Excited by the idea of an electric vehicle (EV)? To support Australia’s climate change efforts, Bank Australia has announced its intention to phase out car loans for new petrol and diesel vehicles by 2025.
While green car loans are generally a tempting option due to their lower interest rates, this is the next step in making an electric car a viable choice. If other banks follow suit, we could see a big trend towards electric vehicles in Australia’s fleet.
The national pressure to move into the electric vehicle industry is high. With the EU poised to phase out sales of new internal combustion engine vehicles by 2035, Australia is struggling hard to remain competitive when it comes to clear climate action.
Electric vehicles could be a cheaper choice
This announcement comes alongside plans by the federal government to reduce the cost of electric vehicles.
These plans include the removal of fringe benefits tax (FBT) for electric vehicles and the waiver of a 5% import duty on electric cars from certain countries.
An expected drop in the price of lithium batteries (a key component in electric car engines) could also cause EV prices to drop, potentially making them much more accessible to everyday Aussies.
Until then, limited new car supply in Australia will continue to drive demand – and prices are sure to follow.
What does the trend towards environmentally friendly vehicles mean for me?
Bank Australia has said it will continue to offer used car loans for both fuel and diesel vehicles, as not everyone will be able to make the switch to an electric car at this point.
Your existing auto loans won’t be affected either, so don’t think you’ll get out of the last year of repayments.
This is unlikely to change until 2025 – or announcements from other lenders – so your car purchase will remain unaffected. Green loans will likely get you lower interest rates, but the benefits of EVs have been shown in their long-term fuel savings (and environmental footprint).
Hopefully this will lead to continued growth in Australia’s electric vehicle market and a move towards net-zero emissions.
For other banking options that make you feel comfortable with beyond your wallet, we’ve rounded up some ethical banking options. If you are looking for car loans, you will find Mozo’s selection with our best car loans.
^See information on the Mozo Experts Choice Personal Loan Awards
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