A green car loan is a specialised finance product designed to help Australians purchase low-emission or zero-emission vehicles.
It provides a financial incentive to choose a cleaner, more energy-efficient car through favourable interest rates and borrowing flexibility.
As electric vehicles (EVs) and hybrids become mainstream, these loans are becoming more popular.
Even with government incentives being withdrawn in recent years, they still reduce the overall cost of vehicle ownership.
Key Takeaways: Green Car Loans
| Benefits of Green Car Loans | Green car loans typically offer discounted interest rates (often 0.5%–1.0% lower than standard rates) to incentivise the purchase of eco-friendly vehicles. |
| Eligible Vehicles | Electric vehicles (EVs), some Hybrids (PHEVs), Hydrogen cars, and some low-emission petrol cars (often <125g/km CO2) may be eligible. |
| EV Extras | Some lenders allow you to bundle the cost of a home charging station (and installation) into the loan amount. |
| Vehicle Age Limits | Green loans are usually restricted to new or near-new cars. Older hybrids may not qualify due to battery degradation risks. |
Benefits of a Green Car Loan
Lower interest rates
Green car loans often come with discounted interest rates.
Most are between 0.25% and 0.5%, with some lenders offering up to 1% off their standard interest rate.
This can save you hundreds of dollars over the full repayment term!
For example, a 0.5% reduction on a $50,000 loan over 7 years will save you $1,031 compared to a regular car loan.
Check out our car loan repayments calculator to compare your own scenarios.
Faster Assessment Times
Some lenders have communicated to our brokers that Green Car Loan applications can be expedited through the credit assessment process.
This is an indication of just how much competition there is for these loans in the market. Which always works in favour of the consumer.
Funding for charging equipment
Some larger lenders will allow customers to borrow extra funds to install home charging infrastructure, such as a wall-mounted charger.
While you can charge most newer EVs in a regular power point it can be very slow to do so.
Running Cost savings
The main benefit to a green car outside of the finance directly is the ongoing running costs.
Electric vehicles are cheaper to operate and cost significantly less per kilometre to than a petrol or diesel vehicle.
If you have solar panels at home and can charge at off-peak times you may be driving around for almost nothing.
Compared to the $100 a week many spend on fuel it can be very compelling.
An EV generally has fewer moving parts, which can reduce the ongoing maintenance expenses as well.
For as long as your battery stays sound at least…
What Qualifies as a Green Vehicle
Lenders apply strict criteria to ensure the loan genuinely supports lower-emission transport.
Eligible vehicle types typically include:
- Battery electric vehicles (EVs)
- Plug-in hybrid electric vehicles (PHEVs)
- Conventional hybrid vehicles
- Hydrogen fuel-cell vehicles
- Other Low-emission that fall below a lender’s CO₂ threshold
However, there will be significant differences between lenders and the various benefits will not always apply to every vehicle category.
Our expert team of brokers know the credit policies of our 40+ lenders inside out and can tell you what discounts your target vehicle will be eligible for.
Click below to get started.
Emissions Thresholds Used by Lenders
The emissions on an EV ifs effectively zero. So if your vehicle is in one of the other eligible categories it may be subject to an upper limit for carbon output.
For example, a common benchmark is 125-150g/km of CO₂ or lower. If your chosen vehicle exceeds that figure, it may fall outside the scope of green-loan eligibility.
You will find similar methods used to calculate stamp duty discount eligibility in Victoria and the ACT.
This emissions cap creates a level playing field. Only vehicles that genuinely reduce fuel consumption and environmental impact qualify.
Australia’s Green Vehicle Guide
The Australian Government provides guidance on vehicle emissions via the Green Vehicle Guide.
Borrowers can cross-check their desired car to confirm whether it satisfies the lender’s environmental criteria.
Or you can just let our brokers do it.
Age-based eligibility
Some lenders restrict green auto finance to new or near-new vehicles, often up to five or seven years old.
With most car loans repaid over a 5-7 year term the car will be up to 12 years old once fully paid off.
This is much more risky territory for a lender in a volatile and unproven secondary market.
So they understandably want to avoid holding older EVs as security on their loans.
Government EV Initiatives
Unfortunately, the golden years of large government incentives for EVs are over.
Most states offered rebates of up to $3,500 until very recently.
Now, the best a green car buyer can hope for is a discount on Stamp Duty and rego which will vary from state to state.
In a more recent development, EV drivers may in fact be up for additional costs in the near future.
Road User Charges
Governments are slowly catching on to the fact that the transition to low emissions vehicles is going to hurt tax revenue.
Fuel excise is a huge earner for the federal government and as fewer vehicles rely on petrol there is going to be a shortfall to cover.
Some states have introduced a road user charge for EVs – very unsuccessfully in Victoria (like most things they do).
But now the federal government has flagged it as a priority it is only a matter of time until this becomes a broad federal tax.
How Do I Apply for a Green Car Loan?
Applying for a green car loan is similar to applying for any car loan, with a few additional checks that our brokers will complete behind the scenes:
- Confirm the vehicle is eligible for a green loan.
- Narrow lender selection to those offering the best green loan rates.
Click below to start the process and our team of expert brokers will get to work.
Can I Get a Green Car Loan With Bad Credit?
Yes, you can get a green car loan with a lower credit score. Your choice of lenders will be narrower and your interest rate a little higher.
However, we have access to a number of lenders that specialise in borrowers with a low credit score that also offer small discounts for EVs and Hybrid vehicle loans.
Calculate the Total Cost of EV Ownership
A green car loan provides an accessible pathway to owning an environmentally friendly vehicle while enjoying favourable finance terms and long-term running-cost savings.
While government incentives are on the way out, you can still save a lot of money by purchasing an EV.
However, this can be heavily dependent on the type of EV you purchase with the re-sale market for some makes and models proving to be weak in recent years
Lender incentives are only part of this calculation, but is a nice sweetener for what is already a cost effective alternative to traditional petrol vehicles.
