EVs are taking an increasingly large share of Australia’s new car market, accounting for 21% of new vehicle sales in the June quarter of 2026.
And while an electric car may come with a higher price tag, that doesn’t mean it will cost more to finance.
Lower rates can leave EV buyers paying less interest overall, saving hundreds or even thousands compared with an ICE car loan.
Bigger loan, lower cost
Savvy data for 2025–26 shows the average EV buyer borrowed $48,902 to finance their car, compared with $37,346 for an ICE vehicle, a difference of $11,556.
However, EV buyers got a significantly lower interest rate on average by 3.68%.
Over a five-year loan term, the average EV borrower would pay $12,063 in interest, compared with $13,318 for an ICE borrower.
That’s $1,255 less interest despite borrowing more than $11,500 extra.
| 2025–26 | ICE car loans | EV loans |
|---|---|---|
| Average loan | $37,346 | $48,902 |
| Average interest rate | 12.72% p.a. | 9.04% p.a. |
| Monthly repayment | $844 | $1,016 |
| Interest over five years | $13,318 | $12,063 |
The higher loan means EV buyers still face a larger monthly repayment, but the 3.68 percentage point difference in average rates changes how much interest builds up over the life of the loan.
The new car gap
The gap in average loan sizes partly reflects the vehicles being financed. Used ICE car loans can include vehicles up to 15 years old or more, giving buyers access to a much wider range of cars at different price points. In comparison, Australia’s used EV market is still relatively young, with most buyers financing higher-cost new or near-new vehicles.
Looking at new cars alone, the numbers are much closer.
The average new EV loan through Savvy in 2025–26 was $51,362, almost identical to the $51,417 borrowed for the average new ICE car.
But again, EV borrowers secured a lower average rate, at 8.49% p.a. compared with 9.80% p.a. for a new ICE vehicle.
| 2025–26 | New ICE car | New EV |
|---|---|---|
| Average loan | $51,417 | $51,362 |
| Average interest rate | 9.80% p.a. | 8.49% p.a. |
| Monthly repayment | $1,087 | $1,054 |
| Interest over five years | $13,827 | $11,849 |
Even though only $55 separates the average amount borrowed, the EV borrower would pay $1,978 less over five years due to the lower interest rate. And that’s without taking into account the cheaper running costs of an EV compared to a petrol or diesel.
Why are EV buyers getting better deals?
A key reason EV buyers are securing lower rates is the availability of green car loans, which offer a discounted interest rate for vehicles meeting green eligibility criteria.
Depending on the lender, green car loan discounts can range from around 0.50 to 1.50 percentage points compared with standard vehicle finance (although not every lender offers them). This lines up closely with the 1.31 percentage point gap seen between new EV and new ICE loans.
But the car itself is only part of the picture.
As with other loans, borrower profile plays a major role in the interest rate someone can access, and is likely a factor in the wider 3.68 percentage point gap seen across the full range of loans compared above. Lenders consider factors including credit history, income, employment and whether the borrower owns property.
Homeowners, for example, can often qualify for lower car loan rates than renters. Savvy car finance data from March to June 2026 found 75% of EV buyers were property owners, compared with 53% of petrol and diesel buyers.
EV buyers may also have access to other finance incentives. Eligible EVs financed through a novated lease can currently benefit from FBT concessions, with the full exemption set to continue until 31 March 2027.
Will cheaper EV finance last?
Australia’s EV market is changing quickly.
Battery EVs made up more than one in five new vehicles sold in the June quarter of 2026, while rising fuel prices have also pushed more drivers to consider making the switch. Earlier this year, Savvy found 78% of prospective car buyers would consider a more fuel-efficient or electric vehicle if fuel prices continued to rise.
The question is whether lenders will continue offering the same incentives as EVs become a more mainstream choice.
With more brands and models entering the EV market, along with a growing number of used options, buyers can expect a wider choice of cars to suit different budgets.
As the EV market starts to look more like the established ICE market, the gap between the two could begin to narrow, including when it comes to finance.
Savvy Managing Director Bill Tsouvalas said buyers shouldn’t take the current finance advantage for EVs for granted:
“EV buyers are benefiting from some very competitive rates right now, but there’s no guarantee that advantage will last.
“Green loan discounts have helped make EV finance more attractive, but these incentives aren’t set in stone. As electric cars become more mainstream and demand continues to grow, lenders may no longer feel the need to offer the same incentives to attract borrowers.
“That makes it even more important for buyers to be proactive about how they finance their car. Comparing lenders and putting yourself in the strongest possible borrowing position can all help when it comes to securing a competitive rate.”
