With gasoline prices soaring, many drivers are tempted to trade in their gas-guzzling vehicle for something more fuel efficient. But with EV prices also typically higher than conventional cars, the upfront costs can make the switch a bit more expensive than you might expect. Fortunately, there are a number of incentives and financing options available that can help make an electric car more affordable. Among these is the green auto loan, which is a specific type of financing product that provides specialized terms to those seeking to finance an environmentally friendly car.

While traditional green auto loan rates Hillsboro such as the one you might secure at your bank, may seem similar to a green loan, they are very different. First, green auto loans are only offered to borrowers who are buying an eco-friendly car. This could include hybrid vehicles, fully-electric vehicles or even some more experimental, low-emission options like hydrogen fuel cells. As the demand for greener vehicles grows, lenders are jumping on board to offer this specialized financing option.

Credit unions in particular are known for offering green auto loans, though a few banks also have them as well. In fact, a third of the credit unions surveyed reported offering these loans in a recent report. These lenders are taking advantage of a growing customer need and a unique opportunity to promote their brand to customers who are interested in driving an eco-friendly car.

Generally speaking, green auto loans come with lower interest rates than their traditional counterparts. In some cases, they also have extended repayment periods to accommodate the higher costs of a green vehicle. This can help reduce the amount of time it will take for you to pay off the loan in full, which is especially helpful if you want to own your vehicle outright rather than trading it in at the end of your lease term.

The exact criteria a lender uses to determine who is eligible for a green auto loan will vary. Most will focus on a borrower’s credit score and income, as these factors play an important role in their ability to repay the loan. Lenders will usually charge a higher interest rate to borrowers with a lower credit score because they view these borrowers as a greater risk of defaulting on their debt.

If you have a decent credit score, a sizable down payment or trade-in, and some discretionary income, you should be in good shape to qualify for a green auto loan. The perks that these types of loans offer can be worth the extra effort it will take to get approved for them. If you don’t meet these requirements, it may be a better fit to pursue a traditional car loan with a shorter term and a lower interest rate. To save time and ensure you’re getting the best possible deal, it’s a good idea to shop around for different lenders before you settle on the right one. This can help you compare green auto loan rates and find the one that works best for you.