While EVs are becoming more accessible, the upfront cost can still feel a bit steep for many. For instance, a Tesla Model 3 currently starts at $54,900 for the rear-wheel drive variant, while the BYD Atto 3 is priced at $39,990.
With the current high cost of living, many Aussies require a car loan to fund the purchase of a new EV. Thankfully, most lenders are now offering green car loans tailored for low-emission vehicles, some of which are quite affordable, particularly regarding repayments.
This guide will show you how to find one that might be most suitable for your needs.
Why EV loans are a bit different
Electric vehicles are great for the environment, and lenders have slowly started to realise this. That’s why many banks, credit unions and fintech lenders offer what’s known as a green car loan.
These loans usually come with discounted interest rates if you’re buying an EV, hybrid, or other low-emission vehicle. Some lenders partner with organisations like the Clean Energy Finance Corporation (CEFC) to offer even more attractive terms.
Because EVs tend to retain their value better and are cheaper to run, they’re being seen as a lower risk than a regular petrol car. This means that, in most cases, these types of loans will result in a lower interest rate and more flexibility.
Bad credit car loans
Unfortunately, not everyone has a spotless credit history. Whether it’s a financial hiccup or a small dent on your record, it doesn’t mean you have to give up on owning an electric car or a vehicle to get you from point A to B.
If you do have a poor credit history and are looking for a way to get a vehicle quite quickly, Azora’s bad credit car loans might be a good option for you. These are designed for Aussies who are getting back on track financially.
Car loans like these can help you secure the funds you need while rebuilding your credit score over time. Options from lenders like this are a great way to ensure you have a vehicle even if you are in a difficult or tricky financial situation.
How to find an affordable EV car loan
When it comes to finding an electric vehicle car loan you can afford, here are a few things you should consider.
1. Don’t just look at the sticker price
While the upfront cost of an EV can be higher than a petrol or diesel equivalent, it’s worth looking beyond that initial figure. One of the biggest perks of owning an electric car is the ongoing savings.
If you do purchase one, you’ll spend far less on fuel in the long run, especially if you can recharge at home. In addition, the regular servicing costs are generally lower because these types of cars have fewer moving parts.
All of these long-term savings can help balance out a higher monthly repayment. For this reason, when you’re working out your budget, think in terms of total cost of ownership rather than just the drive-away price.
2. Compare loans from different lenders
When searching for an electric vehicle car loan, it is important to shop around because in the last couple of years, a growing number of Aussie lenders have started to offer specific EV finance options.
This includes most of the major banks and a suite of online-only lenders and credit unions. Each one will have different interest rates, terms, and flexibility, which you should familiarise yourself with.
Additionally, when comparing loans, make sure you look at both the advertised rate and the comparison rate. The comparison rate includes fees and gives a more realistic idea of the total cost of the loan.
It’s also worth considering things like early repayment options, redraw facilities, and whether you’ll be hit with any penalties for paying the loan off early. Perhaps most importantly, make sure you’re comparing apples with apples.
Don’t just sign up for the lowest rate.
3. Watch for the fine print
While some car loans might look great on the surface, they may come with catches that will end up costing you more in the long run. For example, establishment fees and monthly account fees can quickly add up.
You should also be wary of balloon payments, which require a big lump sum to be paid at the end of the loan. Such terms might lower your repayments now, but leave you struggling later down the line.
Keep an eye out, too, for early-exit penalties or limits on extra repayments. If you’re planning to upgrade your EV in a couple of years or want to pay it off faster, you won’t want to be hamstrung by them.
4. How to improve your chances of getting a better rate
Even with green loan discounts, your personal interest rate depends on how much of a risk you seem to the lender. Therefore, if you want the best deal possible, it’s worth doing a bit of preparation and research beforehand.
Perhaps the best starting point is to save up a solid deposit of around 10 per cent or more, if possible. At the same time, try to avoid having any credit card debts and clear any old defaults that can give your credit score a nice boost.
It is also worth considering getting pre-approved for a loan before visiting the dealer. Doing this not only makes you look more serious as a buyer, but also gives you a clearer budget to buy the electric vehicle you most want.
This content is for informational purposes only. You should not consider this as financial guidance. It does not address the personal circumstances of any individual or entity and should you be considering vehicle finance, you should seek your own independent advice.
