How EV finance differs
An electric or hybrid car is funded much like any other car: a secured loan over the vehicle, a set term and a fixed rate for most. The differences are in how lenders price it.
Some lenders offer a green car rate, a discount for vehicles under a set emissions level. Others still treat a used EV's battery as an unknown and shorten the term or trim the loan amount. Comparing is how you end up with the first kind of lender, not the second.
Most of that comes back to one question: what will the car be worth at the end of the term? On an EV that answer is less settled than on a model line that has been on the road for thirty years, and it shapes the rate, the term and how a balloon is priced.
Who an EV loan suits
New EV buyers
The widest choice of lenders and green car rates, backed by a full manufacturer and battery warranty.
Used EV buyers
More lenders fund used EVs than a few years ago. Expect questions about age, kilometres and battery health.
Business and work use
A chattel mortgage or lease through the business may suit better than a personal loan. See business vehicle finance.
Green car rates
What they are
A discounted rate some lenders offer for electric and some hybrid vehicles. The size of the discount, and which vehicles qualify, differs from lender to lender.
What counts as green?
There is no industry standard. Some lenders apply the discount only to fully electric vehicles, some extend it to plug in hybrids, and some tie it to an emissions threshold or a list of eligible models. Two lenders can both advertise a green product and disagree about whether the car in front of you qualifies, so it is a question to ask rather than assume.
Check the comparison rate
A green rate with higher fees can still cost more overall. The comparison rate rolls the headline rate and standard fees into one figure, so compare that, then the total repayable over the same term. See comparison rate vs interest rate.
Not only for new cars
Some green rates apply to used EVs too. Others are limited to new or demo vehicles, so it pays to check before you shop.
New, demo or used
New
The easiest to fund, with the widest choice of lenders and green car rates.
Demo
Often a sweet spot: most of the new-car finance options at a lower price.
Used
More lenders fund used EVs than a few years ago, though some look closely at age, kilometres and battery health.
Age is measured the same way as on any vehicle. Most lenders care how old the car will be at the end of the term, not how old it is on the day you buy it. On a used EV that can come back as a shorter term than you planned for. The upside is that someone else has already absorbed the steepest depreciation.
The battery
Why lenders care
The battery is the most valuable part of the car, and unlike an engine it is not something you rebuild at the roadside. Some lenders are still working out how to price that, which can show up as a more conservative term on an older used EV than on a petrol car of the same age.
The battery warranty
Manufacturers generally warrant the battery separately from the rest of the car, often for longer and with a minimum capacity it must keep. The terms vary by make and model, and so does whether the warranty passes to a second owner. On a used EV, find that out first.
State of health
Battery state of health is how much usable capacity is left compared with new, usually shown as a percentage. Some cars report it themselves, and it can be read with diagnostic equipment. It is the closest thing an EV has to a mechanical inspection of the expensive part, so bring a recent reading with you when you apply.
Typical terms
Common ranges, not promises. Every lender sets its own policy.
- Term: commonly one to seven years, shorter for older used EVs.
- Rate: usually fixed for the life of the loan, with a green car discount from some lenders.
- Security: most EV loans are secured against the car, which keeps the rate lower than an unsecured personal loan.
- Balloon: optional, and worth sizing cautiously while EV resale values are still settling.
- Deposit: not always needed, but it narrows the gap between what you owe and what the car is worth.
- Insurance: comprehensive cover is normally a condition of a secured loan for its whole life.
An example repayment
Illustrative only. A $50,000 EV loan over five years, fees not included.
| Setup | Repayment | Total repaid |
|---|
| 8.00% p.a., no balloon | $1,014 a month | $60,829 |
| 8.00% p.a., $15,000 balloon | $810 a month | $63,580 |
| 7.50% p.a., no balloon | $1,002 a month | $60,114 |
Half a percent off the rate is worth about $715 over five years here, which a few hundred dollars of extra fees can eat into quickly. The balloon cuts about $204 off each month but adds about $2,750 in interest, and leaves $15,000 due in one hit at the end. If the car is worth less than that by then, you cover the difference.
These figures are illustrative only. They are not a quote, a current rate or an offer of credit. Your rate, fees and terms depend on the lender, the vehicle and your circumstances. Repayments are calculated in arrears and rounded.
What lenders look at
The car sets the boundaries. Your side of the file decides what happens inside them.
- Income, how long you have earned it, and whether it is steady
- Your credit file, including repayment history and recent enquiries
- Existing commitments, including credit card limits and buy now pay later accounts
- Living expenses, checked against your bank statements
- The car: make, model, age, kilometres and condition
- The battery's remaining warranty and, on a used car, its state of health
Every formal application leaves a mark on your credit file, so lodging several in a short window to hunt for a green rate can work against you. Finding out which lenders have an EV product, and what they count as eligible, is the cheaper way round.
Things to think about
Resale and the balloon
EV resale values have been harder to predict than petrol cars. A big balloon relies on the car being worth enough at the end, so we size it cautiously. Owing more than the car is worth causes no trouble while you drive and pay as planned, and plenty the moment you want out. See balloon payments explained.
Charging at home
The charger is the obvious cost. Installation depends on your switchboard and how far it is from where the car parks, so it is a quote rather than a fixed price. Renters generally need the owner's consent for the work.
Insurance and running costs
Premiums for EVs can differ from a comparable petrol car, so quote the exact model before you set your budget. Servicing is often simpler, though tyres can wear faster on a heavy car with strong torque.
Buying privately
The usual checks apply: the seller must be the registered owner, the lender pays the seller directly, and a PPSR search on the VIN shows any money owing or a write-off record. On an EV, also ask for the state of health reading and confirm the battery warranty transfers. See buying privately.
What to have ready
- Photo ID, your licence and proof of address
- Payslips, or tax returns if you are self employed
- Recent bank statements
- A quote or invoice for the car and anything else you want funded
- The VIN, odometer reading and service history
- Any battery state of health report and the battery warranty details
- A quote for the home charger, if you are getting one
EV finance questions
Are EV loan rates lower?
Sometimes. Lenders with green car rates can price an EV below a comparable petrol car. Not every lender does, which is why comparing matters.
Do hybrids get a green car rate?
With some lenders. Some limit the discount to fully electric cars, others include plug in hybrids or anything under an emissions threshold. It is lender by lender.
Can I finance a used EV?
Yes. Expect questions about the vehicle's age and kilometres, and sometimes about battery health.
Does battery health affect my loan?
It can on a used EV. A healthy reading and a battery warranty that transfers to you both make a lender more comfortable, and can help with the term you are offered.
Can I buy an EV privately?
Yes. As with any private sale, the lender checks the seller owns the car and that there's no money owing on it.
How long can the loan be?
Terms commonly run up to seven years, depending on the car's age and the lender.
Can I include a home charger?
Some lenders allow it. Tell us up front and we'll look for one that does.
Should I take a balloon on an EV?
Only with care. It lowers the repayment, but EV resale values are still settling, so a large balloon carries more risk of owing more than the car is worth at the end.
Compare regular car loans, or if the car is for work, see business vehicle finance.
.svg)
.svg){kind=icon}
