Green car credits for eco-responsible vehicles

Electric vehicles are generally more expensive than their gasoline 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 attractive as they are ecologically? And how do you find the right loan for you? We are looking at your options.

What is a green car loan?

Green car loans are marketed to encourage consumers to buy environmentally friendly vehicles instead of standard gasoline 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 waived fees.

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

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

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

Now you can 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, Survey Editor at CHOICE, gives some wise advice on green auto loans: “Most people would agree that reducing our individual carbon footprint is a good thing, and buying a green car is a good thing. way to achieve it, ”he said. .

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

What is an “eligible” ecological car?

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

You can review and compare a range of makes and models of green vehicles using the government’s Green Vehicle Guide. 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 auto loans cheaper than conventional auto 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 get the best deal possible and the one that’s right for you.

Can a green car loan save me money?

Electric vehicles are an expensive expense, but you can save money on running costs such as fuel. Depending on where you live and the car you are looking for, there are also state and federal incentives that can help lower the cost of purchasing a new electric or hybrid car.

A green auto loan can potentially lower the interest rate on an auto 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

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

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

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

Andy Kollmorgen, Editor-in-Chief of CHOICE Surveys

“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 payments may change.

Which lenders offer green auto 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 on offer as there are standard car loans.

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

Bank Australia

Bank Australia (formerly MECU) was the first Australian bank to switch to 100% renewable energy and is claiming a series 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 tariff benefits may be new or used, but must be purely electric, plug-in hybrids, regenerative hybrids or have internal combustion engines that produce less than 125 g / km CO2 (g / km) as published by the Vehicle Green Guide.


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

Bank Australia will also withdraw one percent of its normal auto loan interest rate for qualifying LEV cars.


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

charging and electric car

If you want a specific eco-vehicle, make sure it meets your lender’s requirements.

Bank first

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


Promotional package: 5.29% per year (three percent off the standard rate).
Promotional Comparison Rate: 5.56% per annum (three percent off the standard rate).


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

Bendigo Bank

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


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


Application fees of $ 150 and document preparation fees of $ 100. There may also be ongoing and miscellaneous charges, depending on your situation.

Beyond the bank

This 100% customer-owned bank offers green loans for a variety of environmental purposes. There are two auto loan options for qualifying vehicles (combined exhaust CO2 emissions of 180 g / km):

Car loan at low environmental rate


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


There is a range of fees depending on your situation, including setup fee ($ 175), security documentation fee ($ 25), monthly administration fee ($ 5), and research fee and registration in the securities register (PPSR) ($ 17.50 each). ).

Auto loan without environmental fees


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



This lender offers what they call 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 demo vehicle and is more efficient than average for a car of its size – or is a hybrid vehicle – it is likely to be eligible.


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


One-time setup fee of $ 400 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 to become a member of the Police Bank.


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


There is a setup fee of $ 98, but no ongoing account maintenance fee. Fees apply for early repayment of the loan depending on the amount outstanding.

Mutual transport

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 on 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.


Establishment fee of $ 220.

About Galen A. Williams

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