Green auto loans for environmentally friendly vehicles

Electric vehicles are generally more expensive than their petrol equivalents. The good news is that a handful of Australian lenders are now offering consumers “green car loans”, many of which come with a reduced interest rate on qualifying green vehicles.

But are these new green loans as financially worthy as they are? ecologically? And how to find the loan that suits you? We review your options.

What is a green car loan?

Green auto loans are marketed as an incentive for consumers to buy qualifying green vehicles instead of standard gasoline-powered cars, which are more damaging to the environment.

Green loans are different from standard auto loans in that they usually come with lower interest rates or certain fees waived.

Green car loans are just one of many eco-friendly initiatives Australian financial lenders are now offering across a range of qualifying products.

Green loans are different from standard car loans in that they usually come with lower interest rates or certain fees waived

These include green products for your home, such as solar panels, water tanks, insulation, double glazing and energy efficient appliances.

You can now also invest in a green home loan with reduced interest rates for energy-efficient homes with a reduced environmental footprint.

“Like any other car loan”

Andy Kollmorgen, Surveys Editor at CHOICE, has sage advice on green car loans: “Most people would agree that reducing our individual carbon footprint is a good thing, and buying an eco-friendly car is a way to achieve this,” he said. .

“With green car loans, some lenders offer incentives in the form of better rates for certain models. Reducing car pollution is certainly a worthy goal, but potential car buyers should approach the transaction like any other car loan. .”

What is an “eligible” green car?

Whether a vehicle is eligible for a green loan depends entirely on the criteria of the lender – and these can vary. If you want a particular green vehicle, do your homework to make sure it meets the requirements specified by your lender.

You can review and compare a range of eco-vehicle makes and models using the government Guide to green vehicles. This gives information on the environmental performance of light vehicles sold in Australia and will help you determine if the car you want meets your lender’s criteria.

Before signing, make sure you can afford the repayments as well as any fees, charges, or lump sum payments (the lump sum you sometimes have to pay towards the end of a loan).

Are green car loans cheaper than standard car loans?

Green auto loans aren’t necessarily cheaper than standard auto loans, so do your homework and carefully compare all loan options, fees, and terms to make sure you’re getting the best deal possible and the one that’s right for you.

Can a green car loan save me money?

Electric vehicles are a costly expense, but you can save money on running costs such as fuel. Depending on where you live and the car you’re considering, there are also state and federal incentives that can help lower the costs of buying a new electric or hybrid car.

A green car loan can potentially lower the interest rate on a car loan, which will save you money over the life of the loan and could help you pay it off sooner. But, like any other loan, you should shop around before choosing a policy because you could save thousands of dollars in interest.

Other advantages and disadvantages

Lending criteria for green car loans can be extremely strict, so you will need to do extensive research on the eligibility of your chosen vehicle. Also, some green cars may cost more than standard new cars, so your loan amount may be higher.

CHOICE’s Andy Kollmorgen suggests reading the fine print to make sure you can afford not only regular payments, but also all fees, charges and lump sum payments (a lump sum you may have to pay the lender at the end of the term of the loan).

In general, a personal loan from a bank or other lender is a better idea than financing from a car dealership

Andy Kollmorgen, CHOICE Surveys Editor

“In general, a personal loan from a bank or other lender is a better idea than financing from a car dealership, and always read the terms of any loan with a keen eye,” he says.

Also, if you choose a variable interest rate loan, be aware that your regular payment may change.

Which lenders offer green car loans?

Australia’s market for low-emission green vehicles lags behind the rest of the world, so there aren’t as many green car loan policies as there are standard car loans.

Here we take a look at some lenders that offer green loans to see what their rates and fees include. (All rates and fees were current as of July 2021.)

Bank Australia

Bank Australia (formerly MECU) was the first Australian bank to switch to 100% renewable energy and boasts a range of public commitments to sustainability and environmental practices. It markets its Low Emission Vehicle (LEV) loans as an incentive for consumers to reduce greenhouse gas emissions in Australia.

Vehicles eligible for LEV pricing benefits can be new or used, but must be pure electric, plug-in hybrid, regenerative hybrid or equipped with internal combustion engines producing less than 125 g/km of exhaust CO2 (g/km ), as published by the Guide to green vehicles.


Fixed rate: 5.45% per year.
Comparative rate: 5.45% per year.

Bank Australia will also take one per cent off its normal car loan interest rate for qualifying LEV cars.


A one-time $150 facility fee that is waived for vehicles that meet an Australasian New Car Assessment Program (ANCAP) five-star rating.

charging and electric car

If you’re looking for a specific green vehicle, make sure it meets your lender’s requirements.

Bank first

Bank First describes its green car loan as a way to reward the green choices of its customers. Eligible cars must have a CO2 value of 180g/km or less – generally this will include new cars, hybrid cars or low emission cars. for their size. To find out if your car is eligible, email the bank directly.


Promotional fixed rate: 5.29% per annum (3% reduction on the standard rate).
Promotional comparative rate: 5.56% per annum (3% reduction on the standard rate).


A one-time setup fee of $195, with no ongoing fees.

Bendigo Bank

Offers a secure green personal loan that can be used for Class A vehicles emitting less than 130g oCO2 per kilometer.


Fixed interest rate: 6.79% per annum.
Comparison rate: 7.21% per year.


$150 application fee and $100 document preparation fee. There may also be ongoing and miscellaneous charges, depending on your situation.

Beyond the bank

This 100% customer-owned bank offers green loans for various environmental purposes. There are two car loan options for eligible vehicles (combined tailpipe CO2 emissions of 180g/km):

Low Environmental Rate Car Loan


Interest rate: 6.24% per annum.
Comparison rate: 6.93% per year.


There is a range of fees depending on your situation, including a setup fee ($175), security documentation fee ($25), monthly administration fee ($5) and research fee and Securities Registry Registration (PPSR) ($17.50 each). ).

Green car loan without fees


Interest rate: 7.24% per annum.
Comparison rate: 7.24% per year.



This lender offers what it calls a 0.7% rebate if you buy a “qualifying” green car. One of the lender’s representatives can explain what it means to “qualify” over the phone. But the website also says that if a car is a new or demonstration vehicle and is more efficient than average for a car of its size – or is a hybrid vehicle – it is likely to qualify.


Fixed rate: 3.97% per year.
Comparison rate: 4.51% per year.


One-time $400 setup fee and no monthly account maintenance fees.

Police bank

Police Bank offers green loans for electric vehicles and other green initiatives. You do not need to be employed by the police to get a loan, but you will need to apply for Police Bank membership.


Fixed rate: 5.79% per year.
Comparison rate: 5.92% per year.


There is a $98 setup fee, but no ongoing account maintenance fees. Charges apply for prepayment of the loan based on the amount you have left to pay.

Mutual Transport Fund

The credit union is currently promoting an initiative called The GreenRoad, which it describes as “a green loan for electric or hybrid vehicles, and the means to power them.”

Details of eligible vehicles are not readily available, so you will need to contact the union directly. However, the website says electric vehicles, hybrid electric vehicles, and bicycles (including e-bikes) are included.


GreenRoad car loan –
Interest rate: 4.74% per annum.
Comparison rate: 5.04% per year.


$220 facility fee.

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