric or hybrid, it's important to keep the potential for these kinds of cost adjustments in mind. Tax credit changes can alter the math for your car purchase, and not every car manufacturer will necessarily follow it up with a discount like Chevrolet.
Other models are still eligible for the federal tax credit, and state and local incentives may also help you save money. Before you decide on a vehicle, research the money-saving opportunities that are out there to potentially bring your costs down.
For people who support environmental conservation and reducing the impact of climate change, it may be worth it to pay more for an all-electric vehicle over a hybrid model. In contrast, if you simply want to reduce your carbon emissions but can't afford to pay more for certain electric models, it's still worth considering a hybrid.
How you plan to use your vehicle can also tip your decision in one direction or the other. Long road trips might be inconvenient or impossible with an electric vehicle, for example. And even if an electric or hybrid model works for your lifestyle, you might ultimately decide that fuel savings and environmental benefit don't justify the purchase.
There are different types of hybrid vehicles: full hybrids, mild hybrids and plug-in hybrids. With the first two, the combustion engine recharges the battery, so you never have to worry about plugging it in. With the third, however, you can choose to run it in just electric mode, but you have to plug it in to recharge the battery.
Not having to plug in your vehicle is a lot more convenient, especially if you're on a road trip or there aren't a lot of charging stations nearby. But if you live in an area where charging stations are plentiful, it may still be worth it to opt for a plug-in hybrid or electric vehicle.
Make Sure Your Credit Is Ready for Your Next Vehicle Purchase
The amount of your monthly payment will depend on a few factors, including the cost of your vehicle, the interest rate on your loan and the amount of your down payment. If you want to maximize your savings on your vehicle purchase, taking the time to improve your credit score can help you secure a better rate on your loan.
Start by checking your credit score and reviewing your credit report to determine where you stand and which areas you need to address. Then take concrete steps to build your credit score, so you can boost your odds of getting favorable financing.