Bank Australia to cease car loan funding for fossil fuel vehicles: the lenders trumpeting eco-friendly car initiatives

Two Australian lenders have announced green car loans initiatives to encourage the uptake of electric vehicles in Australia.

Bank Australia recently revealed that it will cease funding car loans for new fossil fuel vehicles from 2025 as part of its commitment to achieve net zero carbon emissions by 2035.

While the campaign means no loans will be offered for new petrol-powered vehicles, the bank said it will continue to offer loans for second-hand fossil fuel cars until the market evolves beyond this trend.

The institution’s climate action strategy is unique. Bank Australia has been offering discounted rates for green car loans since 2018 and is the only bank in the country with a 2035 net zero carbon emissions target.

Pepper Money established an exclusive partnership with Evie Networks to offer 12 months’ worth of complimentary public charging to eligible finance customers from August 17, 2022.

Drivers that finance their electric vehicle (EV) with Pepper can recharge for free at any Evie public charging station across Australia for up to one year or 2,000 kilowatt hours (kWh). Pepper Money estimates that this equates to between 10,000-15,000km of driving range.

The deal works for both new and used EV lending agreements but to take advantage you’ll need to activate the offer within 30 days of the loan settlement date.

Governments and banks seeing green

The Electric Vehicle Council released its latest State of Electric Vehicles report in March this year, noting that there were 1,580 regular public EV charging locations and 291 fast-charging locations across Australia.

Approved state and federal funding programs will see the deployment of a further 700 fast-charging stations throughout the country over the next five years.

New South Wales has committed to a plan ensuring that fast-charging locations are available every 5km in residential areas with limited off-street parking; every 5km along major commuter corridors in Sydney; and every 100km along regional driving routes.

Last month the ACT government announced that from 2035 it will ban the sale of new petrol cars. The embargo does not include heavy vehicles, but is narrowed in on personal transport vehicles, like passenger cars and light trucks.

While affordability and availability limitations could improve by 2035, Australian Automotive Dealer Association (AADA) CEO James Voortman suggests that Australians will likely hold onto their petrol cars for longer.

“It is unclear how the ACT will enforce this ban and prevent consumers from simply purchasing an internal combustion engine vehicle across the border and re-registering it here [in the ACT] as a used car,” Voortman said in a recent media release.

However, a number of Australian financial institutions are backing the global movement to phase out fossil fuels due to the impact of petrol emissions on the environment.

In May, one of Australia’s big four banks, Westpac, began offering a lower car loan interest rate for eligible customers considering purchasing a new or used hybrid or EV.

Westpac’s green car loan rate is a decrease to its existing car loan rate, offering customers rates from 4.99% (comparison rate 6.21%) to borrow between $10,000 - $100,000 to finance a hybrid or EV purchase.

The green car loan rate is available for new and used hybrid and electric vehicles, aged up to seven years old.

Earlier this year, Westpac announced a new funding deal with consumer fintech lender Plenti to help make the transition to electric vehicle ownership easier. The initiative comprised a $250 million structured debt facility to fund electric vehicles and related features, such as recharge equipment for Plenti.

Other banks offering select rates for green car loans include Credit Concierge, loans.com.au and MOVE Bank.

Choosing a competitive green car loan can help make repayments affordable. Green car loan lenders often offer eligible customers lower interest rates on average to encourage them to make more sustainable vehicle purchases.

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