So, you have decided to go electric – great choice! Electric vehicles (EVs) have taken the Indian automobile market by storm, offering a cleaner, greener way to get around while saving money on fuel and maintenance in the long run. But before you zip off in your shiny new EV, one question looms large – How are you going to pay for it?
Whether you’re looking to upgrade your current vehicle or buy your first car, the process of EV financing can be a bit overwhelming. Fret not! In this guide, we’ll explore the different financing options available in India to help you make the right choice for your budget and lifestyle.
1. The Traditional Way of Car Loans
Just like with petrol or diesel vehicles, car loans are also one of the most popular ways to purchase an Electric Vehicle in India. The best part is most of the banks are willingly providing car loans at competitive interest rates to everyone who is purchasing an EV.
What You Need to Know?
- Interest Rates: Typically range between 7% to 9%, but some banks offer special rates for electric vehicles.
- Loan Tenure: Most car loans come with tenures ranging from 1 to 7 years.
- Down Payment: Be prepared to make a down payment of around 10% to 20% of the car’s value.
- Eligibility: Your credit score, employment status, and income level will determine your eligibility and the interest rate.
You won’t believe banks like the State Bank of India (SBI) are providing special car loans for Electric Vehicles. All these things help eco-conscious buyers switch to electric vehicles.
2. Electric Vehicle (EV) Specific Loans
As Electric vehicles are booming in India, financial institutions also started providing loans specifically for such vehicles. These loans are also provided on easier terms than car loans of usual times. All this is happening to make people more inclined towards EVs.
Benefits of EV Loans:
- Lower Interest Rates: Some lenders offer interest rates starting from as low as 6.8%, which can help you save on your EMIs.
- Flexible Repayment Options: Tenures can range from 1 to 8 years, giving you flexibility in planning your finances.
- Minimal Processing Fees: Banks like HDFC Bank and Axis Bank offer EV-specific loans with lower processing fees compared to conventional car loans.
3. Lease Plans
If you’re not keen on owning the vehicle outright or want to avoid the hassle of long-term maintenance, leasing an electric vehicle is an excellent option. Leasing allows you to drive a new EV for a fixed period while paying a monthly lease fee. At the end of the lease, you can either return the car, purchase it at a reduced price, or lease a new model.
Why Consider Leasing:
- Lower Monthly Payments: Lease payments are often lower than EMIs for car loans.
- Maintenance Included: Many lease plans include maintenance, insurance, and other costs, offering a hassle-free ownership experience.
- Upgrade Flexibility: Leasing allows you to upgrade to a newer EV model once your lease term ends.
Several companies, such as Tata Motors and Mahindra Electric, offer attractive leasing options for their electric models.
4. Government Incentives
Indian Government is supporting the efforts to increase the use of electric vehicles by providing financial support through the FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme. They support these efforts but they are not actually financing options, instead, they reduce costs that would have been incurred when purchasing an EV.
Available Incentives:
- Subsidies: The government offers subsidies on the purchase of electric two-wheelers, three-wheelers, and four-wheelers. For example, electric cars like the Tata Nexon EV or MG ZS EV come with government-backed discounts.
- Tax Benefits: Under Section 80EEB of the Income Tax Act, you can claim a deduction of up to ₹1.5 lakhs on the interest paid on loans taken to purchase an electric vehicle.
These incentives can make a significant dent in the overall cost of owning an EV, making it a more budget-friendly option.
5. Personal Loans
If you prefer to skip the car loan process altogether, a personal loan could be an option for financing your electric vehicle. Personal loans are unsecured loans, meaning you won’t need to pledge the car or any other asset as collateral.
What to Consider:
- Higher Interest Rates: Personal loans usually come with higher interest rates, ranging from 10% to 15%, compared to car loans.
- Flexibility: You can use the loan amount for not just the car purchase, but also for accessories, insurance, and other related expenses.
- Quick Processing: Personal loans are often disbursed faster than car loans, which can be helpful if you’re in a hurry.
6. Fintech and NBFCs
With the rise of digital lending platforms, several fintech companies and non-banking financial companies (NBFCs) now offer customized loans for electric vehicles. Companies like Bajaj Finserv, IDFC First Bank, and others provide easy-to-access loans with flexible terms.
Advantages:
- Quick Approvals: Many fintech platforms promise loan approvals within minutes.
- Tailored Plans: These companies often provide tailored loan plans, allowing you to choose EMI amounts, tenures, and repayment schedules.
- No Paperwork: Most of the process is digital, making it more convenient for tech-savvy buyers.
7. Zero-Down Payment Plans
Some car manufacturers and financial institutions offer zero-down payment plans, which means you don’t need to pay any money upfront to take the car home. Instead, the entire cost of the vehicle is financed, and you pay it off in monthly instalments.
Things to Watch For:
- Higher Interest Rates: Zero-down payment plans usually come with higher interest rates compared to standard car loans.
- Longer Tenures: The tenure for such plans can be longer, which might increase the overall cost of the loan.
Wrapping Up
Financing your first electric vehicle may seem like a big financial decision, but with so many options available in India, there’s a solution for everyone. Whether you go with a traditional car loan, opt for a lease, or explore newer options like EV-specific loans and government incentives, the transition to an electric vehicle can be smooth and affordable.
Remember, electric vehicles are not just a smart choice for the environment—they’re also a long-term investment in savings. With lower running costs and government incentives, now is the perfect time to take the plunge and embrace the future of driving.
Bringing EV’s in place of traditional petroleum vehicles is a step towards a greener and cleaner India. If you are also interested in this movement then be a part of the #GreenBharat initiative. A step towards making India carbon emission-free.
Happy driving—and welcome to the electric side!
