Written by Green car loans are a type of secured car loan designed to help you buy an environmentally friendly car, such as an EV or hybrid vehicle. While they’re no different from any other secured car loan in almost every way, the one key difference is that they come with a discounted rate and/or fees.
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How are green car loans different from standard car finance?
As mentioned, the main factor is the cost. Even a small difference in interest and fees can save you plenty in the long run. Take the following example:
| Type of loan | Interest rate | Establishment fee | Ongoing fee | Monthly repayment | Overall cost |
|---|---|---|---|---|---|
|
Standard |
7.00% p.a. |
$300 |
$10 |
$1,195 |
$72,241 |
|
Green |
6.50% p.a. |
$150 |
$0 |
$1,177 |
$70,615 |
Calculations based on a $60,000 car loan repaid over five years.
As you can see, you’d stand to save over $1,600 by opting for the green car loan out of the two example options, making it one of the best ways to finance your car purchase in this situation.
However, it’s important to mention that these loans can sometimes come with stricter car eligibility requirements. Each lender will have its own set of criteria and/or list of cars which qualify for financing under a green loan, so you’ll need to check this before you apply (or, if you apply with Savvy, have one of our friendly consultants check it for you).
What is classified as a green car?
The following models are most commonly available for purchase with a green car loan:
- Electric vehicles (EVs): also known as battery electric vehicles (BEVs), these cars run on 100% battery power, needing to be recharged via a plug-in electricity source.
- Plug-in hybrid electric vehicles (PHEVs): one of two types of hybrid vehicle currently available, PHEVs run on both electricity and petrol and, as the name suggests, can be charged via a plug-in electricity source.
- Hybrid electric vehicles (HEVs): these also operate on both electricity and petrol but aren’t able to be charged like PHEVs.
- Low-emission petrol-based vehicles: some lenders offering green loans will also allow the purchase of low-emission models, which will need to meet certain emission.
- 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.
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.
The most popular green cars in Australia: 2024
The following statistics are for the most recent completed year of 2024 (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 |
21,253 |
|
Tesla Model 3 |
17,094 |
|
MG MG4 |
6,934 |
|
BYD Seal |
6,393 |
|
BYD Atto 3 |
5,751 |
|
BMW iX1 |
2,618 |
|
Volvo EX30 |
2,129 |
|
BYD Dolphin |
2,116 |
|
BMW i4 |
2,062 |
|
Kia EV6 |
1,785 |
Hybrid vehicles
| Car make and model | Total new car sales |
|---|---|
|
Toyota RAV4 |
55,902 |
|
Toyota Corolla |
19,460 |
|
Toyota Camry |
14,475 |
|
Toyota Kluger |
8,212 |
|
Toyota Corolla Cross |
7,727 |
|
Toyota Yaris Cross |
5,266 |
|
Hyundai Kona |
4,825 |
|
GWM Haval H6 |
4,521 |
|
Lexus NX |
4,417 |
|
GWM Haval Jolion |
4,328 |
PHEVs
| Car make and model | Total new car sales |
|---|---|
|
BYD Sealion 6 |
6,198 |
|
Mitsubishi Outlander |
6,126 |
|
Mitsubishi Eclipse Cross PHEV |
2,368 |
|
Mazda CX-60 P50e |
1,481 |
|
MG HS |
882 |
|
Volvo XC60 Recharge |
872 |
|
Cupra Formentor VZe |
598 |
|
Porsche Cayenne |
490 |
|
Audi Q5 |
351 |
|
Lexus NX450h+ |
351 |
What requirements will my vehicle need to meet to be approved for a green car loan?
Different lenders will have different requirements when it comes to what qualifies for a green car loan. However, some of the common things you’ll need to keep in mind include:
- Emissions: your vehicle must release less than your lender’s maximum CO2 emissions per kilometre to meet the green loan requirements. This will generally be between 100g and 150g per kilometre.
- Vehicle age: you may be required to purchase a new or ex-demonstrator model, rather than a used vehicle that’s a few years old.
- Fuel efficiency: if you’re buying a car that is partly or fully petrol-run, your lender will probably want to see that it has a strong fuel economy. Buying a fuel guzzler kind of defeats the purpose of a green vehicle.
How do I choose a green vehicle?
Choosing the right car depends on your specific needs and driving habits. Here are some key areas to consider before you buy:
- Purchase price: of course, the first thing you’ll need to look at is the cost of the car and whether it fits within your budget. Think carefully about how much you want to spend and the amount you can afford to pay each fortnight or month on your loan.
- Upfront cost vs. long-term savings: generally, EVs have a higher upfront cost compared to similar petrol or diesel 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.
- Driving range: another crucial factor is how far you typically drive each day and week. If you’re buying an EV or PHEV, see how many kilometres you can reach on a full charge. Otherwise, seeking out a fuel-efficient petrol car can save you on petrol.
- Technology: EVs and hybrids often come with some pretty neat tech features. Review the spec carefully (and get in the car yourself before you buy it if possible) to see which one offers the most attractive inclusions.
