Green Car Loans

Reduce your carbon footprint and buy an environmentally friendly car with a green loan through Savvy.

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on July 2nd, 2024       

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Car Loans Banner - Man charging his electric car while his wife and child stand with him

The push towards electrified and partially electrified vehicles is gathering momentum in Australia. According to the Federal Chamber of Automotive Industries (FCAI), 23.5% of all cars sold in Australia in March 2024 were elective vehicles (EVs), plug-in hybrid electric vehicles (PHEVs) or hybrid vehicles, while they accounted for 16.2% (196,868) of all new Australian cars sold in 2023.

With this rise in demand, lenders are now offering green car loans to cater to those looking to finance their eco-friendly vehicles. You can compare a range of options for your electric or hybrid car right here with Savvy, so get started today with a free, no-obligation quote!

What are green car loans?

Green car loans are a type of secured car finance designed to help you buy an environmentally friendly car, such as an EV or hybrid vehicle. They are essentially the same as any other standard car loan in terms of structure. The key factor setting them apart from other products is that green car loans often comes with a rate discount and/or fee reductions or waivers. This can be an important factor to consider in the process, as securing such a discount can help you save hundreds over the life of your loan agreement. Take the following example to compare a standard and electric car loan worth $60,000 over five years:

Type of loan Interest rate Establishment fee Ongoing fee Monthly repayment Overall cost
Standard
7.00% p.a.
$300
$10
$1,195
$72,241
Electric
6.50% p.a.
$0
$0
$1,174
$70,439

As you can see, you’d stand to save almost $1,800 by taking out a loan with a small interest discount and waived establishment and ongoing fees, making it one of the best ways to finance your car purchase.

It’s also important to mention that these loans can sometimes come with stricter requirements relating to vehicle eligibility. Each lender will have its own set of criteria and/or list of cars which qualify for financing under an electric car loan. Even if your chosen car doesn’t make the cut, though, this doesn’t mean you won’t be able to find an affordable loan deal to purchase your chosen electric car. Your Savvy consultant will compare offers on our panel to find the best available option for your situation.

What is classified as a green car?

The exact makes and models which can be purchased under a green finance deal will vary depending on the lender and their criteria. However, the general vehicle types which you can buy with a green loan can include the following:

  • Electric vehicles: commonly referred to as EVs, these are cars that are run 100% on battery power and are also known as battery electric vehicles (or BEVs) as a result.
  • Hydrogen fuel cell vehicles: these vehicles are powered by electricity generated from a chemical reaction between hydrogen fuel and oxygen in the car's fuel cell. They produce zero tailpipe emissions, similar to EVs, but offer the advantage of faster refuelling times compared to battery charging. However, hydrogen refuelling infrastructure is still limited in Australia.
  • Plug-in hybrid electric vehicles (PHEVs): one of two types of hybrid vehicle currently available, PHEVs run on both electricity and petrol but, as the name suggests, can be charged via a plug-in electricity source.
  • Hybrid vehicles: the second type of hybrid car, simply known as hybrid vehicles (or HEVs), operate on both electricity and petrol but aren’t able to be charged.
  • Low-emission petrol-based vehicles: green loans aren’t just for cars which partially or entirely run on electricity. Some lenders offering these products will also allow the purchase of models which produce low emissions.

If you’re unsure whether the vehicle you’re looking to buy qualifies as a green car, get in touch with your lender or read their green car loan requirements. Alternatively, you can check the Australian Government’s Green Vehicle Guide to see how different models rank against one another in terms of emissions.

How do I choose a green vehicle?

Choosing the right green car depends on your specific needs and driving habits. Here are some key questions to consider:

  • Driving range: how far do you typically drive on a daily basis? EVs are excellent for shorter commutes, while hybrids offer a good balance between electric and fuel power for longer journeys. If your driving habits are unpredictable, a fuel-efficient petrol car might be a more practical option.
  • Charging infrastructure: if considering an EV or hybrid, assess your access to charging stations at home and work. Having a dedicated charging point at home is ideal for convenient overnight charging. Public charging infrastructure is expanding rapidly, but it's still important to factor in availability in your area.
  • Upfront cost vs. long-term savings: generally, EVs have a higher upfront cost compared to fuel cars. However, lower running costs can help offset this over time. Hybrids typically fall somewhere in between EVs and petrol cars in terms of purchase price.
  • Environmental impact: while all the options here offer reduced environmental impact compared to standard fossil fuel cars, EVs boast zero tailpipe emissions, making them the greenest choice. Hybrids still produce emissions when running on fuel, but they offer significant improvements over traditional models.

