What is a green car loan?

A green car loan, often referred to in Australia as an "eco-friendly car loan," is a specialised financial product designed to incentivise the purchase of low emissions vehicles. These loans typically offer lower interest rates or additional benefits for cars that have a reduced carbon footprint, such as electric vehicles (EVs), hybrids, and other low-emission models. Some financiers also allow you to package a solar system, batteries and EV charger into the loan amount.

What is the interest rate for EV cars?

The interest rates for EV cars can vary based on the lender, the applicant's creditworthiness, and the specific loan product chosen. However, many financial institutions offer competitive rates for electric vehicles, recognising their environmental benefits. As of August 2023, variable interest rates for EV car loans range from 4.99% to 9.50% p.a. It's always a good idea to shop around and compare rates from different lenders to ensure you're getting the best deal for your electric vehicle purchase.

How do green loans work?

Green loans operate similarly to traditional car loans but with an emphasis on promoting environmentally-friendly vehicles. Here's how they typically work: - Eligibility: The vehicle you intend to purchase must meet specific environmental criteria set by the lender, such as low CO2 emissions or being a certified electric or hybrid model. - Interest Rates: Many green loans offer reduced interest rates or cashback incentives for eligible green vehicles. - Loan Terms: Terms can range from 1 to 7 years, with both fixed and variable rate options available. Additional Benefits: Some lenders may offer additional perks, such as reduced fees, longer loan terms, or cash rebates for installing home EV charging stations.

Green Car (EV) Loans Options Compared (2023)

Key Points

Green Car (EV) Loans often provide lower interest rates
Can be packaged with solar panels, batteries and EV chargers in to the loan amount
Sometimes come with perks such as free charging

If you're looking for an electric car loan, you might want to consider “EV loans” or “green loans”. These loans often have discounted interest rates and have features specific to electric vehicles, or EVs, that aren’t found in traditional car loans. Examples include bundling it with an EV charger or access to free public charging. The convenience of bundling and perks can make these loans worth considering if you’re buying an EV, though you shouldn’t restrict your search to these types of loans exclusively.

➡️MORE: How you save money on an electric car novated lease

What makes Green Car (EV) Loans Different

EV loans more or less work like normal car loans. What makes EV loans different is that they could contain a services or features unique to EV ownership, including:

Loan amounts that include the cost to install a solar system, batteries and/or level 2 charger at your home.
Free charging of your EV at select public charging networks
Free roadside assistance
EV rebates incorporated into your loan details.

Interest Rate Discounts

It is common for a lender that offers both EV and traditional loans to reserve its lowest rates for EVs. Often this is possible due to subsidised financing they receive from government organisations (CEFC) which they are able to pass on to customers.

The EV discount offered by a loan provider is a comparison only to other loans offered by it — not to loans offered by any other provider. So, for example, you may see EV loans advertised as being 0.5% or 1.0% lower than that provider’s standard loans. That is no guarantee that you won’t get a lower rate elsewhere even if its not labelled an EV or Green loan.

Who Offers Green Car (EV) Loans?

Green car loans are offered by several different types of lenders from traditional banks to credit unions. As you can see the interest rate offered is significantly lower than the comparison rate.

Below is a list of current Green Car (EV) loans available in the Australian market. This list is current as at 12 August 2023.

Green Car (EV) Loans vs. EV Novated Leases

If your employer offers salary packed novated lease as an employee benefit, you may want to consider this option as an alternative to green car loans. The tax benefits of arising from an electric car novated lease could mean it is the better financial option for you.

Green Car (EV) Loan FAQs

About the author

Danny Thai

Danny is a consultant and entrepreneur working at the cutting edge of the electric vehicle and energy transition. He is passionate about educating and helping consumers make better decisions through data. He is the founder of zecar and is currently the EV Innovation Manager at Endeavour Energy.

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