- Environmental impact: 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 petrol or diesel models.
- Charging infrastructure: if you’re thinking about an EV or PHEV, consider your access to charging stations at home and work. Having a dedicated charging point at home is ideal for convenient overnight charging and while public charging infrastructure is expanding rapidly, not all areas are well-serviced.
Where can I find out more about green cars?
If you want to find out more about the green models in Australia, here’s where you can look:
- The Green Vehicle Guide: the Green Vehicle Guide is an Australian Government resource that provides drivers with tools to compare car models. You can search for vehicles based on several different criteria, including fuel consumption, emissions, running costs and safety ratings.
- Car review websites: independent car review websites provide in-depth reviews and comparisons of electric and hybrid cars. Look for reviews that specifically consider the environmental aspects of different vehicles, focusing on factors like real-world fuel efficiency and battery range for EVs.
- Car manufacturer websites: each car manufacturer website showcases its electric and hybrid car models, highlighting features and specifications. Browsing these websites can give you a better understanding of the range of green vehicles available and narrow down your options based on your budget and desired features.
- Car dealerships: many dealerships now have dedicated sections for their electric and hybrid models. Visiting a dealership allows you to get a closer look at the vehicles, ask questions of knowledgeable sales staff and potentially schedule a test drive.
How much will my green car loan cost?
The cost of your loan will ultimately come down to a variety of factors specific to your profile, including:
- Your interest rate: the lower your rate, the less interest you’ll pay.
- Your fees: it’s important to check loan fees in addition to rates.
- 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 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 reduce the cost of your repayments but increase the total interest.
The following table demonstrates how different interest rates can impact the cost of car finance across different loan sizes:
| 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: Savvy’s car loan calculator.
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.
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The pros and cons of green car loans
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 EV incentives. The following states and territories currently have schemes in place:
- The ACT offers incentives for zero-emissions vehicles, including no motor vehicle duty, discounted registration and no-interest loans of up to $15,000 for eligible buyers.
- The Northern Territory offers EV and plug-in hybrid owners free registration and a stamp duty concessionof up to $1,500 from 1 July 2022 until 30 June 2027.
- 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 still applies.
- Tasmania’s Electric Vehicle Rebate programprovides $2,000 for new and second-hand (but ‘new to Tasmania’) EVs, although just 19 rebates are available as of 23 September 2024.
- Western Australia’s Zero Emission Vehicle (ZEV) Rebate Schemeoffers a rebate of $3,500 for eligible EVs or hydrogen vehicles registered in the state up to 10 May 2025.
The states without green car incentives
Green car schemes have now closed in these states:
- 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. However, if you placed a deposit on a vehicle prior to this date and it hasn’t been delivered, you’ll still be eligible.
- Queensland offered the largest EV subsidy in Australia, with rebates of up to $6,000on eligible cars through the Zero Emission Vehicle Rebate Scheme. However, the scheme closed to new applications on 2 September 2024.
- Victoria’s Zero Emissions Vehicle Subsidy Programwas the first in Australia, but is now closed to new applicants.
How to apply for your car loan with Savvy
Car loan eligibility and documentation
More green loan questions answered
Yes – as is the case with all cars, you’ll have to budget for costs such as stamp duty (if you don’t have an exemption), vehicle registration, comprehensive car insurance (mandatory if you take out a car loan) and other on-road costs. If you’re buying an electric vehicle, you’ll also have to consider whether you need to install a charging station at your home.
No – electric and hybrid vehicles can still be purchased with a standard car loan, which may be required if they don’t meet the green loan 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 lowest rate available for your car and profile.
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.
Yes – there are lenders, including those partnered with Savvy, who can offer business operators a discount on rates and fees for eco-friendly vehicles. As such, you can still take advantage of this benefit even when buying on behalf of your business.
You may have to pay LCT if you decide to purchase a green car whose value exceeds the taxable threshold. If you’re buying from a dealership, the cost of this tax will likely be included in the purchase price of the car, but importing a car yourself means you’ll have to pay it directly.
However, the threshold for fuel-efficient vehicles, which is defined by the ATO as those which don't exceed a combined fuel economy of 7.0L/100km, is higher than for other vehicles. As of the 2024-25 financial year, this is set at $91,387, compared to $80,567 for other cars.
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 between 30 and 60 minutes to get your vehicle up to a decent charge.
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.
Even after switching to an eco-friendly car, there are steps you can take to further reduce the environmental impact of driving:
- Practice eco-driving: techniques like smooth acceleration, maintaining a steady speed and anticipating traffic lights can significantly improve fuel efficiency.
- Plan your trips: by combining errands and planning efficient routes, you can minimise unnecessary driving.
- Maintain your vehicle: regularly scheduled maintenance keeps your car running smoothly and efficiently. A well-maintained car can produce fewer emissions and optimise fuel use.
- Consider public transport and carpooling: for shorter trips or commutes, explore the use of public transport, cycling or walking. Carpooling with colleagues or friends can also help reduce the number of cars on the road.
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