The most popular green cars in Australia: 2023

The following statistics are for the most recent completed year of 2023 (at the time of writing) and are obtained through the FCAI’s VFACTS data.

Electric vehicles

Car make and model Total new car sales
Tesla Model Y
28,769
Tesla Model 3
17,347
BYD Atto 3
11,042
MG MG4
3,134
Volvo XC40 Recharge
2,846
MG ZS EV
2,794
Polestar 2
2,463
Kia EV6
1,831
Mercedes-Benz EQA
1,196
Volvo C40 Recharge
1,103

Hybrid vehicles

Car make and model Total new car sales
Toyota RAV4
25,666
Toyota Corolla
16,455
Toyota Camry
9,771
Toyota Kluger
6,966
Toyota Corolla Cross
5,734
Toyota Yaris Cross
4,387
GWM Haval H6
4,162
GWM Haval Jolion
3,017
Lexus NX
3,002
Toyota C-HR
2,537

PHEVs

Car make and model Total new car sales
Mitsubishi Outlander PHEV
2,274
MG HS Plus EV
2,171
Mitsubishi Eclipse Cross PHEV
1,296
Mazda CX-60 P50e
1,139
Volvo XC60 Recharge
599
Kia Sorento PHEV
490
Cupra Formentor VZe
485
Volvo XC90 Recharge
479
Mini Countryman Cooper SE
469
Lexus NX450h+
415

How much will my green car loan cost?

As mentioned, green car loans are generally cheaper than standard car loans due to the interest rate discount included by most lenders who offer them. However, the cost of your loan will ultimately come down to a variety of factors specific to your profile, including the following:

  • Your interest rate: the lower your rate, the lower the cost of interest on your loan.
  • Your fees: another area to consider closely is fees. Even if you find a product with the lowest rates, it’s important to check its fees to confirm whether it’s actually the cheapest.
  • Your loan term: the faster you pay off your car loan, the less interest you’ll pay.
  • Your loan size: the same rate on a smaller loan compared to a larger one will result in less interest charged overall.
  • Whether you make additional payments: extra payments across your loan term will reduce the amount of interest you’ll pay, although you may be charged early break fees by some lenders.
  • Whether you add a balloon payment: a balloon or residual payment can be added as a lump sum to be paid at the end of your loan, which will increase the interest paid overall.
  • Your repayment frequency: even if you decide to pay weekly or fortnightly instead of monthly, you can save money across your loan.

The following table demonstrates how different interest rates and loan terms can impact the cost of car finance:

Loan size 7.00% p.a. 8.00% p.a. 9.00% p.a. 10.00% p.a.
$30,000
$594
$608
$623
$637
$40,000
$792
$811
$830
$850
$50,000
$990
$1,014
$1,038
$1,062
$60,000
$1,188
$1,217
$1,246
$1,275
$70,000
$1,386
$1,419
$1,453
$1,487

Source: Car Finance with Instant Approval Online – Savvy

You can use Savvy’s car loan calculator to help you work out the monthly and overall cost of your finance deal.

How should I compare green car loans?

There are several key areas in which to compare green car loans, with some of the most important being the following:

  • Interest rates: the minimum rates offered are very important to consider, as these will form the most substantial cost of your car loan. Even small differences of 0.5% p.a. can save you hundreds of dollars overall.
  • Fees: additionally, many green car loans may either reduce fees or waive them entirely. This can include establishment and ongoing fees, which can add up to hundreds of dollars combined. However, not all lenders may reduce their fees, so these are crucial to consider.
  • Vehicle eligibility: of course, it’s essential to make sure the car you’re buying qualifies for finance with different lenders, so this is a simple way to compare and narrow down your options.
  • Available terms: while some lenders will offer the full range of terms from one to seven years, others may limit you to a minimum of three and/or a maximum of five, so it’s important to ensure you find a term which suits your needs.
  • Applicant eligibility: on top of ensuring your vehicle is eligible, you should narrow down your options to include only those which can accept your application. Factors include age, residency, employment, income and credit history.

When applying with Savvy, however, your consultant will do all the heavy lifting and car loan comparisons for you. They’ll keep your preferences and situation front of mind when comparing offers to find the best one for your needs, seeking out the most affordable deal and only considering those for which you and your vehicle are eligible.

Are there any incentives for buying a green car in my state?

