How It Works: Hyundai Evolve Retail Financing

Hyundai is introducing a lease-like financing option on all of its new EVs and plug-in hybrid electric vehicles. It's called Hyundai Evolve Retail and involves balloon financing with benefits worth knowing about if you're on the fence about buying or leasing. Here's a look at how Hyundai Evolve Retail works and whether or not it may be a good deal.

How does Hyundai Evolve Retail work? Hyundai Evolve Retail refers to a type of balloon financing and is only available when financing a car through Hyundai Motor Finance (HMF), Hyundai's captive lender. Unlike a traditional purchase, Hyundai Evolve Retail offers four different choices once the 36, 48, or 60-month payment term is up.

These choices include:

• Keep the vehicle by paying the balloon payment
• Keep the vehicle and refinance the balloon payment with HMF (a $250 refinance fee applies in certain states)
• Trade-in or sell the vehicle and use any equity toward the down payment on a new car
• Return the vehicle to HMF (a $400 disposition fee applies)

What models are eligible for Hyundai Evolve Retail? For now, only new Hyundai electric vehicles and PHEVs with less than 1,000 miles and untitled demonstrator and service loaner vehicles with up to 6,000 miles are eligible. Additionally, this program isn’t available in all 50 states.

Eligible states include Alabama, Arkansas, Arizona, Colorado, Florida, Georgia, Idaho, Kansas, Louisiana, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Utah, and Wyoming.

Hyundai Evolve Retail advantages. The biggest advantage for most buyers might be a low payment with driving allowance flexibility. 12,000 and 15,000-mile annual allowances are available. For reference, leases will usually offer these benefits, but HMF doesn't pass along a federal tax credit on the Ioniq 5 when leasing.

Hyundai Evolve Retail is a good deal for other reasons, as well. Financing this way can potentially offer promotional rates you can't get when leasing. What’s more is that shoppers with a credit score of 620 and above are eligible to participate in this program, and to further sweeten the deal, returning customers can get a 2-tier rate enhancement on their credit score.

Hyundai Evolve Retail disadvantages. The final balloon payment, if you decide to keep your car, can be scary. For example, Hyundai's estimated final balloon payment on a 2022 Ioniq 5 SEL RWD is over $17,000, assuming $0 down and a rate of 4.89% APR for a 60-month term with a 12,000-mile annual driving allowance.

Alternatively, the same Ioniq 5 with a 36-month term and the same annual driving allowance will have an estimated final balloon payment of just under $25,000, assuming $0 down and a 4.69% APR.

What Hyundai Evolve Retail is not. Hyundai Evolve Retail is not to be confused with Hyundai Evolve — Hyundai and Amazon's collaborative virtual showroom that was introduced during the coronavirus pandemic to assist in car shopping when the nation was in lock-down — and Hyundai Evolve+ — a subscription-based mobile app that allows customers to try a Hyundai EV with maintenance, insurance, and roadside assistance included.

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