Avoid These 5 Mistakes When Financing an EV

Buying an electric vehicle is different to financing a petrol or diesel car, and most couples make at least one avoidable mistake in the process.

The charging infrastructure you need, the resale assumptions lenders make, and the way depreciation gets calculated all affect how much you can borrow and what you'll pay each month. Getting these wrong can cost you thousands or leave you with a loan structure that doesn't suit how you'll actually use the car.

Assuming All Lenders Treat EVs the Same Way

They don't. Some lenders cap the loan amount on electric vehicles at a lower percentage of the purchase price compared to conventional cars, while others offer the same terms but charge a different interest rate based on perceived resale risk. A handful of lenders have specific electric car finance products designed around battery warranties and expected depreciation curves, which can result in lower monthly repayments or access to a higher loan amount.

Consider a couple purchasing a mid-range electric sedan. One lender might approve finance for 80% of the vehicle's value at a standard rate, while another offers 90% but applies a slight rate adjustment. The difference in upfront cash required could be $8,000 to $10,000 depending on the vehicle price, which matters if you're also managing a mortgage or other commitments. The interest rate gap might only be 0.3% to 0.5%, but over a five-year loan term that compounds into real money.

Ignoring How Balloon Payments Work With Depreciation

A balloon payment lets you defer part of the loan to the end of the term, reducing your monthly repayment. The catch with electric vehicles is that resale values are still stabilising, and setting a balloon too high based on optimistic projections can leave you owing more than the car is worth when the loan matures.

Lenders typically allow a balloon payment of up to 50% on a consumer loan and higher percentages on commercial loans, but that doesn't mean you should max it out. If you're planning to trade the vehicle in after three or four years, the balloon needs to align with realistic resale expectations. Battery technology is improving quickly, which can make older models less attractive to buyers. Setting a conservative balloon or skipping it entirely gives you flexibility at the end of the term without forcing a refinance or cash injection to cover a shortfall.

Not Checking Whether Your Lender Includes Charging Infrastructure in the Loan

Some lenders will roll the cost of a home charging station into your car finance application, while others treat it as a separate expense. If you're buying an EV without existing charging infrastructure at home, this distinction matters. A wall-mounted charger with installation can cost anywhere from $1,500 to $3,000 depending on your electrical setup, and paying for it out of pocket at the same time as a deposit can stretch your cash reserves.

If the lender allows you to include it in the loan amount, you spread that cost over the loan term and keep your upfront cash for other expenses. Not all lenders advertise this option, so it's worth asking during the application process rather than assuming it's not possible.

Overlooking the Difference Between New and Used Car Loans for EVs

Interest rates and loan terms on used electric vehicles are often less favourable than on new models, even if the car is only two or three years old. Lenders price in uncertainty around battery health and the lack of long-term resale data, which translates into higher rates or shorter loan terms. The gap can be 1% to 2% depending on the lender and the age of the vehicle.

A couple buying a three-year-old EV to save on the purchase price might find that the higher interest rate and shorter loan term push the monthly repayment close to what they'd pay on a new car loan for a current model. Running the numbers on both scenarios before committing to a used vehicle gives you a clear view of whether the saving on the purchase price actually translates into a lower cost of ownership.

Applying for Finance Without Knowing Your Charging Costs

Lenders don't usually factor charging costs into the loan approval, but you should. The monthly repayment might look manageable on paper, but if you're relying on public fast chargers rather than home charging, your running costs will be higher than you expect. Fast charging can cost two to three times more per kilometre than charging at home overnight on an off-peak tariff.

If your property doesn't have off-street parking or your electricity plan isn't optimised for EV charging, that ongoing expense affects how much you can comfortably afford to repay each month. It's not a mistake that shows up in the loan application, but it shows up in your household budget a few months after you've taken delivery, and by then you're locked into the repayment.

Most of these mistakes are avoidable if you ask the right questions before you apply. Call one of our team or book an appointment at a time that works for you, and we'll walk through how different lenders structure electric vehicle finance so you can make a decision based on your actual circumstances rather than generic assumptions.

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