Depending on where you live in Australia, you may be able to benefit from incentives for EVs and zero-emission vehicles. The following states and territories currently have incentives in place:

However, green car schemes have now closed in the these states:

  • South Australia’s subsidy scheme, which offered a $3,000 subsidy on new battery and hydrogen fuel cell vehicles, closed on 1 January 2024. However, a three-year registration exemption for eligible vehicles remains in place.
  • New South Wales’s Electric Vehicle Strategy, which allowed NSW residents to apply for a $3,000 rebate for eligible EV purchases, ended on 1 January 2024.
  • Victoria’s Zero Emissions Vehicle Subsidy Program was the first in Australia, but is now closed to new applicants.

The pros and cons of green car loans

PROS

Discount on interest rate and fees

The main benefit offered by green car finance is the discount available to vehicle buyers, which comes in the form of both reduced rates and reduced or waived fees.

Same loan structure as standard car loans

These are effectively the same product as a car loan, meaning there aren’t any major structural differences which applicants will need to wrap their head around.

Reducing your carbon footprint

By purchasing a green car, such as an electric or hybrid vehicle, you can be safe in the knowledge that you're helping reduce emissions in Australia.

CONS

Criteria differs between lenders

What constitutes a green car and the other eligibility criteria for vehicles which fit under this product can vary between lenders, so it’s important to apply with Savvy.

Fewer options available for used green cars

Green car loans are designed to incentivise the purchase of the latest environmentally friendly vehicle technology, which may make it more difficult to purchase a used car.

Not available with all lenders

Additionally, green loans aren’t offered by every lender, meaning you won’t have as many options to choose from compared to standard car loans.

Why Australians take out green car loans through Savvy

What our customers say about their finance experience

Savvy Feefo Platinum Award 2024 Savvy Feefo Platinum Award 2023 Savvy Feefo Platinum Award 2022 Savvy Feefo Plainum Award 2021

Savvy is rated 4.9 for customer satisfaction by 3514 customers.

How to apply for a green car loan with Savvy

Our Process

Submit your application online

Firstly, tell us about yourself and the car you’re after. This will help your consultant determine which of our partnered lenders can offer the best green finance deal. You can do this online or apply over the phone.

Submit any further documents

We may request additional documents to verify your employment and income, which you can submit through our online portal. You can also electronically sign documents like your consent form here.

Discuss with your consultant

Once we’ve compared from our lenders, your consultant will reach out to inform you of what the best options are and offer an indicative interest rate. If you're satisfied with this choice, we can proceed.

Get approved, settle and sail away

Your consultant will prepare and submit your application for formal approval, which can come as soon as one business day after. We’ll handle the settlement with your vendor so you can drive away!

More common green loan questions answered

Are there any other costs to think about when purchasing a green car?

Yes – as is the case with all cars, you’ll have to budget for costs such as stamp duty, vehicle registration, comprehensive car insurance and other on-road costs. If you’re buying an electric vehicle, you’ll also have to consider a charging station in your home to ensure it remains charged when you need it.

Do I have to take out a green loan when buying a green car?

No – electric and hybrid vehicles can still be purchased with a standard car loan, which may be required if they don’t otherwise meet the eligibility criteria set in place by your lender. You might also find that in some cases, the standard rate offered by one lender may be lower than the green car loan rate offered by another, so it may be your best option. Apply with Savvy and your consultant will help you find the most suitable car loan for your vehicle purchase with the lowest rate.

Will my interest be fixed or variable?

Secured car loans typically come with fixed interest rates, meaning you’ll know for certain what you’ll be paying each month and over the course of your agreement should you stick to your schedule. You can speak with your Savvy consultant if you're looking for a product with variable rates.

Can I take out a green loan for a commercial vehicle purchase?

Yes – there are lenders amongst our partners who can offer business operators purchasing green vehicles for commercial purposes a discount on rates and fees. As such, you can still take advantage of this benefit even when buying on behalf of your business.

Will I have to pay the Luxury Car Tax (LCT) on my green car purchase?

You may have to pay LCT if you decide to import a green car and its value exceeds the taxable threshold. However, the threshold for fuel-efficient vehicles, which is defined by the ATO as those which don't exceed a combined fuel economy of 7L/100km, is higher than for other vehicles. As of the 2023-24 financial year, this is set at $89,332, compared to $76,950 for other cars.

Are home charging sockets the best way to recharge my electric car?

Installing a socket at home is the most cost-effective and convenient way to charge your car, as you won’t have to rely on charging it at service stations which may or may not have the required infrastructure to do so. However, it’s typically much slower to recharge your car at home, as this can take up to 12 hours in some cases, compared to a public charger which will typically take less than one and as little as half an hour.

Can I include other on-road costs in my electric car loan?

Yes – vehicle costs such as stamp duty, registration and insurance premiums can all be incorporated into your car loan if you wish to include them. This helps you space out the costs more and manage one single loan payment.

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