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8 minutes read. Published August 15 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the details of taking out loans to buy cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances with concise, well-studied information that breaks down complicated subjects into digestible pieces. The Bankrate promise
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We receive compensation for the promotion of sponsored goods and, services, or when you click on certain links posted on our website. Therefore, this compensation may influence the manner, place and when products appear within listing categories, except where prohibited by law. We also offer mortgage home equity, mortgage and other products for home loans. Other elements, such as our own proprietary website rules and whether or not a product is available in your area or at your self-selected credit score range could also affect the manner in which products are featured on this website. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit item or product. One in four new car buyers are now considering buying a hybrid or electric vehicle similar to gasoline-powered vehicles as per (KBB). Making the switch to electric — or any alternative fuel vehicle — could prove worthwhile both for your pocket and the climate. Before you head to the dealership it is wise to electric vehicle options and be aware of the differences in cost of ownership. What exactly is an electric vehicle? Electric cars have seen a huge rise in popularity in recent times and especially as the understanding of climate-related issues continues to grow. This, along with steep gas prices have all resulted in drivers seeking to save money driving electric. Unlike the typical gas-powered vehicles that line the highways and parking areas, EVs have a motor that is powered by a battery. There are three kinds of electric vehicle. The hybrid electric vehicle (HEVs) Powered by both an electric motor as well as an internal combustion engine HEVs are able to compete with the power of a gas-powered traditional vehicle with the benefit of improved performance and fuel efficiency. It is not possible to charge an HEV the same way as the EVs it is compared to, however it charges the battery by the engine. There are a large variety of models and makes of HEVs in the marketplace. A few of the top choices according to KBB include those like the Honda Accord Hybrid, the Toyota RAV4 Hybrid and the Hyundai Elantra Hybrid. Plug-in hybrid electric cars (PHEVs) Plug-in hybrids is just as it sounds, a hybrid vehicle that is charged through a plug. It’s powered by batteries inside the vehicle and recharged via another cable. The PHEVs can also utilize another fuel, usually gasoline, to power an internal combustion engine (ICE). This kind of vehicle utilizes the electric charge until it is spent and then taps into the ICE capabilities. The options for PHEVs are less limiting, however KBB’s most popular choices include those of the Ford Escape SE Plug-in Hybrid and the Hyundai Tucson Plug-in Hybrid, and the Kia Niro Plug-in Hybrid. Full electric cars (EVs) Fully electric vehicle increases the quality and is entirely powered by an electric motor -without ICE or an alternative fuel sources involved. They have a battery that powers the vehicle . It is charged in a similar way to a PHEV. They are charged via a specialized outlet. Although charging stations can be accessible locally, it’s important to remember the added costs that a charger will cost if you are considering an all-electric. KBB’s top fully-electric choices are the Chevrolet Bolt EV, the Nissan Leaf and the Ford Mustang Mach-E. The cost of electric vehicles as compared to. gas vehicles Before you dive in the deep end of electric and hybrid cars it is crucial to comprehend the differences in price between gas and electric. Although driving an EV may have lower costs overall however, the initial cost could be an obstacle for some. Lately, buying a new car can be expensive no matter what the source of power. July 2022 saw record-breaking average transaction prices for new vehicles of over $48,000, according to . However, the price of an EV is still more expensive than the gas-powered alternative. It is estimated by KBB estimates for an EV exceeds $60,000- which aligns with an average price for a luxury car. It is expected that by the EV market will grow to 40 percent by 2031 according to . This prediction is supported by more vehicles hitting the market. And, fortunately, this increase in EV availability serves as an opportunity to equalize. When more consumers are looking into purchasing electric vehicles and electric cars, the cost of them will go down. The evidence of this is already evident by the increasing number of new models coming onto the market. For the quarter that began in early 2022 4.64 percent of new vehicle registrations were EVs, and 7.18 percent of them were hybrids according to Experian’s report of automotive market trends. This resulted in 60.4 percent increase for EVs over the first quarter of 2022 and a 10.7 percent increase for hybrids. Cost of owning electric vehicles in comparison to. gas vehicles While the upfront cost of your next vehicle is important it is also important to consider the costs involved in maintaining and own the vehicle over the lifetime of ownership. Consider the five-year cost-to-own comparison of two popular sedans according to Edmunds. The first, 2022 Chevrolet Bolt EV, comes with a price tag of $31,955 and has a large space, a spacious cabin and a well-rated handling. The secondmodel, the 2022 Mazda 3, is a popular gas-powered option with a price tag of $24,115 that offers an elegant interior, a smooth ride and turbocharged engines. Consider how the following costs accumulated over five years of car ownership influence which vehicle you’d like to purchase. 2022 Chevrolet Bolt EV
2022 Mazda 3
Vehicle depreciation
$8,767
$6,700
Fees and taxes
$2,603
$1,814
Financing
$2,921
$2,309
Fuel
$2,283
$11,255
Insurance
$5,411
$3,941
Repairs
$731
$666
Maintenance
$2,806
$4,592
True cost to own
$25,522
