Seduced by the idea of an electric vehicle (EV)? To show its support for Australia’s climate change efforts, Bank Australia has declared its intention to phase out car loans for new petrol and diesel vehicles by 2025.
Although green car loans are usually a tempting option for their lower rates, this is the next step in making an electric car a viable choice. If other banks follow suit, we could see a big shift to electric vehicles in the Australian fleet.
National pressure is strong to get the EV industry moving. As the EU is set to phase out the sale of new combustion engine vehicles by 2035, Australia is fighting to stay competitive on clear climate action.
Electric vehicles could be a cheaper choice
This announcement builds on federal government plans to reduce the cost of electric vehicles.
These plans involve the removal of the employee benefits tax (FBT) for electric vehicles, as well as the removal of a 5% import duty applied to electric cars from certain countries.
An anticipated drop in the price of lithium batteries (a key component of electric car engines) could also lead to lower prices for electric vehicles, potentially making them much more accessible to everyday Australians.
Until then, the limited supply of new cars in Australia will continue to drive up demand – and prices are sure to follow.
What does the drive towards green vehicles mean to me?
Bank Australia said it would continue to offer used car loans on petrol and diesel vehicles as not everyone will be able to upgrade to an electric car at this stage.
Your existing auto loans won’t be affected either, so don’t think you’re going to get rid of that last year of repayments.
Until 2025 – or other lenders’ announcements – there is unlikely to be a change, so your car purchases will not be affected. Green loans are likely to earn you lower interest rates, but the benefits of electric vehicles have been demonstrated in their long-term fuel savings (and environmental footprint).
Hopefully this will see the continued growth of the Australian electric vehicle market and the move towards net zero emissions.
For other banking options that make you feel beyond your wallet, we’ve rounded up some ethical banking options. If you’re looking for car loans, find Mozo’s picks with our best car loans.
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