As more Australians become concerned about our environment, many drivers are opting for cars that are better for the environment in one way or another. Lenders are jumping on the green bandwagon and incentivising the purchases of eco-friendly cars by providing dedicated green car loans. If you want to be rewarded while making a difference to our planet, making your next car purchase using a green car loan is worth considering.
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Green Car Loan
$5k to $100k
Green Road Personal Loan
Fixed Car Loan (with Low Emission Vehicle discount)
Discounted Green Car Loan
Green Car Loan Fixed (Special)
Green Car Loan - Green Car Loan
$1k to $50k
Green Car Loan
Green Car Loan Fixed
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What is a green car loan?
A green car loan is a type of car financing specifically for eco-friendly vehicles. Every lender will have a different definition of what a green car is. But it’s generally accepted that eco-friendly vehicles are cars that produce less carbon dioxide emissions than traditional fuel-powered cars. Lower carbon emissions typically reduce a car’s impact to the environment.
Green car loans are relatively new to the Australian personal lending market, and are indicative of a growing interest in sustainability. However, because it’s a newer concept, not every lender provides dedicated green car loans.
How can a green car loan save me money?
Green car loans generally work the same as regular car loans. When you take out a car loan, you need to repay the money you’ve borrowed (known as the principal), as well as interest on the car loan.
The difference is that a green car loan often has lower interest rates. In other cases, the lender may waive certain fees on the car loan. The interest rate discounted and the amount of fees waived will vary depending on the lender.
With a lower interest rate, you could be saving hundreds of dollars, or in some cases even thousands, in interest – money that you could put to paying off your car loan earlier or fuel costs.
To find out how much you could save by going for a green car loan, check out RateCity’s Car Loan Calculator.
Before signing up for any car loan, it’s worthwhile to do your research and compare your car financing options. Things to weigh up include the interest rate, fees, features, loan terms and the monthly repayments.
Alvin is shopping for a new car. He comes across one lender which has a 5% interest rate on its regular car loans and a 4% interest rate for its green car loans. He crunches the numbers and compares apples with apples:
- If Alvin takes out a $50,000 car loan for five years with a 5% interest rate, he would need to pay $6,614 in interest over the course of the loan.
- But if Alvin takes out a $50,000 car loan for five years with a 4% interest rate, he would need to pay $5,250 in interest over the course of the loan.
So, by taking the green car loan with the lower interest rate, he could save $1,364 in interest over the loan term.
What type of cars can be used for a green car loan?
Whether the new ride you’re eyeing is a battery electric vehicle or simply a more energy-efficient car, it’s important to understand your car’s specs. This is because what one lender considers to be an eco-friendly car may differ to another lender, so it’s best to find out if the car you want meets your lender’s criteria.
Generally speaking, a vehicle that has lower carbon dioxide emissions than other cars similar in size could be considered a green car. This may include:
- a low emissions vehicle.
- an electric vehicle.
- a hybrid electric vehicle.
- certain new cars.
Find out more about environmentally friendly cars using the Australian Government’s Green Vehicle Guide.
Pros and cons of a green car loan
- Lower interest rate than regular car loans
- Some fees could be waived
- Car budget range could potentially be expanded by taking out a car loan
- Not widely available yet
- Lender’s criteria for green cars can be strict
- Generally available for new cars only
- Purchase cost of an eligible green car may be higher than a regular car
A financial writer for RateCity, Alison Cheung specialises in housing and real estate. Since 2015, she has written about commercial and residential property for Domain Group and NewsCorp in print and online, and has been published in both Domain and RealEstate.com.au. Alison is passionate about property investment and innovations in the real estate industry, and firmly believes in the most basic yet vital financial advice ever given: saving for a rainy day.