$31,277 Fuel On the most basic level, driving a fully electric vehicle means the end of having to the gas station. A study conducted in 2020 discovered that EV owners spend on average 60 percent less money for fueling their vehicles. The difference in cost of fuel between the Chevy or the Mazda is more significant than the typical. However, getting power for your EV is not easy as simply choosing standard middle-priced or high-end. Electric vehicle charging can be divided into three options that all have different benefits and costs. One charging. This is the most common method of charging and is accessible through the same outlet you charge your smartphone using. They are the slowest charging option that provide up to five and two miles charge per hour. Level two charging. These chargers, typically installed and found in your garage utilize the same power as your washing machine. You could get 10 to 20 miles of charging in just an hour. Level three charging. Also known as DC charging These are accessible in public areas. They are the quickest option and drivers can receive an 80 percent charge within 20 minutes. As washing your washer several times in succession will increase your electricity bill, the additional cost incurred when charging at home can add up. This ongoing cost is in addition to the initial cost for installing an at-home charger that could range between $300 and $50,000, depending on the level of charge. But keep in mind that many communities now have access to chargers, so you may not have to shell out for installation immediately. Visit a free map of electric vehicle stations to locate chargers within your area. Financing Although you can -gasoline or electric powered — just apply online or in person with several lenders prior to deciding on the , financing a green car can come with additional benefits. serve drivers looking to finance their electric vehicle. These types of loans are usually offered through the credit union sector and tend to have lower interest rates than traditional auto loans. You may also qualify for , a financial incentive offered in certain states in the U.S. You can benefit from a credit worth as high as $7,500, contingent on the state in which you reside. Insurance Insuring your car is a vital part of the ownership process that will protect you and your passengers. It follows the same method you would take to cover a conventional vehicle option. It will cover the bodily injury, collision, responsibility and comprehensive insurance. As with all vehicles the cost will be based on several variables. But insurance for an EV is typically more expensive than traditional gas-powered options. One reason is the price of the vehicle’s parts. A minor accident could cause, for instance in the requirement to replace a battery pack — something that can be upwards of $15,000. Bankrate analyzed 12 vehicle models provided by Quadrant Information Serves and discovered that, on the average premiums are more expensive for electric cars. This is evident in the increased insurance cost forecast for the Bolt as compared to Mazda 3. Pros as well as cons for electric cars electric vehicles may provide a drive that’s better for the environment and your pocket in the long term However, they do have disadvantages. The advantages of electric vehicles Some benefits to driving an electric vehicle include the following: less maintenance. Electric cars require less trips to the mechanic, which means lower costs for expenses, such as oil changes and brake system checks. Costs are lower over the lifetime of the vehicle. The cost of owning a vehicle can be high however EVs come with a lower cost. Better to the planet. EVs do not release pollutants from tailpipes, making them better for local air quality and general emission of greenhouse gases. The latest technology is readily available. A lot of the latest electric cars come with advanced control panels as well as mobile apps to control and monitor the vehicle. Cons of electric cars Some drawbacks that come with driving an electric vehicle are: Higher cost to purchase. On average, buying an EV carries a steeper initial cost, which is close to $12,000 more, based on KBB’s average July 2022 transaction prices. The fear of range. Charging stations can be few and far in certain regions, which can leave motorists feeling anxious when looking for a place to get energy. Faster vehicle depreciation. Battery deterioration and vehicle incentives create quick value loss when it comes to electric cars. Cost to install a charging station. If you prefer the convenience of charging in your home installing a charging station could cost you up to $50,000. Are electric cars the right choice for you? if your next set of wheels will be electric, it must be thought of similar to how you’d pick the model or design of traditional vehicle is the best fit for yoube aware of your lifestyle and requirements. If your commute works with the range that the EV provides or you prefer the sleek style and environmental advantages, then an electric vehicle may be a great option. If however, jumping into an all-electric EV is too big of a financial investment, you might want to think about , or opt for the hybrid or plug-in option when you’re planning to purchase. Hybrids and plug-ins generally cost less upfront , but still carry some of the money-saving benefits that a fully electric vehicle does. Take note of these key aspects when shopping for a car to make sure that the EV is worth investing in. The range of your vehicle If you’re accustomed to a lengthy commute and do not have access to charging stations along the route and at the point you want to go, think about the vehicle range that the new vehicle you’re considering purchasing. The battery’s range of use can differ significantly based on the type of car. Make sure that you don’t purchase a car that isn’t able to easily charge to go on your daily excursions. Access to chargers Before going to the dealership to shop make sure you have access to chargers in your area or look into the cost of the installation and maintenance of an on-site charger. This involves weighing the level one, two, and three options with your needs. Your lifestyle It is not only important to consider your lifestyle in terms of form but also in the way of function. Electric vehicles tend to function differently than the ones you’re familiar with. Due to its reliance on regenerative brakes, for instance, you will experience slower brakes but more smoother overall experience. The bottom line The true cost of owning an EV could be lower than a gas-powered option. Even with higher depreciation rates for vehicles and possibly higher insurance and financing costs, the lower maintenance and five-year cost to own an EV can make it a viable option. If you are a prospective car owner, it is important to consider which costs are important the most to you and if EV will fit into your lifestyle. Questions about how long it will take to charge an electric car Based depending on the dimensions of the battery, charging could take as little as 30 minutes, or up to 12 hours. A recommended best practice is to recharge your electric car by smaller portions rather than all at once in order to lessen the amount of time required to charge. What is the cost to recharge an electric car? While the specific price to charge will vary by location due to varying electric costs, the charge is based on the range available and cost per kilowatt (kWh). In California for instance the average electricity price is 18 cents for every kWh, therefore an electric vehicle that has a range of 150 miles will fall somewhere between $7 and $7 for a full charge. How long will battery packs for electric vehicles last? The batteries in an EV will last between 10 to 20 years, until they need a full replacement.
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of borrowing money to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to control their finances through providing precise, well-studied details that cut otherwise complex subjects into bite-sized pieces.
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