Bank Australia to cut out car loans for new petrol and diesel cars by 2025

By Sara Borman · · 2 min read
Fact Checked
Advertiser disclosure
electric vehicle on top of the world with banks cutting loans on new petrol cars

Enticed by the idea of an electric vehicle (EV)? To show support for Australia’s climate change efforts, Bank Australia has stated its intent to phase out car loans for new petrol and diesel vehicles by 2025.

While green car loans are generally a tempting option for their lower rates, this is the next step in making an electric car a viable choice. Should other banks follow suit, we could see a large swing towards electric vehicles in Australia’s fleet.

National pressure is high to make moves in the EV industry. With the EU poised to phase out the sale of new combustion engine vehicles by 2035, Australia is fighting hard to stay competitive when it comes to clear climate action. 

Electric vehicles could be a cheaper choice

This announcement comes alongside federal government plans to lessen the cost of electric vehicles. 

These plans involve the removal of fringe benefits tax (FBT) for EVs, as well as the waiving of a 5% import tariff charged on electric cars from certain countries.

An anticipated drop in the price of lithium batteries (a key component in engines for electric cars) could also see prices lowering on EVs, potentially making them a lot more accessible for everyday Aussies.

Until then, limited new car supply in Australia will continue to drive up demand - and prices are sure to follow.

What does the push toward green vehicles mean for me?

Bank Australia has said that they will continue to offer second-hand car loans on fuel and diesel powered vehicles, as not everyone will be positioned to make the shift to an electric car at this stage. 

Your existing car loans also won’t be impacted, so don’t think you’re going to get off that last year of repayments.

Until 2025 - or announcements from other lenders - there is unlikely to be any change, so your car shopping will be unaffected. Green loans are likely to score you lower interest rates, but the benefits of EVs have been demonstrated in their long-term savings on fuel (and their environmental footprint). 

Hopefully this will see the continued growth of Australia’s electric vehicle market and movement towards net zero emissions.

For other banking options that make you feel good beyond just your wallet, we’ve rounded up some ethical banking options. If it’s car loans you’re after, find Mozo’s picks with our best car loans.

Compare car loans

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can search our database of 91 car loans.
Last updated 30 October 2024 Important disclosures and comparison rate warning*
  • New Car Loan

    Fixed, Secured, $5,000-$75,000

    Interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Get a competitive fixed interest rate on a secured new car loan of up to $75,000 depending on your credit score. Easy online application. Fast pre-approval. Pre-approved funds held for up to 3 months. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Go to site
    Details
  • New Car Loan - Special

    Including Demo, Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    8.39% p.a.
    9.50% p.a.based on $30,000
    over 5 years

    Low fixed car loan rate for purchasing new and demo vehicles from dealers. There is no monthly or ongoing fees and early payout options available. Winner of Mozo's Experts Choice Car Loan 2021 award^. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 8.39% would cost $37,714.40 including fees.

    Compare
    Find out more
    Details
  • Better Car Loan Special Offer

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.48% p.a.
    6.89% p.a.based on $30,000
    over 5 years

    Get a fixed rate car loan for amounts over $20,000 with Police Credit Union. Make additional repayments at any time without penalty. Free online redraw. Available for new and used cars. Can also be used for motorcycles, boats, caravans, trailers or any registrable vehicle.

    Repayment terms from 1 year to 5 years. Representative example: a 5 year $30,000 loan at 6.48% would cost $35,497.21 including fees.

    Compare
    Find out more
    Details

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.