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

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 - last updated 20 April 2024

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    Interest rate
    comparison rate
    Monthly repayment
    6.24% p.a.
    7.36% p.a.based on $30,000
    over 5 years

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  • New Car Loan - Special

    Including Demo, Variable, Secured

    Interest rate
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    Monthly repayment
    7.74% p.a.
    8.85% p.a.based on $30,000
    over 5 years

    Low variable car loan rate for purchasing new and demo vehicles from dealers. Extra low rate for qualifying homeowners. Personalised loan amounts between $5,000 and $150,000. Flexible repayment options. Choose between the 3 to 7 year loan terms. Good credit history. Stable employment history and Australian citizenship or PR required.

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  • New Car Loan

    Fixed, Secured, Excellent Credit Score [832+]

    Interest rate
    comparison rate
    Monthly repayment
    7.29% p.a.to 7.79% p.a.
    8.00% p.a.to 8.50% p.a.based on $30,000
    over 5 years

    Enjoy a quick application process and no monthly fees on NRMA new car loans. Finance also available motorcycles, caravans and motorhomes. Low fixed interest rates with terms of up to seven years. Plus, NRMA Blue Member benefits apply so you could enjoy even lower rates as an NRMA Member**.

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    Fixed, Secured

    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
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    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.

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  • New Car Loan - Special

    Home Owner Discount, Including Demo, Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.99% p.a.
    8.11% p.a.based on $30,000
    over 5 years

    Eligible for homeowners only. Low fixed car loan rate for purchasing new and demo vehicles from dealers. 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 6.99% would cost $36,513.67 including fees.

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* 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

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