Are EV Drivers Less Likely to Default on Car Loans? New Study Says Yes

EV Borrowers Had Lower Default Risk

Electric car drivers are far less likely to default on their auto loans than owners of traditional gas-powered cars, according to a new study.

A report from the Natural Resources Defense Council and Atlas Public Policy found that electric vehicle drivers had a 50% lower auto loan default rate than drivers of lower-fuel-economy cars.

Despite that finding, the groups said, EV drivers usually face higher loan rates than owners of traditional cars, partly because plug-in vehicles typically cost more.

“Based on our analysis, late payment risk decreased as vehicle fuel economy increased,” the groups said. “Borrowers financing higher fuel economy vehicles appeared less likely to fall behind on payments than borrowers financing lower fuel economy vehicles.”

“Lenders, however, did not appear to price loans in a way that recognized the lower repayment risk with higher fuel economy vehicles,” the groups continued. EV borrowers, who carried the lowest predicted late-payment risk in the dataset, paid more than $300 in additional financing costs over the life of a loan compared with otherwise comparable gas-vehicle borrowers.

With that in mind, the USA TODAY Cars team examined some potential advantages of driving an electric car and some downsides of falling behind on an auto loan.

Where Electric Vehicles May Save Money

• Gas: A driver who opts for a new or used EV could save $2,200 annually on gas, according to the U.S. Department of Energy. Hybrid drivers could save $1,500 annually, the agency said.
• Maintenance: Owners of electric models saved an average of about $8,811 in ownership and maintenance compared with the best-selling traditional cars over 200,000 miles, according to Consumer Reports.
• Depreciation: EVs have historically depreciated faster than gas-powered cars, but Consumer Reports said the gap is narrowing as the used EV market expands. EVs typically lose around 58% to 60% of their value over five years, compared with a typical depreciation rate in the low to high 40% range for gas cars.

The Risk of Falling Behind on a Car Loan

Falling behind on car payments could reduce your credit score or result in repossession if you cannot catch up.

Almost 30% of recent new-car buyers were underwater on loans for their trade-ins when they went to buy new cars, according to Edmunds.com. The group said 29.3% of trade-ins used in new-car purchases were underwater in the fourth quarter of 2025. That means owners owed more on their existing vehicles than the cars were worth at trade-in.

Edmunds said that was the highest share of underwater car buyers it had recorded since the first quarter of 2021, when 31.9% of buyers had negative equity on their trade-ins.

Edmunds.com said its data “highlights how easily negative equity can become a cycle that’s difficult to escape.”

“Rolling debt forward may offer short-term relief, but it often leaves buyers with higher payments and fewer options the next time they’re in the market,” the group said.

Keith Laing is an automotive reporter on the National Trending Desk at USA TODAY.
USA TODAY Network via Reuters Connect.