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.
Why apply for a car loan with Savvy?
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
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.
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 concession of 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 program provides $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 Scheme offers 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 $6,000 on 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 Program was the first in Australia, but is now closed to new applicants.
How to apply for your car loan with Savvy
-
Fill out our simple online application form
Tell us about yourself and the car and loan you’re after. This will include information about your income, employment and credit score and helps us find the best available loan for you.
-
Supply any required documents
After you complete your application, we may request further documentation to verify details such as your employment and income. These can be submitted online via our portal.
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Discuss your options with us
Once we have all the information we need, we’ll compare the offers available to you from our lending panel. Your consultant will reach out to you and talk you through your car finance options to get the all-clear.
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Find your ideal car
If you haven’t already decided on (or found) your ideal car, our in-house car broker team, Vehicles Direct, can search our national network of dealerships to find the best available model for you.
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Have your application prepared and approved
Once we have all the info we need, your consultant will get to work preparing your application for submission. You can receive formal approval as soon as one business day after it’s submitted.
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Sign on the dotted line
We’ll send through your final loan documents and other forms to sign electronically. Once settlement is complete (which we’ll also handle for you), you’ll be the proud owner of your new or used car!
Car loan eligibility and documentation
Eligibility
-
Age
You must be at least 18 years of age
-
Residency
You must be an Australian citizen or permanent resident (or, in some cases, an eligible visa holder)
-
Income
You must be earning a stable income which is enough to comfortably support your repayments (this can start from as little as $20,000 to $26,000 per year)
-
Employment
You must be employed and earning a consistent income from your job
-
Credit score
You must meet your lender’s requirements related to your credit score
-
Car
Your car must meet your lender’s requirements related to type, age and condition
Documents
-
Driver's licence
Front and back (or another form of government-issued ID)
-
Payslips
Your last two consecutive payslips (or your last tax return if you're self-employed)
-
Savvy forms
Your Savvy application, consent form and credit guide (supplied by your consultant)
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Car details
Information about your car, such as its age, is handy to have
-
Bank statements
90 days of bank statements may be requested, but not always
