Buyers make good on down payment deal

Electric vehicle shoppers who receive lower monthly payments for agreeing to send the lender a delayed down payment — such as money received from an EV tax credit — are making good on that promise, two companies facilitating that financing model say.

Startups Tenet and EV Life offer customers a deferred payment structure, with EV Life incorporating it into loans it writes itself and Tenet serving as the matchmaker between customers and financial institutions supportive of the concept.

Tenet also participates in indirect loans involving dealerships, and EV Life is interested in that space.

Both companies have other EV financing businesses as well. EV Life has created tax credit and rebate calculation software and licensed it to Nissan and Toyota; Tenet pairs customers with climate-mindful lenders willing to offer cheaper loans and provides lenders EV depreciation models and automated loan application decisions.

Tenet allows consumers to defer up to 20 percent of the value of the vehicle or loan amount, whichever is lower, and pay that delayed down payment whenever they wish.

According to the company, the most popular amount to defer is $7,500, the maximum amount of the federal tax credit on new electric vehicles.

The delayed balance is subject to interest.

On average, borrowers reduce their monthly payments by $200 through this strategy, Tenet said.

Tenet CEO Alex Liegl said consumers have been repaying the deferred amounts.

"So far, it's been excellent performance," he said.

EV Life Co-CEO Kevin Favro said his company began a "very small pilot" of these deferred payments in 2022. This year, it officially launched the program — which has proved to be so popular the company had to temporarily halt fresh loans.

Advancing customers the state and federal tax credits and utility rebates they'll be eligible to collect later puts enough down on the loan that the customer can lower their monthly payment by up to $200, according to EV Life.

EV Life gives customers 18 months to repay the amount its software calculates they're eligible to receive in credits and rebates. This provides enough leeway for situations in which the customer finances an EV in January but can't claim the credit on their taxes until April of the following year, Favro said. The deferred amount is subject to interest.

EV Life's 2022 pilot also suggests customers won't just spend the tax credit and come up short when it comes time to pay a deferring lender.

"We had a 100 percent repayment," Favro said.

He said some customers even contacted EV Life about applying their state rebates — which taxpayers typically receive earlier than their federal tax credits — immediately to their balance due.

"They were really on it," he said.